<PAGE> 1
As filed with the Securities and Exchange Commission on February 29, 1996
Registration No. 2-93538
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/
Pre-Effective Amendment No. ___ / /
Post-Effective Amendment No. 41 /X/
and/or
REGISTRATION STATEMENT UNDER
THE INVESTMENT COMPANY ACT OF 1940 /X/
Amendment No. 42 /X/
--------------------
ZWEIG SERIES TRUST
(Exact Name of Registrant as Specified in Charter)
5 Hanover Square, New York, New York 10004
----------------------------------------------------------
(Address of Principal Executive Offices) (Zip code)
Registrant's Telephone Number, including Area Code: (212) 635-9800
EUGENE J. GLASER
President
Zweig/Glaser Advisers
5 Hanover Square
New York, New York 10004
---------------------------------------------
(Name and Address of Agent for Service)
Copy to:
PAUL S. SCHREIBER, Esq.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Approximate Date of Proposed Public Offering: Effective date of this
Post-Effective Amendment.
It is proposed that this filing will become effective on April 30,
1996, pursuant to paragraph (a) of Rule 485 under the Securities Act of 1933, as
amended.
DECLARATION PURSUANT TO RULE 24f-2
Pursuant to Rule 24f-2 under the Investment Company Act of 1940, as
amended, the Registrant has registered an indefinite number or amount of
securities under the Securities Act of 1933, as amended. A Rule 24f-2 Notice for
the Registrant's fiscal year ended December 31, 1995 was filed on February 23,
1996.
<PAGE> 2
[By this amendment to the Registration Statement (No. 2-93538) on Form N-1A of
Zweig Series Trust, the Board of Trustees of Zweig Series Trust, a Delaware
business trust, adopts the registration statement of Zweig Series Trust, a
Massachusetts business trust, under the Securities Act of 1933 and the
notification of registration and the registration statement of Zweig Series
Trust under the Investment Company Act of 1940. -- See "Explanatory Note"
immediately following this page.]
<PAGE> 3
EXPLANATORY NOTE
This Post-Effective Amendment to the Registration Statement on
Form N-1A by Zweig Series Trust, a Massachusetts business trust (the "Trust"),
assumes that each of the proposals included in the proxy statements of the Trust
dated February 16, 1996 (to be voted upon at the Special Meeting of Shareholders
scheduled for April 19, 1996) has been approved and implemented, including,
without limitation, the reorganization of the Trust from a Massachusetts
business trust into a Delaware business trust, and the reclassification and/or
amendment of certain fundamental policies of various series of the Trust. This
Post-Effective Amendment also assumes the closing of the sale by the distributor
of its right to receive certain payments under its Distribution Agreement to a
financial institution in order to finance the distribution of the Class B
Shares. The financing transaction is expected to close on or before the
effective date of this Post-Effective Amendment. In addition, the introduction
of the Class B Shares discussed in this Post-Effective Amendment has been
delayed. The Class B Shares, which are currently expected to be available before
the effective date of this Post-Effective Amendment are not as of the date
hereof being offered.
<PAGE> 4
ZWEIG SERIES TRUST
CONTENTS
This Post-Effective Amendment No. 41 to the Registration Statement on Form N-1A
consists of the following:
1. Facing Sheet
2. Contents
3. Cross-Reference Sheet
4. Part A - Prospectus for all shares other than Class M Shares of
Zweig Cash Fund
- Prospectus for Class M Shares of Zweig Cash Fund
5. Part B - Statement of Additional Information for all shares other
than Class M Shares of Zweig Cash Fund
- Statement of Additional Information for Class M Shares of
Zweig Cash Fund
6. Part C - Other Information
7. Signature Sheet
8. Exhibits
<PAGE> 5
ZWEIG SERIES TRUST
Cross-Reference Sheet pursuant to Rule 495(a)
for all shares other than Class M Shares of the Zweig Cash Fund
<TABLE>
<CAPTION>
Form N-1A
Item No. Location
- --------- --------
<S> <C>
Part A - Prospectus
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights; Performance
Information
4. General Description of Registrant Zweig Series Trust; Organization of the
Funds; Portfolio Securities; Investment
Objectives of the Zweig Mutual Funds; Risk
Factors and Managing Exposure to Market
Risk; Stock Selection and Bond Duration;
Other Investment Policies
5. Management of the Registrant Risk Factors and Managing Exposure to
Market Risk; Dr. Martin E. Zweig; The
Portfolio Managers; The Manager and
Management Fee
5A. Management's Discussion of Fund Performance Information
Performance
6. Capital Stock and Other Securities Organization of the Funds; Net Asset
Value; Distributions and Taxes; Choosing
Among Classes of Shares
7. Purchase of Securities Being Offered How to Invest in the Zweig Mutual Funds;
Choosing Among Classes of Shares; Net
Asset Value; Distributions and Taxes
8. Redemption or Repurchase Choosing Among Classes of Shares; How to
Redeem your Shares; Exchange Privilege
9. Legal Proceedings Not Applicable
</TABLE>
-i-
<PAGE> 6
Part B - Statement of Additional
Information
<TABLE>
<S> <C>
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
13. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions
14. Management of the Fund Trustees and Officers of the Trust
15. Control Persons and Principal Trustees and Officers of the Trust;
Holders of Securities Control Persons and Principal Holders
of Securities
16. Investment Advisory and Other Investment Management and Other Services
Services
17. Brokerage Allocation and Other Portfolio Transactions and Brokerage
Practices
18. Capital Stock and Other Securities Purchase and Redemption of Shares
19. Purchase, Redemption and Pricing of Purchase and Redemption of Shares; Net
Securities Being Offered Asset Value and Taxes
20. Tax Status Net Asset Value and Taxes
21. Underwriters Investment Management and Other Services
22. Calculation of Performance Data Yield and Performance Information
23. Financial Statements Financial Statements
</TABLE>
-ii-
<PAGE> 7
ZWEIG SERIES TRUST
Cross-Reference Sheet pursuant to Rule 495(a)
for Class M Shares of the Zweig Cash Fund
<TABLE>
<CAPTION>
Form N-1A
Item No. Location
- --------- --------
<S> <C>
Part A - Prospectus for Class M Shares of
Zweig Cash Fund
1. Cover Page Cover Page
2. Synopsis Fee Table
3. Condensed Financial Information Financial Highlights; Performance
Information
4. General Description of Registrant Organization and Management; The Fund's
Investments and Risk Factors
5. Management of the Registrant Organization and Management; How to Buy
Shares
6. Capital Stock and Other Securities Organization and Management; Net Asset
Value, Distributions and Taxes; How to Buy
Shares
7. Purchase of Securities Being Offered How to Buy Shares; Net Asset Value,
Distributions and Taxes
8. Redemption or Repurchase How to Redeem Shares
9. Legal Proceedings Not Applicable
Part B - Statement of Additional
Information for Class M Shares of Zweig
Cash Fund
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History Not Applicable
</TABLE>
-iii-
<PAGE> 8
<TABLE>
<S> <C>
13. Investment Objectives and Policies Investment Objective and Policies;
Investment Restrictions
14. Management of the Fund Trustees and Officers of the Trust
15. Control Persons and Principal Trustees and Officers of the Trust;
Holders of Securities Control Persons and Principal Holders
of Securities
16. Investment Advisory and Other Investment Management and Other Services
Services
17. Brokerage Allocation and Other Portfolio Transactions
Practices
18. Capital Stock and Other Securities How to Purchase and Redeem Shares
19. Purchase, Redemption and Pricing of How to Purchase and Redeem Shares; Net
Securities Being Offered Asset Value and Taxes
20. Tax Status Net Asset Value and Taxes
21. Underwriters Investment Management and Other Services
22. Calculation of Performance Data Yield and Performance Information
23. Financial Statements Financial Statements
</TABLE>
Part C
Information required to be included in Part C is set forth under the
appropriate item, so numbered, in Part C to this Post-Effective Amendment No. 41
to the Registration Statement on Form N-1A.
-iv-
<PAGE> 9
ZWEIG
SERIES TRUST
PROSPECTUS
ZWEIG STRATEGY FUND
ZWEIG APPRECIATION FUND
ZWEIG MANAGED ASSETS
ZWEIG GOVERNMENT FUND
ZWEIG CASH FUND
May 1, 1996
Zweig Series Trust offers investors the opportunity to invest in one or more of
five mutual funds. The five funds, or series, of the Trust, are:
- - Zweig Strategy Fund
- - Zweig Appreciation Fund
- - Zweig Managed Assets
- - Zweig Government Fund
- - Zweig Cash Fund
Each fund has its own investment objectives and policies. A shareholder's
interest is limited to the fund in which she or he owns shares.
The funds are designed for investors who intend to invest for the long term,
including those who wish to purchase shares for tax-qualified retirement plans
and Individual Retirement Accounts (IRAs). The funds are not appropriate for
investors who intend to liquidate their investment after a short period of time.
Each fund offers three classes of shares: Class A, Class B and Class C Shares.
Investors in Class A Shares pay an initial sales charge. Investors in Class B
Shares pay no initial sales charge, but are subject to a declining contingent
deferred sales charge (CDSC) if they sell their shares within six years of
purchase. Investors in Class C Shares pay no initial sales charge, but are
subject to a CDSC if they sell their shares within one year of purchase. Class B
and Class C Shares have higher annual operating expenses than Class A Shares.
Class B Shares convert to Class A Shares after a holding period of seven years
from the initial purchase. Class C Shares have a shorter CDSC period than Class
B Shares, but they do not convert to Class A Shares. When choosing among classes
of shares, you should consider the amount of the purchase, the planned length of
time for the investment and other relevant circumstances. Zweig Cash Fund, a
money market fund, also offers Class M Shares, which are described in a separate
prospectus.
Zweig/Glaser Advisers is the investment manager of the funds. Zweig Securities
Corp. is the principal distributor of the funds' shares.
Shares of the Zweig Mutual Funds are not deposits or obligations of, or
guaranteed, endorsed or insured by, the U.S. Government, any bank, the Federal
Deposit Insurance Corp., the Federal Reserve Board, or any other agency, entity
or person. There can be no assurance that the Zweig Cash Fund will be able to
maintain a stable net asset value of $1.00 a share.
This Prospectus contains important information that you should know before
investing. Please keep it for future reference. A Statement of Additional
Information (SAI) dated May 1, 1996, has been filed with the Securities and
Exchange Commission. The SAI is incorporated by reference into this Prospectus.
You can obtain a copy without charge by calling 1-800-272-2700.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Zweig Series Trust
5 Hanover Square-17th Floor
New York, NY 10004
1-800-272-2700
i
<PAGE> 10
FEE TABLE
We've provided the following table to help you understand the expenses
of investing in the Zweig Mutual Funds. Mutual fund investors bear two types of
expenses: transaction expenses and operating expenses. You pay transaction
expenses when you buy shares in a fund. The fund as a whole pays operating
expenses, which reduce the fund's annual return to you.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
SHARES SHARES SHARES
------ ------ ------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Initial Sales Charge on purchases
(as % of Offering Price)
Zweig Strategy Fund, Zweig Appreciation Fund and
Zweig Managed Assets............................. 5.50% None None
Zweig Government Fund............................. 4.75% None None
Zweig Cash Fund................................... None* None None
Maximum Contingent Deferred Sales Charge (CDSC)...... None** 5.00%*** 1.25%****
</TABLE>
- ---------------
* Sales charges apply on exchanges of Class A Shares of Zweig Cash Fund
(on which no initial sales charge was paid) for Class A Shares of any
other fund.
** A 1% CDSC is imposed on redemptions within 18 months of purchases of $1
million or more as described in "Quantity discounts on Class A Shares,"
except for shares of Zweig Cash Fund originally purchased without an
initial sales charge.
*** The maximum CDSC is imposed on Class B Shares redeemed in the first
year. For shares held longer than one year, the CDSC declines according
to the schedules set forth under "Class B Shares" in this Prospectus.
**** The CDSC on Class C Shares applies only if redemption occurs in the
first year.
EXAMPLES -- The table below is based on operating expenses for the last fiscal
year for Class A Shares and Class C Shares. The Class B Shares expenses are
based on estimated expenses that would have been incurred if Class B Shares had
been in existence for such fiscal year. The table does not represent future
expense levels, which may be greater or less than those shown. Federal
regulations require the examples to assume a 5% annual return, but actual annual
returns have varied as shown in the column headed "Total Return" in the table on
the following page.
ii
<PAGE> 11
ANNUAL FUND
OPERATING EXPENSES
(As % of average net assets)
<TABLE>
<CAPTION>
EXAMPLE: You would pay the EXAMPLE: You would pay the
following expenses on a $1,000 following expenses on a $1,000
investment assuming (1) 5% investment assuming (1) 5%
annual return and annual return and (2) no
(2) redemption at the end of redemption:
each time period:
Fund Management 12b-1 Other Total Fund 1 3 5 10 1 3 5 10
Fees Fees(2) Expenses Operating Year Years Years Years Year Years Years Years
Expenses
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CLASS A SHARES
Zweig Strategy Fund...... .75% .30% .22% 1.27% $67 $ 93 $121 $200 $67 $93 $121 $200
Zweig Appreciation Fund.. 1.00 .30 .33 1.63 71 104 139 238 71 104 139 298
Zweig Managed Assets..... 1.00 .30 .29 1.59 70 102 137 234 70 102 137 234
Zweig Government Fund.... .60 .30 .36 1.26 60 86 113 193 60 86 113 193
Zweig Cash Fund.......... .50 .30 (.15) .65(1) 7 21 36 81 7 21 36 81
CLASS B SHARES
Zweig Strategy Fund...... .75 1.00 .22 1.87 70 92 126 203(3) 20 62 106 203(3)
Zweig Appreciation Fund.. 1.00 1.00 .33 2.33 74 103 145 244(3) 24 73 125 241(3)
Zweig Managed Assets..... 1.00 1.00 .29 2.29 73 102 143 237(3) 23 72 123 233(3)
Zweig Government Fund.... .60 1.00 .36 1.96 70 92 126 202(3) 20 62 106 202(3)
Zweig Cash Fund.......... .50 1.00 (.15) 1.35(1) 64 73 94 134(3) 14 43 74 134(3)
CLASS C SHARES
Zweig Strategy Fund...... .75 1.00 .22 1.97 33 62 106 230 20 62 106 230
Zweig Appreciation Fund.. 1.00 1.00 .33 2.33 36 73 125 267 24 73 125 267
Zweig Managed Assets..... 1.00 1.00 .29 2.29 36 72 123 263 23 72 123 263
Zweig Government Fund.... .60 .75 .36 1.71 30 54 93 202 17 54 93 202
Zweig Cash Fund.......... .50 .30 .15 .65(1) 19 21 36 81 7 21 36 81
</TABLE>
- ---------------
(1) The manager has voluntarily undertaken to limit the expenses of Zweig
Cash Fund (exclusive of taxes, interest, brokerage commissions, certain
distribution fees and extraordinary expenses) to 0.35% of its average
net assets effective November 9, 1995. The manager reserves the right
to discontinue this policy at any time.
(2) The 12b-1 Fees include a 0.25% Service Fee, 100% of which is
reallocated to National Association of Securities Dealers, Inc.
("NASD") member firms (commencing one year after purchase with respect
to Class B and Class C Shares) for continuous personal service by such
members to investors in the Trust, such as responding to shareholder
inquiries, quoting net asset values, providing current marketing
materials and attending to other shareholder matters. The distributor
retains a portion of the asset based sales charge also included in the
12b-1 Fees; the remainder is paid to brokers for promoting sales of the
Trust's shares. The NASD limits asset based sales charges to 6.25% of
new sales, plus interest. Long-term shareholders may pay more than the
economic equivalent of the maximum front-end sales charges permitted by
the NASD.
(3) Class B Shares automatically convert to Class A Shares after seven
years (see Class B Shares Conversion Feature). Years eight through ten
reflect expenses of the Class A Shares.
iii
<PAGE> 12
FINANCIAL HIGHLIGHTS
The following table sets forth financial history for a Class A Share
and Class C Share of each of the Zweig Mutual Funds. The distribution of Class B
Shares commenced on March __, 1996.
Coopers & Lybrand L.L.P., the funds' independent accountants, has
audited this information. Their report for each of the last five years is
included in the 1995 Annual Report of the Trust. The report is available upon
request and is incorporated by reference into the Statement of Additional
Information (SAI).
iv
<PAGE> 13
<TABLE>
<CAPTION>
Year Net Asset Net Net Total from Dividends Distribu- Distribu- Total
Ended Value Investment Realized Investment from Net tions from tions from Distribu-
- ----- Beginning Income and Operations Investment Realized Capital tions
of Year ------ Unrealized ---------- Income Capital Paid-In -----
------- Gains ------ Gains -------
(Losses) -----
--------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND CLASS A
1995 $12.36 $0.27 $2.80 $3.07 $(0.37) $(0.55) $-- $(0.92)
1994 12.52 0.24 (0.10) $0.14 (0.20) (0.10) -- (0.30)
1993 13.60 0.13 1.72 1.85 (0.12) (2.81) -- (2.93)
1992 13.03 0.17 0.80 0.97 (0.21) (0.19) -- (0.40)
1991 10.81 0.21 2.27 2.48 (0.26) -- -- (0.26)
1990 11.36 0.42 (0.67) (0.25) (0.30) -- -- (0.30)
1989(1) 11.34 -- 0.02 0.02 -- -- -- --
ZWEIG STRATEGY FUND CLASS C
1995 12.35 0.16 2.82 2.98 (0.22) (0.55) -- (0.77)
1994 12.51 0.15 (0.10) 0.05 (0.11) (0.10) -- (0.21)
1993 13.61 0.05 1.71 1.76 (0.05) (2.81) -- (2.86)
1992(2) 12.89 0.08 0.69 0.77 (0.05) -- -- (0.05)
ZWEIG APPRECIATION FUND CLASS A
1995 13.54 0.16 3.05 3.21 (0.33) (0.51) -- (0.84)
1994 14.33 0.16 (0.43) (0.27) (0.06) (0.46) -- (0.52)
1993 13.10 0.07 1.83 1.90 (0.06) (0.61) -- (0.67)
1992 12.03 0.06 1.07 1.13 (0.03) (0.03) -- (0.06)
1991(3) 11.34 0.03 0.66 0.69 -- -- -- --
ZWEIG APPRECIATION FUND CLASS C
1995 13.36 0.06 3.03 3.09 (0.11) (0.51) -- (0.62)
1994 14.19 0.06 (0.43) (0.37) -- (0.46) -- (0.46)
1993 13.01 (0.01) 1.80 1.79 -- (0.61) -- (0.61)
1992(2) 12.33 (0.02) 0.70 0.68 -- -- -- --
ZWEIG MANAGED ASSETS CLASS A
1995 11.76 0.47 1.40 1.87 (1.03) (0.12) -- (1.15)
1994 12.38 0.33 (0.69) (0.36) (0.26) -- -- (0.26)
1993(4) 11.34 0.22 1.13 1.35 (0.14) (0.17) -- (0.31)
ZWEIG MANAGED ASSETS CLASS C
1995 11.73 0.38 1.40 1.78 (0.90) (0.12) -- (1.02)
1994 12.36 0.23 (0.68) (0.45) (0.18) -- -- (0.18)
1993(4) 11.34 0.15 1.13 1.28 (0.09) (0.17) -- (0.26)
ZWEIG GOVERNMENT FUND CLASS A
1995 9.63 0.52 0.77 1.29 (0.53) -- -- (0.53)
1994 10.43 0.50 (0.79) (0.29) (0.51) -- -- (0.51)
1993 10.01 0.55 0.46 1.01 (0.59) -- -- (0.59)
1992 10.21 0.65 (0.22) 0.43 (0.63) -- -- (0.63)
1991 9.60 0.68 0.62 1.30 (0.69) -- -- (0.69)
1990 9.75 0.70 (0.15) 0.55 (0.70) -- -- (0.70)
1989 9.29 0.66 0.46 1.12 (0.66) -- -- (0.66)
</TABLE>
<TABLE>
<CAPTION>
Ratios to Average Net
Assets
---------------------
Year Net Asset Total Expenses Net Portfolio End of Year
Ended Value End Return -------- Investment Turnover Net Assets
- ----- of Year ------ Income Rate (in
------- ------ ---- thousands)
----------
<S> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND CLASS A
1995 $14.51 25.12% 1.27% 1.92% 95% $558,286
1994 12.36 1.14 1.40 1.90 70 $424,805
1993 12.52 14.97 1.43 1.00 359 405,884
1992 13.60 7.61 1.63 1.32 249 358,318
1991 13.03 23.34 1.58 1.79 179 367,343
1990 10.81 (2.16) 1.67 3.89 105 298,734
1989(1) 11.36 0.18 N/A N/A N/A 333,391
ZWEIG STRATEGY FUND CLASS C
1995 14.56 24.26 1.97 1.22 95 530,300
1994 12.35 0.41 2.10 1.20 70 307,011
1993 12.51 14.18 2.13 0.30 359 188,631
1992(2) 13.61 6.00 2.43* 0.40* 249 64,697
ZWEIG APPRECIATION FUND CLASS A
1995 15.91 24.00 1.63 1.10 68 272,590
1994 13.54 (1.83) 1.70 1.09 97 213,400
1993 14.33 14.65 1.73 0.52 69 230,230
1992 13.10 9.52 1.96 0.49 61 200,656
1991(3) 12.03 6.08 2.19* 1.27* 8 157,948
ZWEIG APPRECIATION FUND CLASS C
1995 15.83 23.20 2.33 0.40 68 195,204
1994 13.36 (2.55) 2.40 0.39 97 139,397
1993 14.19 13.84 2.43 (0.18) 69 105,957
1992(2) 13.01 5.52 2.80* (0.32)* 61 42,089
ZWEIG MANAGED ASSETS CLASS A
1995 12.48 16.26 1.59 3.69 239 141,110
1994 11.76 (2.93) 1.68 2.70 299 154,441
1993(4) 12.38 11.98 1.67* 1.93* 196 121,620
ZWEIG MANAGED ASSETS CLASS C
1995 12.49 15.44 2.29 2.99 239 527,432
1994 11.73 (3.66) 2.38 2.00 299 570,710
1993(4) 12.36 11.34 2.37* 1.23* 196 429,088
ZWEIG GOVERNMENT FUND CLASS A
1995 10.39 13.84 1.26 5.22 195 42,207
1994 9.63 (2.83) 1.28 5.07 191 47,622
1993 10.43 10.35 1.30 5.46 256 60,207
1992 10.01 4.51 1.30 6.58 200 70,062
1991 10.21 14.35 1.42 7.10 361 83,859
1990 9.60 6.09 1.44 7.44 263 102,209
1989 9.75 12.46 1.88 7.04 445 119,742
</TABLE>
v
<PAGE> 14
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1988 9.54 0.68 (0.25) 0.43 (0.68) -- -- (0.68) 9.29 4.63 1.91 7.27 24 203,999
1987 10.70 0.70 (0.92) (0.22) (0.70) (0.11) (0.13) (0.94) 9.54 (2.02) 1.81 7.09 58 350,614
1986 10.87 0.76 0.28 1.04 (0.92) (0.29) -- (1.21) 10.70 10.23 1.87 6.93 169 421,837
ZWEIG GOVERNMENT FUND CLASS C
1995 9.62 0.48 0.76 1.24 (0.48) -- -- (0.48) 10.38 13.27 1.71 4.77 195 19,778
1994 10.40 0.46 (0.79) (0.33) (0.45) -- -- (0.45) 9.62 (3.18) 1.73 4.62 191 22,599
1993 10.02 0.52 0.41 0.93 (0.55) -- -- (0.55) 10.40 9.48 1.75 5.01 256 21,301
1992(2) 9.86 0.52 0.09 0.61 (0.45) -- -- (0.45) 10.02 6.31 1.81* 5.93* 200 9,210
ZWEIG CASH FUND CLASS A(5)
1995 1.00 0.05 -- 0.05 (0.05) -- -- (0.05) 1.00 5.08 0.87% 4.97% N/A 3,661
1994(6) 1.00 0.03 -- 0.03 (0.03) -- -- (0.03) 1.00 2.55%** 0.62%** 2.52%** N/A 4,303
ZWEIG CASH FUND CLASS C(5)
1995 1.00 0.05 -- 0.05 (0.05) -- -- (0.05) 1.00 5.08 0.87 4.97 N/A 4,458
1994(6) 1.00 0.03 -- 0.03 (0.03) -- -- (0.03) 1.00 2.55** 0.61** 2.52** N/A 5,040
</TABLE>
- ---------------
(1) Commenced operations December 29, 1989.
(2) Commenced operations February 4, 1992.
(3) Commenced operations October 7, 1991.
(4) Commenced operations February 8, 1993.
(5) During 1995, the manager voluntarily reimbursed Zweig Cash Fund Class A and
Class C $.005 and $.003 per share (.47% and .28% ratio of operating expenses
to average net assets), respectively.
(6) Commenced operations May 1, 1994.
* Annualized.
** Not annualized.
vi
<PAGE> 15
ZWEIG SERIES TRUST
Zweig Series Trust offers investors the opportunity to pool their money to
achieve the benefits of a mutual fund: economies of scale, diversification and
professional money management. Economies of scale result in lower costs per
investor, due to the large number of investors sharing the expenses of the
funds. Investors can achieve greater diversification in a mutual fund than they
could by investing in individual securities. The Trust offers investors access
to the professional investment expertise of Zweig/Glaser Advisers, the manager.
Dr. Martin E. Zweig, Ph.D., is Chairman of the manager and President of the
Trust.
INVESTMENT OBJECTIVES OF THE ZWEIG MUTUAL FUNDS
ZWEIG STRATEGY FUND seeks long-term capital appreciation through investment
primarily in "Blue Chip Stocks" (see Portfolio Securities), consistent with
preservation of capital and reduction of portfolio exposure to market risk. The
fund is managed using risk management strategies and a stock selection model
developed by Dr. Zweig and his staff.
Dr. Zweig's risk management strategies rely on a series of monetary, sentiment
and market indicators. The indicators measure risk levels in the stock and bond
markets. As the indicators point to increasing levels of market risk, the
portfolio manager reduces, or can off-set entirely, the fund's market exposure
by gradually selling portions of the fund's stock holdings and buying cash
equivalents, such as money market securities. Stock index futures or options
also may be used as a means of adjusting the fund's exposure to market risk,
but not for the purpose of leverage (see Risk Factors and Managing Exposure to
Market Risk). Under normal conditions, Dr. Zweig's investment models will not
reallocate more than 10% of a fund's assets among asset classes at any one
time.
ZWEIG APPRECIATION FUND seeks long-term capital appreciation through investment
primarily in "Small Company Stocks" (see Portfolio Securities), consistent with
preservation of capital and reduction of portfolio exposure to market risk.
Current income is not an objective. Under normal circumstances, the fund will
have between 50% and 65% of its invested assets in Small Company Stocks and may
invest up to 35% in large company stocks. The risk management strategies
described in the preceding paragraph also are used in managing this fund.
ZWEIG MANAGED ASSETS seeks a high level of total return over the long-term from
capital appreciation, dividends and interest, with a reduction of portfolio
exposure to market risk by allocating its assets among domestic and foreign
stocks, bonds, short-term debt instruments, currencies and currency-related
instruments. Up to 50% of the fund's assets may be invested in foreign
securities, as conditions warrant (see Portfolio Securities). The asset
allocation mix will be determined using risk management strategies and
investment models developed by Dr. Zweig and his staff.
The fund's assets will normally be allocated within the following parameters:
0-60% in stocks, 0-60% in bonds and 0-100% in short- term debt instruments. A
neutral mix will consist of 35% stocks, 35% bonds and 30% cash equivalents.
This will occur when the research indicates that conditions do not favor one
asset class over another. The fund may use futures and forward currency
contracts and options to increase or decrease its exposure to changing
securities prices, interest rates or currency exchange rates.
