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1996
(Zweig Series Trust logo appears here)
SEMI-ANNUAL REPORT
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CONTENTS
Shareholder Letter 1
A Conversation with Marty Zweig 3
A Hypothetical Analysis 4
Zweig Strategy Fund Review 6
Zweig Managed Assets Review 8
Zweig Appreciation Fund Review 10
Zweig Government Fund Review 12
Zweig Cash Fund Review 13
Standardized Performance 13
Statement of Net Assets 14
Statement of Operations 35
Statement of Changes in Net Assets 36
Notes to Financial Statements 38
Financial Highlights 42
Supplemental Proxy Information 44
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF SHAREHOLDERS OF ZWEIG
SERIES TRUST AND IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY
A CURRENT PROSPECTUS. THE PROSPECTUS INCLUDES INFORMATION REGARDING THE
TRUST'S EXPENSES, OBJECTIVES, POLICIES, MANAGEMENT, PERFORMANCE AND OTHER
INFORMATION. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. CALL
ZWEIG AT 1-800-272-2700 TO OBTAIN ADDITIONAL COPIES OF THE PROSPECTUS.
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE
OF FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO
THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN
THEIR ORIGINAL COST.
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DEAR FELLOW SHAREHOLDER
There's an old saying on Wall Street, "They don't ring a bell at the top or
the bottom." This means that no one can tell precisely when a good market
turns sour, or vice versa. However, our research is picking up some noise.
The first six months of 1996 saw the five-and-a-half year-old bull market
continue. Stocks moved upward, hitting record heights, but the gains were
accompanied by increased volatility. Since February, our research has pointed
to rising risk and, in response, we scaled back our market exposure to 64% by
quarter end.
Our equity mutual funds lagged their respective benchmarks for the first six
months of 1996. While it never feels good to underperform, the key to our
style has been to remain disciplined, follow our research, and manage risk.
The better performing funds this year have been fully invested in the most
aggressive stocks. That's not a market environment that's conducive to our
style of management. You don't hire us to be aggressive in an unattractive
risk/reward environment -- even if the market moves higher. As is often the
case well into a bull market, balance, caution and a healthy respect for risk
are devalued, if not scorned. However, we know that you hired us to manage
your exposure to risk, and that is what we continue to do.
Our research on the monetary front is low-neutral. Bonds have had a difficult
few months, yet stocks have continued to rise. This is unusual, and we're not
sure how long it can continue. When bonds are weak, stocks generally fall as
well. The trouble in bonds is due to a strengthening economy. This often
leads to inflation and rising interest rates, which hurt companies and their
stock prices.
Our sentiment model has deteriorated and is now negative. Optimism has risen,
and signs of speculation are increasing. This occurs when investors' faith in
the market outweighs all sense of risk or reason. While no single sign means
that the bull market is ending, when you look at several factors and they all
point the same way, you begin to see a case for excessive
optimism.
Our momentum indicators are negative as well. The stock market had a string
of negative days in late June, and this turned the momentum model negative.
In spite of our downgraded research, the market still has some positives. Stocks
could continue to rise for some time if the economy and interest rates behave.
The presidential election could help keep the market going, as election years
historically have been good for stocks.
1
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I don't know what will happen next, and my research doesn't try to predict it.
The market could go higher from here. But I'm always concerned about the
devastating impact of corrections and bear markets. I've found that, for me as
well as for many investors, faith in the future is hard to maintain when your
account is down 20% or more in a bear market. That's why my associates and I are
so sensitive to our models. If, by following our indicators, we can keep you
largely in the market when it's going up, and protect the bulk of your money
from a severe market decline, we will have done our job. We don't have to match
the market during the bull phases -- although we must participate -- in order to
deliver attractive long-term returns. The key for us is to limit losses during
the major market declines.
Only one of our open-end equity funds has been through a bear market --
Strategy Fund in 1990. It performed very well, limiting losses to half that
of the S&P 500 Index. Since we established our other funds, however, the
stock market has been unusually benign. I urge you not to be swayed by recent
history. Bear markets are not a thing of the past. The market always has
cycles --meaning it goes up AND down--no matter how long it takes. Even though
risk-averse money management is not currently in vogue, the long-term
wisdom of our approach is not in doubt.
Our portfolio managers comment on the performance of each of their funds
beginning on page 6. This report also includes an essay on the potential for
attractive long-term returns through a loss limitation strategy.
We appreciate your continued confidence.
(Photo of Martin E. Zweig appears here)
Martin E. Zweig, Ph.D.
PRESIDENT
Sincerely,
(Signature of Martin E. Zweig)
MARTIN E. ZWEIG, Ph.D.
PRESIDENT
JULY 12, 1996
2
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A CONVERSATION WITH MARTY ZWEIG
Q: Marty, the market has risen without interruption for nearly six years. Do
you think it's possible that this time is different, and that severe bear
markets are a thing of the past?
A: No. It's never different. There are differences in each turn of the wheel,
but markets go up and markets go down, and there are always two constants. One
is money, or liquidity. Money makes the mare run. Markets go up when there is
ample liquidity, and they go down when money is tight. The second constant is
human emotion, particularly greed and fear. Right now, we're solidly in the
greed phase. I haven't seen a market like this since 1968, and that was followed
by a period of underperformance in stocks. The excesses that we're seeing are
incredible. When the mere mention of a company on CNBC or the Internet can send
its stock soaring, there are clear speculative excesses in the market. This
thing will not end well, but I don't know WHEN it's going to end. My research is
low-neutral at the moment. The market still has a lot of momentum behind it and
a reasonable amount of liquidity, and it's very hard to end one of these
speculative bubbles without a catalyst.
What kind of catalyst could put an end to this bull market?
Usually higher interest rates, or a crisis somewhere in the world. For example,
the 1990 bear market was triggered when Saddam Hussein moved into Kuwait and the
price of oil doubled. An event like that sucks the liquidity out of the system.
Outside of that, the most likely catalyst is a stronger economy and higher
interest rates. Right now, however, our monetary research is low-neutral. One
thing that the market has going for it is that this is an election year. The
market rarely goes down in the six months before a presidential election.
Many market watchers are saying that the flood of retirement savings from
baby boomers will keep this market going up for years to come.
That argument ignores the fact that the market has never been fueled by any
single factor for long. To believe that now one single factor is enough to
drive the markets seems simplistic. I've been in the market for 35 years now,
and in every cycle, without exception, I've heard "this time is different."
There is always some new reason why the market will never go down. I do
respect the power of money coming in from the 401(k)s, but I respect it from
the liquidity standpoint. From the sentiment standpoint, it's less stable
money.
What do you mean?
In my newsletter, THE ZWEIG FORECAST, I noted that 83% of all net sales in
mutual funds have come in since the bottom of the last 10% correction in late
1990. So 83% of all the new money that's come into mutual funds has never
seen a 10% correction. Of even more cause for concern, IN THE FIRST FIVE
MONTHS OF THIS YEAR, MUTUAL FUNDS TOOK IN JUST OVER $100 BILLION DOLLARS.
That's more money than came into funds from 1954 through 1990. We don't know
how that money will react when the market turns bad. What does a 55 year-old
investor do when, all of a sudden, the market is down 20%, his portfolio is
down 30%, and he sees his retirement money evaporating? Some people aren't
going to be able to take that pain. I can't take the pain of a bear market,
and that's why my whole style evolved this way. I've been through it, and I
don't like losing money. Not everybody is like me, but there are enough
risk-averse investors out there that they may sell and accentuate a down
market.
Marty, has there been a period this century when being a risk-averse money
manager has been more difficult?
It was probably just as bad in the 1920s. That market had a big head of steam,
and it just kept going up. But this bull market has been unbelievable. It's
surpassed everyone's expectations, and it hasn't given us a chance to add much
value. Our style of investing is based on limiting losses as a means to superior
long-term returns. When there aren't any losses to limit, we tend to lag behind
fully invested mutual funds. However, I believe that risk-averse investing has a
place in most people's portfolios. The strong market of recent years only
convinces me further of the need for our flexible approach. I don't think that
bear markets are a thing of the past. And when one occurs, we're one of the few
managers who have an exit strategy.
3
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A HYPOTHETICAL ANALYSIS:
THE POTENTIAL FOR ATTRACTIVE
LONG-TERM RETURNS
THROUGH A LOSS LIMITATION STRATEGY
Is it possible to "underperform" in a bull market and still earn attractive
returns?
After more than five years of exceptionally high market returns combined with
extraordinarily low volatility, many investors think that any attempt to
limit risk must also lower long-term returns.
Since October 11, 1990, the market averages have not experienced so much as a
10% decline on a closing basis--the longest such run ever--while the Dow has
soared from 2400 to 5800. This describes an investment environment that
brutally punishes caution, while lavishly rewarding investors who take on the
most risk.
After such a torrid bull-market run, loss limitation becomes the Rodney
Dangerfield of investment strategies--it "don't get no respect...no respect at
all." We believe this viewpoint is emotionally understandable, but
mathematically suspect.
Here is a purely hypothetical* analysis of the potential for attractive
performance through a loss limitation strategy. Let's look at an imaginary
four-year performance record for two fund managers, whom we hope you will
forgive us for calling Aggressive Al and Cautious Cal.
Aggressive Al spends three years in perfect harmony with a wild bull market,
racking up gains of 19.5% per year. Cautious Cal, a much more risk-averse type,
pays for his innate caution with three years of lagging returns: let's say 15%
per year.
Mathematically,
you can "underperform"
during bull market
phases and still earn
attractive returns by
pursuing a loss limitation
strategy.
But in the fourth year, a perfectly normal 20% market correction takes place.**
(The Dow Jones Industrial Average has experienced such a correction 29 times
this century; the AVERAGE of these 29 declines was 35%.)
*THIS ILLUSTRATION IS PURELY HYPOTHETICAL AND IS NOT INTENDED TO SHOW THE
RESULTS OF AN ACTUAL INVESTMENT IN ZWEIG MUTUAL FUNDS.
**UNDER DIFFERENT CIRCUMSTANCES, WITHOUT A MARKET CORRECTION, THE RESULTS
WOULD BE DIFFERENT.
4
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Aggressive Al, the fully invested perpetual bull, rides the market down 20%.
Cautious Cal has a strategy for reducing his market exposure. He doesn't
predict the decline -- no one can consistently do that -- but he manages to get
partially out of harm's way as the damage unfolds. The result, in this purely
hypothetical example, is that Cal is only down 10%, because of his loss
limitation strategy.
The "chronic underperformer," Cautious Cal, ends this hypothetical exercise with
the same return as his flashier colleague. Thus, he demonstrates our point:
after years of spectacular bull market gains, caution may seem almost
counterintuitive. But losses -- even in the most "temporary" of major
corrections -- are hard to overcome because you have less money working for you
on the way back up. We believe that mathematically, you can "underperform"
during bull market phases and still earn attractive returns by pursuing a loss
limitation strategy during major market setbacks. And if a manager limits your
losses, it may be easier psychologically for you to stay in the market long
enough to enjoy the superior returns that stocks historically have delivered,
and that we believe will continue in the future.
Which 37%
return do
you want?
(Two bar graphs appear here with the following plot points.)
AGGRESSIVE AL
19.5% 19.5% 19.5%
YEAR 1 YEAR 2 YEAR 3
YEAR 4
-20%
CAUTIOUS CAL
15% 15% 15%
YEAR 1 YEAR 2 YEAR 3
YEAR 4
-10%
The result:
Aggressive Al = 37%
Cautious Cal = 37%
5
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Zweig Strategy Fund
A risk-averse
approach to the
growth potential
of mid-sized and
large-company stocks
Quotron Symbols:
ZSTAX / ZSTBX / ZSTCX
Assets as of 6/30/96:
$ 1.25 billion
Portfolio Manager:
(Photo of David Katzen)
David Katzen
For the second quarter of 1996, the A and C Shares lost 0.1% and 0.4%,
respectively. The S&P 500 was up 4.5%, and the Lipper Growth Fund Average
gained 4.4%.
Marty Zweig explained the rationale behind the reduction of our
investment exposure in his shareholder letter. Due to a market that favored
high-flying stocks, our results lagged the benchmarks. Our stock selection
process, which pays equal homage to value and growth factors, would not allow
us to buy what our model considered to be risky stocks, yet these stocks have
led the market so far this year. Though not necessarily predictive, this is
often the case during the late stages of a bull market.
The outperformance by less stable segments of the market is illustrated by
the performance of the retail sector (excluding grocery stores) of the S&P 500.
This sector gained 30% during the first half of 1996. Its average price/earnings
ratio is 25, while its average earnings growth rate is only 4.1%. In other
words, one of the best-performing sectors in the market costs an average of 25%
more than the S&P 500, yet grew less than half as much. Simply put, people are
paying a lot for these stocks, given the stocks' earnings trends.
It is instructive of our style to note the structure of the portfolio
today versus a year ago, and how we got from there to here. Though our market
exposure isn't much different now than a year ago, how we got to the
respective mid-year points couldn't be more different. A year ago, bonds were
rallying and the supply of stock was rapidly shrinking. We systematically
increased our market exposure through the first half of 1995. This year we've
been steadily reducing our market exposure.
The character of our equity exposure is also quite different from a
year ago. Last year at this time, we heavily favored technology stocks.
Today, our technology holdings are well below the market's weighting. We've
also upped our investment in defensive industry groups such as utilities, a
sector which made up less than 5% of the Fund a year ago.
The point of all this is our flexibility. It is evident in both our
asset allocation and our stock selection. Our personal comfort is not an
issue in determining our asset mix or industry exposure. This is one of the
benefits of a quantitative style. If our indicators warn that risk levels are
rising, we will cut back. If our stock selection model signals that utility
stocks have the best combination of growth and value characteristics, we will
invest there.
Please see page 13 for additional performance information.
(Signature of David Katzen)
DAVID KATZEN
SENIOR VICE PRESIDENT
JULY 12, 1996
6
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Zweig Strategy Fund has captured 87% of the gains of the average growth fund
since its inception, and has done so with an average market exposure of 67%.
(Four bar graphs appear here with the following plot points.)
PERFORMANCE for the year-to-date through 6/30/96
4.2% 3.8% 10.1% 10.1%
A Shares C Shares Lipper Growth S&P 500
Fund Average
Zweig Strategy Fund
Average market exposure: 76%
AVERAGE MARKET
Annualized since inception EXPOSURE
Zweig Strategy Fund (A Shares) 11.0% 67%
Lipper Growth Fund Average 12.7%+
S&P 500 Index 13.6%
Zweig Strategy Fund (C Shares) 10.7% 65%
Inception dates: A Shares-12/29/89
C Shares-2/4/92
ASSET MIXES
June 30, 1995 December 31, 1995 June 30, 1996
Stocks 70% Stocks 80% Stocks 64%
Cash 30% Cash 20% Cash 36%
PRINCIPAL SECTORS as of 6/30/96*
Utilities 22.1%
Non-bank Financial 15.6%
Process Industries 12.9%
Transportation 10.0%
Banking 9.9%
Non-energy Minerals 6.1%
Electronic Technology 5.1%
Producer Manufacturing 4.6%
Energy Minerals 3.8%
Consumer Non-durables 2.5%
THE NEW CLASS B SHARES ARE DOWN 0.2% SINCE THEIR INCEPTION ON APRIL 8, 1996,
VERSUS A GAIN OF 4.6% FOR THE S&P 500.
+THE LIPPER GROWTH FUND AVERAGE IS BASED ON THE TOTAL RETURN OF 667 GROWTH
FUNDS. THE PERIOD MEASURED IS FROM 12/31/89 DUE TO LIPPER'S WEEKLY DATA.
RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES.
FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING OR INCREASING STOCK EXPOSURE AND INCREASING OR REDUCING
CASH.
*PERCENTAGE OF THE STOCK PORTION OF THE FUND ONLY; DOES NOT TAKE INTO
ACCOUNT THE FUND'S CASH POSITION.
7
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Zweig Managed Assets
Flexible asset
allocation among
domestic and
international stocks,
bonds and cash
Quotron Symbols:
ZMAAX / ZMABX / ZMACX
Assets as of 6/30/96:
$ 612 million
Portfolio Manager:
(Photo of Carlton B. Neel)
Carlton B. Neel
The first half of 1996 has been great for stocks, but horrible for bonds.
Though the second quarter showed some improvement, long-term U.S. bonds still
had a negative 1.3% return for the quarter.
The bond portion of the Fund negatively impacted our returns. For the
quarter, the A and C Shares returned 1.8% and 1.5%, respectively, versus 2.9%
for the Lipper Global Flexible Fund Average.
The Fund is made up of four distinct segments: U.S. stocks, U.S. bonds,
foreign stocks and foreign bonds. Even though the returns of our stock
portions were comparable to their respective benchmarks, the bonds we held
made it difficult to perform well overall.
In keeping with our risk-averse, reactive strategy, we reduced the
duration, or sensitivity to changes in interest rates, of our U.S. bond
portfolio during the bond market's violent sell-off. Our duration reached a
low of three years during the second quarter, much lower than normal. In this
manner, we reduced our market exposure and attempted to lower our risk.
The correction was so precipitous, however, that our research, which seeks
to react to trends rather than predict them, was hard pressed to respond early
enough to stem the losses. This year has been dubbed the "payroll bear market"
for bonds. Every major sell-off has occurred on days when the government's
unemployment statistics, or payroll numbers, have been released. When the market
changes so abruptly, on single days rather than over time, it is difficult for
our models to respond in a timely manner.
We finally have begun to see life in the foreign stock markets. Virtually
every major stock market has positive returns for the year. Consistent with our
style, we have overweighted stocks versus bonds in reaction to our research, but
our conservative nature will never allow us to take a huge bet on any single
asset or asset class. We have trimmed our exposure to bonds, but we will not
totally reject fixed income as a viable portion of a diversified global strategy
for risk-averse investing. Our returns reflect solid participation in a variety
of markets globally with very little volatility, especially considering the
brutal bond market conditions which have prevailed in 1996.
Please see page 13 for additional performance information.
(Signature of Carlton B. Neel)
CARLTON B. NEEL
FIRST VICE PRESIDENT
JULY 12, 1996
8
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ZWEIG MANAGED ASSETS HAS CAPTURED 76% OF THE GAINS OF THE AVERAGE GLOBAL
FLEXIBLE FUND SINCE ITS INCEPTION, AND HAS DONE SO WITH AN AVERAGE MARKET
EXPOSURE OF 64%.
(Four bar graphs appear here with the following plot points.)
PERFORMANCE for the year-to-date 6/30/96
2.2% 1.8% 6.1%
A Shares C Shares Lipper Global
Flexible Average
Zweig Managed Assets
Average exposure: Stocks 51%, Bonds 29%, Cash 20%
Annualized since inception AVERAGE MARKET
Zweig Managed Assets (A Shares) 7.8% EXPOSURE
Zweig Managed Assets (C Shares) 7.1% Stocks 30%
Lipper Global Flexible Fund Avg. 10.3%+ Bonds 34%
Inception dates: A Shares-2/8/93 Cash 36%
C Shares-2/8/93
ASSET MIXES
June 30, 1995 December 31,1 995 June 30, 1996
Bonds 32% Bonds 46% Bonds 24%
Stocks 31% Stocks 44% Stocks 47%
Cash 37% Cash 10% Cash 29%
COUNTRY ALLOCATIONS as of 6/30/96
Cash
Stocks Bonds Equivalents
U.S. 19.4% 14.5% 28.7%
Canada 0.0 1.9 0.0
Denmark 1.1 0.0 0.0
Finland 1.6 2.1 0.0
France 2.8 0.0 0.0
Germany 2.5 0.0 0.0
Italy 3.0 2.2 0.0
Japan 4.2 0.0 0.0
Malaysia 1.1 0.0 0.0
Netherlands 1.2 0.0 0.0
Spain 3.7 2.3 0.0
Sweden 3.2 1.1 0.0
United Kingdom 3.4 0.0 0.0
Total 47.2% 24.1% 28.7%
(Map appears here with the following caption.)
Countries ZMA is invested in.
THE NEW CLASS B SHARES ARE UP 1.9% SINCE THEIR INCEPTION ON APRIL 8, 1996,
VERSUS 3.5% (FROM 4/11/96) FOR THE LIPPER GLOBAL FLEXIBLE FUND AVERAGE.
+THE LIPPER GLOBAL FLEXIBLE FUND AVERAGE IS BASED ON THE TOTAL RETURN OF 71
GLOBAL FLEXIBLE FUNDS. THE PERIOD MEASURED IS FROM 2/11/93 DUE TO LIPPER'S
WEEKLY DATA. RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES
CHARGES.
FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING OR INCREASING STOCK EXPOSURE AND INCREASING OR REDUCING
CASH.
9
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ZWEIG
APPRECIATION
FUND
A risk-averse
approach to the
growth potential of
small-company stocks
Quotron Symbols:
ZAPAX / ZAPBX / ZAPCX
Assets as of 6/30/96:
$ 496 million
Portfolio Manager:
(Photo of David Katzen)
David Katzen
For the second quarter of 1996, the A and C Shares returned 2.8% and 2.6%,
respectively. The Value Line Geometric Index was up 3.2%, and the Lipper
Small-Company Fund Average gained 7.9%.
Marty Zweig explains the rationale behind the reduction of our
investment exposure in his shareholder letter. Part of the reason that our
results lagged the benchmarks was that the environment for stock-picking was
one of the least friendly for our style that we've seen in some time.
We select stocks using a computer model that analyzes companies based
on a number of different growth and value criteria, and ranks them
accordingly. Simply put, we tend to favor lower price/earnings ratios (or the
amount a stock costs relative to its profits), and higher earnings growth
rates. Obviously, these extreme combinations rarely can be found in
individual stocks, since companies with strong growth rates generally command
higher valuations. But by focusing on stocks with favorable relationships
between growth and value characteristics, we are able to construct a
portfolio in which we consistently get higher growth than the market for a
lower price--a much more favorable risk/reward relationship.
The environment this year, unfortunately, has been characterized by
outperformance in the riskier and less fundamentally stable segments of the
market. For example, the Russell 2000, a widely used barometer of
small-company stock performance, can be broken down by industry group.
Consider its Consumer Discretionary and Service sector, which accounts for
about 17% of the index and was up approximately 23% through June. This
sector's average price/earnings ratio is almost twice that of the S&P 500,
while its earnings growth is only 15% to 20% better than that of the market.
In other words, one of the strongest performing sectors of the market had
very little in the way of improving profits to support investor enthusiasm.
Needless to say, given our style, stocks with this type of valuation
and earnings growth will be unlikely to have significant representation in
our portfolio. Though
periods with this type of activity occur from time to time, experience has
shown that they are short-lived and that our balanced, disciplined approach
works well over time.
Please see page 13 for additional performance information.
(Signature of David Katzen)
DAVID KATZEN
SENIOR VICE PRESIDENT
JULY 12, 1996
10
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ZWEIG APPRECIATION FUND HAS EARNED 68% OF THE GAINS OF ITS PEERS SINCE ITS
INCEPTION, AND HAS DONE SO WITH AN AVERAGE MARKET EXPOSURE OF 66%.