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<PAGE> 16
Zweig Government Fund seeks a high total return from current income and capital
appreciation consistent with preservation of capital over the long term by
investing primarily in U.S. Government and agency securities, including
Government National Mortgage Association mortgage-backed certificates, and
repurchase agreements collateralized by such securities. The fund may use
futures contracts and options as a means of hedging against changes in interest
rates.
ZWEIG CASH FUND seeks high current income consistent with maintaining liquidity
and preserving capital. The goal of the fund is to maintain a stable share
price of $1.00. The fund invests exclusively in short-term securities issued or
guaranteed as to the payment of principal and interest by the U.S. Government,
its agencies or instrumentalities and repurchase agreements collateralized by
such obligations. Zweig Cash Fund also offers Class M Shares which are
described in a separate Prospectus. Class M Shares have different distribution
fees and expenses, which may affect performance. You may obtain more
information about Class M Shares by calling 1-800-272-2700. Class M Shares of
Zweig Cash Fund have no exchange privileges with other funds in the Trust.
The investment objectives described in the first sentence under the name of
each fund above, except for those of Zweig Managed Assets, are fundamental.
They can be changed only by vote of a majority of the outstanding shares of a
fund. A majority for this purpose is defined as the lesser of either: (a) 67%
of the shares represented at a meeting if more than 50% of all shares are
represented, or (b) more than 50% of all outstanding shares. We do not
anticipate that Zweig Managed Assets will change its objectives or alter its
"neutral" asset mix. If the fund should change its investment objective, we
will notify shareholders 30 days prior to making the change.
Please read the Risk Factors and Managing Exposure to Market Risk, Stock
Selection and Bond Duration and Portfolio Securities sections of this
prospectus for more detailed information about the investment practices of each
fund. The SAI has further details. As with any mutual fund, there is no
assurance that a fund's objectives will be achieved.
DR. MARTIN E. ZWEIG
Dr. Martin E. Zweig has created and refined a risk-averse style of money
management over a 25-year career providing investment advisory and portfolio
management services. Investment advisers affiliated with Dr. Zweig presently
manage over $10.3 billion of assets. This $10.3 billion includes approximately
$4.2 billion in institutional accounts, $1.2 billion in publicly traded
closed-end investment companies and $2.4 billion in open-end mutual funds, as
well as other accounts.
Dr. Zweig is the Chairman of the manager and President of the Trust. He has
been a regular panelist on PBS television's Wall Street Week with Louis
Rukeyser for 22 years and, in 1992, became the ninth person selected for the
program's Hall of Fame. Dr. Zweig is the author of various investment advisory
newsletters, including The Zweig Forecast. He is also the author of the books
Winning on Wall Street, The ABCs of Market Forecasting and Winning with New
IRAs.
Dr. Zweig determines the asset allocation strategy for each of the Zweig Mutual
Funds; he does not select the individual securities to implement the strategy.
The portfolio manager
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<PAGE> 17
of each individual fund selects the specific securities for that fund (see
Stock Selection and Bond Duration).
THE PORTFOLIO MANAGERS
David Katzen has been the portfolio manager for Zweig Strategy Fund and Zweig
Appreciation Fund since their inceptions. Mr. Katzen is a Senior Vice President
of the funds. He has been with the Zweig Organization since 1986. Mr. Katzen
received his B.A. in Mathematics from City University of New York and an M.A.
in Mathematics from Dartmouth College, where he was admitted to the Ph.D.
program.
Carlton Neel became the portfolio manager for Zweig Managed Assets and Zweig
Government Fund on July 5, 1995. Mr. Neel is a First Vice President of the
funds. Mr. Neel received a dual B.A. in Economics and Political Science from
Brown University. Prior to joining the Zweig Organization, he was a Vice
President with J.P. Morgan & Co., Inc.
STOCK SELECTION AND BOND DURATION
The portfolio manager of the Zweig Strategy Fund and Zweig Appreciation Fund
uses a proprietary computer-driven model developed by Dr. Zweig and his staff
to choose stocks for the funds. The model evaluates and ranks 3,000 stocks
based primarily upon earnings momentum, relative valuation, changes in
analysts' earnings estimates and price momentum. The stock selection model may
evolve or be replaced by other techniques intended to select stocks with the
potential for growth. We will notify shareholders of any material change to the
stock selection model.
Out of the 1,400 most liquid stocks, the portfolio manager selects up to 300
stocks for the Zweig Strategy Fund. The manager of the Zweig Appreciation Fund
selects a larger number of stocks (presently more than 600) primarily from the
2,500 stocks immediately after the 500 largest stocks ranked by market
capitalization or trading volume. The Appreciation Fund also may invest up to
35% of its assets in large-company stocks.
U.S. stocks in Zweig Managed Assets are selected using a model that is
comprised of industry specific background indicators and momentum components.
These indicators determine the optimal weighting in each major industry group.
The selection of the individual securities is determined by ranking
approximately 750 stocks the portfolio manager considers to be comparable in
market capitalization and liquidity to the stocks in the Standard & Poor's 500
Index. Up to 200 stocks are selected in accordance with the weightings of the
industry groups.
Zweig Government Fund invests in U.S. Government securities. These obligations
of the United States Government and its agencies and instrumentalities are
considered to have minimal risk of default. Therefore, the primary
consideration in choosing bonds is managing risks related to changes in
interest rate levels. A bond's duration measures its sensitivity to changes in
interest rates (interest rate risk). In concept, duration is the weighted
average "maturity" of all cash flows of a bond (the interest payments as well
as the principal repayment). The longer the duration, the greater the bond's
price movement will be as rates change. The portfolio manager adjusts duration
by altering the mix of short, medium and long-term bonds, and by buying or
selling Treasury futures contracts.
Investments for the Zweig Government Fund are chosen primarily by utilizing a
model that incorporates various indicators, such as: momentum of bond prices,
short-term
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<PAGE> 18
interest rate trends, inflation indicators, general economic and liquidity
indicators, and other market indicators and statistics.
Each foreign country in which Zweig Managed Assets intends to invest has a
currency model, as well as stock and bond models similar to those used for
determining the domestic asset allocation strategy. Zweig Managed Assets
presently invests only in groups of foreign stocks that, in the aggregate, are
expected to perform similarly to the major stock market index of the country in
which the stocks are located and in country funds.
PORTFOLIO SECURITIES
The securities described below may be used in pursuit of a fund's investment
objectives. Percentage limitations on investments are considered at the time of
purchase; the sale of portfolio securities is not required in the event of a
subsequent change in value or in a fund's net assets.
STOCKS and other equity securities represent an ownership interest in a
company. Securities in this category include common stocks, fixed-rate
preferred stocks, bonds convertible into equity securities, warrants, rights,
depository receipts and other equity securities. Common stocks have a history
of long-term growth in value. However, stock prices fluctuate in response to
general market and economic conditions, as well as to factors affecting
individual companies. Zweig Government Fund and Zweig Cash Fund may not invest
in stocks.
"BLUE CHIP STOCKS" (the primary investments of Zweig Strategy Fund)
are stocks with a minimum market capitalization (the total value of
their shares) of $400 million, average daily trading volume of 50,000
shares or $425 million of total assets, that the portfolio manager
considers to be comparable to the stocks included in the Standard &
Poor's 500 Index. Blue Chip Stocks are traded on the New York Stock
Exchange (NYSE), the American Stock Exchange (AMEX), over the counter
(OTC) or on foreign exchanges.
"SMALL COMPANY STOCKS" (the primary investments of Zweig Appreciation
Fund) are the 2,500 stocks traded on the NYSE, AMEX or OTC that are
positioned immediately after the 500 largest stocks ranked in terms of
market capitalization and/or trading volume. Presently, the market
capitalization of the 2,500 stocks ranges between approximately $100
million and $2.5 billion. Their average daily trading volume is
approximately $2.3 million. Small Company Stocks historically have
presented greater potential for capital appreciation and greater risk,
and they tend to be more volatile, than stocks of larger, more
established companies.
BONDS and other debt instruments represent a loan from the investor to the
issuer of the security. The issuer pays the investor a fixed or variable rate
of interest and must repay the amount borrowed when the bond matures. The value
of bonds and other debt instruments fluctuates primarily based on the maturity
and coupon (interest rate), changes in the general level of interest rates, and
the credit quality of the issuer. Zweig Strategy Fund may not invest in
bonds. Zweig Appreciation Fund may invest only in U.S. Government securities
with remaining maturities of five years or less. Zweig Managed Assets may
invest in foreign and domestic bonds rated "A" or higher by Moody's Investors
Service, Inc. or Standard & Poor's Corporation, or if unrated, the bonds must
be judged by the portfolio manager to be of comparable quality.
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<PAGE> 19
U.S. GOVERNMENT SECURITIES are debt instruments issued or guaranteed
by the U.S. Treasury or by a U.S. Government agency or
instrumentality. Not all U.S. Government securities are backed by the
full faith and credit of the United States. Some are supported only by
the credit of the agency or instrumentality that issued them. Agencies
and instrumentalities include: Bank for Cooperatives, Export-Import
Bank of the U.S., Farmers Home Administration, Federal Financing Bank,
Federal Home Loan Banks, Federal Home Loan Mortgage Corp., Federal
Housing Administration, Federal Intermediate Credit Banks, Federal
Land Banks, Federal National Mortgage Association, Government National
Mortgage Association (GNMA), Resolution Funding Corp., Student Loan
Marketing Association, Tennessee Valley Authority and U.S. Postal
Service.
MORTGAGE SECURITIES are debt instruments that include mortgage-backed
securities (for example, GNMA certificates) and collateralized
mortgage obligations. In addition to price fluctuations based on
changes in interest rates and the market's perception of the issuer,
mortgage securities also are subject to prepayment risk which can
result in the proceeds being reinvested at a lower rate of interest
and loss of any premium. This typically occurs when large numbers of
homeowners refinance their mortgages at lower rates.
Money market instruments are short-term, high quality debt securities that
present minimal risk of loss. We use these securities for defensive purposes --
to reduce fluctuations in a fund's net asset value -- and often refer to them
as "cash" or "cash equivalents". Money market securities include: short-term
U.S. Government obligations, commercial paper, other short-term corporate
obligations, bank deposits (including time deposits with a maturity of less
than 1 year) and other financial institution obligations.
REPURCHASE AGREEMENTS are arrangements by which a fund buys a security at one
price and at the same time agrees to sell the security back to the seller at a
higher price, usually on the next business day (or within seven days for
foreign repurchase agreements). Repurchase agreements offer a means of
generating income from excess cash that a fund might otherwise hold. Delays in
payment or losses may result if the other party to the agreement defaults or
becomes bankrupt. A fund will enter into repurchase agreements only with member
banks of the Federal Reserve System or primary dealers in U.S. Government
securities. The fund's repurchase agreements must be fully backed by collateral
(U.S. Government securities in the case of the Zweig Government Fund and Zweig
Cash Fund) that is marked to market, or priced, each day.
FOREIGN STOCKS AND BONDS may involve additional risks. These include currency
fluctuations and risks related to political and economic conditions in foreign
countries. These factors could make foreign investments less liquid and more
volatile. Foreign companies may not be subject to accounting standards or
governmental supervision comparable to U.S. companies, and there may be less
public information about their operations. Foreign investments also may be
subject to possible nationalization of issuers or expropriation of their
assets, which would adversely affect a fund's ability to liquidate its
investment. Zweig Government Fund and Zweig Cash Fund may not invest in foreign
securities. The other Zweig Mutual Funds may invest in foreign securities and
American depository receipts that are publicly traded in the U.S. In addition,
Zweig Strategy Fund and Zweig Appreciation Fund may invest up to 15% of
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their assets in foreign securities not publicly traded in the U.S. Zweig
Managed Assets may invest up to 50% of its assets in foreign securities not
publicly traded in the U.S., but not more than 15% of its assets in any one
country.
ILLIQUID AND RESTRICTED SECURITIES may be difficult to sell promptly at an
acceptable price, or may be sold only pursuant to certain legal restrictions.
Difficulty in selling securities may result in a loss or entail expenses not
normally associated with the sale of a portfolio security. Illiquid
securities include securities not listed on a recognized foreign securities
exchange and repurchase agreements having more than seven days remaining to
maturity. Not more than 15% of a fund's net assets (10% for Zweig Cash Fund)
may be invested in illiquid securities.
INDEXED SECURITIES are securities whose value depends on the price of
securities indexes, other securities, foreign currencies or other assets. Among
the more traditional indexed securities are futures and options. Futures and
options are standardized contracts that have been used by mutual funds for many
years to manage their portfolios more efficiently. Index futures, for example,
enable the manager to position assets in the market immediately, with a modest
margin deposit (roughly 5% to 10% of the position size) to simulate a much
larger invested position. Transaction costs also may be lower than purchasing
or selling the underlying securities. A fund will purchase or sell indexed
securities for hedging purposes only, including increasing or decreasing
exposure to changing securities prices, but not to leverage assets. (See Risk
Factors and Managing Exposure to Market Risk.)
RISK FACTORS AND MANAGING EXPOSURE TO MARKET RISK
Investing in stocks and bonds, directly or through a mutual fund, involves
risks that are not found in federally insured money market and savings accounts
and CDs. The most significant is the risk of losing your principal. The prices
of individual stocks and bonds, and markets as a whole, move up and down.
Markets move based on economic factors such as interest rates and market
conditions such as investor sentiment. Individual stock or bond prices also are
affected by results of the issuer's operations and factors peculiar to its
industry.
Diversification can reduce the risks of investing. Diversifying includes
limiting the amount invested in any one company or, on a broader scale,
limiting the amount invested in any one industry, any one class of assets (e.g.
stocks) or any one country. The funds' Annual and Semi-annual Reports to
Shareholders detail the holdings of each fund. Call 1-800-272-2700 to obtain
the most recent Report.
Like most mutual funds, the Zweig Mutual Funds use diversification to minimize
the effect of a loss in any one investment. U.S. Government securities (the
primary investments of Zweig Government Fund and Zweig Cash Fund) avoid the
risks related to factors affecting a particular company or industry, but they
do not eliminate market (interest rate) risk.
Unlike most mutual funds, the Zweig Mutual Funds also manage exposure to market
risk by significantly adjusting the amount of a fund's assets that are invested
in stocks or bonds and the duration (risk) of a bond portfolio. While the Zweig
Funds manage exposure to risk, we cannot eliminate risk.
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We manage the Zweig Mutual Funds by diversifying portfolios very broadly (other
than funds comprised of U.S. Government securities) and by increasing or
reducing the amount of the fund's assets that are invested in stocks or bonds,
using the strategies developed by Dr. Zweig and his associates. As the research
indicates that risk levels are rising in the stock and/or bond markets, the
portfolio manager gradually sells a portion of each fund's stocks and/or bonds
and buys money market securities. As the research shows decreasing levels of
risk in stocks and/or bonds, the portfolio manager sells some of the money
market securities and buys stocks and/or bonds. The shifts in the asset mix of
a fund are made incrementally. Under normal conditions, a fund will not adjust
its asset mix by more than 10% at any one time.
In addition to buying and selling money market securities, the portfolio
manager may use other methods to increase or reduce market exposure. The
portfolio manager may buy or sell futures contracts and options. He also may
sell short and enter into currency exchange contracts. These strategies allow
the fund to increase or decrease its exposure to changes in interest rates,
exchange rates and movements in stock prices. Used cautiously, they may be
effective tools that lend greater stability to fund assets. They may also help
to reduce the cost of administering a portfolio and allow managers to buy and
sell relatively large positions without distorting prices. The portfolio
managers use these techniques to adjust the risk and return characteristics of
a fund. They do not use these practices to leverage the fund. If a manager
misjudges market conditions or employs a strategy that does not correlate well
with the fund's primary investments, use of these techniques may result in a
loss, regardless of the manager's original intent to reduce risk. Descriptions
of these strategies follow, and the SAI contains more detailed explanations.
You should understand these investment practices and be sure that you are able
to withstand the potential risks inherent in their use.
FUTURES CONTRACTS AND OPTIONS. Each of the Zweig Mutual Funds except Zweig
Cash Fund may use futures contracts and options to manage its exposure to
changing stock and bond prices or to alter its asset mix. A fund may use any
type of future or option related to its investments. These include: stock index
futures and options, foreign stock index futures and options, interest rate
futures and options, and foreign currency futures and options, including those
traded on foreign exchanges and options not traded on exchanges. Some futures
and options strategies hedge against price fluctuations. These include: selling
futures as a portfolio hedge, buying puts and writing covered calls. Other
strategies increase market exposure. These include buying futures, writing puts
and buying calls.
A fund will not purchase puts if more than 10% of its assets would be invested
in premiums on puts. A fund will write calls only if they are covered
throughout the life of the call. A fund will write puts only if: (a) the
aggregate value of the obligations underlying the puts does not exceed 50% of a
fund's assets, and (b) the puts are fully secured by high-quality debt
obligations in a segregated account with the fund's custodian, The Bank of New
York. Call options on futures must be similarly secured.
Futures and options involve, to varying degrees, market risk in excess of their
value. Futures and options may be used or combined with each other, or with
forward contracts, in order to adjust the risk and return characteristics of an
overall strategy; however, there may be an imperfect correlation between the
prices of options and futures contracts and the price movements of the
securities being hedged. Another risk associated with options and futures is
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a potential lack of liquidity. A fund may be unable to close out, or sell, its
futures or options positions at all times. Each fund seeks to limit losses from
all options transactions to 5% of its average net assets per year. If
necessary, a fund will cease options transactions in order to comply with the
5% limitation.
CURRENCY EXCHANGE CONTRACTS. Only Zweig Managed Assets may enter into forward
currency exchange contracts. Currency exchange contracts are agreements to
exchange one currency for another at a set rate on a future date. Currency
exchange contracts may be used to lock in an exchange rate for purchases of
securities denominated in foreign currencies or used for investment purposes.
These contracts, however, involve the risk that currency movements will be
inaccurately predicted, in which case, the fund's return would be adversely
affected. To manage its exposure to fluctuations in currency exchange rates,
Zweig Managed Assets may enter into forward currency exchange contracts, may
buy and sell options and futures contracts relating to foreign currencies or
may purchase securities indexed to foreign currencies.
Some futures and forward foreign currency contracts are customized financial
contracts between two parties. Such contracts are subject to the risk that the
counterparty will not meet its obligations under the contract. They also may be
less liquid and more difficult to value than standardized contracts traded on a
regulated exchange.
SELLING SHORT. Zweig Cash Fund may not sell short. A fund sells a security,
future or currency short when the manager believes the price of the security,
future or currency will decline. A fund may sell a stock index future short to
offset a potential decline in a group of stocks the fund owns. A fund may make
such short sales if the manager believes reducing portfolio exposure to
changing securities prices can be accomplished at a lower cost than if the
securities themselves were sold. A fund also may sell a security short to
protect against a decline in the price of a security it already owns, but
wishes to defer the realization of a capital gain. To sell a security short,
the fund must borrow the security. A fund's obligation to replace the security
borrowed and sold short will be fully secured at all times by cash or U.S.
Government securities deposited with the lender of the security or in a
segregated account with the fund's custodian. A fund may not sell securities
short if: (a) the market value of all securities sold short will be more than
25% of the fund's assets, or (b) the market value of unlisted securities sold
short will be more than 10% of the fund's assets.
The Board of Trustees, which has the primary responsibility for the overall
management of the Zweig Mutual Funds, has determined that, while there are
certain risks inherent in futures, options, currency exchange contracts and
short sales, Zweig/Glaser Advisers has demonstrated its expertise and ability
to use these hedging techniques effectively. The flexibility and potential for
enhanced long-term performance and risk reduction provided by such investment
techniques warrant their use, in the opinion of the Board of Trustees.
MEASURING RISK. In choosing an investment that is right for you, it is
important to consider the level of risk that you can withstand. There are many
ways to measure risk when comparing mutual funds. One that is easily understood
is maximum decline in net asset value (NAV). Many national newspapers measure
the extent to which a fund's net asset value has changed from day to day.
Micropal Inc, an independent fund rating service, takes this concept one step
further by measuring the largest high-to-low drop in the month-end to month-end
net asset value of a fund during any
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given period, and expressing it as a percentage decline. When comparing the
maximum NAV declines of different funds, ask yourself if you could have
experienced each particular drop without selling the fund. The maximum NAV
declines for Class A Shares and Class C Shares from inception through December
31, 1995, computed by Micropal Inc, are shown below for the Zweig Mutual Funds
and for the average fund with a comparable investment objective (distribution
of the Class B Shares commenced on [March __,] 1996). Also shown are the
maximum declines for a relevant standard measure of securities prices. In all
cases, distributions have been reinvested and maximum NAV declines do not
reflect sales charges. Please remember that past performance does not predict
future results.
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<TABLE>
<CAPTION>
Class A Shares Class C Shares*
-------------- ---------------
<S> <C> <C>
Max NAV Decline of ZWEIG STRATEGY FUND -7.13% (3rd lowest of -4.30% (9th lowest of
from inception on 12/29/89 246 growth funds) 309 growth funds)
Max NAV Decline of Average Growth Fund for period -18.46% -8.59%
Max Decline of S&P 500 for period+ -14.69% -6.95%
Max NAV Decline of ZWEIG APPRECIATION FUND -6.04% (8th lowest of -6.20% (11th lowest of
from inception on 10/8/91 109 small cap funds) 119 small cap funds)
Max NAV Decline of Average Small-Cap Fund for -13.68% -11.78%
period+
Max Decline of Value Line Geometric Index for period -9.87% -9.87%
Max NAV Decline of ZWEIG MANAGED ASSETS -4.88% (4th lowest of -5.44% (7th lowest of
from inception on 2/8/93 30 multi-asset global funds) 30 multi-asset global funds)
Max NAV Decline of Average Multi-Asset Global Fund -9.50 -9.50%
for period***
Max NAV Decline of ZWEIG GOVERNMENT FUND -4.79% (10th lowest of -5.18% (17th lowest of
from 9/1/89** 80 U.S.Gov't Securities funds) 104 U.S. Gov't Securities funds)
Max NAV Decline of Average U.S. Govt. Fund for -8.00% -6.88%
period+
Max NAV Decline of Lehman Composite Government -5.41% -5.41%
Bond Index
</TABLE>
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- ---------------
Definitions of Indices used for comparison:
The Standard & Poor's 500 Index is a broad-based measurement of
changes in stock market conditions based on the average performance of
500 widely held common stocks.
The Multi-Asset Global Fund category was recently created by
Morningstar. It consists of mutual funds whose investment objectives
are too broad and flexible to allow them to fit comfortably into any
other objective. The information is based on 30 funds, and Micropal
Inc. calculated the maximum NAV decline.
The Lehman Composite Government Bond Index measures the return of
government bonds ranging in maturity from one to 30 years.
The Value Line Geometric Index measures the returns of 1,700 stocks
ranging from large-cap to small-cap on an unweighted basis.
* From inception on 2/4/92 (2/8/93 for Zweig Managed Assets).
** Zweig/Glaser Advisers assumed responsibility for managing the fund on
September 1, 1989. Under the prior manager, from inception on March
25, 1985, the maximum NAV decline was -10.87% for the fund, -7.5% for
the Average U.S. Government Fund and -5.41% for the Lehman Composite
Government Bond Index.
+ The maximum NAV decline for funds with a comparable investment
objective is an unweighted average of all such funds tracked by
Micropal Inc.
*** Sources: Morningstar and Micropal Inc.
Comparable information for other mutual funds, prepared by Micropal
Inc, is available by calling 1-800-444-2706.
OTHER INVESTMENT POLICIES
PORTFOLIO TURNOVER RATE. The length of time a fund has held a stock or bond is
not usually considered when making investment decisions. As a result of the
Zweig style of money management, a fund's turnover rate may be higher than that
of other mutual funds. (A portfolio turnover rate in excess of 100% may be
deemed to be high.) Portfolio turnover may result in realization of taxable
capital gains and generally involves expense, including brokerage costs. (The
SAI contains a detailed explanation of certain relevant tax considerations.)
The portfolio managers consider the cost of making portfolio adjustments when
deciding whether to implement a strategy by selling stocks or bonds and
investing the proceeds in money market securities, or by using futures or
options to reduce exposure to market risk. See the table under Financial
Highlights for portfolio turnover rates.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS. A fund may purchase a bond or
stock with delivery of the security and payment deferred to a future date. The
money to purchase such securities will be invested in other securities until
the fund receives delivery. This could increase the possibility that the fund's
net asset value would increase or decrease faster than would otherwise be the
case.
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LENDING SECURITIES. A fund may lend securities to broker/dealers and
institutions as a means of earning income. Delays or losses could result if a
borrower becomes bankrupt or defaults in its obligation to return the loaned
security. The Zweig Mutual Funds may lend securities only if: (a) the loan is
fully backed by collateral at all times, and (b) the value of all loaned
securities is less than one-third of the fund's total assets.
BORROWING. All Zweig funds may make temporary borrowings from banks to cover
redemptions. If the performance of the fund's investments fails to cover the
cost of borrowing, including interest, the net asset value of its shares will
decrease faster than if the fund had no borrowings outstanding.
NET ASSET VALUE
Zweig Mutual Funds determine the net asset value of each class of shares on
each day that the New York Stock Exchange (NYSE) is open. Net asset values are
calculated as of 2:00 p.m. New York time for Zweig Cash Fund shares and as of
the close of regular trading on the NYSE for Zweig Cash Fund and the other
funds.
We subtract the liabilities of a fund from its assets to determine its total
net assets. We then determine each class's proportionate interest in the fund's
net assets. The liabilities of that class, including its distribution fees, are
then deducted and the resulting amount is divided by the number of shares of
that class outstanding to produce the net asset value per share.
Portfolio securities for which market quotations are readily available are
stated at market value. Securities for which market quotations are not readily
available are valued at fair value as determined using procedures determined by
the Board of Trustees. Foreign forward currency contracts are valued using
forward currency exchange rates supplied by a quotation service. Short- term
obligations having a remaining maturity of 60 days or less are valued at
amortized cost (which approximates market value). Zweig Cash Fund attempts to
stabilize the net asset value of its shares at $1.00 and uses the amortized
cost method to value all its securities.
DISTRIBUTIONS AND TAXES
Each of the Zweig Mutual Funds intends to qualify as a regulated investment
company for federal income tax purposes and to distribute to its shareholders
all income and net capital gains so as to be relieved of federal taxes so long
as, in management's view, such qualification is in the shareholders' interest.
Distributions are declared separately for each class of shares of a fund.
Distributions will be reinvested at net asset value unless you elect to receive
distributions in cash.
The Zweig Cash Fund declares a dividend at 2:00 p.m. New York time on each day
the NYSE is open. Zweig Cash Fund's dividends include all accrued interest,
earned discounts and realized gains and losses, less amortized premiums and
accrued expenses. The fund pays or reinvests these dividends on the last
business day of each month.
Zweig Government Fund declares and pays net investment income dividends
monthly. Zweig Strategy Fund and Zweig Managed Assets declare and pay net
investment income
xviii
<PAGE> 27
dividends quarterly. Zweig Appreciation Fund declares and pays net investment
income, if any, at least annually. Any net realized capital gains will be paid
at least annually, except that net short-term capital gains may be paid more
frequently, together with the dividends from net investment income.
Because Class B and Class C Shares have higher distribution fees, dividends on
Class A Shares will be higher than dividends on Class B and Class C Shares of
the same fund.
Distributions of income and short-term capital gains are taxed as dividends.
Long-term capital gain distributions are taxed as long-term capital gains.
Distributions are taxable when paid, whether taken in cash or reinvested,
except that distributions declared in November and December and paid in January
are taxable as if paid on December 31st.
By January 31st of each year, we will send you a statement showing the tax
status of your distributions for the prior year and the proceeds of your
redemptions (including exchanges), if any. You should keep your account
statements with your other tax records. When you sell your shares, their tax
basis is the total of your cash investments plus all distributions that have
been reinvested, less any return of capital distributions.
The foregoing is a summary of certain federal income tax consequences. Be sure
to consult your own tax adviser to determine the precise effect of your
investments in the Zweig Mutual Funds on your particular tax situation, and any
state and local tax consequences.