(Four graphs appear on this page with the following plot points.)
PERFORMANCE for the year-to-date through 6/30/96
6.2% 5.8% 15.1% 8.0%
A Shares C Shares Lipper Small-Company Value Line
Fund Average Geometric Index
Zweig Appreciation Fund
Average market exposure: 76%
Average market
Annualized since inception exposure
Zweig Appreciation Fund (A Shares) 12.2% 66%
Lipper Small-Co. Fund Average 17.9%+
Value Line Geometric Index 10.0%
Zweig Appreciation Fund (C Shares) 10.1% 65%
Inception dates: A Shares-10/7/91
C Shares-2/4/92
ASSET MIXES
June 30, 1995 December 31, 1995 June 30, 1996
Stocks 70% Stocks 80% Stocks 64%
Cash 30% Cash 20% Cash 36%
PRINCIPAL SECTORS as of 6/30/96*
Utilities 15.9%
Non-bank Financial 13.8%
Process Industries 11.0%
Producer Manufacturing 10.7%
Banking 10.4%
Non-energy Minerals 8.3%
Electronic Technology 8.0%
Transportation 4.7%
Consumer Durables 4.3%
Commercial Services 2.3%
THE NEW CLASS B SHARES ARE UP 2.5% SINCE THEIR INCEPTION ON APRIL 8, 1996,
VERSUS 3.6% FOR THE VALUE LINE GEOMETRIC INDEX.
+THE LIPPER SMALL-COMPANY FUND AVERAGE IS BASED ON THE TOTAL RETURN OF 397
SMALL-COMPANY FUNDS. THE PERIOD MEASURED IS FROM 10/10/91 DUE TO LIPPER'S
WEEKLY DATA. RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES
CHARGES.
THE VALUE LINE GEOMETRIC INDEX MEASURES THE RETURNS OF 1,700 STOCKS
RANGING FROM LARGE-CAP TO SMALL-CAP ON AN UNWEIGHTED BASIS. THE RETURNS
INCLUDE AN ESTIMATE FOR DIVIDENDS REINVESTED.
FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING OR INCREASING STOCK EXPOSURE AND INCREASING OR REDUCING
CASH.
*PERCENTAGE OF THE STOCK PORTION OF THE FUND ONLY; DOES NOT TAKE INTO
ACCOUNT THE FUND'S CASH POSITION.
11
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ZWEIG
GOVERNMENT
FUND
Monthly income
from U.S. Government
securities
Quotron Symbols:
ZGVAX / ZGVBX / ZGVCX
Assets as of 6/30/96:
$ 52 million
Portfolio Manager:
(Photo of Carlton B. Neel)
Carlton B. Neel
Bonds and bond funds have had a very difficult year so far. Your Fund was
affected by these conditions, as the A Shares returned 0.2% and the C Shares
lost 0.1% for the quarter. The Lipper U.S. Government Fund Average returned
0.1%.
The violent sell-off in bonds that occurred in February and early March
was so precipitous that our research, which seeks to react to trends rather than
predict them, was hard pressed to stem the losses. By the second quarter,
however, we had trimmed our duration, or sensitivity to changes in interest
rates, to three years in response to the weak market. This duration was much
lower than most government bond funds, which averaged 5.3 years. In this manner,
we reduce our market exposure and attempt to lower our risk.
This year has been dubbed the "payroll bear market" for bonds. Every
major sell-off has occurred on days when the government's unemployment
statistics, or payroll numbers, have been released. When the market changes
so abruptly, on single days rather than over time, it is difficult for our
models to respond in a timely manner.
Economic strength has been more robust than our models have shown this
year, and as a result our performance has been lackluster year-to-date.
Recently, however, our low duration has had a positive effect on our
relative performance.
Please see page 13 for additional performance information.
(Signature of Carlton B. Neel)
CARLTON B. NEEL
FIRST VICE PRESIDENT
JULY 12, 1996
PERFORMANCE YEAR- ANNUALIZED
THROUGH 6/30/96 TO-DATE SINCE INCEPTION
Zweig Government Fund (A Shares) -3.7% 7.2%
Lipper U.S. Gov't. Fund Average -2.6% 8.3%+
Zweig Government Fund (C Shares) -4.0% 4.7%
Inception dates: A Shares-3/25/85*, C Shares-2/4/92
THE NEW CLASS B SHARES ARE UP 1.0% SINCE THEIR INCEPTION ON APRIL 8, 1996,
VERSUS 1.5% (FROM 4/11/96) FOR THE LIPPER U.S. GOVERNMENT FUND AVERAGE.
+THE LIPPER U.S. GOVERNMENT FUND AVERAGE IS BASED ON THE TOTAL RETURN OF 176
GOVERNMENT BOND FUNDS. THE PERIOD MEASURED IS FROM 3/31/85 DUE TO LIPPER'S
WEEKLY DATA. RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES
CHARGES.
*ZWEIG/GLASER ADVISERS ASSUMED RESPONSIBILITY FOR MANAGING THE FUND ON SEPTEMBER
1, 1989.
12
<PAGE>
STANDARDIZED PERFORMANCE
<TABLE>
<CAPTION>
AVERAGE ANNUAL RETURNS THROUGH 6/30/96 NET OF ALL CHARGES AND EXPENSES
ZWEIG STRATEGY FUND
Class A Shares (ZSTAX) Class B Shares (ZSTBX)Class C Shares (ZSTCX)
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(12/29/89) FIVE YEAR ONE YEAR (4/8/96) (2/4/92) ONE YEAR
<S> <C> <C> <C> <C> <C>
10.0% 11.6% 5.8% -5.2% 10.7% 9.7%
ZWEIG MANAGED ASSETS
Class A Shares (ZMAAX) Class B Shares (ZMABX) Class C Shares (ZMACX)
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(2/8/93) ONE YEAR (4/8/96) (2/8/93) ONE YEAR
6.0% 3.0% -3.2% 7.1% 6.9%
ZWEIG APPRECIATION FUND
Class A Shares (ZAPAX) Class B Shares (ZAPBX) Class C Shares (ZAPCX)
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(10/7/91) ONE YEAR (4/8/96) (2/4/92) ONE YEAR
10.8% 11.9% -2.7% 10.1% 16.1%
ZWEIG GOVERNMENT FUND
Class A Shares (ZGVAX) Class B Shares (ZGVBX) Class C Shares (ZGVCX)
FROM INCEPTION FROM INCEPTION
10 YEAR FIVE YEAR ONE YEAR (4/8/96) (2/4/92) ONE YEAR
5.6% 5.7% -2.4% -4.1% 4.7% 0.6%
</TABLE>
Class A Share returns reported above include the effect of the 5.5% maximum
initial sales charge (4.75% for Zweig Government Fund). Class B Share returns
include the maximum contingent deferred sales charge (CDSC) of 5.0% for
redemptions made one year or less from date of purchase. Class C Shares, sold
with no initial sales charge, are subject to a 1.25% CDSC if sold within 12
months of purchase. Class C Share one-year returns reported above assume that a
1.25% CDSC was paid. Returns assume that all dividends and capital gains are
reinvested. Aggregate annual service and distribution fees are 0.30% for Class A
Shares, 1.0% for Class B Shares, and 1.0% for Class C Shares (0.75% for Zweig
Government Fund).
ZWEIG
CASH
FUND
The annualized net yield of Zweig Cash Fund for the six months ended June 30,
1996, was 4.73% for Class A and C Shares, and 4.97% for Class M Shares.*
*THE ANNUALIZED NET YIELD OF THE NEW CLASS B SHARES
SINCE THEIR INCEPTION ON APRIL 8, 1996, WAS 4.21%.
13
<PAGE>
ZWEIG STRATEGY FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF SHARES (NOTE 2)
COMMON STOCKS: 91.64%
AEROSPACE: 0.64%
Northrop Grumman Corp.................. 98,400 $ 6,703,500
* Wyman-Gordon Co........................ 73,800 1,309,950
8,013,450
AIRLINES: 8.38%
* Alaska Air Group Inc................... 247,400 6,772,575
* America West Airlines Inc., Class B.... 322,300 7,090,600
* AMR Corp............................... 271,600 24,715,600
British Airways Plc., ADR.............. 38,100 3,267,075
* Continental Airlines Inc., Class B..... 279,400 17,252,950
Delta Air Lines Inc.................... 302,800 25,132,400
KLM Royal Dutch Airlines N.V., ADR..... 90,000 2,857,500
* Northwest Airlines Corp................ 253,800 10,025,100
* USAir Group Inc........................ 402,900 7,252,200
104,366,000
AUTOMOBILES: 1.62%
Chrysler Corp.......................... 282,200 17,496,400
Volvo Aktiebolaget, ADR., Class B...... 118,900 2,675,250
20,171,650
AUTOMOTIVE PARTS AND EQUIPMENT: 0.68%
Borg-Warner Automotive Corp............ 63,800 2,520,100
Dana Corp.............................. 145,700 4,516,700
Goodyear Tire & Rubber Co.............. 30,000 1,447,500
8,484,300
BANKS: 9.03%
Allied Irish Banks Plc, ADR............ 1,100 34,238
Bancorp Hawaii Inc..................... 90,000 3,240,000
Bank of Boston Corp.................... 487,400 24,126,300
BankAmerica Corp....................... 337,800 25,588,350
Chase Manhattan Corp................... 355,628 25,116,228
City National Corp..................... 144,600 2,277,450
Crestar Financial Corp................. 56,200 2,999,675
First American Corp., Tennessee........ 102,000 4,296,750
Haven Bancorp Inc...................... 26,800 753,750
Hibernia Corp., Class A................ 2,500 27,188
* Imperial Bancorp....................... 21,800 523,200
NationsBank Corp....................... 61,000 5,040,125
North Fork Bancorp..................... 86,100 2,249,363
Peoples Heritage Financial Group....... 33,000 672,375
Republic New York Corp................. 87,000 5,415,750
* Riggs National Corp.................... 58,700 711,738
UnionBancal Corp....................... 36,600 1,935,225
Wells Fargo & Co....................... 30,600 7,309,575
Zions Bancorp.......................... 900 65,475
112,382,755
BUILDING MATERIALS AND PRODUCTS: 1.03%
Lafarge Corp........................... 109,100 2,209,275
Lone Star Industries Inc............... 43,700 1,469,412
* Owens Corning Fiberglass Corp.......... 29,200 1,255,600
Schuller Corp.......................... 231,000 2,396,625
* Waban Inc.............................. 232,000 5,539,000
12,869,912
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
CHEMICALS: 5.72%
Albemarle Corp......................... 110,800 $ 2,022,100
Cabot Corp............................. 23,200 568,400
* Cytec Industries Inc................... 59,500 5,087,250
duPont (E. I.) De Nemours & Co......... 101,600 8,039,100
* Global Industrial Technology Corp...... 81,400 1,302,400
Goodrich (B.F.) & Co................... 126,100 4,712,988
Imperial Chemical Industries Plc,
ADR.................................. 147,100 7,226,288
International Specialty Products
* Inc.................................. 29,600 325,600
Olin Corp.............................. 135,200 12,066,600
Rohm & Haas Co......................... 109,400 6,864,850
Terra Industries Inc................... 222,000 2,747,250
Union Carbide Corp..................... 508,200 20,200,950
71,163,776
COMPUTER COMPONENTS AND SOFTWARE: 0.11%
* Computervision Corp.................... 131,675 1,316,750
CONGLOMERATES: 3.32%
American Financial Group Inc........... 132,400 3,988,550
Freeport McMoran Inc................... 68,900 2,445,950
Loews Corp............................. 281,300 22,187,538
Norsk Hydro A.S., ADS.................. 184,100 8,997,887
Textron Inc............................ 45,800 3,658,275
41,278,200
CONSTRUCTION EQUIPMENT: 1.84%
AGCO Corp.............................. 10,700 296,925
Case Corp.............................. 437,800 21,014,400
Deere & Co............................. 20,800 832,000
PACCAR Inc............................. 15,500 759,500
22,902,825
CONTAINERS AND PACKAGING: 0.34%
Carastar Industries Inc................ 39,500 1,046,750
* Owens-Illinois Inc..................... 199,300 3,188,800
4,235,550
DATA PROCESSING SYSTEMS: 2.04%
* Data General Corp...................... 99,500 1,293,500
* Digital Equipment Corp................. 146,600 6,597,000
* Intergraph Corp........................ 114,000 1,382,250
International Business Machines
Corp................................. 142,200 14,077,800
* Radius Inc............................. 365 1,004
* Storage Technology Corp................ 55,000 2,103,750
25,455,304
ELECTRONICS: 3.07%
* Advanced Semiconductors Corp........... 133,800 1,455,075
* Advanced Technology Labs Inc........... 80,300 2,930,950
* Applied Magnetics Corp................. 156,100 1,639,050
Avnet Inc.............................. 171,200 7,211,800
Burr-Brown Corp........................ 70,200 1,246,050
* Electro Scientific Industries Inc...... 8,500 178,500
* Electroglas Inc........................ 91,000 1,296,750
* Hadco Corp............................. 67,200 1,444,800
Harris Corp............................ 146,300 8,924,300
Innovex Inc............................ 64,100 1,129,762
* Kulicke & Soffa Industries Inc......... 190,400 2,784,600
* Lam Research Corp...................... 128,800 3,348,800
* Marshall Industries Inc................ 59,000 1,652,000
* Silicon Valley Group Inc............... 76,500 1,434,375
Wyle Electronics Inc................... 48,530 1,607,556
38,284,368
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF SHARES (NOTE 2)
ENGINEERING: 0.36%
Empresas ICA Sociedad, ADS............. 322,200 $ 4,470,525
FINANCE: 1.34%
Equitable Companies, Inc............... 133,100 3,310,863
First Financial Caribbean Corp......... 3,000 61,500
Travelers Group, Inc................... 292,600 13,349,875
16,722,238
FOOD AND BEVERAGES: 0.76%
IBP Inc................................ 342,300 9,456,037
FOREST AND PAPER PRODUCTS: 4.32%
Abitibi Price Inc...................... 89,625 1,221,141
Boise Cascade Corp..................... 215,300 7,885,362
Bowater Inc............................ 429,500 16,159,938
Consolidated Papers Inc................ 57,365 2,982,980
International Paper Co................. 297,503 10,970,423
Potlatch Corp.......................... 13,115 513,124
Rayonier Inc........................... 142,075 5,398,850
Westvaco Corp.......................... 145,400 4,343,825
Weyerhaeuser Co........................ 100,300 4,262,750
53,738,393
HEALTHCARE FACILITIES AND PRODUCTS: 0.66%
* Foxmeyer Health Corp................... 68,100 1,012,987
ICN Pharmaceuticals Inc................ 120,380 2,798,835
Kinetic Concepts Inc................... 83,900 1,300,450
* Maxicare Health Plans Inc.............. 75,900 1,432,613
* OrNda Healthcorp....................... 69,100 1,658,400
8,203,285
HOMEBUILDING AND LAND DEVELOPMENT: 0.26%
Lennar Corp............................ 63,900 1,597,500
* U.S. Home Corp......................... 69,100 1,701,587
3,299,087
HOUSEHOLD PRODUCTS: 0.03%
Toro Co................................ 9,700 321,313
INDUSTRIAL PRODUCTS: 0.39%
Parker-Hannifin Corp................... 54,800 2,322,150
Tecumseh Products Co., Class A......... 48,000 2,580,000
4,902,150
INSURANCE: 4.70%
Ace Ltd................................ 117,900 5,541,300
AMBAC Inc.............................. 40,000 2,085,000
American Bankers Insurance Group....... 53,400 2,329,575
* American Travellers Corp............... 44,800 1,030,400
Capital Re Corp........................ 23,000 845,250
Conseco Inc............................ 112,400 4,496,000
* Delphi Financial Group Inc., Class A... 27,700 747,900
Equitable of Iowa Companies Inc........ 24,100 855,550
EXEL Limited........................... 137,400 9,686,700
First Colony Corp...................... 61,000 1,891,000
Fremont General Corp................... 115,400 2,654,200
Horace Mann Educators Corp............. 153,900 4,886,325
Old Republic International Corp........ 233,700 5,024,550
Penncorp Financial Group Inc........... 135,800 4,311,650
Presidential Life Corp................. 11,100 115,163
Providian Corp......................... 26,000 1,114,750
Reliastar Financial Corp............... 56,200 2,423,625
Safeco Corp............................ 8,000 283,000
SunAmerica Inc......................... 8,600 485,900
TIG Holdings Inc....................... 153,400 4,448,600
* 20th Century Industries Inc............ 3,200 53,200
NUMBER VALUE
OF SHARES (NOTE 2)
* United Insurance Companies Inc......... 70,500 $ 1,603,875
Vesta Insurance Group Inc.............. 47,000 1,568,625
58,482,138
INVESTMENT BANKING AND BROKERAGE: 4.44%
Alex Brown Inc......................... 66,760 3,771,940
* Arbatax International Inc.............. 19,600 99,225
Bear, Stearns & Co. Inc................ 180,560 4,265,730
BHC Financial Inc...................... 8,000 112,000
Edwards (A.G.) & Sons, Inc............. 60,200 1,632,925
Lehman Brothers Holdings Inc........... 477,800 11,825,550
Morgan Stanley & Co. Inc............... 248,900 12,227,212
Paine Webber Group Inc................. 4,700 111,625
Quick & Reilly Group Inc............... 93,105 3,025,913
Salomon Inc............................ 414,700 18,246,800
55,318,920
MARINE TRANSPORTATION: 0.06%
Stolt-Nielsen S.A...................... 43,500 788,437
METAL FABRICATION: 0.26%
* Mueller Industries Inc................. 42,525 1,764,788
Timken Co.............................. 37,600 1,457,000
3,221,788
METALS AND MINING: 3.40%
* Alumax Inc............................. 241,400 7,332,525
ASARCO Inc............................. 272,300 7,522,288
Phelps Dodge Corp...................... 291,200 18,163,600
Reynolds Metals Co..................... 157,800 8,225,325
Zeigler Coal Holdings Co............... 71,300 1,140,800
42,384,538
OFFICE AUTOMATION AND EQUIPMENT: 0.08%
Miller (Herman), Inc................... 31,700 970,813
OIL AND GAS: 5.54%
British Petroleum Plc., ADR............ 42,500 4,542,187
Coastal Corp........................... 362,900 15,151,075
Columbia Gas Systems Inc............... 204,700 10,669,987
El Paso National Gas Co................ 18,500 712,250
Elf Aquitaine S.A. ADR................. 114,100 4,193,175
Repsol S.A., ADR....................... 427,400 14,852,150
Texaco Inc............................. 131,900 11,063,112
USX-Marathon Group..................... 259,200 5,216,400
Valero Energy Corp..................... 101,300 2,532,500
68,932,836
RAILROADS: 0.70%
Canadian Pacific Ltd................... 234,300 5,154,600
CSX Corp............................... 74,600 3,599,450
8,754,050
REAL ESTATE INVESTMENT TRUSTS: 0.39%
CWM Mortgage Holdings Inc.............. 232,000 3,944,000
Thornburg Mortgage Asset Corp.......... 55,800 906,750
4,850,750
RENTAL AND LEASING: 0.30%
AT & T Capital Corp.................... 27,400 1,198,750
Comdisco Inc........................... 93,400 2,486,775
3,685,525
RESTAURANTS: 0.40%
Darden Restaurants Inc................. 366,000 3,934,500
* Foodmaker Inc.......................... 115,600 997,050
4,931,550
</TABLE>
15
<PAGE>
ZWEIG STRATEGY FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
RETAIL TRADE: 1.79%
Claire's Stores Inc.................... 54,600 $ 1,508,325
* Eckerd Corp............................ 75,700 1,712,713
Great Atlantic & Pacific Tea Co........ 29,600 973,100
Mercantile Stores Inc.................. 41,800 2,450,525
Neiman Marcus Group Inc................ 15,900 429,300
* Revco D.S. Inc......................... 117,000 2,793,375
Ross Stores Inc........................ 158,300 5,500,925
* Safeway Inc............................ 180,000 5,940,000
Shopko Stores Inc...................... 33,200 535,350
Smith's Food & Drug Centers Inc., Class
* B.................................... 19,984 477,118
22,320,731
SAVINGS & LOAN ASSOCIATIONS: 3.16%
Ahmanson (H.F.) & Co................... 162,700 4,392,900
* Bankunited Financial Corp., Class A.... 5,800 42,050
California Federal Bank Corp........... 248,500 4,535,125
* Coast Savings Financial Inc............ 42,100 1,378,775
Great Western Financial Corp........... 410,300 9,795,912
Leader Financial Corp.................. 25,200 1,127,700
Long Island Bancorp Inc................ 168,100 5,137,556
Peoples Bank of Bridgeport............. 28,100 625,225
RCSB Financial Inc..................... 63,000 1,630,125
Sovereign Bancorp Inc.................. 31,600 316,000
T.R. Financial Corp.................... 31,000 852,500
TCF Financial Corp..................... 135,800 4,515,350
Washington Mutual Inc.................. 167,900 5,016,013
39,365,231
STEEL: 0.91%
* AK Steel Holdings Corp................. 136,600 5,344,475
British Steel Plc, ADS................. 188,400 4,780,650
Quanex Corp............................ 29,595 699,182
* Tubos De Acero de Mexico, ADR.......... 31,625 298,461
* WHX Corp............................... 17,700 161,513
11,284,281
TELECOMMUNICATIONS: 3.47%
Sprint Corp............................ 473,800 19,899,600
Tele Danmark A.S., ADS................. 299,100 7,589,662
Telefonica de Espana, S.A., ADS........ 267,300 14,734,913
Telefonos de Mexico, S.A., ADS......... 30,000 1,005,000
43,229,175
TOBACCO: 1.48%
RJR Nabisco Holdings Corp.............. 587,600 18,215,600
* Swedish Match Co., ADR................. 6,990 215,816
18,431,416
UTILITIES: 14.62%
Allegheny Power Systems Inc............ 137,800 4,254,575
American Electric Power Inc............ 191,000 8,141,375
Atlantic Energy Inc.................... 55,100 1,005,575
Baltimore Gas & Elecrtic Co............ 174,700 4,957,112
Boston Edison Co....................... 111,300 2,838,150
Central Maine Power Co................. 27,200 394,400
Dominion Resources Inc................. 82,900 3,316,000
DQE Inc................................ 29,400 808,500
DTE Energy Co.......................... 1,800 55,575
Eastern Enterprises Inc................ 24,700 821,275
Edison International................... 835,700 14,729,212
Entergy Corp........................... 597,000 16,939,875
General Public Utilities Inc........... 445,000 15,686,250
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
Idaho Power Co......................... 79,400 $ 2,471,325
Illinova Corp.......................... 253,900 7,299,625
IPALCO Enterprises Inc................. 42,300 1,110,375
Long Island Lighting Co................ 308,100 5,160,675
MCN Corp............................... 39,500 962,812
MidAmerican Energy Co.................. 24,800 427,800
National Fuel & Gas Co................. 17,800 640,800
New England Electric Systems Co........ 153,600 5,587,200
New York State Electric & Gas Co....... 255,900 6,237,562
NorAm Energy Corp...................... 307,500 3,344,062
Northern States Power Co............... 95,700 4,725,187
ONEOK Inc.............................. 58,200 1,455,000
Pacific Gas & Electric Co.............. 97,800 2,273,850
Peoples Energy Corp.................... 39,600 1,326,600
Pinnacle West Capital Corp............. 276,400 8,395,650
Portland General Corp.................. 169,400 5,230,225
Powergen Plc., ADR..................... 43,500 1,294,125
Public Service Co. of Colorado......... 65,000 2,388,750
Public Service Co. of New Mexico....... 124,300 2,548,150
Rochester Gas & Electric Co............ 65,000 1,397,500
Texas Utilities Co..................... 359,000 15,347,250
TransCanada Pipelines Limited.......... 15,000 221,250
* Tucson Electric Power Co............... 54,000 729,000
Unicom Corp............................ 696,100 19,403,788
United Illuminating Co................. 38,400 1,435,200
UtiliCorp United Inc................... 39,500 1,091,187
Washington Water Power Co.............. 68,100 1,268,362
Westcoast Energy Inc................... 56,500 847,500
Western Resources Inc.................. 93,800 2,802,275
WPL Holdings Inc....................... 20,900 687,088
182,058,047
TOTAL COMMON STOCKS (Cost $1,086,136,966)............. 1,141,048,094
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS: 2.00%
UNITED STATES TREASURY BILLS: 2.00%
4.935%, 7/5/96......................... $ 2,000,000 (a) 1,998,667
4.945%, 7/5/96......................... 2,000,000 (a) 1,998,667
5.01%, 7/5/96.......................... 7,000,000 (a) 6,995,332
4.91%, 7/11/96......................... 2,000,000 (a) 1,997,104
5.035%, 8/29/96........................ 12,000,000 (a) 11,904,628
TOTAL SHORT-TERM OBLIGATIONS (Cost $24,892,196)....... 24,894,398
REPURCHASE AGREEMENTS: 4.51%
With Morgan Stanley & Co., Inc., (dated
6/28/96), 5.375%, due 7/1/96
(Repurchase proceeds $28,012,542);
collateralized by: $29,111,000
Federal National Mortgage
Association, 7.50%, 7/1/2026 (Market
value $28,728,918)................... 28,000,000 28,000,000
With Prudential Securities Inc., (dated
6/28/96), 5.50%, due 7/1/96
(Repurchase proceeds $28,153,898);
collateralized by: $28,574,117
Federal National Mortgage
Association, 6.225%-8.00%, 6/1/2006-
5/1/2024 (Market value
$28,703,820)......................... 28,141,000 28,141,000
TOTAL REPURCHASE AGREEMENTS (Cost $56,141,000)........ 56,141,000
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF CONTRACTS (NOTE 2)
NET UNREALIZED DEPRECIATION
ON FUTURES CONTRACTS: (0.32)%
Standard & Poor's 500 September 1996
Short futures (b).................... (1,028) $ (3,958,812)
TOTAL INVESTMENTS (Cost
$1,167,170,162)...................... 97.83 % 1,218,124,680
Other Assets........................... 2.33 28,996,008
Total Assets......................... 100.16 % 1,247,120,688
Total Liabilities (Note 6)........... (0.16) (1,984,095)
NET ASSETS (Note 7).................... 100.00 % $1,245,136,593
CLASS A SHARES
Net asset value ("NAV") and redemption price per share
($598,066,160/39,801,729 shares).................... $15.03
Maximum public offering price per share-NAV/(1-maximum
sales charge) ($15.03/.945)......................... $15.90
CLASS B SHARES
Net asset value and offering price per share
($19,326,754/1,282,237 shares)...................... $15.07
Redemption price per share............................ **
CLASS C SHARES
Net asset value and offering price per share
($627,743,679/41,705,952 shares).................... $15.05
Redemption price per share............................ **
</TABLE>
*Non-income producing security
**Varies by length of time shares are held. (Note 3b)
(a) Pledged as collateral for futures transactions.
(b) The market value of the short futures was $347,875,200 (representing 27.94%
of the Fund's net assets) with a cost of $343,916,388.
For Federal income tax purposes, the tax basis of investments owned at June 30,
1996 was $1,167,574,704 and unrealized appreciation on investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation......................... $ 83,121,070
Gross unrealized depreciation......................... (32,571,094)
Net unrealized appreciation........................... $ 50,549,976
</TABLE>
See notes to financial statements.
17
<PAGE>
<PAGE>
ZWEIG APPRECIATION FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF SHARES (NOTE 2)
COMMON STOCKS: 83.38%
ADVERTISING: 0.02%
* ADVO Inc................................ 7,700 $ 79,888
AEROSPACE: 0.94%
Aviall Inc.............................. 26,500 245,125
* Moog Inc., Class A...................... 21,600 529,200
Northrop Grumman Corp................... 7,200 490,500
* RMI Titanium Co......................... 72,600 1,706,100
* Sequa Corp., Class A.................... 19,390 836,194
* Wyman-Gordon Co......................... 48,300 857,325
4,664,444
AIRLINES: 3.25%
* Alaska Air Group Inc.................... 38,400 1,051,200
* America West Airlines Inc., Class B..... 37,200 818,400
* AMR Corp................................ 43,700 3,976,700
British Airways Plc., ADR............... 27,300 2,340,975
* Continental Airlines Inc., Class B...... 17,400 1,074,450
Delta Air Lines Inc..................... 46,000 3,818,000
KLM Royal Dutch Airlines N.V., ADR...... 45,902 1,457,389
* Northwest Airlines Corp................. 18,500 730,750
* USAir Group Inc......................... 47,600 856,800
16,124,664
APPAREL: 0.05%
* DonnKenny Inc........................... 13,800 269,100
AUTOMOBILES: 1.01%
Chrysler Corp........................... 54,452 3,376,024
Volvo Aktiebolaget, ADR., Class B....... 72,500 1,631,250
5,007,274
AUTOMOTIVE PARTS AND EQUIPMENT: 0.97%
Apogee Enterprises Inc.................. 27,200 931,600
Barnes Group Inc........................ 16,800 858,900
Carlisle Companies Inc.................. 7,500 398,438
Dana Corp............................... 25,400 787,400
* Desmarais Energy Corp., ADR............. 3,600 75,600
Goodyear Tire & Rubber Co............... 2,900 139,925
Smith (A.O.) Corp....................... 5,600 140,000
Starrett (L.S.) Co., Class A............ 24,800 644,800
Wynns International Inc................. 30,300 855,975
4,832,638
BANKS: 8.64%
Allied Irish Banks Plc, ADR............. 100 3,113
Banco Latinamericano de Export "E'...... 12,100 680,625
Bancorp Hawaii Inc...................... 14,600 525,600
Bank of Montreal, ADR................... 200 4,900
Bank of Boston Corp..................... 73,100 3,618,450
BankAmerica Corp........................ 45,500 3,446,625
Banknorth Group Inc..................... 11,200 383,600
Banponce Corp........................... 44,500 2,002,500
Chase Manhattan Corp.................... 42,868 3,027,553
City National Corp...................... 24,800 390,600
Comerica Inc............................ 23,359 1,042,395
Community First Bankshares Inc.......... 15,800 371,300
Corus Bankshares Inc.................... 5,700 171,000
Crestar Financial Corp.................. 18,700 998,112
Cullen Frost Bankers Inc................ 19,300 535,575
CVB Financial Corp...................... 1,381 23,132
First American Corp., Tennessee......... 25,900 1,091,038
First Citizens BancShares Inc., Class
A..................................... 2,000 123,000
First Empire State Corp................. 3,700 891,700
First Union Corp........................ 27,200 1,655,800
Hibernia Corp., Class A................. 151,800 1,650,825
HUBCO Inc............................... 51,801 1,094,296
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
* Imperial Bancorp........................ 17,688 $ 424,512
National Australia Bank Ltd., ADR....... 4,300 199,412
National Westminster Bank Plc, ADR...... 15,300 879,750
NationsBank Corp........................ 43,400 3,585,925
North Fork Bancorp...................... 69,156 1,806,700
Peoples Heritage Financial Group........ 41,000 835,375
Provident Bancorp....................... 350 12,337
Republic New York Corp.................. 27,700 1,724,325
* Riggs National Corp..................... 83,500 1,012,438
* Santa Monica Bank....................... 24,180 308,295
Silicon Valley Bancshares............... 20,600 530,450
SouthTrust Corp......................... 29,925 841,641
Sterling Bancorp........................ 33,730 371,030
Summit Bancorp.......................... 3,100 108,887
UnionBancal Corp........................ 23,600 1,247,850
UST Corp................................ 52,000 773,500
Wells Fargo & Co........................ 10,500 2,508,188
Westamerica Bancorp..................... 24,300 1,221,075
Westpac Banking Corp., ADR.............. 7,300 164,250
Zions Bancorp........................... 8,500 618,375
42,906,054
BUILDING MATERIALS AND PRODUCTS: 2.11%
Ameron Inc.............................. 15,200 600,400
Florida Rock Industries Inc............. 14,900 385,538
Johnson Controls Inc.................... 12,500 868,750
Lafarge Corp............................ 47,600 963,900
* Lamson & Sessions Co.................... 79,300 941,687
Lone Star Industries Inc................ 44,300 1,489,587
Medusa Corp............................. 13,100 406,100
* Mestek Inc.............................. 44,200 657,475
* Nortek Inc.............................. 42,500 494,062
Puerto Rican Cement Inc................. 11,200 348,600
Republic Group Inc...................... 48,800 695,400
Schuller Corp........................... 44,400 460,650
Shelter Components Corp................. 53,487 902,593
* Southdown Inc........................... 27,500 646,250
Vulcan Materials Co..................... 3,900 231,563
* Waban Inc............................... 16,700 398,713
10,491,268
CATALOG DISTRIBUTION: 0.02%
National Media Corp..................... 6,300 111,037
CHEMICALS: 2.47%
AEP Industries Inc...................... 23,849 1,019,545
Albemarle Corp.......................... 21,100 385,075
Cabot Corp.............................. 24,800 607,600
Cambrex Corp............................ 27,200 1,390,600
* Cytec Industries Inc.................... 6,200 530,100
First Mississippi Corp.................. 12,400 275,900
Goodrich (B.F.) & Co.................... 16,400 612,950
IMC Global Inc.......................... 5,000 188,125
Imperial Chemical Industries Plc, ADR... 41,175 2,022,722
* International Specialty Products Inc.... 16,800 184,800
NL Industries Inc....................... 10,900 133,525
Rohm & Haas Co.......................... 24,100 1,512,275
Shanghai Petrochemical, ADR............. 4,300 122,550
Stephan Co.............................. 16,500 299,062
Terra Industries Inc.................... 71,700 887,287
Union Carbide Corp...................... 52,000 2,067,000
12,239,116
COAL MINING: 0.06%
Sasol Ltd. ADR.......................... 2,600 27,950
Zeigler Coal Holdings Co................ 16,100 257,600
285,550
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF SHARES (NOTE 2)
COMMERCIAL SERVICES: 0.50%
ADT Ltd................................. 57,600 $ 1,087,200
* Pinkertons Inc.......................... 2,900 67,062
Volt Information Sciences Inc........... 13,000 578,500
World Fuel Services Corp................ 41,150 745,844
2,478,606
COMPUTER COMPONENTS AND SOFTWARE: 0.72%
* Chips & Technologies Inc................ 42,700 416,325
* Computervision Corp..................... 103,000 1,030,000
* Cypress Semiconductor................... 38,600 463,200
* Siliconix Inc........................... 36,700 789,050
* Trident Microsystems Inc................ 26,400 333,300
* Xicor Inc............................... 46,200 542,850
3,574,725
CONGLOMERATES: 2.08%
American Financial Group Inc............ 13,600 409,700
BET Plc, ADS............................ 43,690 617,121
Freeport McMoran Inc.................... 13,000 461,500
Loews Corp.............................. 45,300 3,573,037
Montedison S.P.A. ADR................... 46,100 276,600
Norsk Hydro A S., ADS................... 70,100 3,426,137
Textron Inc............................. 19,300 1,541,587
10,305,682
CONSTRUCTION EQUIPMENT: 1.82%
AGCO Corp............................... 78,400 2,175,600
Cascade Corp............................ 58,300 779,762
Case Corp............................... 50,100 2,404,800
* Gardner Denver Machinery Inc............ 47,200 1,244,900
Lindsay Manufacturing Co................ 11,100 446,775
NACCO Industries Inc., Class A.......... 11,400 631,275
Oshkosh Truck Corp., Class B............ 82,400 1,163,900
PACCAR Inc.............................. 3,100 151,900
* Raymond Corp............................ 2,194 38,395
9,037,307
CONTAINERS AND PACKAGING: 0.43%
Carastar Industries Inc................. 30,100 797,650
* Gaylord Container Corp.................. 6,700 52,344
Longview Fibre Co....................... 16,800 285,600
* Owens-Illinois Inc...................... 11,600 185,600
Temple Inland Inc....................... 17,300 808,775
2,129,969
DATA PROCESSING SYSTEMS: 1.30%
* Advanced Logic Research Inc............. 28,700 240,363
* CACI International Inc., Class A........ 13,500 212,625
Computer Data Systems Inc............... 22,600 502,850
Computer Task Group Inc................. 3,600 101,700
* Data General Corp....................... 29,300 380,900
* Digital Equipment Corp.................. 37,500 1,687,500
* Intergraph Corp......................... 17,700 214,612
International Business Machines Corp.... 31,300 3,098,700
* Radius Inc.............................. 238 654
6,439,904
ELECTRICAL PRODUCTS: 0.78%
Charter Power Systems Inc............... 25,600 889,600
* Genlyte Group Inc....................... 57,900 448,725
Kollmorgen Corp......................... 32,640 481,440
Kuhlman Corp............................ 22,700 394,413
Phillips Electronics N.V................ 36,700 1,197,337
* Powell Industries Inc................... 3,300 38,362
Thomas Industries Inc................... 21,760 416,160
3,866,037
NUMBER VALUE
OF SHARES (NOTE 2)
ELECTRONICS: 3.92%
* Advanced Semiconductors Corp............ 32,800 $ 356,700
* Advanced Technology Labs Inc............ 15,700 573,050
* Applied Magnetics Corp.................. 54,300 570,150
* Arrow Electronics Inc................... 11,300 487,313
Avnet Inc............................... 20,100 846,712
* Bel Fuse Inc............................ 28,700 484,312
* Bell Industries Inc..................... 15,935 266,911
Burr-Brown Corp......................... 62,200 1,104,050
* Computer Products Inc................... 98,100 1,679,962
CTS Corp................................ 21,400 1,005,800
* Electro Scientific Industries Inc....... 14,300 300,300
* Electroglas Inc......................... 29,900 426,075
Electrolux A.B. ADR..................... 1,900 95,475
* Esterline Technologies Inc.............. 38,700 967,500
Fedders Corp............................ 71,300 508,012
* Hadco Corp.............................. 40,400 868,600
Harman International Industries Inc..... 20,330 1,001,253
Harris Corp............................. 21,400 1,305,400
* Helen of Troy Ltd....................... 25,700 732,450
Innovex Inc............................. 27,700 488,213
* Kulicke & Soffa Industries Inc.......... 19,500 285,187
* Laser Industries Ltd.................... 5,200 80,600
* LTX Corp................................ 28,800 180,000
* Marshall Industries Inc................. 15,200 425,600
Matsushita Electric Industries, ADR..... 300 55,800
* Novellus Systems Inc.................... 5,700 205,200
* Orbotech Ltd............................ 68,800 894,400
Park Electrochemical Co................. 45,200 904,000
Richardson Electronics Ltd.............. 10,600 106,000
* Silicon Valley Group Inc................ 27,400 513,750
* Tech-Sym Corp........................... 17,700 526,575
* Teradyne Inc............................ 12,100 208,725
Watkins Johnson Co...................... 18,500 506,438
Wyle Electronics Inc.................... 14,500 480,313
19,440,826
ENGINEERING: 0.75%
Butler Manufacturing Company............ 45,700 1,542,375
Empresas ICA Sociedad, ADS.............. 69,200 960,150
Granite Construction Inc................ 42,800 984,400
* Layne Inc............................... 18,400 239,200
3,726,125
ENVIRONMENTAL SERVICES: 0.21%
* Tetra Technologies Inc.................. 28,800 500,400
* York Research Corp...................... 51,000 541,875
1,042,275
FARMING AND MILLING: 0.56%
Archer-Daniels-Midland Co............... 132,085 2,526,126
Orange Co. Inc.......................... 34,100 272,800
2,798,926
FINANCE: 1.11%
Equitable Companies, Inc................ 14,700 365,662
FINOVA Group Inc........................ 12,000 585,000
First Financial Caribbean Corp.......... 25,300 518,650
Fund American Enterprise Holdings....... 7,100 575,100
* Investors Financial Services Corp....... 387 8,998
Travelers Group, Inc.................... 63,000 2,874,375
Value Line Inc.......................... 17,800 605,200
5,532,985
FLUID CONTROLS: 0.51%
Graco Inc............................... 29,450 596,363
Parker-Hannifin Corp.................... 15,800 669,525
</TABLE>
19
<PAGE>
ZWEIG APPRECIATION FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
</TABLE>
FLUID CONTROLS (CONTINUED)
<TABLE>
<S> <C> <C> <C>
Robbins & Myers Inc..................... 27,900 $ 1,241,550
2,507,438
FOOD AND BEVERAGES: 0.70%
Golden Poultry Inc...................... 48,700 471,781
Hudson Foods Inc., Class A.............. 31,350 438,900
IBP Inc................................. 72,300 1,997,288
Seaboard Corp........................... 200 39,700
* Seneca Foods Corp., Class A............. 20,700 331,200
* Seneca Foods Corp., Class B............. 10,800 172,800
3,451,669
FOREST AND PAPER PRODUCTS: 3.98%
Abitibi Price Inc....................... 21,800 297,025
American Israeli Paper Co............... 900 38,025
Boise Cascade Corp...................... 27,200 996,200
Bowater Inc............................. 26,500 997,062
Champion International Corp............. 16,300 680,525
Chesapeake Corp......................... 7,600 199,500
Consolidated Papers Inc................. 14,000 728,000
* DOMTAR Inc.............................. 68,300 495,175
Glatfelter (P.H.) & Co.................. 20,200 371,175
International Paper Co.................. 65,855 2,428,403
James River Corp........................ 19,600 516,950
MacMillan Bloedel, Ltd.................. 117,800 1,560,850
Mead Corp............................... 38,500 1,997,188
* Mercer International Inc................ 31,000 418,500
Mosinee Paper Corp...................... 8,680 232,190
Potlatch Corp........................... 16,300 637,737
Rayonier Inc............................ 33,400 1,269,200
Union Camp Corp......................... 30,900 1,506,375
Westvaco Corp........................... 77,600 2,318,300
Weyerhaeuser Co......................... 48,400 2,057,000
19,745,380
HEALTHCARE FACILITIES AND PRODUCTS: 0.77%
ICN Pharmaceuticals Inc................. 12,800 297,600
* Maxicare Health Plans Inc............... 38,700 730,463
* OrNda Healthcorp........................ 44,500 1,068,000
* PCI Services Inc........................ 60,100 1,186,975
* Sierra Health Services Inc.............. 7,200 226,800
* Universal Health Services Inc., Class
B..................................... 11,700 305,663
3,815,501
HOMEBUILDING AND LAND DEVELOPMENT: 0.82%
* Champion Enterprises Inc................ 67,400 1,406,975
Continental Homes Holding Corp.......... 41,700 896,550
Lennar Corp............................. 2,300 57,500
M.D.C. Holdings Inc..................... 76,000 513,000
* Redman Industries Inc................... 32,500 674,375
* U.S. Home Corp.......................... 17,500 430,937
U.S. Home Corp., Warrants............... 7,529 57,409
Webb (Del) Corp......................... 1,500 30,000
4,066,746
HOUSEHOLD PRODUCTS: 0.34%
Bush Industries Inc., Class A........... 21,500 731,000
Oneida Ltd.............................. 42,700 800,625
Toro Co................................. 4,800 159,000
1,690,625
INDUSTRIAL PRODUCTS, SERVICES AND MACHINERY: 2.02%
A.P. Green Industries Inc............... 7,200 145,800
American Filtrona Corp.................. 6,100 195,200
Ampco-Pittsburgh Corp................... 60,900 707,963
Applied Power Inc., Class A............. 24,400 683,200
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
Commercial Intertech Co................. 24,100 $ 620,575
Furon Co................................ 16,200 400,950
Gleason Corp............................ 38,300 1,493,700
Katy Industries Inc..................... 50,500 757,500
Kennametal Inc.......................... 2,200 74,800
Kysor Industrial Corp................... 35,600 863,300
MacDermid Inc........................... 22,500 1,575,000
Regal Beloit Corp....................... 28,800 568,800
Tecumseh Products Co., Class A.......... 20,100 1,080,375
Varlen Corp............................. 41,802 877,842
10,045,005
INSURANCE: 3.47%
Ace Ltd................................. 16,700 784,900
ALLIED Group Inc........................ 21,200 922,200
AMBAC Inc............................... 11,900 620,288
American Annuity Group.................. 66,200 860,600
American Bankers Insurance Group........ 21,600 942,300
* American Travellers Corp................ 23,300 535,900
Capital Re Corp......................... 5,600 205,800
* CNA Financial Corp...................... 18,000 1,854,000
Conseco Inc............................. 18,800 752,000
Equitable of Iowa Companies Inc......... 9,500 337,250
EXEL Limited............................ 12,600 888,300
First Colony Corp....................... 9,000 279,000
Fremont General Corp.................... 17,400 400,200
Life Re Corp............................ 5,100 157,462
* MAIC Holdings, Inc...................... 5,900 219,775
NAC Re Corp............................. 2,100 70,350
National Re Corp........................ 13,000 490,750
Old Republic International Corp......... 68,150 1,465,225
Orion Capital Corp...................... 1,800 91,800
Penncorp Financial Group Inc............ 16,900 536,575
Pioneer Financial Services Inc.......... 50,500 839,562
Presidential Life Corp.................. 13,800 143,175
Providian Corp.......................... 3,500 150,062
PXRE Corp............................... 24,800 601,400
Reliance Group Holdings Inc............. 23,100 173,250