EXCHANGE PRIVILEGE
You can exchange shares of one Zweig Mutual Fund for shares of the same class
of another Zweig Mutual Fund at their respective net asset values (except that
Class A Shares of Zweig Cash Fund purchased without a sales charge are
exchangeable at net asset value plus the applicable sales charge). All
exchanges are effected as of the close of regular trading on the NYSE. You can
exchange shares either through your investment dealer or, if the shares are
registered in your name, through the transfer agent. You may exchange through
the transfer agent by mail, telephone, or systematically on the 20th day of
each month or quarter (see Application Form in this Prospectus).
Each exchange is a sale of shares of one fund and a purchase of the same class
of shares of another fund. An exchange may produce a gain or a loss for tax
purposes and is subject to the terms and conditions applicable to telephone
redemptions and the minimum investment requirement of each fund. We reserve the
right to reject any exchange request or to modify or terminate exchange
privileges upon 60 days' written notice to shareholders.
CHOOSING AMONG CLASSES OF SHARES
Zweig Mutual Funds offer investors three classes of shares (Class A, Class B
and Class C) which bear sales charges in different forms and amounts and which
bear different levels of expenses (see Fee Table on page 2). You should
choose the class of shares that is most beneficial given the amount of your
purchase, the length of time you expect to hold the shares and other relevant
circumstances. Class A shares are sold with an initial sales charge that
varies based upon the amount invested as shown in the table below. Class B
Shares have no initial sales charge, but are subject to a declining contingent
deferred sales charge (CDSC) if sold within six years of purchase. Class C
Shares have no initial sales charge, but are subject to a CDSC if sold within
one year of
xix
<PAGE> 28
purchase. Class B and Class C Shares have higher annual operating expenses than
Class A Shares. Class B Shares convert to Class A Shares after a holding period
of seven years from the initial purchase. Class C Shares have a shorter CDSC
period than Class B Shares, but they do not convert to Class A Shares.
CONTINGENT DEFERRED SALES CHARGE (CDSC). The applicable CDSC rate for each
class of shares is set forth in the Fee Table on page 2. The CDSC is imposed
on the lesser of: (a) the current market value, or (b) the initial cost of the
shares being redeemed. No CDSC is imposed upon shares acquired by reinvesting
distributions. In determining whether a CDSC applies, the order of redemption
is first of shares purchased through reinvestment and then of shares held the
longest. Any CDSC imposed on a redemption is paid to the distributor or
directly to a third party at the direction of the distributor.
We may waive the CDSC on redemption(s): (a) following the death of a
shareholder; (b) if a shareholder becomes unable to engage in any substantial
gainful activity because of a medically determinable physical or mental
impairment which can be expected to result in death or be of long-continued and
indefinite duration; (c) when a total or partial redemption is made in
connection with a distribution from (i) retirement plans after reaching age 59
1/2, or (ii) certain other Class A Share retirement plans; (d) under the
systematic withdrawal program if the amount being withdrawn is no more than 1%
per month of the amount invested in such program; and (e) effected pursuant to
the Fund's right to liquidate a shareholder's account if the aggregate net
asset value of the shares held in the account is less than the then effective
minimum account size.
CLASS A SHARES. Class A Shares of all funds except Zweig Cash Fund are sold at
net asset value plus the applicable sales charge. The offering price applies to
purchases made by a single purchaser or by a single trust account. An
individual, his or her spouse, and children under 21 are considered to be a
single purchaser. The sales charge on Class A Shares is allocated between your
investment dealer and Zweig Securities Corp., the distributor, as shown below.
QUANTITY DISCOUNTS ON CLASS A SHARES. When you invest in Class A Shares of the
Zweig Mutual Funds, you may receive quantity discounts at certain dollar
levels, or breakpoints. The more you invest, the smaller percentage you pay in
sales charges, as shown below.
<TABLE>
<CAPTION>
As a Percentage of
-----------------------------------------
Amount Invested Offering Net Asset
- --------------- Price of Value of Dealer's
the Shares the Shares Sales
Purchased Purchased Concession
--------- ---------- ----------
<S> <C> <C> <C>
ZWEIG STRATEGY FUND, ZWEIG APPRECIATION
FUND
AND ZWEIG MANAGED ASSETS:
Less than $50,000 5.50% 5.82% 4.75%
$50,000 but less than $100,000 4.75% 4.99% 4.00%
$100,000 but less than $250,000 3.75% 3.90% 3.25%
$250,000 but less than $500,000 2.75% 2.83% 2.25%
$500,000 but less than $1,000,000 1.75% 1.78% 1.50%
$1,000,000 or more 0.00% 0.00% (see below)
Zweig Government Fund:
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but less than $100,000 4.00% 4.17% 3.50%
$100,000 but less than $250,000 3.00% 3.09% 2.50%
$250,000 but less than $500,000 2.25% 2.30% 1.75%
$500,000 but less than $1,000,000 1.75% 1.78% 1.50%
$1,000,000 or more 0.00% 0.00% (see below)
</TABLE>
xx
<PAGE> 29
- ---------------
Commissions (as set forth below) will be paid to dealers who initiate and are
responsible for purchases of $1 million or more and for purchases at net asset
value made by unallocated accounts held by third party administrators,
registered investment advisers, trust companies, and bank trust departments
which exercise discretionary authority or hold accounts in fiduciary, agency,
custodial or similar capacity if in the aggregate such accounts equal or exceed
$1,000,000 and by retirement plans with assets of $1,000,000 or more or at
least 50 eligible employees. No initial sales charge applies on these
investments; however, a 1% CDSC will apply on redemptions within 18 months of
purchase.
<TABLE>
<CAPTION>
Dealer's
Amount Purchased Commission
- ---------------- ----------
(as % of amount
purchased)
<S> <C>
ZWEIG STRATEGY FUND, ZWEIG
APPRECIATION FUND
AND ZWEIG MANAGED ASSETS:
First $2,000,000 0.75%
Next $3,000,000 up to
$5,000,000 0.50%
Amount over $5,000,000 0.25%
ZWEIG GOVERNMENT FUND:
First $2,000,000 0.50%
Amount over $2,000,000 0.25%
</TABLE>
Class A Shares also may be purchased at net asset value by any officer,
trustee, director or full-time employee, and their families, of Zweig Mutual
Funds, Zweig/Glaser Advisers, Zweig Securities Corp. and any company affiliated
with these companies, or by employees and their families of securities dealers
that are members of the NASD. Class A Shares also may be sold at net asset
value through certain investment dealers registered under the Investment
Advisers Act of 1940 and other financial services firms that adhere to certain
standards established by the principal distributor, including a requirement
that such shares be sold for the benefit of their clients participating in a
"wrap account" or similar program under which such clients pay an ongoing fee
to the investment adviser or other firm. Such shares are sold for investment
purposes and on the condition that they will not be resold except through
redemption or repurchase by the fund. Class A Shares also may be purchased at
net asset value for shareholders by dealers where the amount invested
represents redemption proceeds from funds distributed other than by the
distributor, and where the shareholder has paid a sales charge in connection
with the purchase of such other fund's shares; provided that (i) such Class A
Shares are purchased within 30 days after redemption of such other fund's
shares; and (ii) sufficient documentation of such redemption as the
distributor may require shall be provided at the time the Class A Shares are
purchased. This provision is not available where the shares of a fund being
redeemed were subject to a deferred sales load or redemption fee.
CUMULATIVE QUANTITY DISCOUNTS ON CLASS A SHARES. A new purchase may be combined
with Class A Shares already in your accounts to qualify for a discount. The
sales charge on the shares being purchased will be at the rate shown in the
table above applicable to the net asset value of the shares then owned plus the
amount of the new purchase. To receive this discount, you or your investment
dealer must request it when placing the order and give the transfer agent or
distributor sufficient information to confirm that your purchase qualifies for
the discount. We reserve the right to change or terminate quantity discounts at
any time.
xxi
<PAGE> 30
QUANTITY DISCOUNTS THROUGH A LETTER OF INTENTION. You may pay a reduced sales
charge on Class A Shares if you sign a Letter of Intention at the time of your
purchase. The Letter also may be back-dated to include purchases made within 90
days prior to signing the Letter of Intention. The Letter, included on the
Application Form in this Prospectus, states your intention to purchase a
sufficient quantity of Class A Shares of the funds indicated within the
13-month period specified to qualify for a reduced sales charge. Purchases
under the Letter are made at the sales charge applicable to the entire amount
to be purchased under the Letter, as if purchased in a single transaction.
The Letter of Intention is not binding. During the period covered by the
Letter, the transfer agent will hold shares in escrow representing 5% of the
intended purchase. A price adjustment based upon the actual amount invested
will be made if the purchase is not completed, by redeeming escrowed shares. A
Letter of Intention can be amended: (a) during the 13-month period by filing an
amended Letter with the same expiration date as the original, and (b)
automatically after the end of the period, if the total purchases credited to
the Letter qualify for an additional reduction in sales charges.
CLASS B SHARES. Class B Shares are sold without an initial sales charge. For
sales of Class B Shares, dealers will receive from the distributor 4% of the
purchase amount. Although you pay no sales charge at the time of purchase, if
you redeem within six years, you are charged a declining CDSC as follows:
<TABLE>
<CAPTION>
The CDSC
Year Since Purchase Was Made is equal to
- ---------------------------- -----------
<S> <C>
First 5%
Second 4%
Third 3%
Fourth 3%
Fifth 2%
Sixth 1%
Seventh None*
</TABLE>
_______________
* Class B Shares convert to Class A Shares as described below.
CLASS B SHARES CONVERSION FEATURE. After a holding period of seven years from
the initial date of purchase, Class B Shares automatically convert, at
respective net asset values, on the 10th business day of the month following
the anniversary date, to Class A Shares of the same fund. At the time of
conversion, Class B Shares of a fund acquired through reinvestment of
distributions will convert to the corresponding Class A Shares of that fund
pro-rata with Class B Shares of that fund not acquired through reinvestment.
The conversion of Class B Shares will relieve the Class B Shares that have been
held for at least seven years from the higher ongoing distribution fees. Only
Class B Shares have this conversion feature.
CLASS C SHARES. Class C Shares are sold without an initial sales charge. For
sales of Class C Shares, dealers will receive from the distributor 1% (0.75%
for Zweig Government Fund and 0.30% for Zweig Cash Fund) of the purchase
amount. If you redeem within one year of your purchase, you will be charged a
CDSC equal to 1.25%.
xxii
<PAGE> 31
Class B and Class C Shares offer the benefit of putting all of your dollars to
work immediately; however, they have higher annual expenses and pay lower
dividends than Class A Shares. Class C Shares have a shorter CDSC period than
Class B Shares; however, they do not convert to Class A Shares.
Zweig Securities Corp. will reallow up to 0.15% to any dealer with sales of
Zweig Mutual Fund shares at an annual rate of $4 million or more, provided that
the dealer has agreed to supply special assistance in marketing shares of the
Zweig Mutual Funds, including providing access to the dealer's sales personnel
and information dissemination systems such as computer screens, internal
publications, publications sent to clients and mailing lists. These
reallowances are in addition to the sales concessions shown in the above tables
and may be subject to chargeback for redemptions within one year. An
alternative arrangement, available to any dealer that has agreed to provide
marketing, record keeping and related administrative services to tax-qualified
employee benefit plans, including the processing of orders for investment and
reinvestment of plan assets in shares of the funds at net asset value, provides
for compensation at an annual rate of up to 0.20% of plan participant holdings
of Zweig Mutual Funds. In addition, Zweig Securities Corp. may also pay dealers
who maintain an omnibus account with the transfer agent, a fee at the annual
rate of 0.10% of the average daily net assets held in any sub-account that has
been continually invested in Zweig Mutual Funds for more than four years. Zweig
Securities Corp. may also pay dealers a fee of up to 0.10% of the average daily
net assets invested through such dealers in Zweig Mutual Fund shares by
participants in programs sponsored by such dealers. Zweig Securities Corp.
reserves the right to alter or discontinue paying any of the foregoing fees at
any time. These fees will be paid from Zweig Securities Corp.'s or the
manager's own funds, including past profits or any other source available to
them.
The above arrangements relate to purchases effected in the United States.
Purchases outside the United States may be subject to local rules and customs,
and different sales charges, fees and dealer compensation may apply. Certain
dealers may not sell all classes of shares.
HOW TO INVEST IN THE ZWEIG MUTUAL FUNDS
You can buy shares in the Zweig Mutual Funds directly from the funds' transfer
agent, through an investment professional, or automatically through a regular
investment plan. The minimum initial investment is $1,000 for a regular account
and $250 for a retirement account. There is no minimum amount for additional
investments. We reserve the right to change or waive minimums or to refuse any
order.
Purchases of Zweig Cash Fund become effective after receipt of Federal funds by
the transfer agent. Purchases for all other Zweig Mutual Funds will be at the
offering price next determined after the transfer agent or investment dealer
receives the order, provided the dealer transmits the order to the transfer
agent that day.
BUYING SHARES FROM AN INVESTMENT DEALER. If you invest through an investment
dealer or agent, that firm may have its own service features, transaction
charges and fees. This Prospectus should be read in conjunction with such
firms' material regarding their fees and services. If you wish us to refer you
to an investment professional, call us at 1-800-272-2700. Investment
professionals receive compensation for providing investment advice, and such
compensation may
xxiii
<PAGE> 32
differ for selling shares of different classes of the Zweig Mutual Funds.
BUYING SHARES THROUGH THE TRANSFER AGENT. Send the Application Form in this
Prospectus or a letter with your check to the transfer agent. The address is:
Zweig Series Trust
c/o State Street Bank & Trust Co.
P.O. Box 8505
Boston, MA 02266-8505
Make your check payable to State Street Bank & Trust Co. If you send a letter,
please specify the fund(s) and the class of shares you wish to buy. You may
deliver your order by courier or overnight mail to State Street's offices at:
2 Heritage Drive (3rd floor)
North Quincy, MA 02171
Attention: Zweig Mutual Funds
Purchases of Zweig Cash Fund shares made directly through the transfer agent by
check or money order do not earn dividends until converted into Federal funds,
which can take up to two business days. You also may wire Federal funds with
your order to avoid this delay. For wiring instructions, call 1-800-628-0441.
BUYING SHARES THROUGH AN INVESTMENT PLAN. You can invest in the Zweig Mutual
Funds through an automatic investment plan. You can automatically move money
from your bank account or via payroll deduction into any of your Zweig accounts
on or about the 15th of each month or quarter. For further details, see the
Application Form or call 1-800-272-2700.
HOW TO REDEEM YOUR SHARES
You can redeem your shares on any day the NYSE is open through the transfer
agent if the shares are registered in your name, or through your investment
dealer. The price you receive will be the net asset value next determined after
the transfer agent or investment dealer receives your request in proper form
(described below), less any CDSC, provided the dealer transmits the order to
the transfer agent that day. Payment for your redemption generally will be
mailed to you within seven days after your request is received. If shares are
purchased with an uncertified check and are being redeemed within 15 days
following purchase, the redemption proceeds may not be paid until 15 days
following purchase (or earlier if the Trust has evidence of cleared funds) .
THROUGH AN INVESTMENT DEALER. If your account has been established by your
investment dealer, contact your investment professional, who will assist you
with your redemption.
THROUGH THE TRANSFER AGENT BY MAIL. If the shares are registered in your name,
send a letter of instruction signed exactly as the shares are registered,
together with any certificates that represent the shares you wish to redeem.
If the shares you redeem have a value of $10,000 or more, the signatures of
registered owners or their legal representatives must be guaranteed by an
appropriate guarantor. Mail your redemption request to:
Zweig Series Trust
c/o State Street Bank & Trust Co.
P.O. Box 8505
Boston, MA 02266-8505
xxiv
<PAGE> 33
Appropriate signature guarantors include: banks and savings associations,
credit unions, member firms of a national securities exchange, municipal
securities dealers and government securities dealers. See the SAI or call
1-800-272-2700 for more information.
Redemption instructions by corporate and fiduciary shareholders also must be
accompanied by appropriate documentation establishing the authority of the
person seeking to act on behalf of the account.
THROUGH THE TRANSFER AGENT BY TELEPHONE. You may issue a telephone redemption
request (unless you have notified Zweig Mutual Funds of an address change
within the preceding 15 days) directly to the transfer agent at 1-800-628-0441
if: (a) your account is registered for telephone/expedited redemption
privileges and (b) your shares are held at the transfer agent without
certificates. The proceeds must be mailed to the address of record. If you
have designated a domestic bank on the Application Form when you opened your
account, you may have redemption proceeds of $1,000 or more wired to the bank.
Subsequent directions for wiring proceeds require a signature guarantee from an
appropriate guarantor. The transfer agent must receive your instructions
before 2:00 p.m. New York time for Zweig Cash Fund in order to wire the
redemption proceeds to you that day. For the other funds, the transfer agent
must receive your order before the close of regular trading on the NYSE
(presently 4:00 p.m. New York time) in order to redeem shares that day.
The maximum amount that may be redeemed for joint accounts by telephone is
$25,000. Neither the Zweig Mutual Funds, the distributor, nor the transfer
agent will be liable for any loss in acting on telephone instructions
reasonably believed to be authentic. In the event of a fraudulent telephone
redemption, the investor will bear the risk of loss. Because the funds may
otherwise be liable for any losses due to unauthorized or fraudulent
instructions, reasonable procedures are employed to confirm that instructions
given by phone are genuine. These include: requiring a form of personal
identification from the caller and recording telephone instructions. For
identification purposes, the transfer agent may require such information as it
deems necessary before accepting redemption instructions.
During periods of extremely drastic economic or market changes, it may become
difficult to implement a telephone redemption. In the event that you have
difficulty reaching the transfer agent at its toll-free number, you should
consider sending written redemption instructions in the manner explained above.
We reserve the right to refuse telephone redemption requests and to limit their
amount or frequency. If, however, we determine not to accept a telephone
redemption request, we will seek to advise you promptly of that decision and,
to the extent feasible, will communicate that decision by telephone.
Redemptions normally will be made in cash, but redemptions may be made in kind
pursuant to an election under Rule 18f-1 of the Investment Company Act of 1940
(the 1940 Act), as discussed more fully in the SAI. Rights of redemption may be
suspended if the NYSE is closed, other than customary weekend or holiday
closings, or for such other periods as the Securities and Exchange Commission
has permitted.
REINSTATEMENT PRIVILEGE. A shareholder who has made a partial or complete
redemption of shares may reinvest all or part of the redemption proceeds and
receive a pro rata credit for any CDSC or initial sales charge paid, provided
the reinvestment is made within 30 days after the redemption. This privilege
may be exercised only once a year by a shareholder.
xxv
<PAGE> 34
SYSTEMATIC CASH WITHDRAWAL PROGRAMS are available for shareholders with
accounts of $5,000 or more who wish to receive a specific amount of cash either
monthly or quarterly. Contact your investment professional or complete the
Application Form in this Prospectus. Under these programs, all distributions
must be reinvested. Purchasing additional shares while receiving payments under
these programs ordinarily will be disadvantageous because of sales charges.
Shares redeemed may be subject to a CDSC. We may modify or terminate these
programs at any time.
MINIMUM ACCOUNT SIZE. If your account balance falls below $1,000 as a result of
redeeming shares, you may be given 60 days' notice to reestablish the minimum
balance. If you do not increase your balance, we reserve the right to close
your account and send the proceeds to you. Your shares will be redeemed at the
net asset value on the day your account is closed. We will not normally close
an account maintained in connection with a tax-deferred retirement plan.
THE DISTRIBUTOR
Zweig Securities Corp. serves as principal distributor of shares of the Zweig
Mutual Funds. At any given time, the distributor may incur expenses in
distributing shares of the funds that are in excess of the total payments made
by the funds under the Rule 12b-1 Plans for distribution. Because there is no
requirement that the distributor be reimbursed for all its expenses, or that a
plan be continued from year to year, this excess does not constitute a
liability of the funds. Although there is no legal obligation for the funds to
pay expenses in excess of payments made to the distributor under the plans, if
for any reason a plan is terminated, the Board of Trustees will consider the
manner in which to treat such expenses. Any cumulative unreimbursed expenses
may or may not be recovered through future distribution fees. If the
distributor receives any Rule 12b-1 payments in excess of actual distribution
expenses (a situation which has not occurred to date), the difference could be
viewed as profit to the distributor for that year. Accordingly, Rule 12b-1
Plans are classified as compensation plans.
The distributor reallows the 0.25% service fee to dealer firms that are members
of the National Association of Securities Dealers, Inc. who have signed a
dealer agreement and for continuous personal service by such members to
investors in the Trust, plus a portion of the asset based sales charges so that
these dealers receive such reallowances at the following aggregate annual
rates: (i) .25% commencing from date of purchase for the Class A Shares, (ii)
0.25% commencing one year after purchase for the Class B Shares, and (iii)
0.95% (0.70% and 0.25% for the Zweig Government Fund and Zweig Cash Fund,
respectively) commencing one year after purchase for the Class C Shares.
THE MANAGER AND MANAGEMENT FEE
The investments of the Zweig Mutual Funds are managed by Zweig/Glaser Advisers,
5 Hanover Square, 17th Floor, New York, NY 10004. The general partners of
Zweig/Glaser Advisers are: Glaser Corp., a Delaware corporation controlled by
Eugene J. Glaser, and Zweig Management Corp., a Delaware corporation controlled
by Dr. Zweig.
Zweig/Glaser Advisers receives a fee based on the average daily net assets of
each fund at the following annual rates: Zweig Strategy Fund, .75%; Zweig
Appreciation Fund, 1.00%; Zweig Managed Assets, 1.00%; Zweig Government Fund,
.60%; Zweig Cash Fund, .50%. These rates are constant and do not
xxvi
<PAGE> 35
diminish with an increase in the net assets of a fund. The management fees are
comparable to the fees paid by mutual funds with similar investment policies.
The fees of Zweig Strategy Fund, Zweig Appreciation Fund and Zweig Managed
Assets, however, are higher than the fees paid by most mutual funds.
In addition to managing the funds' investments, Zweig/Glaser Advisers also:
makes recommendations with respect to the funds' business affairs; furnishes
certain administrative services, office space and equipment; and permits its
employees to serve as the officers of the Trust without additional compensation
from the funds. All other expenses incurred in the operation of the funds are
borne by the funds, including: interest, taxes, fees and commissions of every
kind; expenses of issue, repurchase or redemption of shares; costs of
registering or qualifying shares for sale (including printing costs, legal fees
and other expenses relating to the preparation and filing of the funds'
registration statement with the appropriate regulatory authorities and the
production and filing of the funds' prospectus); costs of insurance;
association membership dues; all charges of custodians, including fees as
custodian, escrow agent, and fees for keeping books and performing portfolio
valuations; all charges of transfer agents, registrars, pricing services,
independent accountants and legal counsel; expenses of preparing, printing and
distributing prospectuses and all proxy materials, reports and notices to
shareholders; expenses of distribution of shares pursuant to Rule 12b-1 Plans;
out-of-pocket expenses of trustees; fees of trustees who are not "affiliated
persons" as defined in the 1940 Act; and all other costs incident to the
Trust's existence as a business trust. The distributor purchases copies of the
fund's prospectus and shareholder reports used for sales purposes at printer's
overrun cost.
BROKERAGE TRANSACTIONS. To buy and sell securities for the Zweig Mutual Funds,
Zweig/Glaser Advisers may use its broker/dealer affiliates or other firms that
sell shares of the funds, provided they have the execution capability and that
their commission rates are comparable to those of other unaffiliated
broker/dealers.
ORGANIZATION OF THE FUNDS
The Trust was established as a Massachusetts business trust on September 24,
1984 and reorganized as a Delaware business trust on April 30, 1996. A copy of
the Agreement and Declaration of Trust is on file with the Secretary of State
of the State of Delaware. The Board of Trustees directs the management of the
business of the Trust. The Board has duties and responsibilities comparable to
those of the boards of directors of corporations, not to those of trustees
under customary trust principles. The Trustees oversee the Trust's activities,
elect the officers of the Trust who are responsible for its day-to-day
operations, review contractual arrangements with the companies that provide
services to the Trust, and review investment performance.
The Trust is a mutual fund, or, in the technical terms of the 1940 Act under
which it is regulated, an open-end, diversified management investment company.
It has an unlimited number of shares of beneficial interest which, without
shareholder approval, may be divided by the Trustees into an unlimited number
of classes and funds. The shares presently are divided into three classes of
shares in four funds and four classes of shares in Zweig Cash Fund. Voting
rights are based on a shareholder's total dollar interest in a Series and are
thus allocated in proportion to the value of each shareholder's investment.
Shares vote
xxvii
<PAGE> 36
together on matters that concern the entire Trust, or by individual fund or
class when the Board of Trustees determines that the matter affects only the
interests of a particular fund or class.
PERFORMANCE INFORMATION
The net asset value of a fund (other than Zweig Cash Fund) and the income it
generates will vary from day to day. This fluctuation reflects the composition
of the fund's portfolio, as well as changes in market conditions, company and
economic developments, interest rates, and other factors. Performance will
reflect Zweig/Glaser Advisers' skill in managing each fund's portfolio, the
period of time during which the investment is held, and the class of shares and
its annual operating expenses. When you sell your shares, they may be worth
more or less than what you paid for them.
Occasionally, advertisements for the Zweig Mutual Funds may include:
MAXIMUM NAV DECLINE since a fund's inception, or for shorter periods.
Micropal Inc, an independent fund rating service, measures the largest
high-to- low drop in a fund's month-end net asset value over a
particular period. The decline is expressed as a percentage of the
fund's NAV per share at the high point during the period measured. See
Measuring Risk on page 9 for the maximum NAV declines of the Zweig
Mutual Funds compared to declines for the same period of the average
comparable fund and a benchmark index for each type of fund. Maximum
NAV declines are historical and are not intended to indicate future
performance; and they do not reflect any sales charges.
TOTAL RETURN for the most recent one-, three-, five-and ten-year
periods, and since the inception of a class of shares through the most
recent calendar quarter. Total return represents the average annual
compounded rate of return on an investment of $1,000 at the maximum
public offering price (in the case of Class A Shares) or reflecting
the deduction of any applicable CDSC. All data are based on past
investment results. Total return also may be presented for other
periods, or be based on an investment at reduced sales charge levels.
Total return does not include the effect of taxes and does not predict
future performance.
YIELD, or the rate of income earned, expressed as a percentage of a
fund's share price. We calculate yield according to accounting methods
that are standardized for all stock and bond mutual funds by taking
the interest and dividend income a fund earns in a 30-day period, net
of expenses, and dividing that amount by the average number of shares
entitled to receive dividends. We express the result as an annualized
percentage rate based on the share price at the end of the 30-day
period. This yield does not reflect gains or losses from selling
securities or from transactions in options and futures contracts.
Yield accounting methods differ from methods used for other accounting
purposes. Therefore, yield may not be the same as the distribution
rate or the income reported in the funds' financial statements. Yield
figures are based on historical earnings and are not intended to
indicate future performance.
SEVEN-DAY CURRENT YIELD for the Zweig Cash Fund refers to the income
generated by an investment in the fund over a seven- day period
specified in the advertisement. This income is assumed to be generated
each week for 52
xxviii
<PAGE> 37
weeks. This 52-week income is then shown as a percentage of the
investment.
EFFECTIVE YIELD is calculated similarly to yield or seven-day current
yield but, when annualized, the income earned is assumed to be
reinvested. The effective yield will be slightly higher than the yield
or seven-day current yield because of the compounding effect of the
assumed reinvestment.
The Zweig Mutual Funds also may include in advertising or marketing materials
for their shares data from financial and other publications and reference
surveys that deal with industry or investment statistics. The SAI lists the
principal industry publications.
The following is an assessment of the 1995 performance of Class A and Class C
Shares of each of the Zweig Mutual Funds (other than Zweig Cash Fund). Class B
Shares were not offered in 1995. We've included a graph comparing each fund's
performance since inception with the appropriate benchmarks.
ZWEIG STRATEGY FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG STRATEGY FUND
CLASS A SHARES, THE STANDARD & POOR'S 500 INDEX AND THE CONSUMER PRICE INDEX
FOR THE PERIOD ENDED DECEMBER 31, 1995
[CHART 1]
AVERAGE ANNUAL TOTAL RETURN - CLASS A SHARES
<TABLE>
<S> <C> <C>
1 YEAR 5 YEAR FROM INCEPTION ON 12/29/89
25.1% 14.1% 11.2
</TABLE>
CLASS C SHARES -- ZWEIG STRATEGY FUND ALSO OFFERS CLASS C SHARES. THE
PERFORMANCE OF CLASS C SHARES WILL BE GREATER OR LESS THAN CLASS A SHARES
DEPENDING ON SALES CHARGES, FEES AND THE LENGTH OF TIME THE SHARES ARE HELD.
AVERAGE ANNUAL TOTAL RETURN - CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/4/92
24.3% 11.1
</TABLE>
Zweig Strategy Fund solidly participated in the stock market gains of 1995.
The Class A and Class C Shares were up 25.1% and 24.3%, respectively. We
achieved our returns while taking considerably less risk than the average fund.
Our average cash position during the year was 37%.
We entered 1995 cautiously with an invested exposure of 30%, but we became more
heavily invested along the way as the results of our research became more
positive. Our stock selection process, which focuses on identifying companies
with above-average earnings growth and below-average valuations, made a strong
contribution to the fund's return. Overweightings in the technology and banking
stocks, two of the top-performing sectors, proved beneficial. The fourth
quarter saw a sharp rotation away from technology stocks, but the favorable
value characteristics cushioned our results, although we still lagged the
Standard & Poors 500 Index during the quarter.
ZWEIG MANAGED ASSETS
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG MANAGED ASSETS
CLASS A SHARES AND CLASS C SHARES, THE
xxix
<PAGE> 38
STANDARD & POOR'S 500 INDEX AND THE CONSUMER PRICE INDEX FOR THE PERIOD ENDED
DECEMBER 31, 1995
[CHART 2]
AVERAGE ANNUAL TOTAL RETURN - CLASS A SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/8/93
16.3% 8.43%
</TABLE>
AVERAGE ANNUAL TOTAL RETURN - CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/8/93
15.4% 7.7%
</TABLE>
* A blended index comprised of 40% Standard & Poor's 500 Index and 60%
Lehman Composite Government Bond Index.
Foreign stock markets were laggards in 1995, however, U.S. stocks and bonds
posted banner years, which helped propel the Fund to returns of 16.3% and 15.4%
for the Class A and Class C Shares, respectively. Zweig Managed Assets
participated solidly in the gains of foreign and domestic stocks and bonds
during 1995, capturing nearly 95% of the 17.4% return of the Lipper Global
Flexible Fund Average.
Throughout 1995, central banks in Europe responded to weaker economic
conditions by lowering key short-term interest rates. Expectations of
continued central bank measures, combined with low inflation, helped bond
markets across Europe rally to new highs late in 1995. After declining more
than 25% in the first six months of 1995, Japanese stocks recovered, ending
December above where they had begun the year. We concentrated our investments
in Japanese bonds as interests rates fell during the early part of the year,
and then moved into Japanese stocks as the market rallied.
ZWEIG APPRECIATION FUND
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG APPRECIATION
FUND CLASS A SHARES, THE VALUE LINE GEOMETRIC INDEX AND THE CONSUMER PRICE
INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995
[CHART 3]
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 10/7/91
24.0% 12.1%
</TABLE>
CLASS C SHARES -- ZWEIG APPRECIATION FUND ALSO OFFERS CLASS C SHARES. THE
PERFORMANCE OF CLASS C SHARES WILL BE GREATER OR LESS THAN CLASS A SHARES
DEPENDING ON SALES CHARGES, FEES AND THE LENGTH OF TIME THE SHARES ARE HELD.
AVERAGE ANNUAL TOTAL RETURN -- CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/4/92
23.2% 9.8%
</TABLE>
We've delivered on our goal of generating attractive returns during this
unusually kind phase in the market. Zweig Appreciation Fund Class A and C
Shares were up 24.0% and 23.2%, respectively, in 1995. These returns surpassed
the 21.8% earned by the Value Line Geometric Index. The average small-company
stock fund, meanwhile, was up 31.5%.
We also delivered on our goal of controlling risk. Our average cash position
during the year was 35%. Thus, we captured 75% of the gains of our peers, with
a market
xxx
<PAGE> 39
exposure of only 65%--a superior risk-adjusted return. Beyond holding cash, we
also kept risk low through prudent industry diversification. We participated
in the gains of the technology sector, although the amount invested in this
sector never exceeded 20%. The Fund's risk control is evidenced in a number of
ways, from its much broader diversification among stocks and sectors, to the
substantially lower price-to-earnings ratios of its stocks.
ZWEIG GOVERNMENT FUND
Comparison of change in value of a $10,000 investment in Zweig Government Fund
Class A shares, the Lehman Composite Government Bond Index and the Consumer
Price Index for the period ended December 31, 1995
[CHART 4]
AVERAGE ANNUAL TOTAL RETURN -- CLASS A SHARES
<TABLE>
<S> <C> <C>
1 YEAR 5 YEAR FROM INCEPTION ON 3/25/85
13.8% 7.8% 7.9%
</TABLE>
CLASS C SHARES -- ZWEIG GOVERNMENT FUND ALSO OFFERS CLASS C SHARES. THE
PERFORMANCE OF CLASS C SHARES WILL BE GREATER OR LESS THAN CLASS A SHARES
DEPENDING ON SALES CHARGES, FEES AND THE LENGTH OF TIME THE SHARES ARE HELD.
AVERAGE ANNUAL TOTAL RETURN -- CLASS C SHARES
<TABLE>
<S> <C>
1 YEAR FROM INCEPTION ON 2/4/92
13.3% 6.4%
</TABLE>
What a difference a year makes! In stark contrast to a dismal 1994, 1995 was a
banner year for bonds. In 1994, the Lehman Brothers Bond Index fell 3.4%, its
worst annual performance in over a decade. But 1995 more than made up for it,
as the Index rallied 18.3% for the year.
Since the Federal Reserve embarked on a series of six interest rates hikes
commencing in February 1994, and was still tightening in early 1995, we elected
to maintain a low exposure to interest rate fluctuations. However, the economy
cooled rapidly, and bonds began to rally to new highs. Beginning in the second
quarter, we gradually increased the Fund's duration to 5.4 years, where it
remained at year-end. Zweig Government Fund captured nearly 80% of the gains
of the average government bond fund last year, with an average duration for
1995 of 4.1 years, which was lower than that of the average fund.
xxxi
<PAGE> 40
APPLICATION (DO NOT USE FOR ZWEIG RETIREMENT PLANS)
FOR APPLICATION ASSISTANCE CALL 1-800-272-2700.
Zweig
Mutual Funds
MAIL ALL FORMS AND CHECKS TO:
The Zweig Mutual Funds
c/o State Street Bank and
Trust Company
P.O. Box 8505
Boston, MA 02266-8505
BY COURIER TO:
The Zweig Mutual Funds
c/o State Street Bank and
Trust Company
2 Heritage Drive, 3rd Floor
North Quincy, MA 02171
IF YOUR ACCOUNT IS ALREADY ESTABLISHED ENTER THE ACCOUNT NUMBER HERE: __________
1. ACCOUNT NAME (Check only one box)
/ / INDIVIDUAL OR JOINT OWNERS*
_______________________________________________________________________
Your Name (first, middle, last)
_______________________________________________________________________
Joint Owner Name (first, middle, last)
_______________________________________________________________________
Social Security Number (to be used for tax reporting)
/ / GIFT TO MINOR A minor is the beneficial owner of the account with an
adult Custodian managing the account until the minor becomes of age, as
specified in the Uniform Gifts/Transfers to Minors Act (UGMA/UTMA). The
Custodian's signature is required for all transactions.
_______________________________________________________________________
Custodian Name (first, middle, last)
_______________________________________________________________________
Minor Name (first, middle, last)
_______________________________________________________________________
Minor Social Security Number Minor State of Residence
/ / TRUST Account is established in accordance with provisions of a trust
agreement. The Trustee's or designated agent's signature is required
for all transactions.
_______________________________________________________________________
Trust Title Date of Trust Agreement
_______________________________________________________________________
Trustee Name Trust Tax ID Number
_______________________________________________________________________
Additional Trustee Name
xxxii
<PAGE> 41
/ / CORPORATION OR OTHER ENTITY
_______________________________________________________________________
Name
_______________________________________________________________________
Tax ID Number Type of entity
_______________________________________________________________________
Officer or Partner authorized to act on the account
2. ADDRESS AND CITIZENSHIP
________________________________________________________________________________
Street or P.O. Box
________________________________________________________________________________
City State Zip Code
________________________________________________________________________________
Daytime Phone
________________________________________________________________________________
Evening Phone
Citizenship: / / U.S. Citizen
/ / Resident Alien
/ / Non-Resident Alien:_________________________
Country
________________________________________________________________________________
Name of Employer
________________________________________________________________________________
Address
* Joint tenancy with right of survivorship unless you reside in a community
property state or prefer otherwise. NOTE: BOTH SIGNATURES WILL BE REQUIRED FOR
CHANGES TO AN ACCOUNT WITH JOINT OWNERSHIP.
3. INVESTMENT INFORMATION
Minimum initial investment for each fund: $1,000; $250 for IRA and other
Retirement Plans, pension and profit sharing plans, custodial accounts under the
Uniform Gifts to Minors Act, trust and estate or qualifying group plans. There
is no minimum amount for subsequent investments. There is no subsequent minimum
investment in the case of IRA and plans described above.
A. Fund Name:
_____________________________________________________________
/ / Class A / / Class B / / Class C
Investment Amount: $____________________________________________________________
B. Fund Name:_____________________________________________________________
/ / Class A / / Class B / / Class C
Investment Amount: $____________________________________________________________
C. Fund Name:_____________________________________________________________
/ / Class A / / Class B / / Class C
Investment Amount: $____________________________________________________________
4. INVESTMENT SOURCE
/ / BY CHECK Please make check payable to State Street Bank and Trust
Company.
$______________________________________________________________________
/ / BY WIRE Call 1-800-628-0441 for instructions.
$______________________________________________________________________
Account No.
xxxiii
<PAGE> 42
5. DISTRIBUTION OPTION
See Prospectus for details. If box is not checked, all distributions will be
reinvested. (Check only one box)
/ / All dividends and capital gains reinvested
/ / Income dividends in cash, capital gains reinvested
/ / All dividends and capital gains paid in cash
/ / Income dividends reinvested, capital gains in cash
6. SHAREHOLDER PRIVILEGES
TELEPHONE EXCHANGE You may use the telephone to make exchanges among any series
in the Trust with the same registration. Unless the box below is checked, the
telephone service WILL be established. In the event of a fraudulent telephone
redemption, the investor will bear the risk of loss. See Prospectus. (Exchanges
are processed only in the same class of shares). The minimum exchange is $1,000
if establishing a new account.
/ / I do NOT want to make exchanges by telephone.
SYSTEMATIC EXCHANGES You can automatically exchange $100 or more on the same day
each month or quarter from one fund account to any other fund accounts on or
about the 15th of the month.
/ / I/We authorize Zweig Series Trust to exchange $________________________
from ____________________________________ to ___________________________________
Fund Name Fund Name
/ / Class A / / Class B / / Class C
beginning with the month of ____________________________________________________
on a / / monthly / / quarterly basis.
TELEPHONE/EXPEDITED REDEMPTION You may redeem shares by telephone. Proceeds will
be sent by check to the address of record. If the redemption is by wire ($1,000
minimum for wire redemption), please provide us with bank account information
below or attach a voided check to establish this service. Unless the box is
checked the telephone service WILL be established.
/ / I do NOT want to redeem my shares by telephone or wire.
WIRE INSTRUCTIONS: ____________________________________________
Name of Bank (Savings, Savings & Loan
and Credit Union; provide Correspondent
Bank information)
____________________________________________
Bank Account Title
____________________________________________
Bank Account Number (include branch #
and ABA #)
In the event of a fraudulent telephone redemption, the investor will bear the
risk of loss, since the Trust and its agents disclaim liability for acting upon
telephone instructions reasonably believed to be authentic. Reasonable
procedures are employed to confirm that instructions given by telephone are
genuine, such as requiring a form of personal identification from the caller,
providing written confirmation of these transactions and recording telephone
instructions.
xxxiv
<PAGE> 43
SYSTEMATIC CASH WITHDRAWAL PROGRAM You may receive a check monthly or quarterly
(minimum $25). There must be a minimum of $5,000 in the selected Series to
initiate this plan. Under this plan dividends and distributions must be
reinvested regardless of the option chosen in Section 5 and all shares must be
on deposit with State Street Bank, not in certificate form. (Shares redeemed may
be subject to a CDSC.) The amount you state will be redeemed or exchanged on or
about the 20th of the month.
/ / I/We authorize Zweig Series Trust to withdraw $________________________
from _____________________ / / Class A / / Class B
Fund Name / / Class C
beginning with the month of ___________________________________________
on a / / monthly / / quarterly basis.
If you wish to have your check mailed to an address other than the
address named in Section 2, complete the next section and sign where
indicated.
_______________________________________________________________________
Name (first, middle, last)
_______________________________________________________________________
Address
_______________________________________________________________________
City State Zip Code
PLEASE SIGN:
_______________________________________________________________________
Signature Signature
AUTOMATIC INVESTMENT PLAN You can automatically move $100 or more (no minimum
for IRA and other plans as described in Section 3) from your bank account --
Savings -- Checking into any of your fund accounts on or about the 15th of the
month. Please attach a voided check or deposit slip from your bank account. If
your investment is by wire please provide bank information below.
/ / I authorize Zweig to make regular investments of $_____________________
into my account in ____________________________________________________
Fund Name
/ / Class A / / Class B / / Class C
beginning with the month of ___________________________________________
on the ____ day (choose any day from the 2nd to the 28th) of each
/ / month / /__ quarter
WIRE INSTRUCTIONS: ____________________________________________
Name of Bank (Savings, Savings & Loan
and Credit Union; provide Correspondent
Bank information)
____________________________________________
Bank Account Title
____________________________________________
Bank Account Number (include branch #
and ABA #)
xxxv
<PAGE> 44
ZWEIG SAVINGS PLAN The Trust will send you an invoice each month or quarter in
order to make regular investments into the Trust. The minimum amount is $100.
You are under no obligation to make these payments.
/ / YES, I want to join the Savings Plan and make regular
investments of $______________ into my account.
Please send me an invoice each / / month / / quarter.
7. LETTER OF INTENTION
You may qualify for a reduced sales charge by electing this item. I agree to the
Letter of Intention provisions outlined in the prospectus, and intend to invest
over a 13-month period beginning _______________, 19__ (purchase date not more
than 90 days prior to this Letter):
/ / $50,000 / / $100,000 / / $250,000 / / $500,000 / / $1,000,000
8. DEALERS AND ADVISERS ONLY
If certification below is executed, duplicate statements will be sent to the
address indicated below. Please be sure to enter the correct Financial
Professional Number and Branch Number.
________________________________________________________________________________
Financial Professional's Name Financial Professional's Number
________________________________________________________________________________
Dealer/Adviser's Name Telephone
________________________________________________________________________________
Dealer/Adviser's Address Branch Number
9. YOUR ACCEPTANCE
ALL REGISTRANTS MUST SIGN. UNTIL A PROPERLY COMPLETED SIGNED APPLICATION HAS
BEEN RECEIVED BY STATE STREET BANK, NO REDEMPTIONS OR EXCHANGES FROM THE ACCOUNT
WILL BE PROCESSED.
I (we) have full right, authority, and legal capacity and am (are) of
legal age in state of residence to purchase shares of the designated Series. I
(we) affirm that I (we) have received the current prospectus of the designated
Series and agree to its terms.
I (we) agree that State Street Bank, Zweig Series Trust, Zweig
Securities Corp., or their officers or employees, will not be liable for any
loss, expense or cost for acting upon any instructions or inquiries believed to
be genuine.
I (we) acknowledge that unless I (we) have elected not to have
telephone privileges in Section 6 above, the account will be subject to the
telephone exchange and redemption privileges described in the current prospectus
and agree that the Trust, the distributor and Transfer Agent will not be liable
for any loss in acting on written or telephone instructions reasonably believed
by them to be authentic.
Under penalties of perjury, each undersigned certifies that the social
security or taxpayer identification number given above is correct and that I
(we) am (are) not subject to backup withholding because I (we) have not been
notified that I (we) am (are) subject to backup withholding or that the IRS has
notified me (us) that I (we) am (are) no longer subject. Sign below exactly as
the account is to be registered (corporations, etc., indicate titles):
________________________________________________________________________________
Individual or Custodian Name Date
xxxvi
<PAGE> 45
________________________________________________________________________________
Joint Registrant, if any
________________________________________________________________________________
Officer, Partner, Trustee, etc. Date Title
________________________________________________________________________________
Officer, Partner, Trustee, etc. Date Title
IMPORTANT:
No investment can be redeemed from an account within 15 days following purchase
if an investor purchases shares with a check which has not cleared. This
limitation does not apply to investments made by wire transfer. The Internal
Revenue Service requires that all taxpayers provide their Taxpayer
Identification Number (Social Security Number) in the space provided in Section
1 of the Application and certify to its correctness. Failure by non-exempt
taxpayers to furnish State Street Bank with their correct Taxpayer
Identification Number WILL result in withholding 31% of all taxable dividends
paid to the account and/or withholding on certain other payments to the account
(this is referred to as "backup withholding").
CONFIRMATION OF ACCOUNT ESTABLISHMENT __ Within a few days after the Application
is received by State Street Bank, a confirmation statement(s) showing the
account number(s), amount received, shares purchased and price paid per share
should be received by the registered shareholder for each Series selected.
SUBSEQUENT PAYMENTS __ A new application need not be submitted with additional
payments to an existing account if a current Application is on file with State
Street Bank. Subsequent purchases should be identified by account number and
account registration. This can be accomplished by using the payment stub
attached to the statement which you will receive shortly after making an
investment.
FOR APPLICATION ASSISTANCE OR RETIREMENT PLAN INFORMATION CALL 1-800-272-2700.
xxxvii
<PAGE> 46
TABLE OF CONTENTS
Fee table 2
Financial highlights 4
Zweig Series Trust 7
Investment objectives of the Zweig Mutual Funds 7
Dr. Martin E. Zweig 8
The portfolio managers 9
Stock selection and bond duration 9
Portfolio securities 10
Risk factors and managing exposure to market risk 12
Other investment policies 17
Net asset value 18
Distributions and taxes 18
Exchange privilege 19
Choosing among classes of shares 19
How to invest in the Zweig Mutual Funds 23
How to redeem your shares 24
The distributor 26
The manager and management fee 26
Organization of the funds 27
Performance information 27
INVESTMENT MANAGER
Zweig/Glaser Advisers
5 Hanover Square-17th Floor
New York, New York 10004
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp.
5 Hanover Square-17th Floor
New York, New York 10004
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND PAYING AGENT
State Street Bank & Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
No dealer, salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
in connection with the offer contained in this Prospectus, and, if given or
made, such other information or representations must not be relied upon as
having been authorized by the Trust, the Investment Manager or the Distributor.
This prospectus does not constitute an offering in any state in which such
offering may not lawfully be made.
Zweig
Series Trust
PROSPECTUS
Zweig Strategy Fund
Zweig Appreciation Fund
Zweig Managed Assets
Zweig Government Fund
Zweig Cash Fund
May 1, 1996
xxxviii
<PAGE> 47
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG STRATEGY
FUND CLASS A SHARES, THE STANDARD & POOR'S 500 INDEX AND THE
CONSUMER PRICE INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995
[The table below was represented as a line graph in the printed material.]
Zweig Consumer
Strategy S&P Price
Fund 500 Index
---------- ---------- ----------
Dec. 29, 1989 $ 9,450.00 $10,000.00 $10,000.00
1989 9,466.66 10,078.00 10,010.00
1990 9,261.99 9,690.27 10,636.00
1991 11,431.47 12,660.45 10,953.00
1992 12,301.46 13,623.49 11,278.00
1993 14,134.00 15,003.84 11,587.00
1994 14,295.00 15,198.00 11,895.00
1995 17,885.90 20,903.33 12,164.00
Average Annual Total Return - Class A Shares
1 year 5 year from inception on 12/29/89
25.12% 14.06% 11.21%
CLASS C SHARES - Zweig Strategy Fund also offers Class C Shares. The
performance of Class C Shares will be greater or less than Class A Shares
depending on sales charges, fees and the length of time the shares are held.
Average Annual Total Return - Class C Shares
1 year From inception on 2/4/92
24.26% 11.12%
Past performance is not predictive of future results.
<PAGE> 48
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG MANAGED ASSETS
CLASS A SHARES AND CLASS C SHARES, THE STANDARD & POOR'S 500 INDEX, A BLENDED
INDEX COMPRISED OF 60% OF THE LEHMAN COMPOSITE GOVERNMENT BOND INDEX AND 40%
OF THE STANDARD & POOR'S 500 INDEX AND THE CONSUMER PRICE INDEX FOR THE
PERIOD ENDED DECEMBER 31, 1995
[The table below was represented as a line graph in the printed material.]
Zweig Zweig
Managed Managed Consumer
Assets Assets Price S&P
Class A Class C Index 60/40* 500
------- ------- -------- -------- -------
Feb. 8, 1993 $ 9,450 $10,000 $10,000 $10,000 $10,000
Dec. 31, 1993 10,582 11,009 10,252 10,744 10,675
Dec. 31, 1994 10,272 10,606 10,526 10,604 10,813
Dec. 31, 1995 11,942 12,244 10,764 13,113 14,872
Average Annual Total Return - Class A Shares
1 year from inception on 2/8/93
16.26% 8.43%
Average Annual Total Return - Class C Shares
1 year From inception on 2/8/93
15.44% 7.67%
* A blended index comprised of 60% Lehman Composite Government Bond Index and
40% Standard & Poor's 500 Index.
Past performance is not predictive of future results.
<PAGE> 49
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN ZWEIG APPRECIATION
FUND CLASS A SHARES, THE VALUE LINE GEOMETRIC INDEX AND THE
CONSUMER PRICE INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995
[The table below was represented as a line graph in the printed material.]
Zweig Value Line Consumer
Appreciation Geometric Price
Fund Index Index
------------ ---------- ----------
Oct. 7, 1991 $ 9,450.00 $10,000.00 $10,000.00
1991 10,025.00 10,457.00 10,088.00
1992 10,980.83 11,260.10 10,388.00
1993 12,589.66 12,549.38 10,673.00
1994 12,360.00 12,047.00 10,958.00
1995 15,326.40 14,673.25 11,206.00
Average Annual Total Return - Class A Shares
1 year from inception on 10/7/91
24.00% 12.09%
CLASS C SHARES - Zweig Appreciation Fund also offers Class C Shares. The
performance of Shares will be greater or less than Class A Shares depending on
sales charges, fees and the length of time the shares are held.
Average Annual Total Return - Class C Shares
1 year From inception on 2/4/92
23.20% 9.82%
Past performance is not predictive of future results.
<PAGE> 50
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN GOVERNMENT
SECURITIES SERIES CLASS A SHARES, LEHMAN COMPOSITE GOVERNMENT BOND
INDEX AND THE CONSUMER PRICE INDEX FOR THE PERIOD ENDED DECEMBER 31, 1995
[The table below was represented as a line graph in the printed material.]
Lehman
Government Composite Consumer
Securities Government Price
Series Index Index
---------- ---------- ----------
Mar. 25, 1985 $ 9,525.00 $10,000.00 $10,000.00
1985 10,960.06 11,792.79 10,253.00
1986 12,080.96 13,598.41 10,375.00
1987 11,860.60 13,896.54 10,834.00
1988 12,462.37 14,874.32 11,311.00
1989 14,073.63 16,991.45 11,836.00
1990 14,966.67 18,475.50 12,576.00
1991 17,157.84 21,307.97 12,951.00
1992 17,932.25 22,847.56 13,335.00
1993 19,487.00 25,282.15 13,701.00
1994 18,936.00 24,427.00 14,067.00
1995 21,556.74 28,906.92 14,385.00
Average Annual Total Return - Class A Shares
1 year 5 year from inception on 3/25/85
13.84% 7.84% 7.87%
CLASS C SHARES - Government Securities Series also offers Class C Shares. The
performance of Class C Shares will be greater or less than Class A Shares
depending on sales charges, fees and the length of time the shares are held.
Average Annual Total Return - Class C Shares
1 year From inception on 2/4/92
13.27% 6.44%
Past performance is not predictive of future results.
<PAGE> 51
[Zweig Cash Fund Prospectus]
ARTWORK
ZWEIG CASH FUND is a professionally managed money market fund that
seeks high current income consistent with liquidity and preservation of capital.
The fund invests in short-term securities issued or guaranteed as to the payment
of principal and interest by the United States Government, its agencies or
instrumentalities, and repurchase agreements with respect to such securities.
Shares of the fund are sold at net asset value.
The fund is one of five different funds, or series, of Zweig Series
Trust. Each fund has its own investment objectives and policies and each offers
different classes of shares. This prospectus describes Class M Shares of Zweig
Cash Fund. Class A Shares and Class C Shares of the fund are described in a
separate prospectus, which includes a description of the other series of the
Trust.
Zweig/Glaser Advisers selects and manages the fund's investments. Zweig
Securities Corp. is the principal distributor of the fund's shares.
Shares of the fund are not deposits or obligations of, or guaranteed,
endorsed or insured by, the U.S. Government, any bank, the Federal Deposit
Insurance Corp., the Federal Reserve Board, or any other agency, entity, or
person. The Zweig Cash Fund seeks to maintain a stable share price of $1.00.
There can be no assurance that the fund will meet this goal.
This prospectus contains important information that you should know
before investing. Please keep it for future reference. A Statement of Additional
Information (SAI) dated May 1, 1996, has been filed with the Securities and
Exchange Commission. The SAI is incorporated by reference into this prospectus.
You can obtain a copy without charge by calling 1-800-272-2700.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Zweig Series Trust
5 Hanover Square, 17th floor
New York, NY 10004
1-800-272-2700
1
<PAGE> 52
P R O S P E C T U S
May 1, 1996
Fee Table
We've provided the following table to help you understand the expenses
of investing in the Zweig Cash Fund. Mutual fund investors bear two types of
expenses: transaction expenses and operating expenses. You pay transaction
expenses when you buy shares in a fund. The fund as a whole pays operating
expenses, which reduce the fund's annual return to you.
<TABLE>
<CAPTION>
Zweig Cash Fund
-------------------------------------------------------
Class Class Class Class
M A B C
------ ------ ------ ------
<S> <C> <C> <C> <C>
Shareholder Transaction Expenses
Maximum Sales Charge (as % of Offering Price) 0% 0% 0% 0%
Contingent Deferred Sales Charge (CDSC)(1)(2) 0% 0% 5.00 1.25%
Annual Operating Expenses (as % of average net
assets)
Management Fees 0.50% 0.50% 0.50% 0.50%
Rule 12b-1 Fees (Asset Based Sales Charge and
Service Fees)(2) 0.07% 0.30% 1.00% 0.30%
Other Expenses 0.07% 0.07% 0.10% 0.07%
Total Operating Expenses (after reimbursement) 0.64%* 0.87%* 1.60%* 0.87%*
</TABLE>
* The Manager has voluntarily undertaken to limit the expenses of Zweig
Cash Fund (exclusive of taxes, interest, brokerage commissions, certain
distribution fees and extraordinary expenses) to .35% of its average
net assets effective November 9, 1995. The Manager reserves the right
to discontinue this policy at any time.
(1) A deferred sales charge on Class C Shares applies only if redemption
occurs within one year from purchase. The maximum CDSC is imposed on
Class B shares redeemed in the first year. For shares held longer than
one year, the CDSC declines over the succeeding six years to zero.