Reliastar Financial Corp................ 2,783 120,017
RLI Corp................................ 18,000 438,750
SunAmerica Inc.......................... 8,950 505,675
TIG Holdings Inc........................ 16,200 469,800
Transatlantic Holdings Inc.............. 8,700 610,087
* 20th Century Industries Inc............. 8,400 139,650
United Fire & Casualty Co............... 5,200 158,600
* United Insurance Companies Inc.......... 6,500 147,875
Vesta Insurance Group Inc............... 7,200 240,300
Washington National Corp................ 3,700 95,275
17,248,153
INVESTMENT BANKING AND BROKERAGE: 2.87%
Alex Brown Inc.......................... 44,300 2,502,950
* Arbatax International Inc............... 39,950 202,247
Atalanta/Sosnoff Capital Co............. 16,400 160,925
Bear, Stearns & Co. Inc................. 38,860 918,067
Edwards (A.G.) & Sons, Inc.............. 8,200 222,425
Fahnestock Viner Holdings Inc........... 45,100 591,938
Jefferies Group Inc..................... 42,100 1,305,100
Lehman Brothers Holdings Inc............ 51,900 1,284,525
McDonald & Company Securities, Inc...... 31,000 612,250
Morgan Stanley & Co. Inc................ 17,000 835,125
Quick & Reilly Group Inc................ 76,774 2,495,155
Salomon Inc............................. 64,100 2,820,400
Southwest Securities Group Inc.......... 12,700 147,638
Waterhouse Investors Services Inc....... 3,400 126,225
14,224,970
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
MANUFACTURING: 1.16%
Blount International Inc., Class A...... 13,350 $ 420,525
Core Industries Inc..................... 19,200 276,000
Global Industrial Technologies Inc...... 69,100 1,105,600
Hanson Plc, ADR......................... 10,100 143,925
Olin Corp............................... 9,100 812,175
Teledyne Inc............................ 19,900 718,887
Transtechnology Corp.................... 33,700 598,175
Tredegar Industries Inc................. 39,500 1,194,875
Trinity Industries Inc.................. 6,500 221,000
TRINOVA Corp............................ 3,400 113,475
Valmont Industries Inc.................. 4,600 156,400
5,761,037
MARINE TRANSPORTATION: 0.32%
Oglebay Norton Co....................... 12,600 576,450
Stolt-Nielsen S.A....................... 51,400 931,625
Transport Maritima Mexicana S.A. ADR.... 12,000 88,500
1,596,575
MEDICAL INSTRUMENTS AND SUPPLIES: 0.81%
Bindley Western Industries Inc.......... 17,600 294,800
Bio-Radiology Labs Inc.................. 18,150 651,131
Collagen Corp........................... 1,900 36,337
* Conmed Corp............................. 16,000 426,000
* Cooper Companies Inc.................... 78,900 927,075
Foxmeyer Health Corp.................... 20,200 300,475
Health Images Inc....................... 68,200 792,825
Kinetic Concepts Inc.................... 38,200 592,100
4,020,743
METAL FABRICATION: 1.87%
Amcast Industrial Corp.................. 15,000 303,750
* Avondale Industries Inc................. 39,800 716,400
Commercial Metals Co.................... 17,933 596,272
Harsco Corp............................. 4,200 282,450
* Hexcel Corp............................. 45,600 695,400
* Intermet Corp........................... 92,200 1,285,037
Kaydon Corp............................. 700 30,100
* Mueller Industries Inc.................. 35,800 1,485,700
Penn Engineering & Manufacturing Corp.,
Class A............................... 1,000 23,625
Penn Engineering & Manufacturing
Corp.................................. 3,300 62,287
Pitt-Des Moines Inc..................... 15,100 641,750
Precision Castparts Inc................. 9,050 389,150
* Shiloh Industries Inc................... 1,700 27,413
SPS Technologies Inc.................... 20,100 1,417,050
Timken Co............................... 17,400 674,250
* Todd Shipyards Corp..................... 85,600 642,000
9,272,634
METALS AND MINING: 1.92%
Alcan Aluminium Ltd..................... 38,100 1,162,050
* Alumax Inc.............................. 40,500 1,230,188
ASARCO Inc.............................. 28,700 792,838
Brush Wellman Inc....................... 5,400 102,600
Cyprus Amax Minerals Co................. 77,200 1,746,650
* MAXXAM Inc.............................. 2,400 94,200
Phelps Dodge Corp....................... 34,000 2,120,750
Reynolds Metals Co...................... 40,800 2,126,700
* Tremont Corp............................ 4,000 144,500
9,520,476
OFFICE AUTOMATION AND EQUIPMENT: 0.11%
Nam Tai Electronics Inc................. 23,000 261,625
* Standard Microsystems................... 17,100 260,775
522,400
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
OIL AND GAS: 3.16%
* American Exploration Co................. 11,400 $ 142,500
* Belden & Blake Corp..................... 31,600 655,700
* Cliffs Drilling Co...................... 21,600 734,400
Coastal Corp............................ 88,500 3,694,875
Columbia Gas Systems Inc................ 50,600 2,637,525
Digicon Inc............................. 48,955 819,996
El Paso National Gas Co................. 13,500 519,750
Elf Aquitaine S.A. ADR.................. 5,500 202,125
Fina Inc, Class A....................... 8,000 442,000
* Getty Petroleum Corp.................... 6,900 103,500
* Howell Corp............................. 3,500 47,468
* Lufkin Industries Inc................... 26,800 549,400
Repsol S.A., ADR........................ 76,900 2,672,275
* RPC Energy Services Inc................. 72,860 837,890
* Tesoro Petroleum Corp................... 49,800 572,700
* Tuboscope Vetco International Co........ 51,400 571,825
USX-Marathon Group...................... 6,800 136,850
Valero Energy Corp...................... 13,200 330,000
15,670,779
POLLUTION CONTROL EQUIPMENT: 0.21%
BHA Group Inc., Class A................. 23,870 316,277
* Gundle/SLT Environmental Corp........... 76,900 480,625
Met Pro Corp............................ 14,280 265,965
1,062,867
PRECISION INSTRUMENTS: 0.95%
* Coherent Inc............................ 25,600 1,331,200
Fluke Corp.............................. 4,700 189,763
* Galileo Electro-Optics Inc.............. 57,500 1,380,000
* Genrad Inc.............................. 26,000 429,000
* Measurex Corp........................... 17,200 503,100
MTS Systems Corp........................ 32,000 672,000
Technitrol Inc.......................... 5,200 206,050
4,711,113
PRINTING AND FORMS: 0.60%
American Business Products Inc.......... 5,675 124,141
* Devon Group Inc......................... 31,700 1,030,250
Graphic Industries Inc.................. 112,500 1,068,750
Quebecor Inc., Class A.................. 46,600 739,775
2,962,916
PUBLISHING: 0.04%
Plenum Publishing Corp.................. 5,800 203,000
RAILROADS: 0.31%
Canadian Pacific Ltd.................... 7,100 156,200
CSX Corp................................ 29,100 1,404,075
1,560,275
REAL ESTATE INVESTMENT TRUSTS: 0.46%
* Bluegreen Corp.......................... 24,029 90,109
CV REIT Inc............................. 36,900 415,125
CWM Mortgage Holdings Inc............... 56,100 953,700
HRE Properties Inc...................... 16,100 245,525
Public Storage Inc...................... 15,600 321,750
Thornburg Mortgage Asset Corp........... 15,900 258,375
2,284,584
RECREATIONAL PRODUCTS: 0.25%
Coachmen Industries Inc................. 36,000 1,260,000
RENTAL AND LEASING: 1.51%
Aaron Rents Inc., Class B............... 42,700 539,088
AT&T Capital Corp....................... 5,700 249,375
Comdisco Inc............................ 80,350 2,139,319
* Electro Rent Corp....................... 123,675 3,060,956
</TABLE>
21
<PAGE>
ZWEIG APPRECIATION FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
RENTAL AND LEASING (CONTINUED)
<S> <C> <C> <C>
GATX Corp............................... 5,600 $ 270,200
PHH Corp................................ 12,500 712,500
PS Group Inc............................ 38,075 523,531
7,494,969
RESTAURANTS: 0.25%
CKE Restaurants Inc..................... 9,200 234,600
Darden Restaurants Inc.................. 46,500 499,875
* Foodmaker Inc........................... 41,900 361,388
* NPC International Inc................... 12,400 125,550
1,221,413
RETAIL TRADE: 1.39%
* Carson Pirie Scott & Co................. 6,900 184,575
Claire's Stores Inc..................... 16,050 443,381
* Eckerd Corp............................. 25,500 576,938
* Fabri-Centers of America Inc............ 41,000 676,500
Great Atlantic & Pacific Tea Co......... 24,000 789,000
* Jenny Craig Inc......................... 11,100 198,412
Mercantile Stores Inc................... 6,300 369,338
* Oshmans Sporting Goods Inc.............. 4,800 43,200
PCA International Inc................... 2,600 43,550
Pier 1 Imports Inc...................... 10,510 156,336
Regis Corp.............................. 7,650 239,063
* Rex Stores Corp......................... 5,300 81,488
Riser Foods Inc., Class A............... 53,200 1,276,800
Ross Stores Inc......................... 34,600 1,202,350
Schultz Sav-O Stores Inc................ 18,700 240,763
Shopko Stores Inc....................... 6,300 101,588
* Smith's Food & Drug Centers Inc.,
Class B............................... 10,719 255,916
6,879,198
SAVINGS & LOAN ASSOCIATIONS: 2.27%
Ahmanson (H.F.) & Co.................... 20,000 540,000
Astoria Financial Corp.................. 27,500 745,938
Boston Bancorp.......................... 11,600 501,700
California Federal Bank Corp............ 53,700 980,025
* Coast Savings Financial Inc............. 6,900 225,975
Commercial Federal Corp................. 7,000 267,750
* Dime Bancorp Inc........................ 18,900 245,700
Great Western Financial Corp............ 53,100 1,267,763
Leader Financial Corp................... 15,800 707,050
Long Island Bancorp Inc................. 15,200 464,550
Peoples Bank of Bridgeport.............. 40,200 894,450
RCSB Financial Inc...................... 38,300 991,012
Sovereign Bancorp Inc................... 59,300 593,000
T.R. Financial Corp..................... 31,800 874,500
TCF Financial Corp...................... 27,600 917,700
Washington Mutual Inc................... 12,800 382,400
Westcorp Inc............................ 37,590 667,223
11,266,736
SHOES: 0.03%
Weyco Group Inc......................... 800 32,400
Wolverine Worldwide Inc................. 3,300 107,250
139,650
STEEL: 2.76%
* AK Steel Holdings Corp.................. 43,900 1,717,588
British Steel Plc, ADS.................. 101,700 2,580,638
Carpenter Technology Corp............... 25,000 800,000
Chaparral Steel Co...................... 64,200 842,625
Cleveland Cliffs Inc.................... 23,100 903,788
Lone Star Technologies Inc.............. 27,800 312,750
* LTV Corp................................ 14,900 169,488
Quanex Corp............................. 39,500 933,187
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
Roanoke Electric Steel Corp............. 88,500 $ 1,227,938
* Steel of West Virginia Inc.............. 33,500 301,500
Texas Industries Inc.................... 32,200 2,209,725
* Tubos De Acero de Mexico, ADR........... 104,000 981,500
USX-U.S. Steel Group.................... 16,900 479,538
* WHX Corp................................ 28,700 261,888
13,722,153
TELECOMMUNICATIONS: 2.27%
* Atlantic Tele-Network Inc............... 25,400 609,600
* Interdigital Communications Corp........ 9,500 80,750
* Norstan Inc............................. 15,700 584,825
Sprint Corp............................. 61,200 2,570,400
Tadiran Ltd............................. 25,700 693,900
Tele Danmark A.S., ADS.................. 88,600 2,248,225
Telefonica de Espana, S.A., ADS......... 52,200 2,877,525
Telefonos de Mexico, S.A., ADS.......... 48,500 1,624,750
11,289,975
TEXTILES: 0.18%
Johnston Industries Inc................. 59,000 508,875
Springs Industries Inc.................. 8,000 404,000
912,875
TOBACCO: 0.80%
* Culbro Corp............................. 20,000 1,192,500
RJR Nabisco Holdings Corp............... 85,500 2,650,500
* Swedish Match Co., ADR.................. 4,150 128,131
3,971,131
UTILITIES: 9.86%
Allegheny Power Systems Inc............. 23,400 722,475
American Electric Power Inc............. 10,900 464,613
American Water Works Inc................ 10,500 422,625
Atlantic Energy Inc..................... 21,100 385,075
Baltimore Gas & Electric Co............. 12,200 346,175
Bay State Gas Co........................ 18,000 501,750
Boston Edison Co........................ 32,200 821,100
Centerior Energy Corp................... 48,700 359,162
Central Maine Power Co.................. 9,600 139,200
CIPSCO Inc.............................. 2,000 77,250
CMS Energy Corp......................... 18,900 583,537
Commonwealth Energy Systems Corp........ 11,900 306,425
Dominion Resources Inc.................. 6,900 276,000
DQE Inc................................. 10,200 280,500
DTE Energy Co........................... 33,800 1,043,575
Eastern Enterprises Inc................. 8,900 295,925
Edison International.................... 199,000 3,507,375
Empresa Nacionale de Electricidad,
ADR................................... 1,800 112,725
EnergyNorth Inc......................... 29,300 571,350
Entergy Corp............................ 129,600 3,677,400
General Public Utilities Inc............ 73,100 2,576,775
Idaho Power Co.......................... 15,000 466,875
IES Industries Inc...................... 5,400 161,325
Illinova Corp........................... 44,100 1,267,875
Indiana Energy Inc...................... 10,900 312,012
Interstate Power Co..................... 30,600 983,025
IPALCO Enterprises Inc.................. 28,300 742,875
Long Island Lighting Co................. 51,300 859,275
MCN Corp................................ 14,400 351,000
Midamerican Energy Co................... 19,500 336,375
National Fuel & Gas Co.................. 10,300 370,800
New England Electric Systems Co......... 22,500 818,437
New York State Electric & Gas Co........ 39,600 965,250
NIPSCO Industries Inc................... 15,000 603,750
NorAm Energy Corp....................... 59,900 651,412
Northern States Power Co................ 14,300 706,062
NUI Corp................................ 26,500 473,687
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
UTILITIES (CONTINUED)
<S> <C> <C> <C>
ONEOK Inc............................... 18,600 $ 465,000
Pacific Gas & Electric Co............... 86,600 2,013,450
Peoples Energy Corp..................... 15,500 519,250
Piedmont National Gas Inc............... 4,500 104,062
Pinnacle West Capital Corp.............. 48,400 1,470,150
Portland General Corp................... 73,700 2,275,487
Powergen Plc, ADR....................... 5,000 148,750
Providence Energy Corp.................. 30,400 524,400
Public Service Co.of Colorado........... 19,000 698,250
Public Service Co. of New Mexico........ 51,000 1,045,500
Rochester Gas & Electric Co............. 31,400 675,100
Southern Union Co....................... 55,700 1,225,400
St. Joseph Light & Power Co............. 1,000 27,750
Texas Utilities Co...................... 21,500 919,125
TNP Enterprises Inc..................... 56,900 1,614,537
* Tucson Electric Power Co................ 12,000 162,000
Unicom Corp............................. 124,900 3,481,587
United Illuminating Co.................. 16,100 601,738
UtiliCorp United Inc.................... 14,700 406,088
Washington Gas Light Co................. 13,300 292,600
Washington Water Power Co............... 15,900 296,138
Westcoast Energy Inc.................... 29,500 442,500
Western Resources Inc................... 16,300 486,963
WICOR Inc............................... 8,900 335,975
WPL Holdings Inc........................ 17,600 578,600
Yankee Energy Systems Inc............... 27,300 593,775
48,945,222
WHOLESALE DISTRIBUTORS: 0.71%
Bearings Inc............................ 15,300 413,100
Castle (A.M.) & Co...................... 51,375 1,213,734
Hughes Supply Inc....................... 23,300 809,675
* Rexel Inc............................... 11,600 163,850
* United Stationers Inc................... 38,400 940,800
3,541,159
TOTAL COMMON STOCKS (Cost $347,208,662)................ 413,973,767
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL
AMOUNT
SHORT-TERM OBLIGATIONS: 1.40%
UNITED STATES TREASURY BILLS: 1.40%
4.935%, 7/5/96.......................... $ 1,000,000 (a) 999,333
5.01%, 7/5/96........................... 1,000,000 (a) 999,333
5.035%, 8/29/96......................... 5,000,000 (a) 4,960,262
TOTAL SHORT-TERM OBLIGATIONS (Cost $6,957,591)......... 6,958,928
<CAPTION>
PRINCIPAL
AMOUNT
OR NUMBER VALUE
OF CONTRACTS (NOTE 2)
<S> <C> <C> <C>
REPURCHASE AGREEMENTS: 13.98%
With Morgan Stanley & Co., Inc., (dated
6/28/96), 5.375%, due 7/1/96
(Repurchase proceeds $34,444,421);
collateralized by: $36,459,224 Federal
National Mortgage Association,
7.00%-7.50%, 9/1/2025-10/1/2025
(Market value $35,333,975)............ $34,429,000 $ 34,429,000
With Prudential Securities Inc., (dated
6/28/96), 5.50%, due 7/1/96
(Repurchase proceeds $35,016,042);
collateralized by: $36,548,850 of
various United States Government
Agency Obligations, 5.50%-8.50%,
4/1/2006-4/1/2035 (Market value
$35,700,001).......................... 35,000,000 35,000,000
TOTAL REPURCHASE AGREEMENTS (Cost $69,429,000)......... 69,429,000
NET UNREALIZED DEPRECIATION ON
FUTURES CONTRACTS: (0.18%)
Standard & Poor's 500 September 1996
Short futures......................... (282 ) (918,366)
TOTAL INVESTMENTS (Cost $423,595,253)... 98.58 % 489,443,329
Other Assets............................ 1.58 7,826,947
Total Assets.......................... 100.16 % 497,270,276
Total Liabilities (Note 6)............ (0.16 ) (792,342)
NET ASSETS (Note 7)..................... 100.00 % $496,477,934
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share
($276,693,667/16,375,687 shares)...... $16.90
Maximum public offering price per share-
NAV/(1-maximum sales charge)
($16.90/.945)......................... $17.88
CLASS B SHARES
Net asset value and offering price per
share
($3,442,154/205,607 shares)........... $16.74
Redemption price per share.............. **
CLASS C SHARES
Net asset value and offering price per
share ($216,342,113/12,915,051
shares)............................... $16.75
Redemption price per share.............. **
</TABLE>
* Non-income producing security.
** Varies by length of time shares are held. (Note 3b)
(a) Pledged as collateral for futures transactions.
(b) The market value of the short futures was $95,428,800 (representing 19.22%
of the Fund's net assets) with a cost of $94,510,434.