(2) The Rule 12b-1 distribution plan for Class M shares is described under
"The distributor". A separate Rule 12b-1 plan for Class A, Class B and
Class C shares provides for a 0.25% Service Fee, 100% of which is
reallocated to National Association of Securities Dealers, Inc. (NASD)
member firms for continuous personal service by such members to
investors in the Trust, such as responding to shareholder inquiries,
quoting net asset values, providing current marketing materials and
attending to other shareholder matters. The Distributor retains 0.05%
of the asset based sales charge also included in the Rule 12b-1 Fees.
Examples -- The table below is based on operating expenses for the
last fiscal year. It does not represent future expense levels, which may be
greater or less than those shown. Federal regulations require the examples to
assume a 5% annual return, but actual annual returns have varied.
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<PAGE> 53
Your investment of $1,000 would incur the following expenses:
<TABLE>
<CAPTION>
1 Year 3 Years 5 Years
----------------------------- ------------------------------- -------------------
Class
M Class A Class C Class M Class A Class C Class M Class A
----- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Assuming 5% annual return and
redemption at the end of each
period: $7.15 $9.18 $21.68 $22.39 $28.70 $28.70 $38.96 $49.85
Assuming 5% annual return but no
redemption: $7.15 $9.18 $ 9.18 $22.39 $28.70 $28.70 $38.96 $49.85
<CAPTION>
5 Years 10 Years
---------- ---------------------------------------------
Class C Class M Class A Class C
---------- --------- ---------- --------
<S> <C> <C> <C> <C>
Assuming 5% annual return and
redemption at the end of each
period: $ 49.85 $ 87.05 $ 110.78 $110.78
Assuming 5% annual return but no $110.78
redemption $ 49.85 $ 87.05 $ 110.78
</TABLE>
Zweig Cash Fund is a convenient way to invest idle cash in a money
market fund that invests in short-term securities issued or guaranteed as to the
payment of principal and interest by the U.S. Government, its agencies or
instrumentalities, and repurchase agreements with respect to such obligations.
The fund is a series of Zweig Series Trust.
The fund seeks high current income consistent with maintaining
liquidity and preserving capital. The goal of the fund is to maintain a stable
share price of $1.00.
Financial Highlights
The following table sets forth financial history for a share of
each class of Zweig Cash Fund. Data for Class M Shares of Zweig Cash Fund prior
to May 1, 1994, is from Zweig Cash Fund Inc., its predecessor by merger.
Coopers & Lybrand L.L.P., the fund's independent accountants, has
audited this information. Their report for each of the last five years is
included in the 1995 Annual Report of Zweig Series Trust. The report is
available upon request and is incorporated by reference into the Statement of
Additional Information.
2
<PAGE> 54
<TABLE>
<CAPTION>
Net
Net Realized
Asset and Total Dividends Distributions
Value Net Unrealized from from Net from Distributions
Year Beginning Investment Gains Investment Investment Realized from Capital Total
Ended of Year Income (Losses) Operations Income Capital Gains Paid-in Distributions
----- --------- ---------- ---------- ---------- ---------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Zweig Cash Fund Class M(1)
1995 $1.00 $0.05 -- $0.05 (0.05) -- -- $(0.05)
1994 1.00 0.04 -- 0.04 (0.04) -- -- (0.04)
1993 1.00 0.03 -- 0.03 (0.03) -- -- (0.03)
1992 1.00 0.03 -- 0.03 (0.03) -- -- (0.03)
1991 1.00 0.06 -- 0.06 (0.06) -- -- (0.06)
1990 1.00 0.07 -- 0.07 (0.07) -- -- (0.07)
1989 1.00 0.08 -- 0.08 (0.08) -- -- (0.08)
1988 1.00 0.07 -- 0.07 (0.07) -- -- (0.07)
1987 1.00 0.06 -- 0.06 (0.06) -- -- (0.06)
1986 1.00 0.06 -- 0.06 (0.06) -- -- (0.06)
Zweig Cash Fund Class A
1995 1.00 0.05 -- 0.05 (0.05) -- -- (0.05)
1994(2) 1.00 0.03 -- 0.03 (0.03) -- -- (0.03)
Zweig Cash Fund Class C
1995 1.00 0.05 -- 0.05 (0.05) -- -- (0.05)
1994(2) 1.00 0.03 -- 0.03 (0.03) -- -- (0.03)
<CAPTION>
Ratios To Average Net Assets
Net Asset ------------------------------- End of Year
Year Value Total Investment Net Assets
Ended End of Year Return Expenses Income (in thousands)
----- ----------- ------ -------- ---------- --------------
<S> <C> <C> <C> <C> <C>
1995 $1.00 5.32% 0.64% 5.20% $48,515
1994 1.00 3.67 0.70 3.58 78,149
1993 1.00 2.86 0.70 2.83 92,471
1992 1.00 3.40 0.70 3.35 145,169
1991 1.00 5.63 0.66 5.63 126,019
1990 1.00 7.53 0.72 7.27 189,943
1989 1.00 8.53 0.77 8.24 163,288
1988 1.00 7.16 0.63 6.93 291,836
1987 1.00 6.08 0.65 5.89 332,773
1986 1.00 6.52 0.68 6.25 318,962
Zweig Cash Fund Class A
1995 1.00 5.08 0.87 4.97 3,661
1994(2) 1.00 2.55* 0.62* 2.52* 4,303
Zweig Cash Fund Class B
1995 1.00 5.08 0.87 4.97 4,458
1994(2) 1.00 2.55* 0.61* 2.52* 5,040
</TABLE>
Ratios to Average
(1) During [1995,] 1994, 1993, 1992 and 1991, the Manager voluntarily
reimbursed Zweig Cash Fund Class M $.001 per share .10% ratio of
operating expenses to average net assets) .002 per share (.15% ratio of
operating expenses to average net assets) $.001 per share (.08% ratio
of operating expenses to average net assets) $.002 per share (.15%
ratio of operating expenses to average net assets) and $.001 per share
(.15% ratio of operating expenses to average net assets), respectively.
(2) Commenced operations May 1, 1994.
* Not Annualized
3
<PAGE> 55
INVESTMENTS AND RISK FACTORS
The fund invests in short-term securities issued or guaranteed as to
the payment of principal and interest by the United States Government, its
agencies or instrumentalities and repurchase agreements with respect to such
securities. Not all U.S. Government securities are backed by the full faith and
credit of the United States. Some are supported only by the credit of the agency
or instrumentality that issued them. Obligations of the U.S. Government and its
agencies and instrumentalities are considered to have minimal risk of default,
but they are not free from risks related to changes in interest rate levels. The
value of debt securities, including those held by the fund, varies inversely
with changes in interest rate levels.
U.S. Government agencies and instrumentalities include: Bank for
Cooperatives, Export-Import Bank of the U.S., Farmers Home Administration,
Federal Financing Bank, Federal Home Loan Banks, Federal Home Loan Mortgage
Corp., Federal Housing Administration, Federal Intermediate Credit Banks,
Federal Land Banks, Federal National Mortgage Association, Government National
Mortgage Association, Resolution Funding Corp., Student Loan Marketing
Association, Tennessee Valley Authority and U.S. Postal Service.
Repurchase agreements are arrangements by which the fund buys a
security at one price and at the same time agrees to sell the security back to
the seller at a higher price, usually on the next business day. Repurchase
agreements offer a means of generating income from excess cash that the fund
might otherwise hold. Delays in payment or losses may result if the other party
to the agreement defaults or becomes bankrupt. The fund will enter into
repurchase agreements only with member banks of the Federal Reserve System or
primary dealers in U.S. Government securities. The fund's repurchase agreements
must be fully backed by collateral (U.S. Government securities) that is marked
to market, or priced, each day.
The fund may purchase a security on a when-issued or delayed-delivery
basis, i.e., with delivery and payment deferred to a future date. The money to
purchase such securities will be invested in other securities until the fund
receives delivery. This could increase the possibility that the fund's net asset
value might be affected by changes in interest rates.
Although it has not used these practices in the past, the fund may:
lend its securities to other financial institutions to earn income; borrow money
for temporary purposes; and invest up to 10% of its net assets in illiquid
securities, such as repurchase agreements maturing in more than seven days. The
investment
4
<PAGE> 56
objective and these practices can be changed only by vote of a majority of the
outstanding shares of the fund. A majority for this purpose is defined as the
lesser of either: (a) 67% of the shares represented at a meeting if at least 50%
of all shares are represented; or (b) more than 50% of all outstanding shares.
The Statement of Additional Information has further details about the
investments and policies of the fund. As with any mutual fund, there is no
assurance that the fund's objective will be achieved.
NET ASSET VALUE, DISTRIBUTIONS AND TAXES
NET ASSET VALUE. The net asset value of each class of shares is
determined as of 2:00 p.m. New York time and as of the close of regular trading
on the New York Stock Exchange ("NYSE") on each day the NYSE is open. The
liabilities of the fund are subtracted from its assets to determine total net
assets. Each class's proportionate interest in the fund's net assets is
determined. The liabilities of that class, including its distribution fees, are
then deducted and the resulting amount is divided by the number of shares of
that class outstanding to produce its net asset value per share. The fund
attempts to stabilize its share price at $1.00 and uses the amortized cost
method of valuing its investments.
DISTRIBUTIONS AND TAXES. The fund intends to qualify as a regulated
investment company for federal income tax purposes and to distribute to its
shareholders all income and net capital gains so as to be relieved of federal
taxes. The fund declares dividends at 2:00 p.m. New York time on each day the
NYSE is open for trading of all its net income, including: accrued interest,
earned discounts, and realized gains and losses, less amortized premiums and
accrued expenses. Dividends are declared separately for each class of shares.
The fund pays or reinvests these dividends at net asset value on the last
business day of each month unless a shareholder elects to receive distributions
in cash. Distributions of income and short-term capital gains are taxed as
dividends (the fund does not expect to realize any long-term capital gains).
Distributions are taxable when paid, whether taken in cash or reinvested. By
January 31st of each year, we will send you a statement showing the tax status
of your distributions for the prior year. The foregoing is a summary of certain
federal income tax consequences. Be sure to consult your own tax adviser to
determine the precise effect on your particular tax situation, as well as any
state and local tax consequences.
HOW TO BUY SHARES
Class M shares of the fund are sold at net asset value without the
imposition of a sales charge. You can buy shares directly from the fund's
transfer agent, through an investment professional, or automatically through a
regular investment plan. The minimum initial investment is $10,000 except for
service organizations whose clients have made aggregate minimum purchases of
5
<PAGE> 57
$1,000,000, the minimum is $1,000. There is no minimum amount for additional
investments. Purchase orders become effective after receipt of Federal funds by
the transfer agent. Purchase orders received by the transfer agent by 2:00 p.m.
New York time earn dividends that day if payment is received in Federal funds
by 4:00 p.m. New York time. We reserve the right to change or waive minimums
or to refuse any order.
BUYING SHARES FROM AN INVESTMENT DEALER. If you invest through a
broker, bank or other institution, that firm or institution may have its own
service features and/or fees. If you wish us to refer you to an investment
professional, call us at 1-800-272-2700. Investment professionals receive
compensation for providing investment advice, and such compensation differs for
selling shares of different classes of the Zweig Mutual Funds.
AUTOMATICALLY THROUGH SWEEP PROGRAMS. Customers of participating
securities dealers and banks may participate in sweep programs by which an
account with the dealer or bank is coordinated with an account in the fund.
Purchases and sales are made by the participating securities dealer or bank as
agent of their customer. For further information about the sweep program, see
the Statement of Additional Information or call 1 -800-272-2700.
BUYING SHARES THROUGH THE TRANSFER AGENT. Send a letter to the transfer
agent directing that Zweig Cash Fund Class M Shares are to be purchased with
your check. The address is: Zweig Cash Fund c/o State Street Bank & Trust Co.,
P.O. Box 8505, Boston, MA 02266-8505. Make your check payable to State Street
Bank & Trust Co. You may deliver your order by courier or overnight mail to
State Street's offices at: 2 Heritage Drive (3rd floor), North Quincy, MA 02171,
Attention: Zweig Mutual Funds. You also may wire your order with Federal funds.
For wiring instructions, call 1-800-628-0441.
BUYING SHARES THROUGH AN INVESTMENT PLAN. You can invest in the fund
through an automatic investment plan. For further details, call 1-800-272-2700.
HOW TO REDEEM SHARES
You can redeem your shares at net asset value on any day the NYSE is
open through the transfer agent if the shares are registered in your name, or
through the investment dealer or institution through which you purchased your
shares.
THROUGH YOUR INVESTMENT DEALER. If your account has been established by
your investment dealer or other institution, contact your investment
professional, who will assist you with your redemption.
THROUGH THE TRANSFER AGENT BY MAIL. If the shares are registered in
your name, send a letter of instruction signed exactly as the shares are
registered,
6
<PAGE> 58
with signature guarantees from an appropriate guarantor, and any certificates
that represent the shares you wish to redeem. A signature guarantee is required
whether or not certificates are involved. Mail the information to: Zweig Cash
Fund c/o State Street Bank & Trust Co., P.O. Box 8505, Boston, MA 02266-8505.
Appropriate signature guarantors include: banks, savings associations, credit
unions, member firms of a national securities exchange, municipal securities
dealers and government securities dealers. See the Statement of Additional
Information or call 1-800-272-2700 for more information. Redemption instructions
by corporate and fiduciary shareholders also must be accompanied by appropriate
documentation establishing the authority of the person seeking to act on behalf
of the account.
THROUGH THE TRANSFER AGENT BY TELEPHONE. The transfer agent must
receive your instructions before 2:00 p.m. in order to redeem shares that day.
You may issue a telephone redemption request directly to the transfer agent at
1- 800-628-0441 if: (a) your account is registered for telephone/expedited
redemption privileges, and (b) your shares are held at the transfer agent
without certificates. If you designated a domestic bank on the Application Form
when you opened your account, you may have redemption proceeds of $1,000 or more
wired to that bank. Subsequent directions for wiring proceeds require a
signature guarantee from an appropriate guarantor. The maximum amount that may
be redeemed for joint accounts by telephone is $25,000. Neither the fund, the
distributor, nor the transfer agent will be liable for any loss in acting on
telephone instructions reasonably believed to be authentic. In the event of a
fraudulent telephone redemption, the investor will bear the risk of loss.
Because the fund may otherwise be liable for any losses due to unauthorized or
fraudulent instructions, reasonable procedures are employed to confirm that
instructions given by phone are genuine. These include: requiring a form of
personal identification from the caller and recording telephone instructions.
For identification purposes, the transfer agent may require such information as
it deems necessary before accepting redemption instructions.
During periods of extremely drastic economic or market changes, it may
become difficult to implement a telephone redemption. In the event that you have
difficulty reaching the transfer agent at its toll-free number, you should
consider sending written redemption instructions in the manner explained above.
We reserve the right to refuse telephone redemption requests and to limit their
amount or frequency. If, however, we determine not to accept a telephone
redemption request, we will seek to advise you promptly of that decision and, to
the extent feasible, will communicate that decision by telephone.
THROUGH THE TRANSFER AGENT BY CHECK. You may establish a Check Service
with State Street Bank and Trust Company. Checks must be in amounts of $500 or
more. To obtain redemption checks, complete an application form which can be
obtained by calling 1-800-272-2700. When a check is presented for payment, State
Street will redeem full and fractional shares in your account to cover the
amount of the check. State Street will not honor a check for less than $500 or
7
<PAGE> 59
for an amount exceeding the value of your account at the time the check is
presented. We reserve the right to impose a service charge for check
redemptions, stop payment orders and returned checks.
AUTOMATICALLY THROUGH SWEEP PROGRAMS. See "Purchase of Shares" above.
MINIMUM ACCOUNT SIZE. If your account balance falls below $10,000 as a
result of redeeming shares, you may be given 60 days' notice to reestablish the
minimum balance. If you do not increase your balance, we reserve the right to
close your account and send the proceeds to you. We normally will not close an
account maintained in connection with a tax-deferred retirement plan.
ORGANIZATION AND MANAGEMENT
The Trust was established as a Massachusetts business trust on
September 24, 1984 and reorganized as a Delaware business trust on April 30,
1996. The Trust is a mutual fund, or, in the technical terms of the Investment
Company Act of 1940 (the 1940 Act) under which it is regulated, an open-end,
diversified management investment company. It has an unlimited number of shares
of beneficial interest which, without shareholder approval, may be divided by
the trustees into an unlimited number of classes and funds. The shares presently
are divided into three classes of shares in the fund and two classes of shares
in the four other funds. Voting rights are based on a shareholder's total dollar
interest in a Series and are thus allocated in proportion to the value of each
shareholder's investment . Shares vote together on matters that concern the
entire Trust, or by individual fund or class when the Board of Trustees
determines that the matter affects only the interests of a particular fund or
class.
The Board of Trustees directs the management of the business of the
Trust. The Board has duties and responsibilities comparable to those of the
boards of directors of corporations, not to those of trustees under customary
trust principles. The trustees oversee the Trust's activities, elect the
officers of the Trust who are responsible for its day-to-day operations, review
contractual arrangements with the companies that provide services to the Trust,
and review investment performance.
THE MANAGER AND MANAGEMENT FEE. The fund's investments are managed by
Zweig/Glaser Advisers, 5 Hanover Square, 17th floor, New York, NY 10004. The
general partners of Zweig/Glaser Advisers are: Glaser Corp., a Delaware
corporation controlled by Eugene J. Glaser, and Zweig Management Corp., a
Delaware corporation controlled by Dr. Martin E. Zweig. The manager also: makes
recommendations with respect to the fund's business affairs; furnishes certain
administrative services, office space and equipment; and permits its employees
to serve as the officers of the Trust without additional compensation from the
fund. All other expenses incurred in the operation of the fund are borne by
8
<PAGE> 60
the fund, including: interest, taxes, fees and commissions of every kind;
expenses of issue, repurchase or redemption of shares; costs of registering or
qualifying shares for sale (including printing costs, legal fees and other
expenses relating to the preparation and filing the Trust's registration
statement with the appropriate regulatory authorities and the production and
filing of the Trust's prospectus); costs of insurance; association membership
dues; all charges of custodians, including fees as custodian, escrow agent, and
fees for keeping books and performing portfolio valuations; all charges of
transfer agents, registrars, pricing services, independent accountants and legal
counsel; expenses of preparing, printing and distributing prospectuses and all
proxy materials, reports and notices to shareholders; expenses of distribution
of shares pursuant to the Rule 12b-1 Plan described below; out-of-pocket
expenses of trustees; fees of trustees who are not "independent persons" as
defined in the 1940 Act; and all other costs incident to the Trust's existence
as a business trust. Zweig/Glaser Advisers receives a fee equal to .50% of its
average daily net assets for managing the fund.
THE DISTRIBUTOR. Zweig Securities Corp. serves as principal distributor
of shares of the Zweig Mutual Funds. Class M Shares have a distribution sharing
plan pursuant to Rule 12b-1 under the Investment Company Act of 1940. The plan
provides that the distributor may enter into service agreements with securities
dealers, financial institutions, banks, and other industry professionals for
distribution, promotion and administration and servicing investors in the fund's
Class M Shares. Under the plan, the fund and the manager reimburse the
distributor in equal shares for service payments to service organizations of up
to 0.30% of the average daily net assets of the fund's Class M Shares. The plan
also provides that the fund will pay up to an additional $100,000 per annum for
marketing costs. In the past, the fund has never paid the full $100,000 per
annum, and it is not anticipated that the fund will pay the full $100,000 during
the present year.
PERFORMANCE INFORMATION
Occasionally, the fund may advertise current yield or effective yield.
Yield figures are based on historical earnings and are not intended to indicate
future performance. Current yield refers to the income generated by an
investment in the fund over a seven-day period specified in the advertisement.
This income is assumed to be generated each week for 52 weeks. This 52-week
income is then shown as a percentage of the investment. Effective yield is
calculated similarly but, when annualized, the income earned is assumed to be
reinvested. The effective yield will be slightly higher than the current yield
because of the compounding effect of the assumed reinvestment. The fund also may
include in advertising or marketing materials data from financial and other
publications or from surveys that deal with mutual fund or investment
statistics. The Statement of Additional Information lists some of such
publications and sources of data.
9
<PAGE> 61
INVESTMENT MANAGER
Zweig/Glaser Advisers
5 Hanover Square--17th Floor
New York, New York 10004
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10286
TRANSFER AGENT AND DIVIDEND PAYING AGENT
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10022
COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp.
5 Hanover Square--17th Floor
New York, New York 10004
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS, IN CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND,
IF GIVEN OR MADE, SUCH OTHER INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE TRUST, THE INVESTMENT MANAGER OR THE
DISTRIBUTOR. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY STATE IN
WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE.
10
<PAGE> 62
TABLE OF CONTENTS
Page
----
Fee Table.......................................................... 1
Financial Highlights............................................... 2
Investments and risk factors....................................... 4
Net asset value, distributions and taxes........................... 5
How to buy shares.................................................. 5
How to redeem shares............................................... 6
Organization and management........................................ 8
i
<PAGE> 63
ZWEIG SERIES TRUST
5 Hanover Square, New York, N.Y. 10004
STATEMENT OF ADDITIONAL INFORMATION
ZWEIG SERIES TRUST (the "Trust"), a Delaware business trust, is a
professionally managed, open-end, diversified, investment company which offers
investors the opportunity to invest in five Series. Each Series has distinct
investment objectives and policies, and a shareholder's interest is limited to
the Series and to the Class in which he or she owns shares. The five Series are:
Zweig Strategy Fund; Zweig Appreciation Fund; Zweig Managed Assets; Zweig
Government Fund; and Zweig Cash Fund (each a "Series").
The Trust has a distribution system that allows each Series to offer
investors the option of purchasing shares either subject to a front-end sales
charge coupled with a Rule 12b-1 Distribution Plan and service fee (except that
Zweig Cash Fund is offered without a sales charge) ("Class A Shares"); subject
to a declining contingent deferred sales charge ("CDSC"), a Rule 12b-1
Distribution Plan and a service fee ("Class B Shares"); or subject to a one year
CDSC, a Rule 12b-1 Distribution Plan and a service fee ("Class C Shares"). Zweig
Cash Fund also issues a fourth class of shares (Class M Shares), which is
described in a separate Statement of Additional Information. The Trust's
distribution system is described more fully in the Prospectus under the headings
"Choosing Among Classes of Shares," "How to Invest in the Zweig Mutual Funds"
and "Redemption of Shares."
The Trust is designed for long-term investors, including those who wish to
use shares of one or more Series as a funding vehicle for tax-deferred
retirement plans (including tax-qualified retirement plans and Individual
Retirement Account (IRA) plans), and not for investors who intend to liquidate
their investments after a short period of time.
Zweig/Glaser Advisers (the "Manager"), manages the investments of each
Series and Zweig Securities Corp. (the "Distributor"), an affiliate of the
Manager, is the principal distributor of the Trust's shares.
This Statement of Additional Information, which should be kept for future
reference, is not a prospectus. It should be read in conjunction with the
Prospectus of the Trust (the "Prospectus"), dated May 1, 1996, which can be
obtained without cost by contacting your financial consultant or by calling or
writing the Trust at the telephone number and address printed on this cover
page. This Statement of Additional Information is intended to provide you with
further information about the Trust.
Zweig Series Trust
(Toll Free--1-800-272-2700)
May 1, 1996
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TABLE OF CONTENTS Page
INVESTMENT OBJECTIVES AND POLICIES.................................... 3
INVESTMENT RESTRICTIONS............................................... 7
PURCHASE AND REDEMPTION OF SHARES..................................... 10
REINSTATEMENT PRIVILEGE .............................................. 10
EXCHANGE PRIVILEGE ................................................... 11
INVOLUNTARY REDEMPTIONS .............................................. 11
RETIREMENT PLANS...................................................... 11
NET ASSET VALUE AND TAXES............................................. 11
TRUSTEES AND OFFICERS OF THE TRUST.................................... 14
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES................... 16
INVESTMENT MANAGEMENT AND OTHER SERVICES.............................. 17
Manager ........................................................ 17
Distributor..................................................... 17
Distribution Plans.............................................. 18
Custodian, Transfer Agent and Dividend Paying Agent............. 20
Independent Accountants......................................... 20
Counsel......................................................... 20
PORTFOLIO TRANSACTIONS AND BROKERAGE.................................. 20
YIELD AND PERFORMANCE INFORMATION..................................... 21
REGISTRATION STATEMENT................................................ 23
FINANCIAL STATEMENTS.................................................. 23
APPENDIX I............................................................ 24
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INVESTMENT OBJECTIVES AND POLICIES
The Trust's investment objectives and policies and permitted investments are
described briefly in the Prospectus under the headings "Investment Objectives of
the Zweig Mutual Funds," "Portfolio Securities," "Stock Selection and Bond
Duration" and "Risk Factors and Managing Exposure to Market Risk." There can be
no assurance that a Series' investment objectives will be achieved. Set forth
below is additional information with respect to the investment objectives and
policies of certain Series and a description of certain financial instruments
and techniques utilized by certain Series.
Repurchase Agreements (All Series)
Repurchase agreements involve purchases of securities by a Series. In such a
transaction, at the time the Series purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller who also
simultaneously agrees to buy back the security at a fixed price and time. This
assumes a predetermined yield for the Series during its holding period, since
the resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an opportunity for the Series
to invest temporarily available cash. Repurchase agreements may be considered
loans to the seller collateralized by the underlying securities. The risk to the
Series is limited to the ability of the seller to pay the agreed-upon sum on the
repurchase date; in the event of default, the repurchase agreement provides that
the Series is entitled to sell the underlying collateral. If the value of the
collateral declines after the agreement is entered into, however, and if the
seller defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Series could incur a loss of
both principal and interest. The manager monitors the value of the collateral at
the time the transaction is entered into and at all times subsequent during the
term of the repurchase agreement in an effort to determine that the value of the
collateral always equals or exceeds the agreed-upon repurchase price to be paid
to the Series. If the seller were to be subject to a Federal bankruptcy
proceeding, the ability of the Series to liquidate the collateral could be
delayed or impaired because of certain provisions of the bankruptcy laws.
Options (All Series except Zweig Cash Fund)
When a Series writes an option, an amount equal to the premium received by
the Series is recorded as an asset and as an offsetting liability. The amount of
the liability is "marked-to-market" daily to reflect the current market value of
the option, which is the last sale price on the principal exchange on which such
option is traded or, in the absence of a sale, the mean between the latest bid
and offering prices. If an option written by Series expires, or a Series enters
into a closing purchase transaction, such Series will realize a gain (or, in the
latter case, a loss, if the cost of a closing transaction exceeds the premium
received) and the liability related to such option will be extinguished.
The premium paid by a Series for the purchase of a put option (its cost) is
recorded initially as an investment, the value of which is subsequently adjusted
to the current market value of the option. If the current market value of a put
option exceeds its premium, the excess represents unrealized appreciation;
conversely, if the premium exceeds the current market value, the excess
represents unrealized depreciation. The current market value of an option
purchased by a Series equals the option's last sale price on the principal
exchange on which it is traded or, in the absence of a sale, the mean between
the latest bid and offering prices.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Series generally
will purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange may exist. In such event, it
might not be possible to effect closing transactions in particular options, with
the result that the Series would have to exercise its options in order to
realize any profit and would incur transaction costs on the sale of underlying
securities pursuant to the exercise of put options. If a Series, as a covered
call option writer, is unable to effect a closing purchase transaction in a
secondary market, it will not be able to sell the underlying security until the
option expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (a) there may be insufficient interest in trading certain
options; (b) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both; (c) trading halts, suspensions or other
restrictions may be imposed with respect to particular classes or series of
options or underlying securities; (d) unusual or unforeseen circumstances may
interrupt normal operations on an exchange; (e) the facilities of an exchange or
the Options Clearing Corporation (the "OCC") may not at all times be adequate to
handle current trading volume; or (f) one or more exchanges might, for economic
or other reasons, decide or be compelled at some future date to discontinue the
trading of options (or a particular class or series of options), in which event
the secondary market
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on that exchange (or in that class or series of options) would cease to exist,
although outstanding options on that exchange that had been issued by the OCC as
a result of trades on that exchange would continue to be exercisable in
accordance with their terms.
In addition, there is no assurance that higher than anticipated trading
activity or other unforeseen events might not, at times, render certain of the
facilities of the OCC inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders.
The amount of the premiums which a Series may pay or receive may be
adversely affected as new or existing institutions, including other investment
companies, engage in or increase their option purchasing and writing activities.
In the event of a shortage of the underlying securities deliverable on
exercise of a listed option, the OCC has the authority to permit other,
generally comparable securities to be delivered in fulfillment of option
exercise obligations. If the OCC exercises its discretionary authority to allow
such other securities to be delivered, it may also adjust the exercise prices of
the affected options by setting different prices at which otherwise ineligible
securities may be delivered. As an alternative to permitting such substitute
deliveries, the OCC may impose special exercise settlement procedures.
Futures Contracts (All Series except Zweig Cash Fund)
Upon entering into a futures contract, a Series will initially be required
to deposit with a custodian an amount of "initial margin" of cash or U.S.
Treasury bills equal to approximately 1 1/2% of the contract amount. The nature
of initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract initial margin does not involve
the borrowing of funds by customers to finance the transactions. Rather, the
initial margin is in the nature of a performance bond or good faith deposit on
the contract which is returned to the Series upon termination of the futures
contract, assuming all contractual obligations have been satisfied.
Subsequent payments, called maintenance margin, to and from the broker, will
be made on a daily basis as the price of the underlying security fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as "marking to the market." For example, when the
Series has purchased a futures contract and the price of the underlying security
has risen, that position will have increased in value and the Series will
receive from the broker a maintenance margin payment equal to that increase in
value. Conversely, when the Series has purchased a futures contract and the
price of the underlying security has declined, the position would be less
valuable and the Series would be required to make a maintenance margin payment
to the broker. At any time prior to expiration of the futures contract, the
Series may elect to close the position by taking an opposite position which will
operate to terminate the Series' position in the futures contract. A final
determination of maintenance margin is then made, additional cash is required to
be paid by or released to the Series, and the Series realizes a loss or a gain.
While futures contracts based on securities do provide for the delivery and
acceptance of securities, such deliveries and acceptances are very seldom made.
Generally, the futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale is effected
by the Series entering into a futures contract purchase for the same aggregate
amount of the specific type of financial instrument with the same delivery date.
If the price in the sale exceeds the price in the offsetting purchase, the
Series immediately is paid the difference and thus realizes a gain. If the
offsetting purchase price exceeds the sales price, the Series pays the
difference and realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the Series entering into a futures contract sale. If the
offsetting sale price exceeds the purchase price, the Series realizes a gain,
and if the purchase price exceeds the offsetting price, the Series realizes a
loss.
There are several risks in connection with the use of futures contracts as a
hedging device. One risk arises due to the imperfect correlation between
movements in the price of the futures contracts and movements in the price of
the subject of the hedge. The price of the futures contract may move more than
or less than the price of the securities or currency being hedged.
If the price of the futures contracts moves less than the price of the
securities or currency hedged, the hedge will not be fully effective, but, if
the price of the securities or currency being hedged has moved in an unfavorable
direction, the Series would be in a better position than if it had not hedged at
all. If the price of the securities or currency being hedged has moved in a
favorable direction, this advantage will be partially offset by the movement in
the price of the futures contract. If the price of the futures contract moves
more than the price of the security or currency, the Series will experience
either a loss or gain on the futures which will not be completely offset by
movements in the prices of the securities or currency which is the subject of
the hedge.
To compensate for the imperfect correlation of such movements in price, the
Series may buy or sell futures contracts in a greater dollar amount than the
dollar amount of the securities or currency being hedged if the historical
volatility of the prices of such securities or currency has been greater than
the historical volatility of the
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futures contracts. Conversely, the Series may buy or sell fewer futures
contracts if the historical volatility of the price of the securities or
currency being hedged is less than the historical volatility of the futures
contracts.
It is also possible that, where a Series has sold futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of securities held in the Series' portfolio may decline. If this occurred, the
Series would lose money on the futures contracts and also experience a decline
in value in its portfolio securities. However, while this could occur for a very
brief period or to a very small degree, over time the value of a diversified
portfolio will tend to move in the same direction as the futures contracts.
Where futures are purchased to hedge against a possible increase in the cost
of securities before a Series is able to invest its cash (or cash equivalents)
in an orderly fashion, it is possible that the market may decline instead; if
the Series then concludes not to invest in the relevant securities at that time
because of concern as to possible further market decline or for other reasons,
the Series will realize a loss on the futures contract that is not offset by a
reduction in the price of securities purchased.
Another risk arises because the market prices of futures contracts may be
affected by certain factors. First, all participants in the futures market are
subject to initial margin and maintenance margin requirements. Rather than
meeting maintenance margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal relationship
between the debt securities and futures markets. Second, from the point of view
of speculators, the margin requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.
Due to the possibility of price distortion in the futures market and because
of the imperfect correlation between movements in securities and movements in
the prices of futures contracts, a correct forecast of interest rate trends by
the Manager may still not result in a successful hedging transaction over a very
short period of time.
Positions in futures contracts may be closed out only on an exchange or
board of trade which provides a secondary market for such futures. Although the
Trust intends to purchase or sell futures only on exchanges or boards of trade
where there appears to be an active secondary market, there is no assurance that
a liquid secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse price
movements, the Series would continue to be required to make daily cash payments
of maintenance margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contracts can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will, in fact, correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures contract.
Successful use of futures contracts by the Trust is also subject to the
Manager's ability to correctly predict movements in the direction of interest
rates and other factors affecting markets for securities. For example, if a
Series has hedged against the possibility of an increase in interest rates which
would adversely affect securities held in its portfolio and prices of such
securities increase instead, the Series will lose part or all of the benefit of
the increased value of its securities which it has hedged because it will have
offsetting losses in its futures positions. In addition, in such situations, if
the Series has insufficient cash, it may have to sell securities to meet
maintenance margin requirements. Such sales of securities may be, but will not
necessarily be, at increased prices which reflect the rising market. The Series
may have to sell securities at a time when it may be disadvantageous to do so.
Zweig Government Fund
Zweig Government Fund seeks a high total return from current income and
capital appreciation consistent with preservation of capital over the long term
by investing primarily in U.S. Government and agency securities, including
Government National Mortgage Association ("GNMA") mortgage-backed certificates,
and repurchase agreements collateralized by such securities.
It is the Series' policy that at least 65% of its total assets will be
invested in U.S. Government securities (including GNMA certificates), except
during times when the Manager believes that adoption of a temporary defensive
position is desirable due to prevailing market or economic conditions. For
temporary defensive purposes, the Series may hold cash or invest in money market
instruments.
The Series may write covered call options and secured put options, and
purchase put options on U.S. Government securities which are traded on an
exchange or over-the-counter. The Series also may purchase and sell interest
rate futures contracts and purchase and write put and call options on such
futures contracts as a means of hedging against changes in interest rates.
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Options on Government Securities
(i) On Treasury Bonds and Notes. Because the trading interest in Treasury
bonds and notes tends to center on the most recently auctioned issues, the
exchanges will not continue indefinitely to introduce new expirations with
respect to such options to replace expiring options on particular issues. The
expirations introduced at the commencement of options trading on a particular
issue will be allowed to run, with the possible addition of a limited number of
new expirations, as the original expirations expire. Options trading on each
issue of bonds or notes will thus be phased out as new options are listed on
more recent issues, and a full range of expirations will not ordinarily be
available on the exchange for every issue on which options are traded.
(ii) On Treasury Bills. Because the deliverable Treasury bill changes from
week to week, writers of Treasury bill calls cannot provide in advance for their
potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the Series holds a long position in Treasury
bills with a principal amount corresponding to the contract size of the option,
it may be hedged from a risk standpoint. In addition, the Series will maintain
Treasury bills, maturing no later than those which would be deliverable in the
event of exercise of a call option it has written, in a segregated account with
its custodian so that it will be treated as being covered for margin purposes.
(iii) On GNMA Certificates. Options on GNMA certificates are not currently
traded on any national securities exchange, although the Securities and Exchange
Commission (the "Commission") has approved such options for trading on the
Chicago Board Options Exchange. Since the remaining principal balance of GNMA
certificates declines each month as mortgage payments are made, the Series as a
writer of a GNMA call may find that the GNMA certificates it holds no longer
have a sufficient remaining principal balance to satisfy its delivery obligation
in the event of exercise of the call option it has written. Should this occur,
additional GNMA certificates from the same pool (if obtainable), or replacement
GNMA certificates, will have to be purchased in the cash market to meet delivery
obligations. The Series will either replace GNMA certificates representing cover
for call options it has written, or maintain in a segregated account with its
custodian cash or U.S. Government securities or other appropriate high grade
debt obligations having an aggregate value equal to the market value of the GNMA
certificates underlying the call options it has written.
The hours of trading for options on U.S. Government securities may not
conform to the hours during which the underlying securities are traded. To the
extent that the options markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the options markets.
Options are traded on exchanges on only a limited number of U.S. Government
securities and exchange regulations limit the maximum number of options which
may be written or purchased by a single investor or a group of investors acting
in concert. The Trust and other clients advised by the Manager may be deemed to
constitute a group for these purposes. In light of these limits, the Trust's
Board of Trustees (the "Board of Trustees" or the "Board") may determine at any
time to restrict or terminate the public offering of the Series' shares
(including through exchanges from the other Series).
Exchange markets in options on U.S. Government securities are a relatively
new and untested concept and it is impossible to predict the amount of trading
interest that may exist in such options. There can be no assurance that viable
exchange markets will develop or continue.
Futures Contracts on Government Securities
Currently futures contracts can be purchased and sold with respect to U.S.
Treasury bonds, U.S. Treasury notes and GNMA certificates on the Chicago Board
of Trade, and with respect to U.S. Treasury bills on the International Monetary
Market at the Chicago Mercantile Exchange.
Options on Futures Contracts
Currently, options can be purchased or sold with respect to futures
contracts on U.S. Treasury bonds on the Chicago Board of Trade.
The Series is required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements similar to those applicable to interest rate futures
contracts described above, and, in addition, net option premiums are included as
initial margin deposits. As with options on debt securities, the writer of an
option on a futures contract may terminate his position by selling or purchasing
an option of the same series. The ability to establish and close out positions
on such options is subject to the existence of a liquid secondary market. The
Series will not purchase options on futures contracts on any
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exchange unless and until, in the Manager's opinion, the market for such options
is sufficiently liquid that the risks in connection with options on futures
contracts are not greater than the risks in connection with futures contracts.
Compared to the purchase or sale of futures contracts, the purchase of
options on futures contracts involves less potential risk to the Series because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the Series when the use of a futures
contract would not, such as when there is no movement in the prices of debt
securities. Writing an option on a futures contract involves risks similar to
those arising in the sale of futures contracts, as described above.
In purchasing and selling futures contracts and in purchasing options on
futures contracts, the Series will comply with rules and interpretations of the
Commodity Futures Trading Commission ("CFTC") under which it is exempted from
regulation as a commodity pool operator. The CFTC regulations which exempt the
Series from regulation as a commodity pool operator require, among other things,
(i) that futures and related options be used solely for "bona fide hedging"
purposes, as defined in CFTC regulations or, alternatively, with respect to each
long futures or options position, the Series will ensure that the underlying
commodity value of such contract does not exceed the sum of segregated cash or
money market instruments, margin deposits on such contracts, cash proceeds from
investments due in 30 days and accrued profitson such contracts held by the
commodity broker, and (ii) that the Series not enter into futures and related
options for which the aggregate initial margin and premiums exceed 5% of the
fair market value of the Series' total assets. There is no other limitation on
the percentage of the Series' assets that may be invested in futures and related
options. The Internal Revenue Code's requirements for qualification as a
regulated investment company may limit the extent to which the Series can engage
in futures transactions.
Zweig Cash Fund
Zweig Cash Fund may invest in U.S. Treasury issues, such as bills,
certificates of indebtedness, notes and bonds, and issues of U.S. Government
agencies and instrumentalities which are established under the authority of an
act of Congress, such as the Government National Mortgage Association, Tennessee
Valley Authority, Bank for Cooperatives, Farmers Home Administration, Federal
Home Loan Banks, Federal Intermediate Credit Banks, Federal Land Banks,
Export-Import Bank of the U.S., Federal Housing Administration ("FHA"), Federal
Home Loan Mortgage Corporation, U.S. Postal Service, Federal Financial Bank,
Federal National Mortgage Association and Student Loan Marketing Association.
Some of these securities, such as Federal Housing Administration debenture
obligations, are supported by the full faith and credit of the U.S. Treasury;
others, such as obligations of Federal Home Loan Banks, are supported by the
right of the issuer to borrow from the U.S. Treasury; others, such as those of
the Federal National Mortgage Association, are supported by the discretionary
authority of the U.S. Government to purchase the agency's obligations; and still
others, such as those of the Student Loan Marketing Association, are supported
only by the credit of the instrumentality. The Series will not invest in
obligations of the International Bank for Reconstruction and Development (the
"World Bank"), the Asian Development Bank, or the Inter-American Development
Bank, or in FHA or VA pooled mortgages.
INVESTMENT RESTRICTIONS
The investment restrictions set forth below are fundamental policies of each
Series (other than Zweig Cash Fund, the investment restrictions of which are set
forth separately below), which cannot be changed with respect to a Series
without the approval of the holders of a majority of the outstanding voting
securities of that Series as defined in the Investment Company Act of 1940, as
amended (the "1940 Act") as the lesser of: (1) 67% or more of a Series' voting
securities present at a meeting of shareholders, if the holders of more than 50%
of a Series' outstanding voting securities are present in person or by proxy, or
(2) more than 50% of a Series' outstanding voting securities. However, these
policies may be modified by the Trustees, in their discretion, without
shareholder approval, to the extent necessary to facilitate the implementation
of a master-feeder structure for any or all of the Series (i.e., a structure
under which a particular Series acts as a feeder and invests all of its assets
in a single pooled master fund with substantially the same investment objectives
and policies). Unless otherwise indicated, all percentage limitations apply to
each Series on an individual basis, and apply only at the time an investment is
made; a later increase or decrease in percentage resulting from changes in
values or net assets will not be deemed to be an investment that is contrary to
these restrictions. Pursuant to such restrictions and policies, except as stated
above with respect to a master-feeder structure, no Series may:
- Purchase the securities of issuers conducting their principal business
activities in the same industry if immediately after such purchase the value of
its investments in such industry would be 25% or more of the value of the total
assets of the Series (there is no such limitation with respect to obligations of
the U.S.
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Government, its agencies and instrumentalities or with respect to investments in
other investment companies complying with such policy);
- With respect to 75% of a Series' assets, purchase the securities of any
one issuer, if immediately after such purchase (i) more than 5% of the value of
the total assets of any Series would be invested in such issuer or (ii) the
Series would own more than 10% of the outstanding voting securities of such
issuer (such limitations do not apply to securities issued by the U.S.
Government, its agencies or instrumentalities or with respect to investments in
other investment companies complying with such policy);
- Invest in real estate or real estate mortgage loans, interests in oil, gas
and/or mineral exploration or development programs, provided that this
limitation shall not prohibit the purchase of securities issued by companies,
which invest in real estate or interests therein, including real estate
investment trusts;
- Make loans, except that this restriction shall not prohibit the purchase
and holding of a portion of an issue of publicly distributed debt securities,
the lending of portfolio securities (if the aggregate value of the loaned
securities does not at any time exceed one-third of the total assets of the
Series), or the entry into repurchase agreements;
- Issue "senior securities," except as permitted under the Investment
Company Act of 1940;
- Act as an underwriter, except that a Series may technically be deemed an
underwriter under the Securities Act of 1933, as amended ("1933 Act"), in a
registration under such Act necessary to resell certain restricted securities;
- Invest in commodities or commodity contracts, except as described in the
Prospectus or purchase or sell physical commodities unless acquired as a result
of ownership of securities, provided that this limitation shall not prevent a
Series from purchasing and selling options and futures contracts; and
- Zweig Strategy Fund, Zweig Appreciation Fund and Zweig Government Fund may
not borrow amounts in excess of 20% of its total assets taken at cost or at
market value, whichever is lower, and then only from banks as a temporary
measure for extraordinary or emergency purposes. If such borrowings exceed 5% of
the Series' total assets, the Series will make no further investments until such
borrowing is repaid. It is the current intention of the Series not to borrow
money in excess of 5% of their assets. Each such Series may pledge up to 10% of
its total assets as security for such borrowing. For purposes of these
restrictions, the deposit of initial or maintenance margin in connection with
futures contracts will not be deemed to be a pledge of such Series' assets.
Zweig Managed Assets may not borrow money, unless from a bank, for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
1/3 of the value of the total assets of Zweig Managed Assets less liabilities
(other than borrowings). Any borrowings that come to exceed 1/3 of the value of
Zweig Managed Assets' total assets by reason of a decline in net assets will be
reduced within three days to the extent necessary to comply with the 1/3
limitations. Zweig Managed Assets does not intend to purchase any security while
borrowings representing more than 5% of its total assets are outstanding. This
5% limitation is not a fundamental policy of Zweig Managed Assets.
Non-Fundamental Restrictions
The investment restrictions set forth below are other investment policies of
each Series (except Zweig Cash Fund) that are non-fundamental that can be
changed by the Board of Trustees without a shareholder vote. Pursuant to such
restrictions and policies, no Series may:
- Borrow money, except from banks for temporary purposes in an amount up to
10% of the value of the Series' total assets. The Series may only pledge its
assets in an amount up to 10% of the value of its total assets, and then only to
secure such borrowings. The Series will borrow money only to accommodate
requests for the redemption of shares to effect an orderly liquidation of
portfolio securities or to clear securities transactions and not for leveraging
purposes; accordingly, it is anticipated that any such borrowing will be repaid
before additional investments are made. The Series currently does not intend to
borrow money to an extent exceeding 5% of its total assets.
- Purchase securities of any other investment company, except (i) by
purchase in the open market involving only customary brokers' commissions, (ii)
in connection with a merger, consolidation, reorganization or acquisition of
assets, or (iii) as otherwise permitted by applicable law;
- Make investments in securities for the purpose of exercising control over
or management of the issuer;
- Participate on a joint or a joint and several basis in any trading account
in securities. (The "bunching" of orders of two or more Series, or one or more
Series and of other accounts under the investment management
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of the Manager or its affiliates, for the sale or purchase of portfolio
securities shall not be considered participation in a joint securities trading
account);
- Purchase securities on margin, except such short-term credits as are
necessary for the clearance of transactions and initial and variation margin
payments in connection with transactions in futures contracts and options
contracts;
- Invest in securities of an issuer which, together with any predecessor,
has been in continuous operation for less than three years if, as a result, more
than 5% of the total assets of the Series would then be invested in such
securities;
- Sell securities short, except as described in the Prospectus and in
accordance with the following:
When a Series makes a short sale, the proceeds it receives will be
retained by the broker until the Series replaces the borrowed security. The
Series may, but will not necessarily, receive interest on such proceeds. In
order to deliver the security to the buyer, the Series must arrange through a
broker to borrow the security and, in so doing, the Series will become obligated
to replace the security borrowed at its market price at the time of replacement,
whatever that price may be. The Series may have to pay a premium to borrow the
security. The Series must pay to the broker any dividends or interest payable on
the security until the Series replaces the security;
A Series' obligation to replace the security borrowed in connection
with a short sale will be secured by collateral deposited with the broker,
consisting of cash or U.S. Government securities or other securities acceptable
to the broker. In addition, a Series will be required to deposit cash or U.S.
Government securities as collateral in a segregated account with a custodian in
an amount such that the value of both collateral deposits is at all times equal
to at least 100% of the current market value of the securities sold short. The
Series will receive the interest accruing on any U.S. Government securities held
as collateral in the segregated account with the custodian. The deposits do not
necessarily limit the Series' potential loss on a short sale, which may exceed
the entire amount of the collateral deposits;
If the price of the security sold short increases between the time of
the short sale and the time the Series replaces the borrowed security, the
Series will incur a loss, and if the price declines during this period, the
Series will realize a short-term capital gain. Any realized short-term capital
gain will be decreased, and any incurred loss increased, by the amount of
transaction costs and any premium, dividend or interest which the Series may
have to pay in connection with such short sale;
- Purchase the securities of an issuer if, to the Manager's knowledge, one
or more of the trustees or officers of the Trust or the officers of the Manager
individually own beneficially more than 1/2 of 1% of the outstanding securities
of such issuer and together such trustees and officers owning more than 1/2 of
1% own beneficially more than 5% of such securities;
- Purchase securities which are not readily marketable, such as certain
securities which are subject to legal or contractual restrictions on resale or
securities which are otherwise illiquid including "non-marketable" securities
and repurchase agreements having more than seven days remaining to maturity, if,
as a result, more than 15% of the Series' net assets would consist of such
securities;
- Invest more than 5% of its net assets in warrants valued at the lower of
cost or market (other than those that have been acquired in units or attached to
other securities). Included within that amount, no more than 2% of a Series' net
assets may be invested in warrants not traded on the NYSE or American Stock
Exchange. Zweig Government Fund and Zweig Cash Fund may not invest in warrants;
and
- A Series may lend its portfolio securities to a limited extent. Such loans
entitle the Series to cash collateral, and the extra cash thus obtained may be
invested in short-term, interest-bearing securities. The Series may make such
loans only to brokers or dealers who are members of the New York Stock Exchange
("NYSE"), or who have net capital, under the rules and regulations applicable to
such broker or dealer, of at least $10,000,000. Such loans will not be made
against less than 100% cash collateral, and the borrower will be required to
maintain the collateral at 100% of the market value (marked-to-market daily) of
the securities on loan. Loans will be made only if: (1) the Series retains the
right to obtain any dividend, interest or other distribution benefits on the
securities and any increase in their market value; and (2) the Series is able to
terminate the loan at any time (such right of termination will be exercised,
among other things, to obtain the return of the securities on loan for the
purpose of voting on any matters considered material by the Series' management).
It is the current intention of each Series not to engage in such activities to
an extent in excess of 5% of the value of the Series' total assets.
Restrictions Applicable to Zweig Cash Fund
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<PAGE> 72
Zweig Cash Fund has adopted certain restrictions and fundamental policies
which cannot be changed without approval by the holders of a majority of the
outstanding voting securities of Zweig Cash Fund as defined in the 1940 Act as
the lesser of: (1) 67% or more of the Fund's voting securities present at a
meeting of shareholders, if the holders of more than 50% of the Fund's
outstanding voting securities are present in person or by proxy, or (2) more
than 50% of the Fund's voting securities. However, these policies may also be
modified by the Trustees, in their discretion, without shareholder approval, to
the extent necessary to facilitate the implementation of a master-feeder
structure for Zweig Cash Fund. Pursuant to such restrictions and policies,
except as stated above with respect to a master-feeder structure, Zweig Cash
Fund may not:
- Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds, industrial revenue bonds or corporate
bonds or debentures;
- Borrow money, except from banks for temporary purposes in an amount up to
10% of the value of its total assets. Zweig Cash Fund may only pledge its assets
in an amount up to 10% of the value of its total assets, and then only to secure
such borrowings. Zweig Cash Fund will borrow money only to accommodate requests
to redeem shares to effect an orderly liquidation of portfolio securities or to
clear securities transactions and not for leveraging purposes; accordingly, it
is anticipated that any such borrowing will be repaid before additional
investments are made. Zweig Cash Fund currently does not intend to borrow money
to an extent exceeding 5% of its total assets. Zweig Cash Fund may not issue any
securities which would be deemed to be "senior securities" in contravention of
the 1940 Act;
- With respect to 75% of the value of the Zweig Cash Fund's total assets,
invest more than 5% of the value of its total assets in the securities of any
one issuer, except securities issued or guaranteed as to the payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities;
- Sell securities short;
- Write or purchase put or call options;
- Underwrite the securities of other issuers;
- Purchase or sell real estate, real estate investment trust securities,
commodities or oil and gas interests;
- Make loans to others, except that engaging in permissible activities
specified in the Prospectus under the heading "Risk Factors and Managing
Exposure to Market Risk" and in this Statement of Additional Information under
the headings "Investment Objectives and Policies" and "Investment Restrictions"
shall not be viewed as loans for this purpose;
- Invest more than an aggregate of 10% of Zweig Cash Fund's net assets
(taken at current value) in repurchase agreements maturing in more than seven
days and other "illiquid investments" (such as non-negotiable certificates of
deposit, non-negotiable time deposits or other "non-marketable" securities);
- Invest in companies for the purpose of exercising control; or
- Invest in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation or acquisition of assets.
The foregoing percentage restrictions apply at the time an investment is
made; a later increase or decrease in percentage may result from changes in
values or Zweig Cash Fund's net assets but will not be deemed to result in an
investment which is contrary to these restrictions.
PURCHASE AND REDEMPTION OF SHARES
Reference is made to the materials in the Prospectus under the headings
"Choosing Among Classes of Shares," "How to Invest in the Zweig Mutual Funds"
and "How to Redeem Your Shares," which describe the methods of purchase and
redemption of Trust shares.
No stock certificates will be issued unless specifically requested in
writing by an investor. Instead, an account will be established for each
investor and all shares purchased or received, including those obtained through
reinvestment of distributions, will be registered on the books of the Trust and
credited to such account.
If the Board of Trustees should determine that it is advisable in the
interest of the remaining shareholders of a Series or Class to make payment
wholly or partly in cash, the Series may pay redemption proceeds in whole or in
part by a distribution in kind of securities from the portfolio of a Series, in
lieu of cash, in conformity with the applicable rules of the Commission. If
shares are redeemed in kind, the redeeming shareholder might incur brokerage
costs in converting the assets into cash. Where the Trust makes a redemption in
kind, such redemption will be made in readily marketable securities whose value
is easily ascertainable. The method of valuing portfolio securities for this
purpose is as described under "Net Asset Value and Taxes." The Trust has,
however, elected
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<PAGE> 73
to be governed by Rule 18f-1 under the 1940 Act pursuant to which it is
obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of
its net assets during any 90-day period for any one shareholder.
REINSTATEMENT PRIVILEGE
Reinvestment of redemption proceeds under the reinstatement privilege
described in the prospectus will be made at the net asset value next determined
after receipt of the reinstatement order.
If the shareholder has realized a gain on the redemption, the transaction is
taxable and reinvestment will not alter any capital gains tax payable. If there
has been a loss on the redemption, some or all of the loss may not be allowed as
a tax deduction depending on the amount reinvested.
For purposes of determining the amount of CDSC payable on any subsequent
redemptions, the purchase payment made through exercise of the reinvestment
privilege will be deemed to have been made at the time of the initial purchase
(rather than at the time the reinvestment was effected).
EXCHANGE PRIVILEGE
Participating securities dealers who have signed a Selling Agreement with
the Distributor may exchange their clients' shares by telephone.
The minimum value of any class of shares that may be exchanged into a Series
in which shares are not already held is $1,000 and no exchange out of a Series
(other than by a complete exchange of all the shares of that Series) may be made
if it would reduce the shareholder's interest in that Series to less than
$1,000.
The Trust reserves the right at any time to modify or terminate the exchange
privilege with respect to one or more Series or classes of shares, if the Board
of Trustees determines that continuing the privilege may be detrimental to
shareholders.
INVOLUNTARY REDEMPTIONS
As with voluntary redemptions, an involuntary redemption may result in the
payment of a tax by the shareholder. (See "Distributions and Taxes" in the
Prospectus.)
RETIREMENT PLANS
Shares may be purchased in connection with all types of tax-deferred
retirement plans. Shares of one or more Series may be purchased in a single
application establishing a single plan account.
The minimum initial investment in connection with tax-deferred retirement
plans is $250 and the minimum may be waived on payments made directly to the
Transfer Agent. There is no minimum for additional purchase payments for
tax-deferred retirement plans.