For Federal income tax purposes, the tax basis of investments owned at June 30,
1996 was $423,658,248 and unrealized appreciation on investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation.......................... $73,737,290
Gross unrealized depreciation.......................... (7,952,209)
Net unrealized appreciation............................ $65,785,081
</TABLE>
See notes to financial statements
23
<PAGE>
<PAGE>
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF SHARES (NOTE 2)
COMMON STOCKS: 50.53%
UNITED STATES: 22.76%
AEROSPACE: 0.32%
Textron Inc.......................... 8,000 $ 639,000
United Technologies Corp............. 11,400 1,311,000
1,950,000
AIRLINES: 0.08%
Delta Air Lines Inc.................. 6,000 498,000
AUTOMOBILES: 0.64%
Ford Motor Co........................ 56,400 1,825,950
General Motors Corp.................. 39,300 2,058,338
3,884,288
BANKS: 1.08%
BankAmerica Corp..................... 41,400 3,136,050
Bankers Life Holding Corp............ 6,800 150,450
Bankers Trust NY Corp................ 9,000 664,875
Mellon Bank Corp..................... 15,500 883,500
PNC Bank Corp........................ 38,600 1,148,350
US Bancorp........................... 17,000 614,125
6,597,350
BIOTECHNOLOGY: 0.03%
* Chiron Corp.......................... 2,100 205,800
BROADCASTING: 0.43%
* Viacom Inc., Class B................. 66,900 2,600,738
BUILDING MATERIALS & PRODUCTS: 0.28%
* Applied Materials Inc................ 20,100 613,050
Ingersoll Rand Inc................... 12,200 533,750
Johnson Controls Inc................. 8,000 556,000
1,702,800
CASINO OPERATORS: 0.00%
Harrah's Entertainment Inc........... 700 19,775
CHEMICALS: 0.63%
Albemarle Corp....................... 8,200 149,650
Ethyl Corp........................... 17,200 165,550
IMC Global Inc....................... 13,300 500,412
Olin Corp............................ 3,600 321,300
PPG Industries Inc................... 28,000 1,365,000
Rohm & Haas Co....................... 9,800 614,950
Union Carbide Corp................... 19,300 767,175
3,884,037
COMPUTERS & SOFTWARE: 0.72%
* Oracle Corp.......................... 98,700 3,892,481
* Sybase Inc........................... 10,400 245,700
* Tandem Computers Inc................. 11,300 139,838
* Unisys Corp.......................... 16,500 117,562
4,395,581
CONGLOMERATES: 0.09%
Tenneco Inc.......................... 10,500 536,813
CONSTRUCTION EQUIPMENT: 0.04%
Stewart & Stevenson Inc.............. 10,700 243,425
CONTAINERS: 0.12%
Stone Container Corp................. 17,500 240,625
Temple-Inland Inc.................... 9,900 462,825
703,450
DATA PROCESSING: 0.13%
* Dell Computer Corp................... 15,200 773,300
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
ELECTRICAL EQUIPMENT: 0.71%
* American Power Conversion Corp....... 30,300 $ 310,575
Exide Corp........................... 13,000 315,250
Westinghouse Electric Corp........... 135,400 2,538,750
Whirlpool Corp....................... 24,100 1,195,963
4,360,538
ELECTRONICS: 3.02%
Intel Corp........................... 134,400 9,870,000
Micron Technology Corp............... 34,000 879,750
Motorola Inc......................... 96,800 6,086,300
Teledyne Inc......................... 8,100 292,612
Teledyne Inc., Pfd................... 308 4,735
Tyco International Ltd............... 22,100 900,575
* Western Digital Corp................. 4,600 120,175
Xilinx Inc........................... 10,200 323,850
18,477,997
ENGINEERING: 0.05%
Cincinnati Milacron Corp............. 6,400 153,600
Harnischfeger Industries Inc......... 5,300 176,225
329,825
FINANCE: 0.75%
Federal National Mortgage
Association........................ 71,300 2,388,550
MBNA Corp............................ 28,000 798,000
Travelers Group Inc.................. 31,050 1,416,656
4,603,206
FOOD & BEVERAGES: 2.51%
Anheuser Busch Companies Inc......... 6,300 472,500
ConAgra Inc.......................... 54,100 2,454,787
Lancaster Colony Inc................. 2,800 104,650
Pepsico Inc.......................... 336,200 11,893,075
Tyson Foods Inc., Class A............ 16,400 448,950
15,373,962
FOREST & PAPER PRODUCTS: 0.34%
Weyerhaeuser Co...................... 35,600 1,513,000
Willamette Industries Inc............ 9,800 583,100
2,096,100
HOSPITAL & HEALTHCARE: 0.91%
* Foundation Health Corp............... 1,800 64,575
* Health Systems International Inc..... 22,600 613,025
Oxford Health Plans Inc.............. 56,200 2,311,225
Pfizer Inc........................... 31,700 2,262,587
* United Healthcare Corp............... 5,400 272,700
* Value Health Inc..................... 1,700 40,162
5,564,274
HOUSEHOLD PRODUCTS: 0.73%
Black & Decker Corp.................. 16,700 645,037
Gillette Co.......................... 44,500 2,775,688
Newell Co............................ 35,000 1,071,875
4,492,600
INSURANCE: 0.38%
American Re Corp..................... 1,500 67,312
Conseco Inc.......................... 12,300 492,000
Marsh & McLennan Co.................. 2,400 231,600
Old Republic International Inc....... 25,650 551,475
Progressive Corp., Ohio.............. 21,900 1,012,875
2,355,262
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
INVESTMENT BANKING & BROKERAGE: 0.44%
Merrill Lynch & Co., Inc............. 11,100 $ 722,888
Morgan (J.P.) & Co................... 21,300 1,802,513
Paine Webber Group Inc............... 6,300 149,625
2,675,026
LEISURE & ENTERTAINMENT: 0.03%
Fleetwood Enterprises Inc............ 2,700 83,700
Time Warner Corp..................... 2,500 98,125
181,825
METALS & MINING: 0.16%
Reynolds Metals Inc.................. 7,500 390,938
Worthington Industries Inc........... 28,900 603,287
994,225
NATURAL GAS: 0.04%
Sonat Inc............................ 5,600 252,000
OFFICE AUTOMATION & EQUIPMENT: 0.22%
Xerox Corp........................... 24,600 1,316,100
OIL & GAS: 1.74%
Enron Corp........................... 16,300 666,262
Exxon Corp........................... 58,700 5,099,563
Mobil Corp........................... 18,700 2,096,738
Phillips Petroleum Corp.............. 42,500 1,779,688
USX-Marathon Group................... 44,600 897,575
Valero Energy Corp................... 3,200 80,000
10,619,826
PHARMACEUTICALS: 0.87%
Ivax Corp............................ 5,900 93,662
Merck & Co........................... 61,700 3,987,362
Schering-Plough Inc.................. 18,400 1,154,600
Witco Corp........................... 2,800 96,250
5,331,874
PHOTOGRAPHIC PRODUCTS: 0.07%
Polaroid Corp........................ 8,800 401,500
PUBLISHING: 0.30%
Knight-Ridder Inc.................... 25,200 1,827,000
RAILROADS: 0.28%
Burlington Northern Santa Fe Corp.... 8,500 687,438
Conrail Inc.......................... 4,700 311,962
* Southern Pacific Rail Inc............ 28,500 712,500
1,711,900
RESTAURANTS: 0.01%
Host Marriott Corp................... 1,300 17,063
Ruby Tuesday Inc..................... 2,300 52,038
Wendy's International Inc............ 800 14,900
84,001
RETAIL TRADE: 1.21%
Kmart Corp........................... 32,800 405,900
* Meyer (Fred) Inc..................... 3,600 105,750
Nike Inc., Class B................... 17,900 1,839,225
Sears, Roebuck and Co................ 24,500 1,191,312
Wal-Mart Stores Co................... 143,700 3,646,388
Woolworth Corp....................... 9,500 213,750
7,402,325
SAVINGS & LOAN ASSOCIATIONS: 0.07%
Ahmanson (H.F.) & Co................. 7,700 207,900
Great Western Financial Corp......... 9,000 214,875
422,775
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
TELECOMMUNICATIONS: 1.89%
American Telephone & Telegraph Co.... 96,900 $ 6,007,800
Bay Networks Inc..................... 9,900 254,925
MCI Communications Corp.............. 41,900 1,073,688
SBC Communications Inc............... 36,900 1,817,325
* Tele-Communications Corp., Class A... 130,200 2,359,875
* Vanguard Cellular Systems Inc........ 2,200 47,850
11,561,463
TOBACCO: 1.20%
Philip Morris Companies.............. 48,700 5,064,800
RJR Nabisco Holdings Corp............ 59,900 1,856,900
UST Inc.............................. 11,900 407,575
7,329,275
TRANSPORTATION: 0.02%
Alexander & Baldwin Inc.............. 1,500 36,187
Tidewater Inc........................ 1,800 78,975
115,162
UTILITIES: 0.22%
Centerior Energy Corp................ 7,400 54,575
CMS Energy Corp...................... 4,600 142,025
Edison International Inc............. 22,300 393,038
Northeast Utilities Corp............. 6,400 85,600
Public Service Co. of Colorado....... 3,200 117,600
Texas Utilities Co................... 11,700 500,175
UtiliCorp United Inc................. 2,400 66,300
1,359,313
TOTAL UNITED STATES (Cost $129,448,815)................ 139,234,711
FOREIGN STOCKS: 27.77%
DENMARK: 1.12%
AIRLINES: 0.02%
Sas Danmark AS....................... 7,192 98,096
Sas Danmark AS Rights................ 28,768 22,071
120,167
BANKS: 0.17%
Den Danske Bank...................... 9,045 606,054
Unidanmark AS, Class A............... 9,060 420,153
1,026,207
CONGLOMERATES: 0.08%
Sophus Berendsen, Class B............ 3,783 505,774
CONSUMER PRODUCTS AND SERVICES: 0.02%
ISS International Service Systems,
Class B............................ 5,377 120,094
FOOD & BEVERAGES: 0.19%
Carlsberg, Class A................... 10,425 613,204
Danisco.............................. 10,452 520,346
1,133,550
HOSPITAL AND HEALTHCARE: 0.15%
Novo-Nordisk AS, Class B............. 6,600 933,968
MACHINERY AND EQUIPMENT: 0.03%
FLS Industries AS, Class B........... 1,694 170,402
TELECOMMUNICATIONS: 0.19%
Tele Danmark AS, Class B............. 23,442 1,173,519
</TABLE>
25
<PAGE>
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
NUMBER VALUE
OF SHARES (NOTE 2)
TRANSPORTATION: 0.27%
D/S 1912, Class B.................... 71 $ 1,609,978
Lauritzen Holdings, Class B.......... 476 54,374
1,664,352
TOTAL DENMARK.......................................... 6,848,033
FINLAND: 1.57%
BANKS: 0.11%
* Merita Ltd., Class A................. 327,700 684,192
CONGLOMERATES: 0.06%
Metra OY, Class B.................... 8,400 376,074
ELECTRONICS: 0.62%
Nokia AB, Class A.................... 62,600 2,304,096
Nokia AB, Class K.................... 40,000 1,461,073
3,765,169
FOOD AND BEVERAGES: 0.09%
Cultor OY 1.......................... 10,800 527,691
FOREST AND PAPER PRODUCTS: 0.34%
* UPM-Kymmen OY........................ 101,700 2,103,655
INSURANCE: 0.07%
Sampo Insurance Co., Class A......... 7,800 451,624
MACHINERY AND EQUIPMENT: 0.04%
Kone Corp., Class B.................. 2,300 255,946
METALS AND MINING: 0.14%
Outokumpu OY, Class A................ 49,200 826,019
WHOLESALE DISTRIBUTORS: 0.10%
Kesko................................ 42,000 619,256
TOTAL FINLAND.......................................... 9,609,626
FRANCE: 2.78%
AUTOMOBILES: 0.12%
Peugeot S.A.......................... 2,900 388,125
Renault Ord.......................... 13,200 340,763
728,888
BANKS: 0.33%
Banque National...................... 10,900 382,594
Cie Fin Paribas...................... 7,650 451,740
Compagnie De Suez.................... 9,300 340,163
Credit Commercial De France.......... 5,350 247,958
Societe Generale..................... 5,377 591,167
2,013,622
BROADCASTING: 0.06%
Canal Plus........................... 1,500 366,835
BUILDING MATERIALS & PRODUCTS: 0.06%
LaFarge Coppee....................... 6,450 390,276
CHEMICALS: 0.19%
Air Liquide Co....................... 3,950 697,453
Rhone Poulenc S.A.................... 18,150 477,011
1,174,464
CONGLOMERATES: 0.14%
AXA.................................. 8,755 478,898
Lyonnais Des Eaux- Dumez............. 4,050 386,742
865,640
NUMBER VALUE
OF SHARES (NOTE 2)
CONSUMER PRODUCTS AND SERVICES: 0.65%
Cie Generale Des Eaux................ 6,700 $ 748,336
Groupe Danone Co..................... 4,680 708,170
Loreal Co............................ 3,300 1,095,494
Pinault-Printemps.................... 1,650 577,234
* Promodes............................. 1,400 403,567
Sanofi SA............................ 6,450 483,366
4,016,167
ELECTRONICS: 0.29%
Alcatel Alsthom...................... 8,300 723,900
* Legrand Inc.......................... 1,700 303,802
Michelin Inc......................... 6,800 332,333
* Schneider SA......................... 7,700 403,839
1,763,874
FOOD AND BEVERAGES: 0.20%
LVMH Moet Hennessy................... 5,100 1,209,594
INSURANCE: 0.05%
Compagnie UAP........................ 15,150 307,527
OIL AND GAS: 0.18%
Societe Nationale Elf Aquitaine...... 14,600 1,073,711
RETAIL TRADE: 0.30%
Carrefour............................ 1,400 784,291
Carrefour Rights..................... 1,400 386,707
Cie De St. Gobain.................... 5,000 669,180
1,840,178
TOURISM: 0.05%
* Havas................................ 3,550 290,312
UTILITIES: 0.16%
Total SA, Class B.................... 13,200 978,957
TOTAL FRANCE........................................... 17,020,045
GERMANY: 2.45%
AUTOMOBILES: 0.33%
Daimler-Benz AG...................... 2,200 1,177,225
Daimler-Benz AG Rights............... 4,770 658
Volkswagen AG........................ 2,200 817,337
1,995,220
BANKS: 0.44%
* Bayerische Hypotheken-Und............ 26,800 650,219
Deutsche Bank AG..................... 26,200 1,239,309
Dresdner Bank AG..................... 32,400 814,183
2,703,711
CHEMICALS: 0.52%
Bayer AG............................. 48,650 1,717,936
Hoechst AG........................... 43,900 1,488,195
3,206,131
CONGLOMERATES: 0.08%
Viag AG.............................. 1,300 518,415
CONSUMER PRODUCTS AND SERVICES: 0.05%
Karstadt AG.......................... 750 303,274
ELECTRONICS: 0.28%
Siemens AG........................... 32,100 1,714,515
INSURANCE: 0.31%
Allianz AG Holding................... 1,100 1,904,228
MACHINERY AND EQUIPMENT: 0.26%
Mannesmann AG........................ 4,550 1,572,327
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
UTILITIES: 0.18%
RWE AG............................... 27,700 $ 1,079,146
TOTAL GERMANY.......................................... 14,996,967
HONG KONG: 0.00%
FOOD & BEVERAGES: 0.00%
Dairy Farm International Holdings.... 228 136
REAL ESTATE: 0.00%
Hong Kong Land Holdings Ltd.......... 227 362
TOTAL HONG KONG........................................ 498
ITALY: 3.00%
APPAREL: 0.04%
Benetton Group Spa................... 19,100 246,701
AUTOMOBILES: 0.21%
Fiat Spa............................. 379,500 1,271,229
BANKS: 0.45%
Banca Commerciale Italiano........... 229,200 460,508
Banca Di Roma........................ 403,100 359,462
Credito Italiano..................... 313,300 367,061
Istituto Banc San Paolo.............. 83,400 538,608
Istituto Mobiliare Italia............ 66,800 557,774
Mediobanca........................... 78,500 498,514
2,781,927
CONGLOMERATES: 0.08%
Montedison Spa....................... 804,400 467,543
ELECTRONICS: 0.03%
Olivetti............................. 369,700 199,447
INDUSTRIAL PRODUCTS: 0.06%
Pirelli Spa.......................... 229,900 384,679
INSURANCE: 0.60%
Alleanza Assicuraziono............... 63,800 538,759
Assicurazioni Generali............... 86,400 1,992,393
Istituto Naz Assicuraz............... 468,300 698,043
Ras Riun Adriat Di Sicurt............ 41,200 425,854
3,655,049
TELECOMMUNICATIONS: 0.76%
Stet................................. 435,400 1,471,262
Telecom Italia....................... 754,000 1,620,685
Telecom Italia Mobile Spa............ 695,900 1,554,817
4,646,764
UTILITIES: 0.77%
Edison Spa........................... 75,600 456,179
Eni Spa.............................. 847,700 4,227,576
4,683,755
TOTAL ITALY............................................ 18,337,094
JAPAN: 4.21%
AIRLINES: 0.02%
All Nippon Airways Co., Ltd.......... 13,000 139,860
APPAREL: 0.09%
Mitsukoshi Ltd....................... 22,000 234,680
Nisshinbo Corp....................... 31,000 305,247
539,927
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
AUTOMOBILES: 0.19%
Honda Motor Co....................... 16,000 $ 414,291
Suzuki Motor Corp.................... 20,000 262,579
Toyota Motor Corp.................... 19,000 474,647
1,151,517
BANKS: 0.26%
Dai-ichi Kangyo Bank, Ltd............ 18,000 334,788
Fuji Bank Ltd........................ 21,000 451,854
Mitsubishi Bank...................... 11,000 185,537
Mitsui Trust & Banking............... 13,000 151,712
Sumitomo Bank........................ 9,000 173,958
The Bank of Tokyo-Mitsubishi......... 12,000 277,896
1,575,745
BUILDING MATERIALS & PRODUCTS: 0.11%
Kajima Corp.......................... 38,000 391,497
Toto Ltd., Co........................ 20,000 300,871
692,368
CHEMICALS: 0.35%
Asahi Denka Kogyo KK................. 37,000 332,618
Kuraray Co........................... 38,000 426,143
Kyowa Hakko Kogyo.................... 38,000 363,781
Nippon Chemical Industries........... 38,000 398,426
Shin-Etsu Chemical................... 21,000 402,073
Takeda Chemical Industries........... 11,000 194,563
2,117,604
ELECTRONICS: 0.76%
Hitachi Ltd.......................... 37,000 344,087
* Matsushita Electric Industrial Co.... 17,000 316,188
Nec Corp............................. 20,000 216,992
* Nippondenso Corp..................... 35,000 759,472
Pioneer Electronics Inc.............. 19,000 452,127
* Sankyo Co., Ltd...................... 15,000 388,397
* Sharp Corp........................... 28,000 490,147
Sony Corp............................ 17,000 1,117,509
Sumitomo Electric Industries Inc..... 21,000 300,598
Yokogawa Electric Industries Inc..... 28,000 280,813
4,666,330
ENTERTAINMENT: 0.18%
Noritake Co., Ltd.................... 38,000 394,962
* Tokyo Dome Corp...................... 36,000 725,373
1,120,335
FINANCE: 0.18%
* Japan Securities Finance............. 28,000 451,854
Nikko Securities Co.................. 38,000 426,143
* Nomura Securities Inc................ 12,000 234,132
1,112,129
FOOD AND BEVERAGES: 0.20%
Ajinomoto Inc........................ 38,000 453,860
Asahi Breweries...................... 8,000 93,361
Kirin Brewery Co., Ltd............... 6,000 73,303
* Nisshin Flour Milling Corp........... 24,000 299,777
Sapporo Breweries.................... 15,000 140,862
Takara Shuzo......................... 17,000 173,594
1,234,757
FOREST AND PAPER PRODUCTS: 0.05%
Hokuetsu Paper Mills................. 35,000 295,173
</TABLE>
27
<PAGE>
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
HOMEBUILDERS: 0.11%
* Daiwa House Industries Inc........... 16,000 $ 247,991
Shimizu Corp......................... 38,000 419,214
667,205
INDUSTRIAL PRODUCTS: 0.16%
Asahi Glass Co., Ltd................. 38,000 453,860
Bridgestone Corp..................... 13,000 247,717
Fujikura Ltd......................... 32,000 264,913
966,490
MACHINERY AND EQUIPMENT: 0.33%
Ebara Corp........................... 38,000 606,301
Komatsu Ltd.......................... 27,000 265,861
* Mitsubishi Corp...................... 38,000 498,899
* Nippon Sharyo Corp................... 27,000 268,322
* Okuma Corp........................... 34,000 378,186
2,017,569
MANUFACTURING: 0.28%
* NGK Insulators....................... 31,000 347,643
Shinagawa Refractories............... 38,000 450,395
* Toyo Seikan.......................... 18,000 626,906
* Yamaha Corp.......................... 19,000 313,544
1,738,488
METALS & MINING: 0.16%
* Chiyoda Corp......................... 38,000 450,395
* Mitsubishi Steel Manufacturing....... 37,000 216,573
* Sumitomo Metal Manufacturing......... 38,000 328,788
995,756
PHARMACEUTICALS: 0.09%
Dainippon Pharmaceutical Co., Ltd.... 38,000 408,820
Yamanouchi Pharmaceuticals........... 6,000 130,195
539,015
PHOTOGRAPHIC PRODUCTS: 0.21%
Canon Inc............................ 19,000 394,962
Fuji Photo Film Ltd.................. 14,000 441,642
* Nikkon Corp.......................... 12,000 137,854
* Ricoh Corp........................... 31,000 327,858
1,302,316
PRINTING AND PUBLISHING: 0.15%
Dai Nippon Printing Co., Ltd......... 21,000 405,903
Toppan Printing Co., Ltd............. 36,000 525,157
931,060
RAILROADS: 0.04%
* Keisei Electric Railway Co........... 22,000 248,720
REAL ESTATE: 0.01%
* Mitsui Fudosan Corp.................. 2,000 26,987
RETAIL TRADE: 0.02%
* Marui Co., Ltd....................... 6,000 132,930
TRANSPORTATION: 0.09%
* Mitsubishi Warehouse & Transportation
Corp............................... 22,000 393,138
* Nippon Express Co., Ltd.............. 18,000 175,599
568,737
UTILITIES: 0.11%
Showa Shell Sekiyu................... 32,000 332,599
Tonen Corp........................... 22,000 322,935
655,534
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
WHOLESALE DISTRIBUTORS: 0.06%
Sumitomo Corp........................ 38,000 $ 337,450
TOTAL JAPAN............................................ 25,774,002
MALAYSIA: 1.08%
AIRLINES: 0.03%
Malaysian Airline System Bhd......... 54,000 172,048
AUTOMOBILES: 0.03%
Edaran Otomobil Nas. Bhd............. 19,000 181,987
BANKS: 0.11%
Malaysian Banking Bhd................ 69,000 663,664
BUILDING MATERIALS & PRODUCTS: 0.15%
Golden Hope Plant Bhd................ 79,000 122,842
Hume Industries (Mal) Bhd............ 9,000 44,004
Kuala Lumpur Kepong Bhd.............. 68,000 171,687
Pan-Malaysia Cement Works Bhd........ 85,000 93,678
United Engineers Bhd................. 38,000 263,462
YTL Corp., Bhd....................... 39,000 203,187
898,860
CONGLOMERATES: 0.12%
Land & General Holdings Bhd.......... 38,000 93,658
Multi-Purpose Holdings Bhd........... 105,000 169,162
Sime Darby Bhd....................... 174,000 481,157
743,977
FINANCE: 0.07%
AMMB Holdings Bhd.................... 17,000 238,454
Rashid Hussain Bhd................... 54,000 198,017
436,471
FOOD AND BEVERAGES: 0.08%
RJ Reynolds Bhd...................... 78,000 229,758
Rothmans of Pall Mall Bhd............ 26,000 273,521
503,279
MACHINERY AND EQUIPMENT: 0.01%
UMW Holdings Bhd..................... 23,000 82,036
METALS AND MINING: 0.01%
Kelanamas Industries Bhd............. 25,000 39,475
REAL ESTATE: 0.07%
IGB Corp., Bhd....................... 208,000 209,231
Malaysian Resources Corp. Bhd........ 53,000 129,567
Mycom Bhd............................ 63,000 79,279
418,077
TELECOMMUNICATIONS: 0.15%
Telekom Malaysia Bhd................. 104,000 925,283
TOURISM: 0.10%
Magnum Corp. Bhd..................... 151,000 255,375
Resorts World Bhd.................... 67,000 383,972
639,347
TRANSPORTATION: 0.03%
Malaysia International Shipping
Bhd................................ 54,000 167,720
UTILITIES: 0.12%
Tenaga Nasional Bhd.................. 167,000 702,739
TOTAL MALAYSIA......................................... 6,574,963
NETHERLANDS: 1.17%
BANKS: 0.07%
ABN Amro Holdings.................... 7,611 408,422
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
BROADCASTING: 0.08%
Vnu-Ver Ned Uitgevers................ 1,850 $ 28,720
Wolters Kluwer-Cva................... 4,200 477,089
505,809
CHEMICALS: 0.12%
Akzo NV.............................. 4,700 563,072
Fortis Amev NV....................... 6,125 175,464
738,536