NET ASSET VALUE AND TAXES
For all Series except Zweig Cash Fund, the net asset value per share of each
class of shares is determined as of the close of regular trading on the NYSE, on
each day that the NYSE is open. The NYSE is closed on the following holidays (or
the weekdays on which these holidays are celebrated when they fall on a
weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas.
Shares are entitled to dividends as declared by the Board and, on
liquidation of a Series, are entitled to receive their share of the net assets
of the Series. Shareholders have no preemptive rights. The Trust's fiscal year
ends on December 31.
Securities listed on a U.S. exchange and NASDAQ are valued on the basis of
the last sale prior to the time of valuation. If there has been no sale since
the immediately preceding valuation, then the mean between the current bid and
asked prices is used. Quotations are taken from the market in which the security
is primarily traded. Over-the-counter securities for which market quotations are
readily available are valued at the mean between the current bid and asked
prices. Securities for which market quotations are not readily available are
valued at fair value as determined by the Manager pursuant to procedures adopted
by the Board of Trustees. Notwithstanding the above, bond and other fixed-income
securities may be valued on the basis of prices provided by an established
pricing service when the Board believes that such prices reflect market values.
Foreign securities are valued on the basis of quotations from the primary market
in which they are traded and are translated from local currency into U.S.
dollars using current exchange rates.
Zweig Cash Fund. The net asset value per share of each class of shares is
determined at 2:00 p.m. New York time and as of the close of regular trading on
the NYSE, on each day the NYSE is open. The Board of Trustees of the Trust (the
"Board" or "Board of Trustees") has determined that it is in the best interests
of Zweig Cash Fund and its shareholders to seek to maintain a stable net asset
value per share, and that the appropriate method for
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<PAGE> 74
valuing portfolio securities is the amortized cost method, provided that such
method continues to fairly reflect the market-based net asset value per share.
The Board shall continuously review this method of valuation and make changes
that may be necessary to assure that Zweig Cash Fund's instruments are valued at
their fair value as determined by the Board in good faith.
The Board has determined that Zweig Cash Fund will comply with the
conditions of Rule 2a-7 under the Act regarding the amortized cost method of
valuing portfolio securities. Under Rule 2a-7, the Board is obligated, as a
particular responsibility within the overall duty of care owed to the Series'
shareholders, to establish procedures reasonably designed, taking into account
current market conditions and the Series' investment objectives, to stabilize
the net asset value per share of the Series for purposes of distribution and
redemption, at $1.00 per share. These procedures include periodically
monitoring, as the Board deems appropriate, at such intervals as are reasonable
in light of current market conditions, the relationship between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon available indications of market value. The
Board will consider what steps should be taken, if any, in the event of a
difference of more than 1/2 of 1% between the amortized cost value and the
market value per share. The Board will take such steps as it considers
appropriate (e.g., redemption in kind, selling portfolio instruments prior to
maturity to realize capital gains or losses, shortening the average portfolio
maturity, withholding dividends, or utilizing a net asset value per share
determined by using market quotations) to minimize any material dilution or
other unfair results that might arise from differences between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon market value.
Rule 2a-7 requires that a dollar-weighted average portfolio maturity of not
more than 90 days, appropriate to the objective of maintaining a stable net
asset value of $1.00 per share, be maintained, and precludes the purchase of any
instrument with a remaining time to maturity of more than 397 calendar days.
However, the underlying securities used as collateral for repurchase agreements
are not subject to these restrictions, because a repurchase agreement is deemed
to have a maturity equal to the period remaining until the date on which the
repurchase of the underlying securities is deemed to occur. Should the
disposition of a portfolio security result in a dollar- weighted average
portfolio maturity of more than 90 days, Zweig Cash Fund will invest its
available cash in a manner that will reduce such average maturity to 90 days or
less as soon as reasonably practicable. Rule 2a-7 also requires Zweig Cash Fund
to limit its investments to instruments that the Board determines present
minimal credit risks and that have been given one of the two highest rating
categories by nationally recognized statistical rating organizations, or, in the
case of instruments that are not so rated, are of comparable quality as
determined under procedures established by the Board.
It is the normal practice of Zweig Cash Fund to hold portfolio securities to
maturity and realize their par values, unless a prior sale or other disposition
thereof is mandated by redemption requirements or other extraordinary
circumstances. A debt security held to maturity is redeemable by its issuer at
its principal amount plus accrued interest. Under the amortized cost method of
valuation traditionally employed by institutions for valuation of money market
instruments, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of
Zweig Cash Fund (computed by dividing the annualized daily income on the Series'
portfolio by the net asset value computed as above) may tend to be higher than a
similar computation made by utilizing a method of valuation based upon market
prices and estimates. Zweig Cash Fund may, to a limited extent, engage in
short-term trading to attempt to take advantage of short-term market variations,
or may dispose of a portfolio security prior to its maturity if the Manager
believes such disposition advisable, or necessary to generate cash to satisfy
redemptions. In such cases, Zweig Cash Fund may realize a gain or loss.
Tax Status
Each Series of the Trust will be treated as a separate corporation for
purposes of the Internal Revenue Code of 1986, as amended (the "Code") (except
for purposes of the definitional requirements for regulated investment companies
under Code Section 851(a)). By paying dividends representing its investment
company taxable income within the time periods specified in the Code and by
meeting certain other requirements, each Series intends to qualify as a
regulated investment company under the Code. Since each Series will distribute
annually its investment company taxable income, net capital gains, and capital
gain net income, it will not be subject to income or excise taxes otherwise
applicable to undistributed income of a regulated investment company. If a
Series were to fail to distribute all its income and gains, it would be subject
to income tax and, in certain circumstances, a 4% excise tax.
Taxation of Shareholders
Dividends from net investment income and distributions from short-term
capital gains are taxable to shareholders as ordinary income. Distributions from
net capital gains that are properly designated as capital gains dividends
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are taxable to shareholders as long-term capital gains regardless of the length
of time the shares in respect of which such distributions are received have been
held.
Dividends from Zweig Cash Fund and the Zweig Government Fund are not
expected to qualify for the 70% dividends received deduction available to
corporate shareholders. Distributions by other Series out of their dividend
income from domestic corporations may qualify in whole or in part for the
deduction if the distributing Series does not sell the stock in respect of which
it received such dividends before satisfying a 46-day holding period requirement
(91 days for certain preferred stock), and the shareholder holds his Trust
shares in the distributing Series for at least 46 days. For this purpose, the
distributing Series holding period in such stock may be reduced for periods
during which the Series reduces its risk of loss from holding the stock (e.g.,
by entering into option contracts).
Investors who purchase shares shortly before the record date for a
distribution will pay a share price that includes the value of the anticipated
distribution and will be taxed on the distribution when it is received even
though with respect to them the distribution represents in effect a return of a
portion of their purchase price. Any loss realized on a sale or exchange of
shares will be disallowed if the shares disposed of are replaced within a period
of 61 days beginning 30 days before the shares are sold or exchanged. If
disallowed, the loss will be reflected in an adjustment to the basis of the
shares acquired.
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on dividends and other distributions from the
Series, as well as on the proceeds of redemptions of Series other than Zweig
Cash Fund, if the affected Series is not provided with the shareholder's correct
taxpayer identification number and certification that the shareholder is not
subject to such backup withholding, or if the Internal Revenue Service notifies
such Series that the shareholder has failed to report proper interest or
dividends. For most individuals, the taxpayer identification number is the
taxpayer's social security number.
Tax Treatment of Certain Transactions
In general, and as explained more fully below, if the Trust enters into
combinations of investment positions by virtue of which its risk of loss from
holding an investment position is reduced on account of one (or more) other
positions (i) losses realized on one position may be deferred to the extent of
any unrecognized gain on another position and (ii) long-term capital gains or
short-term capital losses may be recharacterized, respectively, as short-term
gains and long-term losses. Investments in foreign currency denominated
instruments or securities may generate, in whole or in part, ordinary income or
loss. The Federal income tax treatment of gains and losses realized from
transactions involving options on stock or securities entered into by a Series
will be as follows: Gain or loss from a closing transaction with respect to
options written by a Series, or gain from the lapse of any such option, will be
treated as short-term capital gain or loss. Gain or loss from the sale of put
and call options that a Series purchases, and loss attributable to the lapse of
such options, will be treated as capital gain or loss. The capital gain or loss
will be long- or short-term depending on whether or not the affected option has
been held for more than one year. For this purpose, an unexercised option will
be deemed to have been sold on the date it expired. It should be noted, however,
that if a put is acquired at a time when the underlying stock or security has
been held for not more than one year, or if shares of the underlying stock or
security are acquired while such put is held, any gain on the subsequent
exercise, sale or expiration of the put will generally be short-term gain.
Any regulated futures contract or listed non-equity option held by a Series
at the close of its taxable year will be treated as sold for its fair market
value on the last business day of such taxable year. Sixty percent of any gain
or loss with respect to such deemed sales, as well as the gain or loss from the
termination during the taxable year of the Series' obligation (or rights) with
respect to such contracts by offsetting, by taking or making delivery, by
exercise or being exercised, by assignment or being assigned, by lapse, or
otherwise, will be treated as long-term capital gain or loss and the remaining
forty percent will be treated as short term capital gain or loss. A Series may
make certain elections that modify the above tax treatment with respect to
regulated futures contracts or listed non-equity options that are part of a
"mixed straddle," as defined by the Code.
The Trust may invest in certain investments that may cause it to realize
income prior to the receipt of cash distributions, including securities bearing
original issue discount. The level of such investments is not expected to affect
a Series' ability to distribute adequate income to qualify as a regulated
investment company.
Treasury Regulations pursuant to Section 1092 provide for the coordination
of the "wash sale" rules and the "short sale" rules with the "straddle rules."
Generally, the "wash sale" rules prevent the recognition of loss where a
position is sold at a loss and a substantially identical position is acquired
within a prescribed period. The "short sale" rules generally prevent the use of
short sales to convert short-term capital gain to long-term capital gain and
long-term capital loss to short-term capital loss.
In addition to the Federal income tax consequences described above relating
to an investment in the Trust, there may be other Federal, state, local or
foreign tax considerations that depend upon the circumstances of each
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particular investor. Prospective shareholders are therefore urged to consult
their tax advisers with respect to the effects of this investment on their
specific situations.
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TRUSTEES AND OFFICERS OF THE TRUST
The trustees and officers of the Trust and their business affiliations for
the past five years are as follows:
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
CLAIRE B. BENENSON Trustee Consultant on Financial Conferences; Director of The
870 U.N. Plaza Burnham Fund Inc. Former Director of Financial
New York, NY 10017 Conferences and Chairman, Department of Business and
Financial Affairs, The New School for Social Research and
President of the Money Marketeers of New York University,
Trustee of Simms Global Fund and Former Director of Zweig
Tax-Free Fund Inc. and Zweig Cash Fund Inc.
RICHARD E. DEEMS Trustee Director and Member of the Executive and Finance
959 Eighth Avenue Committees of The Hearst Corporation; Publishing
New York, NY 10019 Consultant to the Hearst Magazines Division of The Hearst
Corporation; Director of The Burnham Fund Inc., ISS
International Service System, Inc. and Oriole Homes
Corporation. Former Director of Zweig Tax-Free Fund Inc.
and Zweig Cash Fund Inc.
S. LELAND DILL Trustee Retired; Director of Coutts & Co. Trust Holdings Limited,
5070 North Ocean Dr. Coutts & Co. Group, Coutts & Co. (USA) , Trustee of BT
Singer Island, FL 33404 Portfolios and BT International Funds. Former partner of
Peat Marwick Mitchell & Co. and Director of Zweig Tax-Free
Fund Inc., Zweig Cash Fund Inc. and Vintners International
Company, Inc.
EUGENE J. GLASER* Chairman, President of the Manager and President and Director of the
5 Hanover Square Chief Executive Distributor; Director of The Zweig Fund, Inc. Former Director
New York, NY 10004 Officer and Trustee of Zweig Tax-Free Fund Inc. and Zweig Cash Fund Inc.
DONALD B. ROMANS Trustee President of Romans & Company, Private Investors and
233 East Wacker Dr. Financial Consultants; Director of the Burnham Fund Inc.
Chicago, IL 60601 Former Consultant to and Executive Vice President and Chief
Financial Officer of Bally Manufacturing Corporation, and
Director of Zweig Tax-Free Fund Inc. and Zweig Cash Fund
Inc.
</TABLE>
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<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
MARTIN E. ZWEIG President Chairman of the Manager; Chairman of the Board and
900 Third Avenue President of The Zweig Total Return Fund, Inc. and The
New York, NY 10022 Zweig Fund, Inc.; President and Director of Zweig Total
Return Advisors, Inc., Zweig Advisors Inc., Zweig-DiMenna
International Managers, Inc., and Zweig Securities Advisory
Service Inc.; Co-Chairman of Research of Avatar Investors
Associates Corp.; Managing Director of the Managing
General Partner of Zweig-DiMenna Partners, L.P. and Zweig-
DiMenna Special Opportunities, L.P.; President and Director
of Gotham Advisors, Inc.and Euclid Advisors, Inc.; Member
of the Undergraduate Executive Board of the Wharton
School, University of Pennsylvania. Former President of
Zweig Tax-Free Fund Inc. and Zweig Cash Fund Inc.;
General Partner of Zweig Katzen Investors, L.P.; President
and Director of Davis/Zweig Futures, Inc., and Director of
Zweig/Avatar Capital Management, Inc.
DAVID KATZEN Senior Vice President Senior Vice President of the Manager; Formerly Vice
900 Third Avenue President of Zweig Advisors, Inc.; Executive Vice
New York, NY 10022 President of Euclid Advisors, Inc.; Director of
Quantitative Research at Avatar Investors Associates
Corp. Formerly Vice President of Zweig Fund Inc.and
ZZK Management, Inc.; Director of Equity Research for
Zweig Total Return Advisors, Inc.; and Research
Director of Zweig Advisors, Inc.
BARRY MANDINACH First Vice President Executive Vice President of the Distributor and Senior Vice
5 Hanover Square President of the Manager.
New York, NY 10004
CARLTON NEEL First Vice President First Vice President of the Manager. Former Vice President
900 Third Avenue of J.P. Morgan & Co., Inc.
New York, NY 10022
ALFRED J. RATCLIFFE First Vice President, First Vice President of the Manager. Former Vice President
5 Hanover Square Treasurer, Principal of The Bank of New York.
New York, NY 10004 Accounting Officer
and Assistant
Secretary
</TABLE>
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<PAGE> 79
<TABLE>
<S> <C> <C>
CHARLES I. LEONE Chief Financial Officer and First Vice President of the
5 Hanover Square First Vice President Manager and the Distributor. Former Assistant Treasurer of
New York, NY 10004 and Assistant Zweig Cash Fund Inc.
Secretary
ANNEMARIE GILLY Vice President First Vice President of the Manager and the Distributor.
5 Hanover Square Former Vice President of Concord Financial Group. Former
New York, NY 10004 Executive Vice President and Chief Operating Officer of The
Gabelli Equity Trust, Inc.
JEFFREY LAZAR Vice President Vice President and Treasurer of The Zweig Fund, Inc. and
900 Third Avenue The Zweig Total Return Fund, Inc.; Vice President, Treasurer
New York, NY 10022 and Secretary of Zweig Advisors, Inc. and Zweig Total
Return Advisors, Inc.
BETH ABRAHAM Assistant Vice Assistant Vice President of the Manager; former self-
900 Third Avenue President employed consultant to the mutual fund industry; former
New York, NY 10022 Senior Compliance Examiner in the New York Regional
Office of the U.S. Securities and Exchange Commission.
MAUREEN MCQUAID Assistant Vice Portfolio Assistant for Zweig Managed Assets. Former
900 Third Avenue President commercial insurance underwriter for American International
New York, NY 10022 Group.
TOM DISBROW Assistant Treasurer Assistant Vice President of the Manager
5 Hanover Square
New York, NY 10004
MARC BALTUCH Secretary First Vice President of the Manager; First Vice President,
900 Third Avenue Director, Chief Compliance Officer and Secretary of the
New York, NY 10022 Distributor.; Director and Vice President of Watermark
Securities, Inc.; Assistant Secretary of Gotham Advisors,
Inc., Zweig Total Return Advisors, Inc. and Zweig Advisors,
Inc. Former Chief of the Branch of Investment Adviser
Examiners and Chief Regional Securities Examiner in the
New York Regional Office of the Securities and Exchange
Commission and Secretary of Zweig Cash Fund, Inc. and
Zweig Tax-Free Fund, Inc.
</TABLE>
*Designates a Trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act.
Those trustees and officers of the Trust who are affiliated with the
Distributor or the Manager are not separately compensated for their services as
trustees or officers of the Trust. The Trust pays each of its "disinterested"
trustees a fee of $4,000 per year, plus $1,000 per meeting attended and
reimburses their expenses for attendance at meetings, all of which is prorated
on the basis of the assets of each Series. In addition, each such trustee
receives a fee of $1,000 per year from each Series. For the fiscal year ended
December 31, 1995, the fees and expenses of disinterested trustees, as a group,
were $59,397. As of December 31, 1995, except for Dr. Zweig, the trustees and
officers of the Trust, as a group, owned less than 1% of any Series of the
Trust.
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Trustees may be removed from office at any meeting of shareholders by a vote
of two-thirds of the outstanding shares of the Trust. Except as set forth above,
the trustees shall continue to hold office and may appoint their successors.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITES
To the Trust's knowledge, except for Dr. Martin E. Zweig (900 Third Avenue,
New York, NY 10022) and members of his immediate family, who own 16.43% of Zweig
Cash Fund Class M shares (of which he has shared voting and investment power as
to 1.06%, and disclaims beneficial ownership as to .11%), Prudential Securities
f/b/o Roger Markle (100 Gold Street, New York, NY 10292-0001), who owns 5.59% of
Zweig Cash Fund Class A shares (sole dispositive and voting power) and
Prudential Securities f/b/o Stanley E. Coleby and Sharon E. Coleby (100 Gold
Street, New York, NY 10292-001), who own 7.41% of Zweig Cash Fund Class C shares
(sole dispositive and voting power), no person is the beneficial owner of 5% or
more of the outstanding voting shares of any class of shares of any Series of
the Trust.
INVESTMENT MANAGEMENT AND OTHER SERVICES
Manager
The Trust and the Manager entered into an amended management agreement,
dated April 29, 1994, which the Board had previously approved on December 14,
1993 (the "Management Agreement"), pursuant to which the Manager reviews the
portfolio of securities and investments of each Series, and advises and assists
each Series with respect to the selection, acquisition, holding or disposal of
securities and makes recommendations with respect to other aspects and affairs
of each Series. The Manager also furnishes the Trust with certain administrative
services, office space and equipment, and permits its officers and employees who
may be elected trustees or officers of the Trust to serve in the capacities to
which they are elected.
The Management Agreement will continue in effect from year to year if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or "interested persons" of any such party. The
Management Agreement may be terminated without penalty by either of the parties
on 60 days' written notice and must terminate in the event of its assignment.
The continuance of the Management Agreement was last approved by the Trustees on
June 22, 1995.
The Management Agreement provides that the Manager is liable only for its
acts or omissions caused by its willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Manager to render services to others and to engage in other activities.
The Trust pays the Manager for its services pursuant to the Management
Agreement a monthly fee at the annual rate of .50% of the average daily net
assets of Zweig Cash Fund, .60% of the average daily net assets of the Zweig
Government Fund, .75% of the average daily net assets of Zweig Strategy Fund and
1.00% of the average daily net assets of Zweig Appreciation Fund and Zweig
Managed Assets. For the fiscal year ended 1995, the management fees paid to the
Manager by each Series were as follows: Zweig Strategy Fund: $6,702,163; Zweig
Appreciation Fund: $4,141,179; Zweig Government Fund: $393,803; Zweig Managed
Assets: $6,994,435; Zweig Cash Fund: $658,589. For the years ended December 31,
1994 and 1993 , the fees paid to the Manager for each Series were as follows:
Zweig Strategy Fund: $5,172,202 and $3,753,277 ; Zweig Appreciation Fund:
$3,612,972 and $2,928,819 ; Zweig Managed Assets $7,161,203 and $2,744,103 and
Zweig Government Fund: $460,359 and $474,955.
The fee of a Series will be reduced, or the Manager will reimburse the
Series (up to the amount of its fee), by an amount necessary to prevent the
total expenses of the Series (excluding taxes, interest, brokerage commissions
or transaction costs, certain distribution fees, certain custodial expenses and
extraordinary expenses) from exceeding limits applicable to the Series in any
state in which its shares then are qualified for sale. Currently, the most
restrictive expense limitation is 2.5% of the first $30 million of a Series' net
assets, 2% of the next $70 million of a Series' net assets and 1.5% of the
remaining net assets. The expense limitation provision applies separately to
each Series. From time to time, the Manager may make certain commitments which
are more restrictive than any state-imposed limitation. In such a case, the
Manager will reserve the right to discontinue any such commitment. These expense
reimbursements, if any, are estimated, reconciled and paid on a monthly basis to
the Trust.
The Manager has voluntarily undertaken to limit the expenses of Zweig Cash
Fund (exclusive of taxes, interest, brokerage commissions, certain distribution
fees and extraordinary expenses) to .35% of its average net assets effective
November 9, 1995. The Manager reserves the right to discontinue this policy at
any time.
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<PAGE> 81
The Manager may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Trust. The Distributor or its
affiliates may provide the Manager (without charge to the Trust) with investment
information and recommendations which may serve as the principal basis for
investment decisions with respect to certain Series of the Trust.
The Manager has adopted a Code of Ethics ("the Code") which requires all
persons subject to the Code to pre- clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in
client accounts. In the event that a client of Manager's affiliates also owns
such security, or it is proposed that such client purchase such security,
available investments or opportunities for sales will be allocated in a manner
deemed to be equitable by the Manager.
Distributor
Pursuant to its Distribution Agreement with the Trust (the "Distribution
Agreement"), Zweig Securities Corp. acts as distributor of the Trust's shares
and receives, with respect to Class A Shares, a front-end sales commission, as
described in the Prospectus under "Choosing Among Classes of Shares;" and a 1%
CDSC which may apply on redemptions within 18 months of purchases not subject to
a sales charge; with respect to Class B Shares, the Distributor receives a
declining CDSC ranging from 5% to 1% of the gross proceeds of a redemption of
shares held for less than six years; and, with respect to Class C Shares, the
Distributor receives a CDSC of 1.25% of the gross proceeds of a redemption of
shares held for less than one year. The Distributor also is compensated under
the Rule 12b-1 distribution plans as described more fully below. The continuance
and amendment of the Distribution Agreement was last approved by the Trustees on
June 22, 1995.
The Distributor may reallow amounts in excess of the sales concessions
listed in the Prospectus, and pay certain costs, to dealers who provide
additional services and special assistance in selling shares of the Trust. These
additional services and special assistance vary significantly from dealer to
dealer, resulting in payments that currently range from 8 to 15 basis points.
Distribution Plans
The Trust has adopted a distribution plan for each class of shares of each
Series (the "Plan") in accordance with Rule 12b-1 under the Act, to compensate
the Distributor for the services it provides and for the expenses it bears under
the Distribution Agreement. Each class of shares of each Series (other than
Class M Shares of Zweig Cash Fund) pay a service fee at a rate of .25% per annum
of the daily average net assets of each of the Series and a distribution fee
based on average daily net assets at the following rates: for Class A Shares of
all Series - .05% per annum; for Class B Shares of all Series - .75% per annum;
for Class C Shares - .75% per annum for Zweig Appreciation Fund, Zweig Strategy
Fund, Zweig Managed Assets , .50% per annum for Zweig Government Fund and .05%
per annum for Zweig Cash Fund.
For the fiscal year ended December 31, 1995, $306,115 in CDSCs was collected
on Class C Shares. The CDSC will be waived under certain circumstances described
in the Prospectus. In addition, the CDSC will be waived on redemptions of shares
by employee benefit plans for the benefit of employees of the Distributor and
its affiliates.
The Trust has also adopted a Rule 12b-1 Plan for the Class M Shares issued
by Zweig Cash Fund (the "Class M Plan"). The Class M Plan provides that the
Distributor may enter into Service Agreements with securities dealers, financial
institutions, banks, and other industry professionals for distribution,
promotion and administration of and/or servicing investors in Class M Shares.
Such service organizations are paid directly or indirectly by Zweig Cash Fund
and the Manager. Service payments under the Class M Plan are paid in equal
amounts by Zweig Cash Fund and the Manager, or Zweig Cash Fund and the Manager
reimburse the Distributor equally for service payments to a service
organization, in an amount not exceeding 0.30% per annum of the average daily
net asset value of the Class M Shares. The Class M Plan also provides that Zweig
Cash Fund will pay the costs and expenses connected with the printing and
distribution of Zweig Cash Fund's prospectuses, shareholder reports, and any
promotional material for other than current Fund shareholders, in an amount not
to exceed $100,000 per annum.
A report of the amounts expended under the Plan and the Class M Plan
(collectively, the "Plans") must be made to the Board of Trustees and reviewed
by the Board at least quarterly. In addition, the Plans provide that they may
not be amended to increase materially the costs which the Trust may bear for
distribution pursuant to the Plans without shareholder approval and that other
material amendments to the Plans must be approved by a majority of the Board,
including a majority of the Board who are neither "interested persons" of the
Trust (as defined in the 1940 Act) nor have any direct or indirect financial
interest in the operation of the Plans (the "Qualified Trustees"), by vote cast
in person at a meeting called for the purpose of considering such amendments.
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<PAGE> 82
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans The Plans may not be
amended to increase materially the amount to be spent for the services described
therein without the requisite approval of shareholders, and all material
amendments of the Plans must also be approved by the Board in the manner
described above. The Plans are terminable at any time by vote of a majority of
the Qualified Trustees or, with respect to any Class or Series, by vote of a
majority of the shares of such Class or Series. Pursuant to the Plans, any new
trustees who are not "interested persons" must be nominated by existing trustees
who are not "interested persons."
If the Plans are terminated (or not renewed) with respect to one or more
Classes or Series, they may continue in effect with respect to any Class or
Series as to which they have not been terminated (or have been renewed).
For the fiscal year ended December 31, 1995, the Class A Shares of the Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Government Fund, Zweig Managed
Assets and Zweig Cash Fund paid a total of $1,466,005, $745,906, $134,454,
$453,720 and $12,009, pursuant to the Trust's distribution plan, in connection
with expenses incurred by the Distributor for compensation to broker/dealers
[ ], marketing [ ] and firm overhead allocation
[ ].
For the fiscal year ended December 31, 1995, the Class C Shares of the Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Government Fund, Zweig Managed
Assets and Zweig Cash Fund paid a total of $4,049,535, $1,654,829, $156,113,
$5,482,036 and $15,103, respectively, pursuant to the Trust's distribution plan,
in connection with expenses incurred by the Distributor for compensation to
broker/dealers [ ], marketing [ ] and firm overhead
allocation [ ].
For the fiscal year ended December 31, 1995, the Class M Shares of the Zweig
Cash Fund and the distributor each paid $44,714 pursuant to the Trust's Class M
distribution and service plan to service organizations.
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
Benefits from the Plans may accrue to the Trust and its shareholders from
the growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Series' net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Series' assets, and facilitating
economies of scale (e.g., block purchases) in the Series' securities
transactions. Under their terms, the Plans will continue from year to year,
provided that such continuance is approved annually by a vote of the Trustees in
the manner described above.
The continuance of the Plan for Class A , Class C and Class M Shares and the
adoption of a Plan for Class B Shares was approved by the Board of Trustees,
including a majority of the Qualified Trustees, at a meeting held on June 22,
1995. Prior to approving the continuance of the Plan and the adoption of the
Class B Plan, the Board requested and received from the Distributor all the
information which it deemed necessary to arrive at an informed determination as
to such continuance and adoption of the Plans. In making its determination to
continue the Plan and adopt the Class B Plan, the Board considered, among other
factors: (1) the Trust's experience under the Plan's and the previous Rule 12b-1
Plan's of the Trust, and whether such experience indicates that the Plans would
operate as anticipated; (2) the benefits the Trust had obtained under the Plans
and would be likely to obtain under the Plans; (3) what services would be
provided under the Plans by the Distributor to the Trust and its shareholders;
and (4) the reasonableness of the fees to be paid to the Distributor for its
services under the Plans. Based upon their review, the Board, including each of
the Qualified Trustees, determined that the continuance of the Plans and the
adoption of the Class B Plan would be in the best interest of the Trust, and
that there was a reasonable likelihood that the Plans would benefit the Trust
and its shareholders. In the Board's quarterly review of the Plans, they will
consider their continued appropriateness and the level of compensation provided
therein.