ELECTRONICS: 0.04%
Philips Electronics.................. 7,450 242,227
FINANCE: 0.11%
ING Groep NV......................... 23,282 694,242
FOOD AND BEVERAGES: 0.40%
Heineken NV.......................... 4,800 1,072,493
Unilever NV-CVA...................... 9,350 1,352,948
2,425,441
INSURANCE: 0.05%
Aegon NV............................. 6,300 290,092
TELECOMMUNICATIONS: 0.07%
Kon Pit Nederland.................... 11,450 433,322
UTILITIES: 0.23%
Royal Dutch Petroleum................ 9,150 1,412,990
TOTAL NETHERLANDS...................................... 7,151,081
SOUTH AFRICA: 0.00%
INSURANCE: 0.00%
Liberty Life Association............. 180 5,767
SPAIN: 3.72%
BANKS: 1.13%
* Argentaria SA........................ 31,631 1,379,113
Banco Bilbao Vizcaya SA.............. 50,021 2,024,859
Banco Central Hispano................ 34,683 706,045
Banco De Santander SA................ 25,950 1,210,357
* Banco Espanol Credito................ 103,078 666,493
* Banco Popular Espanol................ 5,394 960,908
6,947,775
BUSINESS SERVICES: 0.11%
Autopistas Cesa Co................... 56,422 655,707
ENERGY: 0.60%
Gas Natural.......................... 7,238 1,518,609
Repsol Petroleo SA................... 62,308 2,165,043
3,683,652
HOMEBUILDERS: 0.09%
Fomento De Construcion............... 6,472 535,081
RETAIL TRADE: 0.22%
* Centros Com. Pryca SA................ 53,295 1,330,183
TELECOMMUNICATIONS: 0.51%
Telefonica De Espana................. 170,748 3,142,988
UTILITIES: 1.06%
Empresa Nacionale de Electricidad.... 47,177 2,940,032
Iberdrola I SA....................... 344,194 3,530,239
6,470,271
TOTAL SPAIN............................................ 22,765,657
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
SWEDEN: 3.16%
AUTOMOBILES: 0.30%
Volvo AB, Class A.................... 26,200 $ 598,194
Volvo AB, Class B.................... 55,200 1,256,157
1,854,351
BANKS: 0.12%
Svenska Handelsbanken, Class A....... 34,200 713,845
BUILDING MATERIALS & PRODUCTS: 0.23%
Skandinaviska Enskilda, Class A...... 85,800 685,317
Skanska AB, Class B.................. 20,400 720,943
1,406,260
BUSINESS SERVICES: 0.02%
Esselte AB, Class A.................. 6,600 133,284
CHEMICALS: 0.07%
AGA AB, Class A...................... 25,000 444,580
CONGLOMERATES: 0.05%
Trelleborg AB , Class B.............. 25,400 317,717
CONSUMER PRODUCTS AND SERVICES: 0.11%
Hennes & Mauritz AB, Class B......... 7400 685,859
ELECTRONICS: 0.96%
Asea AB, Class A..................... 12,000 1,271,349
Asea AB, Class B..................... 5,600 591,608
Electrolux AB, Class B............... 14,100 708,668
Ericsson LM, Class B................. 153,600 3,310,208
5,881,833
FINANCE: 0.11%
Stadshypotek AB...................... 30,700 684,744
FOREST AND PAPER PRODUCTS: 0.17%
Stora Kopparbergs, Class A........... 77,800 1,025,925
HOSPITAL AND HEALTHCARE: 0.74%
Astra AB, Class A.................... 82,000 3,620,842
Astra AB, Class B.................... 20,100 875,431
4,496,273
INDUSTRIAL PRODUCTS: 0.10%
Autoliv AB........................... 9,600 292,247
S.K.F. AB, Class B................... 14,100 334,678
626,925
INSURANCE: 0.08%
Skandia Forsakrings AB............... 17,500 462,853
MACHINERY AND EQUIPMENT: 0.07%
Atlas Copco AB, Class A.............. 24,300 452,274
TOBACCO: 0.03%
Swedish Match AB..................... 54,600 169,507
TOTAL SWEDEN........................................... 19,356,230
SWITZERLAND: 0.14%
BANKS: 0.14%
Schweizerische Bank.................. 4,400 868,300
UNITED KINGDOM: 3.37%
BANKS: 0.40%
Abbey National Plc................... 78,046 656,060
HSBC Holdings........................ 58,171 891,208
HSBC Holdings, Class A............... 22,632 354,470
National Westminster Bank Plc........ 49,118 470,129
Royal Bank of Scotland............... 12,643 96,848
2,468,715
</TABLE>
29
<PAGE>
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
BROADCASTING: 0.10%
Reed International Corp.............. 37,800 $ 632,562
BUILDING MATERIALS & PRODUCTS: 0.17%
Redland Corp......................... 75,856 472,639
RMC Group Inc........................ 23,600 371,464
Williams Holdings Co................. 37,514 197,601
1,041,704
CHEMICALS: 0.09%
BOC Group............................ 15,848 227,532
Imperial Chemical Industries Inc..... 28,400 347,728
575,260
CONGLOMERATES: 0.12%
Hanson Co............................ 79,670 223,443
Siebe Plc............................ 20,466 290,653
TI Group............................. 29,027 242,650
756,746
CONSUMER PRODUCTS AND SERVICES: 0.49%
BAA Plc.............................. 96,308 700,331
Caradon Plc.......................... 30,533 102,475
De La Rue Plc........................ 12,028 111,200
Glaxo Holdings Plc................... 112,343 1,512,551
Smithkline Beecham................... 21,100 225,726
Tomkins Corp......................... 91,028 342,991
2,995,274
FINANCE: 0.02%
Mercury Asset Management............. 5,643 84,612
FOOD AND BEVERAGES: 0.54%
Allied Domecq Plc.................... 52,111 365,985
BASS Plc............................. 21,408 269,104
Bat Industries Inc................... 123,649 962,551
Cadbury Schweppes Inc................ 116,025 917,624
Unilever Plc......................... 30,800 612,571
United Biscuits Corp................. 43,031 143,084
3,270,919
INSURANCE: 0.19%
Prudential Corp...................... 104,111 656,777
Royal Insurance Co................... 58,960 362,946
Sun Alliance Group Inc............... 26,037 151,307
1,171,030
MANUFACTURING: 0.02%
Rexam Plc............................ 23,700 124,837
OIL AND GAS: 0.47%
British Petroleum Plc................ 222,384 1,950,576
Enterprise Oil Co.................... 16,700 119,363
Shell Transport...................... 52,696 772,120
2,842,059
RETAIL TRADE: 0.36%
Boots Co............................. 26,207 235,771
Great Universal Stores Inc........... 33,900 344,487
Marks & Spencer Corp................. 161,750 1,182,495
Sears Plc............................ 56,328 86,647
Tesco Corp........................... 80,170 366,231
2,215,631
TELECOMMUNICATIONS: 0.23%
British Telecommunications Corp...... 202,673 1,089,601
Cable & Wireless..................... 44,083 291,794
1,381,395
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
<S> <C> <C> <C>
TOURISM: 0.07%
Ladbroke Group....................... 40,161 $ 112,324
Rank Organization Inc................ 38,900 301,005
413,329
UTILITIES: 0.10%
National Power Corp.................. 75,782 612,301
TOTAL UNITED KINGDOM................................... 20,586,374
TOTAL FOREIGN STOCKS (Cost $161,838,180)............... 169,894,637
TOTAL COMMON STOCKS (Cost $291,286,995)................ 309,129,348
<CAPTION>
PRINCIPAL
AMOUNT
<S> <C> <C> <C>
BONDS: 24.06%
UNITED STATES GOVERNMENT OBLIGATIONS:
14.48%
UNITED STATES TREASURY BONDS: 8.41%
10.75%, 5/15/2003.................. $ 7,000,000 8,577,183
7.50%, 2/15/2005................... 11,200,000 11,781,000
7.25%, 8/15/2022................... 8,000,000 8,200,000
7.50%, 11/15/2024.................. 8,500,000 9,012,651
7.625%, 2/15/2025.................. 5,700,000 6,147,090
6.875%, 8/15/2025.................. 7,800,000 7,719,558
51,437,482
UNITED STATES TREASURY NOTES: 6.07%
6.25%, 8/31/2000................... 32,000,000 31,789,980
6.50%, 5/15/2005................... 5,400,000 5,325,750
37,115,730
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS
(Cost $89,328,359)................................... 88,553,212
FOREIGN GOVERNMENT OBLIGATIONS: 9.58%
CANADIAN GOVERNMENT BONDS: 1.94%
7.00%, 12/1/2006.................C$ 17,000,000 11,865,716
FINNISH GOVERNMENT BONDS: 2.09%
9.50%, 3/15/2004................Fim 53,000,000 12,758,604
ITALIAN GOVERNMENT BONDS: 2.16%
9.50%, 2/1/2006................Lira 20,000,000,000 13,248,957
SPANISH GOVERNMENT BONDS: 2.32%
10.00%, 2/28/2005...............Pta 1,000,000,000 8,306,704
10.15%, 1/31/2006...............Pta 700,000,000 5,890,037
14,196,741
SWEDISH GOVERNMENT BONDS: 1.07%
6.00%, 2/09/2005................SKr 50,000,000 6,531,711
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $57,381,703)................................. 58,601,729
TOTAL BONDS (Cost $146,710,062)........................ 147,154,941
UNITED STATES SHORT-TERM OBLIGATIONS:
5.71%
FEDERAL HOME LOAN BANK: 1.63%
5.28%, 7/22/96....................... 10,000,000 9,967,733
FEDERAL HOME LOAN MORTGAGE CORP.: 3.26%
5.28%, 7/19/96....................... 10,000,000 9,973,062
5.27%, 7/22/96....................... 10,000,000 9,970,911
19,943,973
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL
AMOUNT
OR NUMBER VALUE
OF CONTRACTS (NOTE 2)
UNITED STATES TREASURY BILLS: 0.82%
4.89%, 7/5/96........................ $ 4,000,000(a) $ 3,997,322
4.935%, 7/5/96....................... 1,000,000(a) 999,328
4,996,650
TOTAL UNITED STATES SHORT-TERM OBLIGATIONS
(Cost $34,909,324)................................... 34,908,356
UNITED STATES REPURCHASE AGREEMENTS:
19.27%
With Morgan Stanley & Co., Inc.
(dated 6/28/96), 5.375%, due 7/1/96
(Repurchase proceeds $58,920,380);
collateralized by: $59,565,640
various United States Government
Agency Obligations, 6.589%-7.857%,
12/1/2007-4/1/2029 (Market value
$60,769,336)....................... 58,894,000 58,894,000
With Prudential Securities Inc.,
(dated 6/28/96), 5.50%, due 7/1/96
(Repurchase proceeds $59,027,042);
collateralized by: $60,369,720
various United States Government
Agency Obligations, 5.151%-9.00%,
12/1/2000-2/1/2036 (Market value
$60,180,001)....................... 59,000,000 59,000,000
TOTAL UNITED STATES REPURCHASE AGREEMENTS
(Cost $117,894,000).................................. 117,894,000
NET UNREALIZED APPRECIATION ON
FOREIGN FORWARD CURRENCY CONTRACTS
(Note 5): 0.19% 1,192,992
NET UNREALIZED DEPRECIATION ON
FUTURES CONTRACTS: (0.03)%
Standard & Poor's 500 September 1996
Short futures (b).................. (60) (141,080)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOREIGN VALUE
CURRENCY (NOTE 2)
FOREIGN CURRENCY: 0.48%
Australian Dollar..................A$ (481) $ (379)
Danish Krone......................DKr 621,731 106,002
French Franc.......................ff 77,090 14,974
Hong Kong Dollar..................HK$ 135,820 17,547
Italian Lira.....................Lira 15,700,064 10,242
Japanese Yen....................(Yen) 109,407,500 997,502
Malaysian Ringgit.................Myr 42,075 16,862
Mexican Peso.......................MP 16,128 2,128
Netherlands Guilder...............NLG 121,820 71,366
Singapore Dollar..................SGD 21,534 15,257
South African Rand................ZAR 1,743 403
Spanish Peseta....................Pta 1,838,677 14,341
Swedish Krona.....................SKr 1,025,419 154,536
U.K. Pound Sterling..........(pounds) 970,802 1,508,433
TOTAL FOREIGN CURRENCY (Cost $2,935,486)............... 2,929,214
TOTAL INVESTMENTS (Cost
$593,735,867)...................... 100.21% 613,067,771
Other Assets......................... 1.07 6,546,068
Total Assets......................... 101.28% 619,613,839
Total Liabilities (Note 6)........... (1.28) (7,849,652)
NET ASSETS (Note 7).................. 100.00% $611,764,187
CLASS A SHARES
Net asset value ("NAV") and redemption price per share
($129,423,524/10,289,034 shares)..................... $ 12.58
Maximum public offering price per share- NAV/(1-Maximum
sales charge) ($12.58/.945).......................... $ 13.31
CLASS B SHARES
Net asset value and offering price per share
($3,442,700/272,700 shares).......................... $ 12.62
Redemption price per share............................. **
CLASS C SHARES
Net asset value and offering price per share
($478,897,963/38,056,252 shares)..................... $ 12.58
Redemption price per share............................. **
</TABLE>
*Non-income producing security.
**Varies by length of time shares are held (Note 3b).
(a) Pledged as collateral for futures transactions.
(b) The market value of the short futures was $20,304,000 (representing 3.32% of
the Fund's net assets) with a cost of $20,162,920.
For Federal income tax purposes, the tax basis of investments owned at June 30,
1996 was $594,619,009 and unrealized appreciation on investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation.......................... $ 27,548,448
Gross unrealized depreciation.......................... (9,099,686)
Net unrealized appreciation............................ $ 18,448,762
</TABLE>
31
<PAGE>
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
(CONCLUDED)
INDUSTRY BREAKDOWN -- COMMON STOCKS
FOREIGN CURRENCY (CONTINUED)
<TABLE>
<CAPTION>
<S> <C> <C>
VALUE % NET ASSETS
Aerospace.............................. $ 1,950,000 0.32%
Airlines............................... 930,075 0.15
Apparel................................ 786,628 0.13
Automobiles............................ 11,067,480 1.81
Banks.................................. 29,453,475 4.82
Biotechnology.......................... 205,800 0.03
Broadcasting........................... 4,105,944 0.67
Building Materials & Products.......... 6,132,268 1.00
Business Services...................... 788,991 0.13
Casino Operators....................... 19,775 0.00
Chemicals.............................. 12,140,612 1.99
Computers & Software................... 4,395,581 0.72
Conglomerates.......................... 5,088,699 0.83
Construction Equipment................. 243,425 0.04
Consumer Products & Services........... 8,120,668 1.33
Containers............................. 703,450 0.12
Data Processing........................ 773,300 0.13
Electrical Equipment................... 4,360,538 0.71
Electronics............................ 36,711,392 6.00
Energy................................. 3,683,652 0.60
Engineering............................ 329,825 0.05
Finance................................ 7,615,404 1.25
Food & Beverages....................... 25,679,329 4.20
Forest & Paper Products................ 5,520,853 0.90
Homebuilders........................... 1,202,286 0.20
Hospital & Healthcare.................. 10,994,515 1.80
Household Products..................... 4,492,600 0.73
Industrial Products.................... 1,978,094 0.32
Insurance.............................. 10,603,432 1.73
Investment Banking & Brokerage......... 2,675,026 0.44
Leisure & Entertainment................ 1,302,160 0.21
Machinery & Equipment.................. 4,550,554 0.74
Manufacturing.......................... 1,863,325 0.30
Metals & Mining........................ 2,855,475 0.47
Natural Gas............................ 252,000 0.04
Office Automation & Equipment.......... 1,316,100 0.22
Oil & Gas.............................. 14,535,596 2.38
Pharmaceuticals........................ 5,870,889 0.96
Photographic Products.................. 1,703,816 0.28
Printing and Publishing................ 2,758,060 0.45
Railroads.............................. 1,960,620 0.32
Real Estate............................ 445,426 0.07
Restaurants............................ 84,001 0.01
Retail Trade........................... 12,921,247 2.11
Savings & Loan Associations............ 422,775 0.07
Telecommunications..................... 23,264,734 3.80
Tobacco................................ 7,498,782 1.23
Tourism................................ 1,342,988 0.22
Transportation......................... 2,515,971 0.41
Utilities.............................. 17,955,006 2.93
Wholesale Distributors................. 956,706 0.16
$309,129,348 50.53%
</TABLE>
See notes to financial statements.
32
<PAGE>
ZWEIG GOVERNMENT FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
UNITED STATES GOVERNMENT & AGENCY
OBLIGATIONS: 86.20%
OVER ONE YEAR: 76.67%
FEDERAL HOME LOAN MORTGAGE CORP.,
MODIFIED MTGE. PASS-THROUGH SECURITIES: 0.74%
10.50%, 1/1/2001...................... $ 29,191 $ 30,844
10.50%, 6/1/2011...................... 118,253 129,523
11.50%, 10/1/2015..................... 91,957 103,221
12.00%, 11/1/2015..................... 110,279 124,753
388,341
FEDERAL NATIONAL MORTGAGE ASSN.,
MODIFIED MTGE. PASS-THROUGH SECURITIES: 0.09%
12.50%, 10/01/2014.................... 39,619 45,265
FEDERAL NATIONAL MORTGAGE ASSN.: 3.99%
Deb., 8.25%, 12/18/2000............... 950,000 1,007,650
Notes, 6.95%, 9/10/2002............... 1,100,000 1,077,137
2,084,787
GOVERNMENT NATIONAL MORTGAGE ASSN.,
MODIFIED MTGE. PASS-THROUGH SECURITIES: 0.27%
12.50%, 11/20/2013.................... 47,878 55,239
12.00%, 9/15/2015..................... 53,317 61,414
8.00%, 8/15/2022..................... 22,724 22,952
139,605
PRIVATE EXPORT FUNDING CORP.: 1.99%
7.90%, 3/31/2000..................... 1,000,000 1,043,437
UNITED STATES TREASURY BONDS: 34.88%
10.75%, 2/15/2003..................... 1,000,000 1,219,375
10.75%, 5/15/2003..................... 2,000,000 2,450,624
12.00%, 8/15/2013..................... 1,025,000 1,446,851
7.25%, 8/15/2022..................... 4,000,000 4,100,000
7.625%, 11/15/2022.................... 1,145,000 1,225,150
7.625%, 2/15/2025..................... 4,300,000 4,637,279
6.875%, 8/15/2025..................... 3,200,000 3,166,998
18,246,277
UNITED STATES TREASURY NOTES: 34.71%
6.25%, 8/31/2000..................... 16,000,000 15,894,990
6.375%, 8/15/2002..................... 1,200,000 1,189,124
7.25%, 5/15/2004..................... 1,036,000 1,072,908
18,157,022
TOTAL OVER ONE YEAR (Cost $40,501,067).................. 40,104,734
LESS THAN ONE YEAR: 9.53%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 7.62%
5.28%, 7/22/96........................ 4,000,000 3,988,342
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
<S> <C> <C> <C>
FEDERAL NATIONAL MORTGAGE ASSOCIATION.,
DISCOUNT NOTES: 1.91%
5.18%, 7/18/96........................ $ 1,000,000 $ 997,472
TOTAL LESS THAN ONE YEAR (Cost $4,985,234).............. 4,985,814
TOTAL UNITED STATES GOVERNMENT & AGENCY OBLIGATIONS
(Cost $45,486,301).................................... 45,090,548
REPURCHASE AGREEMENTS: 16.18%
With Morgan Stanley & Co., Inc., (dated
6/28/96), 5.375%, due 7/1/96 (Repurchase
proceeds $4,001,792); collateralized by:
$6,349,489 Federal National Mortgage
Assn., 7.00%-7.50%, 12/1/2007-7/1/2026
(Market value $6,285,431)............... 4,000,000 4,000,000
With Prudential Securities Inc., (dated
6/28/96), 5.50%, due 7/1/96 (Repurchase
proceeds $4,465,046); collateralized by:
$4,583,796 Federal National Mortgage
Assn., 6.283%, 11/1/2022 (Market value
$4,552,260)............................. 4,463,000 4,463,000
TOTAL REPURCHASE AGREEMENTS (Cost $8,463,000)........... 8,463,000
TOTAL INVESTMENTS (Cost $53,949,301)...... 102.38% 53,553,548
Other Assets.............................. 1.96 1,024,275
Total Assets............................ 104.34% 54,577,823
Total Liabilities (Note 6).............. (4.34) (2,269,244)
NET ASSETS (Note 7)....................... 100.00% $52,308,579
WEIGHTED AVERAGE DURATION............................... 5.1 years
CLASS A SHARES
Net asset value ("NAV") and redemption price per share
($36,107,826/3,700,598 shares)........................ $9.76
Maximum public offering price per share- NAV/(1-maximum
sales charge) ($9.76/.9525)........................... $10.25
CLASS B SHARES
Net asset value ("NAV") and offering price per share
($85,116/8,701 shares)................................ $9.78
Redemption price per share.............................. *
CLASS C SHARES
Net asset value and offering price per share
($16,115,637/1,652,270 shares)........................ $9.75
Redemption price per share.............................. *
</TABLE>
*Varies by length of time shares are held. (Note 3b)
For Federal income tax purposes, the tax basis of investments owned at June 30,
1996 was $53,949,301 and unrealized depreciation on investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation............................ $ 183,484
Gross unrealized depreciation............................ (579,237)
Net unrealized depreciation.............................. $(395,753)
</TABLE>
See notes to financial statements.
33
<PAGE>
ZWEIG CASH FUND
STATEMENT OF NET ASSETS AS OF JUNE 30, 1996 (UNAUDITED)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
UNITED STATES GOVERNMENT AGENCY
OBLIGATIONS: 84.29%
FEDERAL FARM CREDIT BANK, DISCOUNT NOTES: 17.55%
5.25%, 7/15/96............................. $3,000,000 $ 2,993,875
5.19%, 7/24/96............................. 1,000,000 996,684
5.20%, 8/1/96.............................. 1,000,000 995,522
5.21%, 8/9/96.............................. 3,000,000 2,983,068
5.30%, 8/23/96............................. 2,000,000 1,984,394
9,953,543
FEDERAL HOME LOAN BANK: 12.31%
5.29%, 7/15/96............................. 4,000,000 3,991,771
5.29%, 7/29/96............................. 3,000,000 2,987,657
6,979,428
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 29.89%
5.52%, 7/1/96.............................. 3,988,000 3,988,000
5.22%, 7/8/96.............................. 2,000,000 1,997,970
5.28%, 7/18/96............................. 3,000,000 2,992,520
5.28%, 7/22/96............................. 8,000,000 7,975,407
16,953,897
FEDERAL NATIONAL MORTGAGE ASSN.,
DISCOUNT NOTES: 24.54%
5.21%, 7/24/96............................. 3,000,000 2,990,014
5.17%, 7/30/96............................. 3,000,000 2,987,313
5.21%, 8/6/96.............................. 3,000,000 2,984,370
5.25%, 8/9/96.............................. 1,000,000 994,280
5.20%, 8/27/96............................. 1,000,000 991,767
5.35%, 9/13/96............................. 3,000,000 2,967,008
13,914,752
TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS (Cost
$47,801,620).......................................... 47,801,620
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
<S> <C> <C> <C>
REPURCHASE AGREEMENTS: 21.36%
With Morgan Stanley & Co., Inc. (dated
6/28/96), 5.375%, due 7/1/96 (Repurchase
proceeds $3,115,395); collateralized by:
$3,235,721 Federal National Mortgage
Association, 7.00%, 12/1/2007 (Market
value
$3,208,217)............................ $3,114,000 $ 3,114,000
With Prudential Securities, Inc. (dated
6/28/96), 5.50%, due 7/1/96 (Repurchase
proceeds $9,004,125); collateralized by:
$10,243,763 various United States
Government and Agency Obligations,
0.00%-8.50%, 4/1/2001-7/1/2026 (Market
value $9,180,233)........................ 9,000,000 9,000,000
TOTAL REPURCHASE AGREEMENTS (Cost $12,114,000).......... 12,114,000
TOTAL INVESTMENTS (Cost $59,915,620)....... 105.65% 59,915,620
Other Assets............................... 0.05 27,887
Total Assets............................. 105.70% 59,943,507
Total Liabilities (Note 6)............... (5.70) (3,230,804)
NET ASSETS (Note 7)........................ 100.00% $56,712,703
WEIGHTED AVERAGE DAYS TO MATURITY....................... 22
Net asset value, offering and redemption price per share
(3,365,650 Class A Shares, 58,377 Class B Shares,
3,414,779 Class C Shares and 49,873,897
Class M Shares)....................................... $1.00
</TABLE>
See notes to financial statements.
34
<PAGE>
ZWEIG SERIES TRUST
STATEMENT OF OPERATIONS FOR THE
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED) (IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ZWEIG ZWEIG ZWEIG
STRATEGY APPRECIATION MANAGED
FUND FUND ASSETS
INVESTMENT INCOME:
Income:
Dividends*..................................................................... $ 13,616 $ 4,673 $ 4,591
Interest....................................................................... 1,974 1,624 9,600**
Total Income................................................................. 15,590 6,297 14,191
Expenses: (Note 2)
Advisory fees (Note 3)......................................................... 4,441 2,409 3,227
Distribution fees, Class A (Note 3)............................................ 883 412 205
Distribution fees, Class B (Note 3)............................................ 22 4 4
Distribution fees, Class C (Note 3)............................................ 2,954 1,031 2,541
Distribution fees, Class M (Note 3)............................................ -- -- --
Transfer agent fees............................................................ 624 310 383
Amortization of organization expenses.......................................... -- 74 77
Custodian fees................................................................. 70 48 256
Insurance...................................................................... 24 10 15
Portfolio accounting fees...................................................... 112 89 101
Professional fees.............................................................. 59 40 52
Registration fees.............................................................. 80 30 38
Reports to shareholders........................................................ 131 71 92
Trustees' fees................................................................. 10 6 8
Miscellaneous.................................................................. 34 15 21
Total expenses............................................................... 9,444 4,549 7,020
Less: Expenses reimbursed by investment adviser (Note 3)....................... -- -- --
Net expenses................................................................. 9,444 4,549 7,020
Net investment income............................................................ 6,146 1,748 7,171
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains (losses):
Security transactions.......................................................... 94,661 53,407 7,247
Futures transactions........................................................... (13,944) (3,586) (584)
Currency transactions.......................................................... -- -- 4,949
Net realized gains (losses).................................................. 80,717 49,821 11,612
Decrease in unrealized appreciation of investments and foreign currency.......... (43,398) (23,407) (6,761)
Net realized and unrealized gains (losses) on investments and foreign currency... 37,319 26,414 4,851
Net increase (decrease) in net assets resulting from operations.................. $ 43,465 $ 28,162 $12,022
* Net of taxes withheld on foreign dividends.................................... $ 299 $ 129 $ 389
** Net of taxes withheld on foreign interest of $4
<CAPTION>
ZWEIG ZWEIG
GOVERNMENT CASH
FUND FUND
INVESTMENT INCOME:
Income:
Dividends*..................................................................... $ -- $ --
Interest....................................................................... 1,809 1,685
Total Income................................................................. 1,809 1,685
Expenses: (Note 2)
Advisory fees (Note 3)......................................................... 169 157
Distribution fees, Class A (Note 3)............................................ 58 5
Distribution fees, Class B (Note 3)............................................ -- --
Distribution fees, Class C (Note 3)............................................ 66 7
Distribution fees, Class M (Note 3)............................................ -- 12
Transfer agent fees............................................................ 47 10
Amortization of organization expenses.......................................... -- --
Custodian fees................................................................. 10 10
Insurance...................................................................... 1 1
Portfolio accounting fees...................................................... 23 4
Professional fees.............................................................. 5 5
Registration fees.............................................................. 19 23
Reports to shareholders........................................................ 9 8
Trustees' fees................................................................. 3 3
Miscellaneous.................................................................. 3 2
Total expenses............................................................... 413 247
Less: Expenses reimbursed by investment adviser (Note 3)....................... (29) (112)
Net expenses................................................................. 384 135
Net investment income............................................................ 1,425 1,550
NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS AND
FOREIGN CURRENCY:
Net realized gains (losses):
Security transactions.......................................................... (1,074) --
Futures transactions........................................................... -- --
Currency transactions.......................................................... -- --
Net realized gains (losses).................................................. (1,074) --
Decrease in unrealized appreciation of investments and foreign currency.......... (2,655) --
Net realized and unrealized gains (losses) on investments and foreign currency... (3,729) --
Net increase (decrease) in net assets resulting from operations.................. ($ 2,304) $1,550
* Net of taxes withheld on foreign dividends.................................... -- --
** Net of taxes withheld on foreign interest of $4
</TABLE>
See notes to financial statements.
35
<PAGE>
ZWEIG SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS FOR THE
SIX MONTHS ENDED JUNE 30, 1996
AND FOR THE YEAR ENDED DECEMBER 31, 1995
(UNAUDITED) (IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C> <C> <C>
ZWEIG
APPRECIATION
ZWEIG STRATEGY FUND FUND
1996 1995 1996
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income...................................... $ 6,146 $ 14,369 $ 1,748
Net realized gains (losses) on investments................. 80,717 88,379 49,821
Unrealized appreciation (depreciation) of investments and
foreign currency........................................ (43,398) 81,614 (23,407)
Net increase (decrease) in net assets resulting from
operations.............................................. 43,465 184,362 28,162
Additions to capital paid-in (Note 3a)......................... -- -- --
Dividends to shareholders from net investment income:
Class A.................................................... (3,524) (13,218) --
Class B.................................................... (25) -- --
Class C.................................................... (2,334) (6,393) --
Class M.................................................... -- -- --
Distributions to shareholders from net realized gains on
investments:
Class A.................................................... -- (20,001) --
Class C.................................................... -- (18,613) --
Total dividends and distributions to shareholders............ (5,883) (58,225) --
Capital share transactions (Note 8):
Net proceeds from sale of shares........................... 197,733 329,295 41,242
Net proceeds from merger (Note 4).......................... -- -- --
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 5,063 45,624 --
202,796 374,919 41,242
Cost of shares redeemed........................................ (83,827) (144,286) (40,720)
Increase (decrease) in net assets derived from capital share
transactions............................................... 118,969 230,633 522
Net increase (decrease) in net assets........................ 156,551 356,770 28,684
NET ASSETS:
Beginning of period.......................................... 1,088,586 731,816 467,794
End of period................................................ $1,245,137 $1,088,586 $496,478
Undistributed net investment income (loss)..................... $ 79 $ (25) $ 1,537
<CAPTION>
1995
INCREASE (DECREASE) IN NET ASSETS:
Operations:
Net investment income...................................... $ 3,389
Net realized gains (losses) on investments................. 17,192
Unrealized appreciation (depreciation) of investments and
foreign currency........................................ 68,145
Net increase (decrease) in net assets resulting from
operations.............................................. 88,726
Additions to capital paid-in (Note 3a)......................... --
Dividends to shareholders from net investment income:
Class A.................................................... (5,429)
Class B.................................................... --
Class C.................................................... (1,215)
Class M.................................................... --
Distributions to shareholders from net realized gains on
investments:
Class A.................................................... (8,373)
Class C.................................................... (6,032)
Total dividends and distributions to shareholders............ (21,049)
Capital share transactions (Note 8):
Net proceeds from sale of shares........................... 62,439
Net proceeds from merger (Note 4).......................... 57,544
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions............. 17,132
137,115
Cost of shares redeemed........................................ (89,795)
Increase (decrease) in net assets derived from capital share
transactions............................................... 47,320
Net increase (decrease) in net assets........................ 114,997
NET ASSETS:
Beginning of period.......................................... 352,797
End of period................................................ $467,794
Undistributed net investment income (loss)..................... $ (214)
</TABLE>
See notes to financial statements.
36
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ZWEIG GOVERNMENT
ZWEIG MANAGED ASSETS FUND ZWEIG CASH FUND
1996 1995 1996 1995 1996 1995
$ 7,171 $ 21,943 $ 1,425 $ 3,329 $ 1,550 $ 3,705
11,612 49,667 (1,074) 1,665 -- (106)
(6,761) 30,325 (2,655) 3,304 -- --
12,022 101,935 (2,304) 8,298 1,550 3,599
-- -- -- -- -- 106
(1,793) (8,831) (945) (2,404) (85) (199)
(11) -- (1) -- -- --
(5,085) (26,808) (387) (1,014) (92) (250)
-- -- -- -- (1,373) (3,256)
-- (4,348) -- -- -- --
-- (16,160) -- -- -- --
(6,889) (56,147) (1,333) (3,418) (1,550) (3,705)
42,877 88,397 1,771 8,989 155,702 284,593
-- -- -- -- -- --
5,794 40,755 784 1,943 969 2,031
48,671 129,152 2,555 10,932 156,671 286,624
(110,582) (231,550) (8,595) (24,048) (156,592) (317,482)
(61,911) (102,398) (6,040) (13,116) 79 (30,858)
(56,778) (56,610) (9,677) (8,236) 79 (30,858)
668,542 725,152 61,986 70,222 56,634 87,492
$611,764 $ 668,542 $52,309 $ 61,986 $ 56,713 $ 56,634
$ 1,787 $ 1,508 $ 92 $ -- $ -- $ --
</TABLE>
37
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
NOTE 1 -- ORGANIZATION
Zweig Series Trust (the "Trust"), reorganized as a Delaware business trust from
a Massachusetts business trust effective April 30, 1996, is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Trust presently consists of five separate investment portfolios
("Series"): Zweig Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets,
Zweig Government Fund (formerly Government Securities Series) and Zweig Cash
Fund. Each Series has distinct investment objectives and policies. A
shareholder's interest is limited to the Series in which she or he owns shares.
Each Series offers Class A, Class B and Class C Shares and Zweig Cash Fund also
offers Class M Shares. All classes of shares have identical rights to earnings,
assets and voting privileges, except that each class has its own distribution
and/or service plan, and has exclusive voting rights with respect to matters
affecting only that class. The offering of Class B Shares commenced on April 8,
1996.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
(a) GENERAL: Securities transactions are recorded on trade date. Realized
gains and losses on sales of investments are determined on the identified cost
basis for both financial reporting and income tax purposes. Distributions to
shareholders and dividend income are recorded on the ex-dividend date, except
that certain dividends from foreign securities are recorded as soon as the
Series is informed of the ex-dividend date. Interest income is recorded on the
accrual basis. Direct expenses are charged to each class or Series and general
expenses are allocated in proportion to net assets. Organization expenses are
amortized on a straight-line basis over the first 60 months of operations of a
Series.
(b) PORTFOLIO VALUATION: Stocks, futures and options are valued at the
closing prices reported on recognized securities exchanges or if no sale was
reported, and for unlisted securities, at the mean between the last-reported bid
and asked prices. Bonds and other fixed-income securities are valued at prices
obtained from an established bond-pricing service when such prices are
available. Forward foreign currency contracts are valued using forward currency
exchange rates supplied by a quotation service. Securities for which market
quotations are not readily available (of which there were none at June 30, 1996)
are valued at fair value as determined in good faith by or under the direction
of the Board of Trustees. Short-term obligations having a remaining maturity of
60 days or less are valued at amortized cost (which approximates market value).
Zweig Cash Fund values all short-term investments using the amortized cost
method pursuant to Rule 2a-7 under the Investment Company Act of 1940.
(c) FUTURES CONTRACTS AND OPTION ACCOUNTING PRINCIPLES: Initial margin
deposits on futures contracts are recorded as assets. The value of such
contracts are "marked to market" daily and changes are recognized as unrealized
gains or losses. Variation margin payments are recognized as assets or
liabilities, depending upon whether unrealized gains or losses are incurred.
When a futures contract is closed, the Series realizes a gain or loss equal to
the difference between the proceeds from (or cost of) the closing transaction
and its basis in the contract. When a Series writes an option, an amount equal
to the premium received is recorded as an asset and a corresponding liability.
The liability is subsequently "marked to market" daily. When an option written
is exercised, the proceeds of sale of the underlying security are increased by
the premium originally received and the Series realizes a gain or loss. When an
option written expires or the Series enters into a closing purchase transaction,
the liability is extinguished and the Series realizes a gain or loss.
(d) FOREIGN CURRENCY TRANSLATION: Assets and liabilities denominated in a
foreign currency are translated into U.S. dollars using exchange rates on the
valuation date. Purchases and sales of securities, expense payments and income
receipts are translated into U.S. dollars using the exchange rate on the
transaction date. The Trust does not segregate that portion of the results of
operations resulting from changes in foreign exchange rates from the portion
resulting from changes in market prices of securities held; both are included in
net realized and unrealized gains or losses.
(e) OFF-BALANCE-SHEET RISK, REPURCHASE AGREEMENTS AND DERIVATIVES: Foreign
securities and forward foreign currency contracts may involve risks relating to
the level of governmental supervision and regulation of foreign markets, and the
possibility of political or economic instability. With respect to forward
foreign currency contracts and repurchase agreements, losses may arise if the
counterparty does not perform under the contract or agreement. The Trust's
investment manager monitors the requirement that the market value of the
securities used to collateralize a repurchase agreement exceed the dollar amount
of the counterparty's obligation to repurchase. A Series' use of futures
contracts, forward foreign currency contracts and options involves, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of net assets. These derivative financial instruments ("derivatives")
are used to adjust the risk and return characteristics of a Series' portfolio.
Derivatives are not used for the purpose of leverage. The objective in buying or
selling a derivative instrument is to increase or decrease a Series' exposure to
changing security prices, interest rates or currency exchange rates. If the
Manager misjudges market conditions or employs a strategy that does not
correlate well with the Series' other investments, use of these derivatives
could result in a loss, regardless of the Manager's original intent to reduce
risk.
(f) FEDERAL INCOME TAXES: It is the policy of each Series to continue to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its net taxable income,
including any net realized gain on investments, to its shareholders; therefore,
no provision for federal income tax is required.
(g) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends and distributions
are declared separately for each class of shares of a Series. Dividends from net
investment income are declared and paid monthly by Zweig Government Fund,
semi-annually by Zweig Strategy Fund and Zweig Managed Assets and at least
annually by Zweig Appreciation Fund. Any net realized capital gain distributions
are declared and paid annually, except that amounts attributable to net
short-term capital gains may be included with dividends from net investment
income. Zweig Cash Fund declares daily dividends of all net investment income,
plus or minus realized gains or losses, and pays dividends monthly. The
character of distributions made during the year from net investment income or
net realized gains may differ from their ultimate characterization for federal
income tax purposes due to differences in the recognition of income and expense
items for financial statement and federal income tax purposes.
38
<PAGE>
At October 31, 1995 (each Series' tax fiscal year-end), Zweig Government
Fund had capital loss carryforwards, including acquired loss carryforwards, of
$28,444,648, $13,506,640, $2,631,923, $249,274 and $7,227,155 expiring October
31, 1996, 1997, 1998, 1999 and 2001, respectively; available to offset any net
capital gains subsequently realized, subject to certain limitations.
NOTE 3 -- INVESTMENT ADVISORY FEES AND
OTHER TRANSACTIONS WITH AFFILIATES
(a) INVESTMENT MANAGER: The Trust's investments are managed by Zweig/Glaser
Advisers (the "Manager"). The Manager's investment advisory fee is based on the
average daily net assets of each Series 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%; and Zweig Cash Fund -- 0.50%.
The fee is accrued daily and paid monthly. Investment advisory fees for the six
months ended June 30, 1996 aggregated $10,402,783 before expense reimbursements.
The Manager has voluntarily undertaken to limit the expenses of Zweig Cash
Fund (exclusive of taxes, interest, brokerage commissions, the distribution fees
described below and extraordinary expenses) until December 31, 1996 to 0.35% of
its average daily net assets. During the six months ended June 30, 1996, the
Manager's reimbursements to Zweig Cash Fund aggregated $111,948 under this
voluntary expense limitation. The Manager reserves the right to discontinue this
expense limitation at any time after December 31, 1996. In November 1995, the
Manager contributed $106,250 to Zweig Cash Fund to offset losses incurred by the
Fund on sales of certain variable rate reset notes.
Effective May 1, 1996, the Manager has voluntarily undertaken to limit the
expenses of Zweig Government Fund (exclusive of taxes, interest, brokerage
commissions, the distribution fees described below and extraordinary expenses)
until December 31, 1996 to 0.75% of its average daily net assets. During the
period May 1, 1996 to June 30, 1996, the Manager's reimbursements to Zweig
Government Fund aggregated $29,324 under this voluntary expense limitation. The
Manager reserves the right to discontinue this policy at any time after December
31, 1996.
(b) PRINCIPAL DISTRIBUTOR: Zweig Securities Corp. (the "Distributor") serves
as principal distributor of shares of the Trust. The Trust's Class A Shares
(excluding Zweig Cash Fund shares) are sold with an initial sales charge. Class
B Shares are sold subject to a declining (5% to 1%) contingent deferred sales
charge (CDSC) imposed on shares redeemed within six years of purchase, and
automatically convert to Class A Shares after seven years. Class C Shares are
sold subject to a CDSC of 1.25% imposed on shares redeemed within one year of
purchase, and Class M Shares of Zweig Cash Fund are sold without a sales charge.
The Distributor's share of sales charges paid by the purchasers of Class A
Shares was $450,551 and it's share of CDSC's paid by the redeemers of Class B
Shares and Class C Shares was $0 and $165,318, respectively, during the six
months ended June 30, 1996.
Pursuant to a Rule 12b-1 plan of distribution, the Trust pays the
Distributor a combined service and distribution fee equal to an annual rate of
0.30% of average daily net assets for each Series of Class A Shares, 1.00% for
each Series of Class B Shares, and 1.00% for Class C Shares of Zweig Strategy
Fund, Zweig Appreciation Fund and Zweig Managed Assets, 0.75% for Class C Shares
of Zweig Government Fund and 0.30% for Class C Shares of Zweig Cash Fund,
respectively. The Distributor's aggregate fees under this plan for the six
months ended June 30, 1996 amounted to $1,563,580 for Class A Shares, $30,496
for Class B Shares, and $6,598,551 for Class C Shares. A separate Rule 12b-1
distribution sharing plan for Class M Shares of Zweig Cash Fund provides that
the Manager may enter into service agreements with various service organizations
for distribution, promotion, administration and/or servicing investors in Class
M Shares. The service organizations are paid equally by the Class M Shares and
the Manager. During the six months ended June 30, 1996, the Class M Shares paid
$12,404 under this plan.
During the six months ended June 30, 1996, the Trust paid Zweig Securities
Corp. brokerage commissions of $574,776 in connection with portfolio
transactions that it effected.
One Trustee and all of the officers of the Trust are also officers of the
Manager and/or the Distributor.
NOTE 4 -- MERGER
On April 4, 1995, Zweig Appreciation Fund ("Appreciation") acquired all of the
net assets of Zweig Series Trust Priority Selection List Series ("Priority")
pursuant to a plan of reorganization approved by the shareholders of Priority on
March 28, 1995. The acquisition was accomplished by a tax-free exchange of the
Appreciation shares for all the net assets of Priority and has been accounted
for as a pooling of interest without restatement for financial reporting
purposes. The selected financial information and shares outstanding for the
funds immediately before and after the acquisition were as follows:
<TABLE>
<CAPTION>
NET ASSET
VALUE SHARES EXCHANGE
NET ASSETS PER SHARE OUTSTANDING* RATIO
<S> <C> <C> <C> <C> <C>
Priority Class A.............................................. $ 41,711,769 $ 12.47 3,344,959 x .90442368
Appreciation Class A.......................................... 207,349,503 13.79 15,038,440
Combined...................................................... $249,061,272 $ 13.79 18,383,399
Priority Class C.............................................. $ 15,831,830 $ 12.44 1,272,171 x .90935221
Appreciation Class C.......................................... 139,760,128 13.69 10,212,445
Combined...................................................... $155,591,958 $ 13.69 11,484,616
<CAPTION>
SHARES
OUTSTANDING**
<S> <C> <C>
Priority Class A.............................................. = 3,025,260
Appreciation Class A.......................................... 15,038,440
Combined...................................................... 18,063,700
Priority Class C.............................................. = 1,156,852
Appreciation Class C.......................................... 10,212,445
Combined...................................................... 11,369,297
</TABLE>
The net assets of Priority included unrealized appreciation on investments
of $1,745,945 and accumulated net realized losses of $1,314,728.
* Before acquisition.
** After acquisition.
39
<PAGE>
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)/(CONTINUED)
NOTE 5 -- PURCHASES AND SALES OF SECURITIES AND FORWARD CURRENCY CONTRACTS
During the six months ended June 30, 1996, purchase and sale transactions of the
Trust, excluding repurchase transactions, short-term obligations held to
maturity, and futures contracts, were:
<TABLE>
<CAPTION>
ZWEIG ZWEIG ZWEIG
STRATEGY APPRECIATION MANAGED
FUND FUND ASSETS
<S> <C> <C> <C>
Cost of securities purchased................................... $1,431,366,699 $233,028,799 $591,623,811
Proceeds from securities sold.................................. 1,170,365,760 251,582,973 737,618,700
<CAPTION>
ZWEIG
GOVERNMENT
FUND
<S> <C><C>
Cost of securities purchased................................... $67,492,484
Proceeds from securities sold.................................. 69,372,402
</TABLE>
Forward currency contracts outstanding at June 30, 1996, for Zweig Managed
Assets were:
<TABLE>
<CAPTION>
CONTRACTS TO IN EXCHANGE SETTLEMENT
DELIVER FOR DATE VALUE
<S> <C> <C> <C> <C> <C>
Sales................ Australian Dollar.............. A$ 31,700,000 $25,233,200 9/18/96 $ (24,827,709)
Danish Krone................... DKr 38,800,000 6,676,417 9/18/96 (6,636,298)
Finnish Markka................. Fim 74,600,000 16,198,376 9/18/96 (16,162,593)
French Franc................... ff 114,000,000 22,256,931 9/18/96 (22,209,531)
German Deutsche Mark........... DM 46,400,000 30,810,093 9/18/96 (30,614,960)
Italian Lira................... Lira47,200,000,000 30,504,827 9/18/96 (30,527,780)
Japanese Yen................... (Yen)2,750,000,000 25,810,206 9/18/96 (25,372,993)
Netherlands Guilder............ NLG 2,100,000 7,169,991 9/18/96 (7,121,983)
Spanish Peseta................. Pta 4,710,000,000 36,590,563 9/18/96 (36,567,385)
Swedish Krona.................. Skr 169,200,000 25,478,858 9/18/96 (25,463,265)
$226,729,462 $(225,504,497)
Purchases............ Australian Dollar.............. $ 24,948,851 A$ 31,700,000 9/18/96 $ 24,827,709
French Franc................... 5,695,886 ff 29,400,000 9/18/96 5,727,721
German Deutsche Mark........... 15,514,068 DM23,600,000 9/18/96 15,571,402
$ 46,158,805 $ 46,126,832
Net Unrealized Appreciation on Foreign Forward Currency Contracts..................................
<CAPTION>
NET UNREALIZED
APPRECIATION
(DEPRECIATION)
<S> <C>
Sales................ $ 405,491
40,119
35,783
47,400
195,133
(22,953)
437,213
48,008
23,178
15,593
$1,224,965
Purchases............ $ (121,142)
31,835
57,334
$ (31,973)
$1,192,992
</TABLE>
NOTE 6 -- LIABILITIES -- JUNE 30, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
ZWEIG ZWEIG ZWEIG ZWEIG
STRATEGY APPRECIATION MANAGED GOVERNMENT
FUND FUND ASSETS FUND
<S> <C> <C> <C> <C>
Advisory Fees............................................................... $ 101 $ 54 $ 66 $ 3
Distribution and Service Fees............................................... 677 249 432 19
Capital Shares Redeemed..................................................... 1,734 683 2,034 86
Dividends................................................................... 477 -- 350 96
Securities Purchased........................................................ 2,653 529 50,757 2,021
Accrued Expenses............................................................ 301 196 369 44
Total Liabilities......................................................... $ 5,943 $ 1,711 $ 54,008 $ 2,269
<CAPTION>
ZWEIG
CASH
FUND
<S> <C>
Advisory Fees............................................................... $ 3
Distribution and Service Fees............................................... 4
Capital Shares Redeemed..................................................... --
Dividends................................................................... 228
Securities Purchased........................................................ 2,988
Accrued Expenses............................................................ 8
Total Liabilities......................................................... $ 3,231
</TABLE>
NOTE 7 -- NET ASSETS -- JUNE 30, 1996 (IN THOUSANDS)
<TABLE>
<CAPTION>
ZWEIG ZWEIG ZWEIG ZWEIG
STRATEGY APPRECIATION MANAGED GOVERNMENT
FUND FUND ASSETS FUND
<S> <C> <C> <C> <C>
Net Assets consist of:
Capital paid-in............................................................. $1,072,793 $370,685 $578,647 $104,406
Undistributed net investment income......................................... 79 1,537 1,787 92
Accumulated net realized gain (loss)........................................ 121,310 58,408 12,021 (51,793)
Net unrealized appreciation (depreciation) of investments................... 50,955 65,848 19,309 (396)
$1,245,137 $496,478 $611,764 $ 52,309
<CAPTION>
ZWEIG
CASH
FUND
<S> <C>
Net Assets consist of:
Capital paid-in............................................................. $56,713
Undistributed net investment income......................................... --
Accumulated net realized gain (loss)........................................ --
Net unrealized appreciation (depreciation) of investments................... --
$56,713
</TABLE>
40
<PAGE>
NOTE 8 -- CAPITAL SHARES
The Trust has unlimited authorized shares of beneficial interest ($0.10 par
value), divided into Series and issued in classes (see note 1). Capital share
transactions for the six months ended June 30, 1996 and for the year ended
December 31, 1995 are set forth below.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
1996 1995 1996 1996
<S> <C> <C> <C> <C>
ZWEIG STRATEGY FUND
Sold................................................................... 3,929,640 7,877,181 1,282,629 7,909,147
Issued in reinvestment of dividends and distributions.................. 189,690 1,847,851 1,276 145,973
Redeemed............................................................... (2,785,247) (5,617,447) (1,668) (2,779,504)
Net increase....................................................... 1,334,083 4,107,585 1,282,237 5,275,616
ZWEIG APPRECIATION FUND
Sold................................................................... 718,335 1,345,078 205,727 1,588,554
Issued in reinvestment of dividends and distributions.................. -- 755,791 -- --
Issued in merger of Priority Selection List Series (Note 4)............ -- 3,025,260 -- --
Redeemed............................................................... (1,473,312) (3,757,691) (120) (1,003,289)
Net increase (decrease)............................................ (754,977) 1,368,438 205,607 585,265
ZWEIG MANAGED ASSETS
Sold................................................................... 729,039 1,612,962 272,660 2,409,077
Issued in reinvestment of dividends and distributions.................. 119,802 874,559 698 342,688
Redeemed............................................................... (1,866,120) (4,317,073) (658) (6,926,190)
Net increase (decrease)............................................ (1,017,279) (1,829,552) 272,700 (4,174,425)
ZWEIG GOVERNMENT FUND
Sold................................................................... 32,064 224,049 8,651 136,970
Issued in reinvestment of dividends.................................... 54,912 136,077 50 24,184
Redeemed............................................................... (449,569) (1,242,528) -- (413,946)
Net increase (decrease)............................................ (362,593) (882,402) 8,701 (252,792)
ZWEIG CASH FUND (1)
Sold................................................................... 1,729,067 13,510,433 73,375 1,484,908
Issued in reinvestment of dividends.................................... 72,373 157,598 2 81,845
Redeemed............................................................... (2,096,418) (14,310,228) (15,000) (2,610,363)
Net increase (decrease)............................................ (294,978) (642,197) 58,377 (1,043,610)
<CAPTION>
1995
<S> <C>
ZWEIG STRATEGY FUND
Sold................................................................... 15,068,149
Issued in reinvestment of dividends and distributions.................. 1,322,287
Redeemed............................................................... (4,816,427)
Net increase....................................................... 11,574,009
ZWEIG APPRECIATION FUND
Sold................................................................... 2,780,621
Issued in reinvestment of dividends and distributions.................. 352,626
Issued in merger of Priority Selection List Series (Note 4)............ 1,156,851
Redeemed............................................................... (2,393,311)
Net increase (decrease)............................................ 1,896,787
ZWEIG MANAGED ASSETS
Sold................................................................... 5,502,115
Issued in reinvestment of dividends and distributions.................. 2,398,874
Redeemed............................................................... (14,332,281)
Net increase (decrease)............................................ (6,431,292)
ZWEIG GOVERNMENT FUND
Sold................................................................... 676,987
Issued in reinvestment of dividends.................................... 60,147
Redeemed............................................................... (1,181,786)
Net increase (decrease)............................................ (444,652)
ZWEIG CASH FUND (1)
Sold................................................................... 10,482,656
Issued in reinvestment of dividends.................................... 211,361
Redeemed............................................................... (11,275,296)
Net increase (decrease)............................................ (581,279)
</TABLE>
(1) For the six months ended June 30, 1996 and for the year ended December 31,
1995, respectively, shares of Zweig Cash Fund Class M sold were 152,414,496
and 260,599,750; shares issued in reinvestment of dividends were 814,915 and
1,661,722; and shares redeemed were 151,870,086 and 291,896,255 for a net
increase (decrease) of 1,359,325 and (29,634,783) shares, respectively.
(2) Class B Shares commenced operations on April 8, 1996.
41
<PAGE>
FINANCIAL HIGHLIGHTS
(UNAUDITED)
Selected Data for each share of capital stock outstanding throughout the six
months ended June 30, 1996 and the years ended
December 31, 1995, 1994, 1993, 1992 and 1991
<TABLE>
<CAPTION>
NET
REALIZED
NET ASSET AND DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED TOTAL FROM FROM NET FROM NET TOTAL NET ASSET
PERIOD BEGINNING INVESTMENT GAINS INVESTMENT INVESTMENT REALIZED DIVIDENDS AND VALUE END
ENDED OF PERIOD INCOME (LOSSES) OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS OF PERIOD
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND CLASS A
1996 $ 14.51 $ 0.10 $ 0.51 $ 0.61 $(0.09) $ -- $ (0.09) $ 15.03
1995 12.36 0.27 2.80 3.07 (0.37) (0.55) (0.92) 14.51
1994 12.52 0.24 (0.10) 0.14 (0.20) (0.10) (0.30) 12.36
1993 13.60 0.13 1.72 1.85 (0.12) (2.81) (2.93) 12.52
1992 13.03 0.17 0.80 0.97 (0.21) (0.19) (0.40) 13.60
1991 10.81 0.21 2.27 2.48 (0.26) -- (0.26) 13.03
ZWEIG STRATEGY FUND CLASS B
1996 (5) 15.12 0.02 (0.05) (0.03) (0.02) -- (0.02) 15.07
ZWEIG STRATEGY FUND CLASS C
1996 14.56 0.05 0.50 0.55 (0.06) -- (0.06) 15.05
1995 12.35 0.16 2.82 2.98 (0.22) (0.55) (0.77) 14.56
1994 12.51 0.15 (0.10) 0.05 (0.11) (0.10) (0.21) 12.35
1993 13.61 0.05 1.71 1.76 (0.05) (2.81) (2.86) 12.51
1992 (1) 12.89 0.08 0.69 0.77 (0.05) -- (0.05) 13.61
ZWEIG APPRECIATION FUND CLASS A
1996 15.91 0.09 0.90 0.99 -- -- -- 16.90
1995 13.54 0.16 3.05 3.21 (0.33) (0.51) (0.84) 15.91
1994 14.33 0.16 (0.43) (0.27) (0.06) (0.46) (0.52) 13.54
1993 13.10 0.07 1.83 1.90 (0.06) (0.61) (0.67) 14.33
1992 12.03 0.06 1.07 1.13 (0.03) (0.03) (0.06) 13.10
1991 (2) 11.34 0.03 0.66 0.69 -- -- -- 12.03
ZWEIG APPRECIATION FUND CLASS B
1996 (5) 16.34 0.01 0.39 0.40 -- -- -- 16.74
ZWEIG APPRECIATION FUND CLASS C
1996 15.83 0.03 0.89 0.92 -- -- -- 16.75
1995 13.36 0.06 3.03 3.09 (0.11) (0.51) (0.62) 15.83
1994 14.19 0.06 (0.43) (0.37) -- (0.46) (0.46) 13.36
1993 13.01 (0.01) 1.80 1.79 -- (0.61) (0.61) 14.19
1992 (1) 12.33 (0.02) 0.70 0.68 -- -- -- 13.01
ZWEIG MANAGED ASSETS CLASS A
1996 12.48 0.24 0.03 0.27 (0.17) -- (0.17) 12.58
1995 11.76 0.47 1.40 1.87 (0.75) (0.40) (1.15) 12.48
1994 12.38 0.33 (0.69) (0.36) (0.26) -- (0.26) 11.76
1993 (3) 11.34 0.22 1.13 1.35 (0.14) (0.17) (0.31) 12.38
ZWEIG MANAGED ASSETS CLASS B
1996 (5) 12.43 0.09 0.14 0.23 (0.04) -- (0.04) 12.62
ZWEIG MANAGED ASSETS CLASS C
1996 12.49 0.20 0.02 0.22 (0.13) -- (0.13) 12.58
1995 11.73 0.38 1.40 1.78 (0.62) (0.40) (1.02) 12.49
1994 12.36 0.23 (0.68) (0.45) (0.18) -- (0.18) 11.73
1993 (3) 11.34 0.15 1.13 1.28 (0.09) (0.17) (0.26) 12.36
ZWEIG GOVERNMENT FUND CLASS A (8)
1996 10.39 0.26 (0.64) (0.38) (0.25) -- (0.25) 9.76
1995+ 9.63 0.52 0.77 1.29 (0.53) -- (0.53) 10.39
1994 10.43 0.50 (0.79) (0.29) (0.51) -- (0.51) 9.63
1993 10.01 0.55 0.46 1.01 (0.59) -- (0.59) 10.43
1992 10.21 0.65 (0.22) 0.43 (0.63) -- (0.63) 10.01
1991 9.60 0.68 0.62 1.30 (0.69) -- (0.69) 10.21
ZWEIG GOVERNMENT FUND CLASS B (8)
1996 (5) 9.76 0.08 0.02 0.10 (0.08) -- (0.08) 9.78
ZWEIG GOVERNMENT FUND CLASS C (8)
1996 10.38 0.24 (0.65) (0.41) (0.22) -- (0.22) 9.75
1995+ 9.62 0.48 0.76 1.24 (0.48) -- (0.48) 10.38
1994 10.40 0.46 (0.79) (0.33) (0.45) -- (0.45) 9.62
1993 10.02 0.52 0.41 0.93 (0.55) -- (0.55) 10.40
1992 (1) 9.86 0.52 0.09 0.61 (0.45) -- (0.45) 10.02
ZWEIG CASH FUND CLASS A (6)
1996 1.00 0.02 -- 0.02 (0.02) -- (0.02) 1.00
1995 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00
1994 (4) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00
ZWEIG CASH FUND CLASS B (6)
1996 (5) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 1.00
<CAPTION>
RATIOS TO AVERAGE NET AVERAGE
ASSETS COMMISSION
NET PORTFOLIO PER SHARE ON NET ASSETS END
PERIOD TOTAL INVESTMENT TURNOVER PORTFOLIO OF PERIOD
ENDED RETURN*** EXPENSES INCOME RATE TRANSACTIONS (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND CLASS A
1996 4.20% 1.24%* 1.24%* 213%* $ 0.03 $598,066
1995 25.12 1.27 1.92 95 0.03 558,286
1994 1.14 1.40 1.90 70 N/A 424,805
1993 14.97 1.43 1.00 359 N/A 405,884
1992 7.61 1.63 1.32 249 N/A 358,318
1991 23.34 1.58 1.79 179 N/A 367,343
ZWEIG STRATEGY FUND CLASS B
1996 (5) (0.20) 1.94* 0.54* 213* 0.03 19,327
ZWEIG STRATEGY FUND CLASS C
1996 3.78 1.94* 0.54* 213* 0.03 627,744
1995 24.26 1.97 1.22 95 0.03 530,300
1994 0.41 2.10 1.20 70 N/A 307,011
1993 14.18 2.13 0.30 359 N/A 188,631
1992 (1) 6.00 2.43* 0.40* 249 N/A 64,697
ZWEIG APPRECIATION FUND CLASS A
1996 6.22 1.59* 1.02* 110* 0.03 276,694
1995 24.00 1.63 1.10 68 0.03 272,590
1994 (1.83) 1.70 1.09 97 N/A 213,400
1993 14.65 1.73 0.52 69 N/A 230,230
1992 9.52 1.96 0.49 61 N/A 200,656
1991 (2) 6.08 2.19* 1.27* 8 N/A 157,948
ZWEIG APPRECIATION FUND CLASS B
1996 (5) 2.45 2.29* 0.32* 110* 0.03 3,442
ZWEIG APPRECIATION FUND CLASS C
1996 5.81 2.29* 0.32* 110* 0.03 216,342
1995 23.20 2.33 0.40 68 0.03 195,204
1994 (2.55) 2.40 0.39 97 N/A 139,397
1993 13.84 2.43 (0.18) 69 N/A 105,957
1992 (1) 5.52 2.80* (0.32)* 61 N/A 42,089
ZWEIG MANAGED ASSETS CLASS A
1996 2.18 1.62* 2.76* 228* 0.02 129,424
1995 16.26 1.59 3.69 239 0.03 141,110
1994 (2.93) 1.68 2.70 299 N/A 154,441
1993 (3) 11.98 1.67* 1.93* 196 N/A 121,620
ZWEIG MANAGED ASSETS CLASS B
1996 (5) 1.85 2.32* 2.06* 228* 0.02 3,443
ZWEIG MANAGED ASSETS CLASS C
1996 1.77 2.32* 2.06* 228* 0.02 478,898
1995 15.44 2.29 2.99 239 0.03 527,432
1994 (3.66) 2.38 2.00 299 N/A 570,710
1993 (3) 11.34 2.37* 1.23* 196 N/A 429,088
ZWEIG GOVERNMENT FUND CLASS A (8)
1996 (3.71) 1.22* 5.17* 306* N/A 36,108
1995+ 13.84 1.26 5.22 195 N/A 42,207
1994 (2.83) 1.28 5.07 191 N/A 47,622
1993 10.35 1.30 5.46 256 N/A 60,207
1992 4.51 1.30 6.58 200 N/A 70,062
1991 14.35 1.42 7.10 361 N/A 83,859
ZWEIG GOVERNMENT FUND CLASS B (8)
1996 (5) 0.99 1.92* 4.47* 306* N/A 85
ZWEIG GOVERNMENT FUND CLASS C (8)
1996 (3.96) 1.67* 4.72* 306* N/A 16,116
1995+ 13.27 1.71 4.77 195 N/A 19,779
1994 (3.18) 1.73 4.62 191 N/A 22,599
1993 9.48 1.75 5.01 256 N/A 21,301
1992 (1) 6.31 1.81* 5.93* 200 N/A 9,210
ZWEIG CASH FUND CLASS A (6)
1996 2.37 0.65* 4.71* N/A N/A 3.366
1995 5.08 0.87 4.97 N/A N/A 3,661
1994 (4) 2.55** 0.62** 2.52** N/A N/A 4,303
ZWEIG CASH FUND CLASS A (6)
1996 (5) .97 1.35* 4.01* N/A N/A 58
</TABLE>
42
<PAGE>
<TABLE>
<CAPTION>
NET
REALIZED
NET ASSET AND DIVIDENDS DISTRIBUTIONS
VALUE NET UNREALIZED TOTAL FROM FROM NET FROM NET TOTAL NET ASSET
PERIOD BEGINNING INVESTMENT GAINS INVESTMENT INVESTMENT REALIZED DIVIDENDS AND VALUE END
ENDED OF PERIOD INCOME (LOSSES) OPERATIONS INCOME CAPITAL GAINS DISTRIBUTIONS OF PERIOD
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ZWEIG CASH FUND CLASS C (6)
1996 $ 1.00 $ 0.02 $ -- $ 0.02 $(0.02) $ -- $ (0.02) $ 1.00
1995 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00
1994 (4) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00
ZWEIG CASH FUND CLASS M (7)
1996 1.00 0.02 -- 0.02 (0.02) -- (0.02) 1.00
1995 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00
1994 1.00 0.04 -- 0.04 (0.04) -- (0.04) 1.00
1993 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00
1992 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00
1991 1.00 0.06 -- 0.06 (0.06) -- (0.06) 1.00
<CAPTION>
RATIOS TO AVERAGE NET AVERAGE
ASSETS COMMISSION
NET PORTFOLIO PER SHARE ON NET ASSETS END
PERIOD TOTAL INVESTMENT TURNOVER PORTFOLIO OF PERIOD
ENDED RETURN*** EXPENSES INCOME RATE TRANSACTIONS (IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
ZWEIG CASH
1996 2.37% 0.65%* 4.72%* N/A N/A $ 3,415
1995 5.08 0.87 4.97 N/A N/A 4,458
1994 (4) 2.55** 0.61** 2.52** N/A N/A 5,040
ZWEIG CASH
1996 2.50 0.40* 4.95* N/A N/A 49,874
1995 5.32 0.64 5.20 N/A N/A 48,515
1994 3.67 0.70 3.58 N/A N/A 78,149
1993 2.86 0.70 2.83 N/A N/A 92,471
1992 3.40 0.70 3.35 N/A N/A 145,169
1991 5.63 0.66 5.63 N/A N/A 126,019
</TABLE>
(1) Commenced operations February 4, 1992.
(2) Commenced operations October 7, 1991.
(3) Commenced operations February 8, 1993.
(4) Commenced operations May 1, 1994.
(5) Commenced operations April 8, 1996.
(6) During 1996 and 1995, the Manager voluntarily reimbursed Zweig Cash Fund
Class A, Class B and Class C $.003, $.001 and $.003 per share (0.60%, 0.39%
and 0.57% ratio of expenses to average net assets) and $.005, $0 and $.003
per share (0.47%, 0% and 0.28% ratio of expenses to average net assets),
respectively.
(7) During 1996, 1995, 1994, 1993, 1992 and 1991, the Manager voluntarily
reimbursed Zweig Cash Fund Class M $.002, $.001, $.002, $.001, $.002 and
$.001 per share (0.31%, 0.10%, 0.15%, 0.08%, 0.15%, and 0.15% ratio of
operating expenses to average net assets), respectively.
(8) During 1996, the Manager voluntarily reimbursed Zweig Government Fund Class
A, Class B and Class C $.005, $.008 and $.005 per share (0.11%, 0.34%, and
0.10% ratio of operating expenses to average net assets), respectively.
* Annualized
** Not Annualized
*** Total Return does not consider the effect of any initial or contingent
deferred sales charge.
+ Based on the average of the number of shares outstanding during the year.
43
<PAGE>
SUPPLEMENTAL PROXY INFORMATION
A Special Meeting of Shareholders of Zweig Series Trust was held on April
19, 1996. The meeting was held for the purpose of approving a unified
modernization program which would allow the Trust to adapt rapidly to changing
market, economic, and regulatory events. In addition to voting on reclassifying
and amending certain fundamental investment policies, the Trust sought to
approve a change in its domicile from Massachusetts to Delaware and in effect to
change the name of Government Securities Series to Zweig Government Fund.
Finally, the Trust sought ratification of the selection of Coopers & Lybrand
L.L.P. as independent accountants of the Trust. Each of the sixteen (16)
proposals were put forth by the Trust only to the respective shareholders of the
Series affected by such proposals.
The results of the voting on the 16 proposals, each of which was approved,
were as follows:
VOTES
<TABLE>
<CAPTION>
PROPOSAL FOR AGAINST
<S> <C> <C> <C>
1. Ratification of Coopers & Lybrand L.L.P. (a) 127,924,943 1,039,326
2. Change in domicile (a) and name 107,013,561 1,633,915
3. Authorize Trustees to be able to adopt a Pooled Fund Structure without additional 100,727,212 3,727,617
shareholder authorization (a)
4.-7. Amend the fundamental policy of all Series concerning:
4. Investments in securities of investment companies and to reclassify the policy as 65,273,458 2,340,040
non-fundamental (b)
5. Issuance of senior securities (b) 65,322,781 2,333,451
6. Purchase of securities of issuers in the same industry (b) 65,783,886 2,005,185
7. Diversification of portfolio securities (b) 66,050,745 1,864,171
8.-11. Reclassify as non-fundamental the fundamental policy of all Series concerning:
8. Investments made for the purpose of exercising control over or management of the 65,086,137 2,481,910
issuer (b)
9. Investments made on a joint or a joint and several basis in any trading account in 65,383,086 2,168,778
securities (b)
10. Purchase of securities on margin and to amend certain language (b) 64,869,356 2,798,849
11. Purchase of securities of an issuer if one or more trustees or officers of the Trust 64,372,020 3,147,769
or officers of its investment manager individually own beneficially more than 1/2
of 1% of the outstanding securities of such issuer (b)
12.-15. Reclassify as non-fundamental the fundamental policy concerning:
12. Investments in an issuer with a limited operating history (c) 44,521,317 1,983,267
13. Short sales of securities (c) 44,561,106 1,843,109
14. Investments in warrants (c) 44,667,604 1,746,384
15. Purchase of illiquid securities and to amend certain language (c) 44,418,342 2,028,761
16. Amend the fundamental policy of Government Securities Series concerning current 2,167,388 161,592
return and to reclassify certain language as non-fundamental
<CAPTION>
ABSTAINED
<S> <C>
1. 2,154,328
2. 4,312,567
3. 8,505,214
4.-7.
4. 4,518,901
5. 4,475,967
6. 4,343,125
7. 4,217,286
8.-11.
8. 4,564,152
9. 4,580,335
10. 4,466,993
11. 4,611,412
12.-15.
12. 2,880,850
13. 2,982,220
14. 2,972,445
15. 2,939,331
16. 115,665
</TABLE>
(a) Applies to all Series of the Trust.
(b) Applies to all Series of the Trust except Zweig Cash Fund.
(c) Applies to Zweig Strategy Fund, Zweig Appreciation Fund and Government
Securities Series.
44
<PAGE>
Trustees
Claire B. Benenson
Richard E. Deems
S. Leland Dill
Eugene J. Glaser
Donald B. Romans
Officers
Eugene J. Glaser
CHAIRMAN, CHIEF EXECUTIVE OFFICER
AND TRUSTEE
Martin E. Zweig
PRESIDENT
David Katzen
SENIOR VICE PRESIDENT
Barry M. Mandinach
FIRST VICE PRESIDENT
Carlton B. Neel
FIRST VICE PRESIDENT
Alfred J. Ratcliffe
FIRST VICE PRESIDENT & TREASURER
Charles I. Leone
FIRST VICE PRESIDENT
& ASSISTANT SECRETARY
Annemarie Gilly
VICE PRESIDENT
Jeffrey Lazar
VICE PRESIDENT
Marc Baltuch
SECRETARY
Beth Abraham
ASSISTANT VICE PRESIDENT
Thomas Disbrow
ASSISTANT TREASURER
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 10015
Transfer Agent
State Street Bank & Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
Servicing Agent
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
Counsel
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
DESIGN: THE BLANK PAGE, INC. NEW YORK, NY
<PAGE>
Zweig
Mutual Funds
5 Hanover Square-17th Floor
New York, New York 10004
(Recycled logo)THIS ANNUAL REPORT IS PRINTED ON RECYCLED PAPER.