In the event that the Rule 12b-1 Plan for the Class B Shares is terminated,
the Distributor would continue to receive payments of distribution fees in
respect of the outstanding Class B Shares, provided, however, that a complete
termination (as defined in the distribution agreement) of the Rule 12b-1 Plan
for the Class B Shares would terminate such payments to the distributor.
Termination of the Rule 12b-1 Plan for the Class B Shares or the distribution
agreement does not affect the obligation of the Class B shareholders to pay
CDSC's. The distributor has sold its right to receive certain payments under the
Distribution Agreement to a financial institution in order to finance the
distribution of the Class B Shares.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
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<PAGE> 83
The Trust has acknowledged that it has obtained its name by consent of Dr.
Martin E. Zweig and agreed that if (i) the Manager should cease to be the
Trust's investment manager or (ii) if Dr. Zweig should no longer be affiliated
with the Manager, the Trust, upon request of Zweig Securities Corp. or Dr.
Zweig, shall submit to the Trustees for their vote a proposal to delete the word
"Zweig" from its name and cease to use the name "Zweig Series Trust" or any
component or combination thereof or any name deceptively similar thereto, and
indicate on all letterheads and other promotional material that the Manager is
no longer the Trust's investment manager or Dr. Zweig is no longer affiliated
with the Manager, as the case may be. The Trust has agreed that Dr. Zweig or
Zweig Securities Corp. or any of its successors or assigns may use or permit the
use of the word "Zweig," alone or with any other words, for, by or in connection
with any other entity or business, other than the Trust and its business,
whether or not the same directly or indirectly competes or conflicts with the
Trust or its business in any manner.
CUSTODIAN, TRANSFER AGENT AND DIVIDEND PAYING AGENT
The Bank of New York, 48 Wall Street, New York, New York 10286 serves as
custodian and State Street Bank and Trust Company, P.O. Box 8505, Boston,
Massachusetts 02260-8505, serves as the transfer agent and dividend paying agent
for the Trust. Compensation for such services is based on schedules of charges
agreed on by the Trust and the custodian and the Trust and the transfer agent.
For the convenience of shareholders, the Transfer Agent maintains in book
account form the records of shares owned by Trust shareholders. Shareholders may
request that the Transfer Agent issue to them certificates representing their
ownership of Trust shares.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York
10019, serves as independent accountants for the Trust. In addition to reporting
annually on the financial statements of the Trust, the Trust's accountants also
review certain filings of the Trust with the Securities and Exchange Commission.
COUNSEL
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, is
counsel to the Trust. The firm also acts as counsel to the Manager and the
Distributor.
PORTFOLIO TRANSACTIONS AND BROKERAGE
All Series Other Than Zweig Cash Fund
Officers and Trustees of the Trust and officers of the Manager who are also
officers or directors of the Distributor or its affiliates receive indirect
benefits from the Trust as a result of its usual and customary brokerage
commissions which the Distributor or its affiliates may receive for acting as
broker to the Trust in the purchase and sale of portfolio securities. The
Management Agreement does not provide for a reduction of the advisory fee by any
portion of the brokerage fees generated by portfolio transactions of the Trust
which the Distributor may receive. For the year ended December 31, 1995, Zweig
Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets and the Zweig
Government Fund paid total brokerage commissions of $1,335,463, $819,613,
$1,980,954 and $0, respectively. The amount paid by Zweig Managed Assets for the
year ended December 31, 1994 and for the period February 8, 1993 (commencement
of operations) to December 31, 1993 was $1,232,085 and $423,239, respectively.
For the years ended December 31, 1994 and 1993 , respectively, Zweig Strategy
Fund, Zweig Appreciation Fund, and the Zweig Government Fund paid total
brokerage commissions of $525,987, $782,620 and $7,938, respectively, and
$2,341,216, $495,058 and $195,158, respectively.
For the year ended December 31, 1995, the Trust paid Zweig Securities Corp.
$468,501 in brokerage commissions or __% of total brokerage commissions for the
year ended December 31, 1995. For the years ended December 31, 1994 and 1993,
$[ ] and $[ ], respectively, was paid to Zweig Securities Corp.
Allocation of transactions, including their frequency, to various dealers is
determined by the Manager in its best judgment and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt and efficient
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, dealers who provide supplemental investment research,
statistical or other services to the Manager may receive orders for transactions
by the Trust. Information so received will enable the Manager to supplement its
own research and analysis with the views and information of other securities
firms. Such information may be useful and of value to the Manager and its
affiliates in servicing other clients as well as the Trust; in addition,
information obtained by the Manager and its affiliates in servicing other
clients may be useful and of value to the Manager in servicing the Trust. No
principal transactions are effected with Zweig Securities Corp. or any of its
affiliated companies.
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<PAGE> 84
The Trust may from time to time allocate brokerage commissions to firms that
furnish research and statistical information to the Manager. The supplementary
research supplied by such firms is useful in varying degrees and is of
indeterminable value. Such research may, among other things, include advice
regarding economic factors and trends, advice as to occasional transactions in
specific securities and similar information relating to securities. No formula
has been established for the allocation of business to such brokers.
Consideration may be given to research provided and payment may be made of a fee
higher than that charged by another broker-dealer which does not furnish
research services or which furnishes research services deemed to be of lesser
value, so long as the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") are met. Section 28(e) of the 1934 Act
specifies that a person with investment discretion shall not be "deemed to have
acted unlawfully or to have breached a fiduciary duty" solely because such
person has caused the account to pay a higher commission than the lowest
available under certain circumstances. To obtain the benefit of Section 28(e),
the person so exercising investment discretion must make a good faith
determination that the commissions paid are reasonable in relation to the value
of the brokerage and research services provided viewed in terms of either that
particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion.
Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services might exceed commissions
that would be payable for execution series alone, nor generally can the value of
research services be measured. Research services furnished might be useful and
of value to the Manager and its affiliates in serving other clients as well as
the Trust, but on the other hand any research service obtained by the Manager or
the Distributor from the placement of portfolio brokerage of other clients might
be useful and of value to the Manager in carrying out its obligation to the
Trust.
There are no fixed limitations regarding the Trust's portfolio turnover
rate. In computing the portfolio turnover rate, all securities, including
options, the maturities or expiration dates of which at the time of acquisition
are one year or less, are excluded. Subject to this exclusion, the turnover rate
is calculated by dividing (A) the lesser of purchases or sales of portfolio
securities of a particular Series for the fiscal year by (B) the monthly average
of the value of portfolio securities owned by the particular Series during the
fiscal year.
The options activities of the Zweig Government Fund, Zweig Appreciation Fund
and Zweig Strategy Fund may affect their respective turnover rates, the amount
of brokerage commissions paid by each Series and the realization of net
short-term capital gains which, when distributed, are taxed to shareholders
(other than retirement plans) at ordinary income tax rates. There are no fixed
limitations regarding the Zweig Strategy Fund's portfolio turnover. Securities
satisfying the basic policies and objectives of the Zweig Strategy Fund may be
disposed of when they are no longer deemed to be suitable. High portfolio
turnover involves correspondingly greater brokerage commissions, other
transaction costs, and a possible increase in short-term capital gains or
losses. See "Net Asset Value and Taxes."
The exercise of calls written by a Series may cause the Series to sell
portfolio securities, thus increasing its turnover rate. The exercise of puts
also may cause a sale of securities and increase turnover; although such
exercise is within the Series' control, holding a protective put might cause the
Series to sell the underlying securities for reasons which would not exist in
the absence of the put. A Series will pay a brokerage commission each time it
buys or sells a security in connection with the exercise of a put or call. Some
commissions may be higher than those which would apply to direct purchases or
sales of portfolio securities.
For the fiscal year ended December 31, 1995, the portfolio turnover rate for
Zweig Strategy Fund, Zweig Appreciation Fund, Zweig Managed Assets and the Zweig
Government Fund were 95%, 68%, 239% and 195%, respectively.
Zweig Cash Fund
The Manager places orders for the purchase and sale of securities for Zweig
Cash Fund. All of Zweig Cash Fund's portfolio transactions are principal
transactions with major dealers in money market instruments, on which no
brokerage commission is paid. Purchases from or sales to dealers serving as
market-makers include the spread between the bid and asked prices. Transactions
are allocated to various dealers according to the best judgment of the Manager
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt and effective execution of orders at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research, statistical or other services to the Manager may receive
orders for transactions by Zweig Cash Fund.
YIELD AND PERFORMANCE INFORMATION
Zweig Cash Fund
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<PAGE> 85
From time to time, the Trust issues a "current yield" and "effective yield"
for each class of shares of Zweig Cash Fund. For a further discussion of how the
Trust calculates yield, see "Performance Information" in the Prospectus.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. These yields are each computed in accordance
with a standard method prescribed by the rules of the Commission, by first
determining the "net change in account value" for a hypothetical account having
a share balance of one share at the beginning of a seven-day period (the
"beginning account value"). The net change in account value equals the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares. The
unannualized "base period return" equals the net change in account value divided
by the beginning account value. Realized gains or losses or changes in
unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.
The yields are then calculated as follows:
Current Yield = Net Change in Account Value X 365
--------------------------- ---
Beginning Account Value 7
Effective Yield = [(1 + Base Period Return) 365/7 ] - 1
For the seven days ended December 31, 1995, the Zweig Cash Funds' effective
(compounded) and current yields were 5.18% and 5.06%, respectively, for Class A
Shares, 5.18% and 5.06%, respectively, for Class C Shares and 5.45% and 5.32%,
respectively, for Class M Shares.
Yield is a function of portfolio quality and composition, portfolio maturity
and operating expenses. Yields fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Series, it may not provide a basis for comparison with bank deposits, other
fixed rate investments or other investment companies that may use a different
method of calculating yield.
Other Series
The Trust will include performance data for both Class A, Class B and Class
C Shares of each Series in its advertisements, sales literature and other
information distributed to the public that includes performance data of a
Series. Such performance information will be based on investment yields or total
returns for the Series.
YIELD. Yield will be calculated, using a one-month base period, according to
the following formula:
Yield = 2 X [(a-b/cd) + 1]6 - 1
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period.
The annualized yield for the Class A and Class C Shares of Zweig Government
Fund at December 31, 1995 was [ ]% and [ ]%, respectively.
AVERAGE ANNUAL TOTAL RETURN. Average annual total return for a given period
is computed by finding the average annual compounded rate of return over the
period that would equate the initial amount invested to the ending redeemable
value, according to the following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment in the Series of $1,000
T = average annual total return
n = number of years in period
ERV = ending redeemable value, at the end of the period, of a hypothetical
$1,000 investment in the Series made at the beginning of the period.
The average annual total return for the Class A and Class C Shares of each
of the Series for the one and five year periods ended December 31, 1995 and for
the periods from commencement of operations to December 31, 1995 (including the
effect of the maximum sales charge) is as follows:
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<PAGE> 86
AVERAGE ANNUAL TOTAL RETURNS
<TABLE>
<CAPTION>
Class A Shares Yr Ended Five Yrs Ended Commencement of Operations
12/31/95 12/31/95 to 12/31/95
-------------- -------- -------------- --------------------------
<S> <C> <C> <C>
Zweig Appreciation Fund +17.2% N/A +10.6%*
Zweig Strategy Fund +18.2% +12.8% +10.2%**
Zweig Government Fund + 8.4% + 6.8% + 6.5%***
Zweig Managed Assets + 9.9% N/A + 6.3%****
</TABLE>
*For the period beginning October 7, 1991
**For the period beginning December 29, 1989
***For the period beginning March 25, 1985
****For the period beginning February 8, 1993
<TABLE>
<CAPTION>
Class C Shares Year Ended Five Years Ended Commencement to
12/31/95 12/31/95 12/31/95
-------------- ---------- ---------------- ---------------
<S> <C> <C> <C>
Zweig Appreciation Fund +21.7% N/A + 9.8%*
Zweig Strategy Fund +22.7% N/A +11.1%*
Zweig Government Fund +11.9% N/A + 6.4%*
Zweig Managed Assets +14.0% N/A + 7.7%**
</TABLE>
*For the period beginning February 3, 1992 (commencement of offering of
Class C shares).
**For the period beginning February 8, 1993 (commencement of operations).
The investment results of the Class A, Class B and Class C Shares of a
Series will tend to fluctuate over time, so that historical yields, current
distributions and total returns should not be considered representations of what
an investment may earn in any future period. Actual dividends will tend to
reflect changes in market yields, and will also depend upon the level of a
Class' or Series' expenses, realized or unrealized investment gains and losses,
and the results of such Series' investment policies. Thus, at any point in time,
investment yields, current distributions or total returns may be either higher
or lower than past results, and there is no assurance that any historical
performance record will continue.
The Fund also may include in its advertisements data from Age Wave, Inc.;
the American Association of Retired Persons; Barron's; Business Week;
CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's Money
Fund Report; Financial Planning; Financial World; Forbes; Fortune; Hulbert
Financial Digest; Ibbotson Associates; Individual Investor; Investment Advisor;
Investors Business Daily; The Liscio Report; Lipper Analytical Services, Inc.;
Micropal Inc.; Money; Morningstar Mutual Funds; Mutual Fund Forecaster; Mutual
Funds Magazine; The National Center for Education Statistics; The New York
Times; The Philatelic Foundation; Smart Money; USA Today; U.S. News & World
Report; The Wall Street Journal; Worth and other industry publications.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain
all the information included in the Registration Statement filed with the
Commission under the 1933 Act with respect to the securities offered by the
Prospectus. The Registration Statement, including the exhibits filed therewith,
may be examined at the office of the Commission in Washington, D.C.
Statements contained in this Statement of Additional Information and the
Prospectus as to the contents of any contract or other document are not complete
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Statement of Additional Information and the Prospectus form a part, each such
statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
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<PAGE> 87
The audited financial statements of the Trust for the year ended December
31, 1995 and the report of the Trust's independent accountants in connection
therewith, are included in the 1995 Annual Report to Shareholders of the Trust,
which is incorporated by reference into this Statement of Additional
Information.
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APPENDIX I
CORPORATE BOND RATINGS
Description of Moody's Corporate Bond Ratings:
Aaa--Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa--Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A--Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba--Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B--Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa--Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Description of S&P Corporate Bond Ratings:
AAA--Bonds rated AAA have the highest rating assigned by Standard & Poor's
to a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA--Bonds rated AA have a strong capacity to pay interest and repay
principal and differ from the highest rated issues only in small degrees.
A--Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC--Bonds rated "BB," "B" or "CCC" are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. "BB" indicates the
lowest degree of speculation and "CCC" a higher degree of speculation. While
such debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
Bonds rated BBB or lower by S&P and Bonds rated Baa or less by Moody's
("non-investment grade securities") are considered to be speculative in nature.
Non-investment grade securities will generally be less sensitive to interest
rate changes than investment grade securities (those rated A or higher by S&P
and BBB or higher by Moody's) but will be more sensitive to adverse economic
changes or specific corporate developments. The liquidity risk of non-investment
grade securities will be higher than investment grade securities and their value
will be more difficult to ascertain due to the lack of an established secondary
market. These securities may also be adversely affected by new laws or proposed
new laws on the high yield market (e.g., tax proposals).
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COMMERCIAL PAPER RATINGS
Description of Moody's Commercial Paper Ratings:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet obligations.
DESCRIPTION OF S&P'S COMMERCIAL PAPER RATINGS:
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements: long-term senior debt
is rated "A" or better, the issuer has access to at least two additional
channels of borrowing; and basic earnings and cash flow have an upward trend
with allowance made for unusual circumstances. Typically, the issuer's industry
is well established and the issuer has a strong position in the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determines whether the issuer's commercial paper
is rated A-1, A-2 or A-3.
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ZWEIG SERIES TRUST
ZWEIG CASH FUND--Class M Shares
5 Hanover Square, New York, N.Y. 10004
STATEMENT OF ADDITIONAL INFORMATION
ZWEIG CASH FUND (the "Fund"), a Series of Zweig Series Trust (the "Trust"),
is a professionally managed money market fund which seeks high current income
consistent with liquidity and preservation of capital. The Fund invests
exclusively in short-term securities issued or guaranteed by the U.S.
Government, its agencies or instrumentalities and repurchase agreements with
respect to such securities. The Fund issues its shares in three classes. This
Statement of Additional Information describes Class M Shares of the Fund only
and relates to the Prospectus describing such Class M Shares.
Zweig/Glaser Advisers (the "Manager") selects and manages the investments of
the Fund and Zweig Securities Corp. (the "Distributor"), an affiliate of the
Manager, is the principal distributor of the Fund.
This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus relating to the Class M Shares of the
Fund, dated May 1, 1996, which can be obtained without cost by contacting your
financial consultant or by calling or writing the Fund at the telephone numbers
and address printed on this page. This Statement of Additional Information is
intended to provide you with additional information regarding the activities and
operations of the Fund.
Toll Free--1-800-272-2700
May 1, 1996
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<PAGE> 92
<TABLE>
<CAPTION>
TABLE OF CONTENTS Page
<S> <C>
INVESTMENT OBJECTIVE AND POLICIES ..................................... 3
Description of Permitted Investments ......................... 3
INVESTMENT RESTRICTIONS ............................................... 4
HOW TO PURCHASE AND REDEEM SHARES ..................................... 4
"Sweep" Programs ............................................. 4
Check Service ................................................ 5
Exchange of Shares ........................................... 5
RETIREMENT PLANS ...................................................... 5
NET ASSET VALUE AND TAXES ............................................. 7
Tax Status ................................................... 6
Taxation of Shareholders ..................................... 7
TRUSTEES AND OFFICERS OF THE TRUST .................................... 7
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES ................... 10
INVESTMENT MANAGEMENT AND OTHER SERVICES .............................. 11
The Management Agreement ..................................... 11
The Distributor and Distribution Plans ....................... 11
Custodian, Transfer Agent and Dividend Paying Agent .......... 13
Independent Accountants ...................................... 13
Counsel ...................................................... 13
PORTFOLIO TRANSACTIONS ................................................ 13
YIELD AND PERFORMANCE INFORMATION ..................................... 13
REGISTRATION STATEMENT ................................................ 14
FINANCIAL STATEMENTS .................................................. 14
</TABLE>
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<PAGE> 93
INVESTMENT OBJECTIVE AND POLICIES
The Fund's investment objective and policies and permitted investments are
described in the Prospectus under the headings "Zweig Cash Fund" and
"Investments and Risk Factors." There can be no assurance that the Fund's
investment objective will be achieved.
As a general matter, the current value of debt securities held in the Fund
varies inversely with changes in prevailing interest rates. If prevailing
interest rates increase after a security is purchased, the value of the security
will normally decline. Conversely, should prevailing interest rates decrease
after a security is purchased, its market price will normally rise. However,
these market fluctuations generally will not result in any significant permanent
change in value (or realized gains or losses) to the Fund because it invests
primarily in short-term obligations and does not intend to dispose of the
securities it purchases prior to their maturity unless, in the opinion of the
Manager, it is in the best interest of the Fund to do so.
The Fund may, from time to time, loan its securities to brokers, dealers and
financial institutions and receive collateral from the borrower in the form of
U.S. Government obligations, which will be maintained at all times in an amount
equal to at least 100% of the current market value of the loaned securities. The
Fund, which retains the incidents of ownership of the loaned securities,
continues to be entitled to the interest payable on the loaned securities and,
in addition, receives interest on the amount of the loan at a rate negotiated
with the borrower. The loans will be terminable by the Fund at any time and will
not be made to the Manager or to any of its affiliates. The Fund may pay
reasonable finder's fees to persons unaffiliated with it responsible for
arranging the loans. In determining whether to loan securities to a particular
broker/dealer or financial institution, the Manager will consider all relevant
facts and circumstances, including the creditworthiness of the broker/ dealer or
institution. The Fund will not enter into any securities lending agreement
having a duration exceeding one year, and any security with a maturity longer
than one year received as collateral for a particular loan will not become part
of the Fund at the time of the loan or in the event the borrower defaults. The
Fund has never loaned securities and the Fund has no current intention of doing
so during the current year.
Description of Permitted Investments
The following are descriptions of instruments in which the Fund may invest.
(i) U.S. Government Obligations--include U.S. Treasury issues, such as
bills, certificates of indebtedness, notes and bonds, and issues of U.S.
Government agencies and instrumentalities which are established under the
authority of an act of Congress, such as the Government National Mortgage
Association, Tennessee Valley Authority, Bank for Cooperatives, Farmers Home
Administration, Federal Home Loan Banks, Federal Intermediate Credit Banks,
Federal Land Banks, Export-Import Bank of the U.S., Federal Housing
Administration ("FHA"), Federal Home Loan Mortgage Corporation, U.S. Postal
Service, Federal Financial Bank, Federal National Mortgage Association and
Student Loan Marketing Association. Some of these securities, such as FHA
debenture obligations, are supported by the full faith and credit of the U.S.
Treasury; others, such as obligations of Federal Home Loan Banks, are supported
by the right of the issuer to borrow from the U.S. Treasury; others, such as
those of the Federal National Mortgage Association, are supported by the
discretionary authority of the U.S. Government to purchase the agency's
obligations; and still others, such as those of the Student Loan Marketing
Association, are supported only by the credit of the instrumentality. The Fund
will not invest in obligations of the International Bank for Reconstruction and
Development (the "World Bank"), the Asian Development Bank, or the
Inter-American Development Bank, or in FHA or VA pooled mortgages; and
(ii) Repurchase Agreements--involve purchases of debt securities. In such a
transaction, at the time the Series purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller who also
simultaneously agrees to buy back the security at a fixed price and time. This
assumes a predetermined yield for the Fund during its holding period, since the
resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an opportunity for the Fund to
invest temporarily available cash. The Fund may enter into repurchase agreements
with respect to obligations of the U.S. Government, its agencies or
instrumentalities. Repurchase agreements may be considered loans to the seller
collateralized by the underlying securities. The risk to the Fund is limited to
the ability of the seller to pay the agreed-upon sum on the repurchase date; in
the event of default, the repurchase agreement provides that the Series is
entitled to sell the underlying collateral. If the value of the collateral
declines after the agreement is entered into, however, and if the seller
defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Fund could incur a loss of
both principal and interest. The Manager monitors the value of the collateral at
the time the transaction is entered into and at all times subsequent during the
term of the repurchase agreement in an effort to determine that the value of the
collateral always equals or exceeds the agreed-upon repurchase price to be paid
to the Fund. If the seller were to be subject to a Federal bankruptcy
proceeding, the ability of the Fund to liquidate the collateral could be delayed
or impaired because of certain provisions of the bankruptcy laws. The Fund
enters into
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<PAGE> 94
repurchase agreements only with members of the Federal Reserve System or primary
dealers in U.S. Government securities.
INVESTMENT RESTRICTIONS
Zweig Cash Fund has adopted certain restrictions and fundamental policies
which cannot be changed without approval by the holders of a majority of the
outstanding voting securities of the Fund as defined in the Investment Company
act of 1940, as amended (the "1940 Act") as the lesser of: (1) 67% or more of
the Fund's voting securities present at a meeting of shareholders, if the
holders of more than 50% of the Fund's outstanding voting securities are present
in person or by proxy, or (2) more than 50% of the Fund's voting securities.
However, these policies may also be modified by the Trustees, in their
discretion, without shareholder approval, to the extent necessary to facilitate
the implementation of a master-feeder structure for Zweig Cash Fund (i.e., a
structure under which a particular Series acts as a feeder and invests all of
its assets in a single pooled master fund with substantially the same investment
objectives and policies). Pursuant to such restrictions and policies, except as
stated above, the Fund may not:
- Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds, industrial revenue bonds or corporate
bonds or debentures;
- Borrow money, except from banks for temporary purposes in an amount up to
10% of the value of its total assets. The Fund may only pledge its assets in an
amount up to 10% of the value of its total assets, and then only to secure such
borrowings. The Fund will borrow money only to accommodate requests to redeem
shares to effect an orderly liquidation of portfolio securities or to clear
securities transactions and not for leveraging purposes; accordingly, it is
anticipated that any such borrowing will be repaid before additional investments
are made. The Fund currently does not intend to borrow money to an extent
exceeding 5% of its total assets. The Fund may not issue any securities which
would be deemed to be "senior securities" in contravention of the 1940 Act;
- With respect to 75% of the value of the Fund's total assets, invest more
than 5% of the value of its total assets in the securities of any one issuer,
except securities issued or guaranteed as to the payment of principal and
interest by the U.S. Government, its agencies or instrumentalities;
- Sell securities short;
- Write or purchase put or call options;
- Underwrite the securities of other issuers;
- Purchase or sell real estate, real estate investment trust securities,
commodities or oil and gas interests;
- Make loans to others, except that engaging in permissible activities
specified in the Prospectus under the heading "Investments and Risk Factors" and
in this Statement of Additional Information under the headings "Investment
Objective and Policies" and "Description of Permitted Investments" shall not be
viewed as loans for this purpose;
- Invest more than an aggregate of 10% of the Fund's net assets (taken at
current value) in repurchase agreements maturing in more than seven days and
other "illiquid investments" (such as non-negotiable certificates of deposit,
non-negotiable time deposits or other "non-marketable" securities);
- Invest in companies for the purpose of exercising control; or
- Invest in securities of other investment companies, except as they may be
acquired as part of a merger, consolidation or acquisition of assets.
The foregoing percentage restrictions apply at the time an investment is
made; a later increase or decrease in percentage may result from changes in
values or the Fund's net assets but will not be deemed to result in an
investment which is contrary to these restrictions.
HOW TO PURCHASE AND REDEEM SHARES
Reference is made to the materials in the Prospectus under the headings "How
to buy shares" and "How to redeem shares," which describe the methods of
purchase and redemption of Fund shares. The following is additional information
related to certain of those methods.
"SWEEP" PROGRAMS
Class M Shares of the Fund may be purchased through certain participating
securities dealers and/or banks ("Institutions") which have established "sweep"
programs under which a portion of their customers' accounts may be automatically
invested in the Fund. The customers' rights under these programs are governed by
the provisions of the particular Institution's program and the details of the
programs vary. The description below, while generally followed, should be
considered as illustrative of how such programs work, but may not be true of a
particular program.
Typically, in these programs each participating customer, pursuant to an
agreement executed with a particular Institution, becomes the beneficial owner
of specific shares of the Fund which may be purchased, redeemed and held
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<PAGE> 95
by the Institution in accordance with the customer's instructions and may fully
exercise all rights as a shareholder. The participating Institution holds shares
registered in its name, as agent for the customer, on the books of the Fund. A
statement regarding the customer's shares is generally supplied to the customer
monthly, and confirmations of all transactions for the account of the customer
normally are available to the customer promptly upon request. In addition, each
customer is sent proxies, periodic reports and other information from the Trust
with regard to the shares. The customer's shares are fully assignable and may be
encumbered by the customer. The "sweep" agreement can be terminated by the
customer at any time, without affecting its beneficial ownership of the shares.
In order to obtain the benefits of this service, a customer typically is
required to maintain a minimum balance subject to a monthly maintenance fee, or
a higher minimum balance for which no monthly fee would be imposed. In either
case, a penalty fee is imposed if the minimum is not maintained. In general, the
automatic investment in shares of the Fund occurs on the same day that
withdrawals are made from the customer's account by the participating
Institution, but there may be a greater time lag between the removal of funds
from an account and their investment in shares of the Fund. Depending on the
particular program of the participating Institution, the customer may or may not
earn interest on the funds being swept during this lag.
All agreements which relate to the service are with the participating
Institution. Neither the Distributor nor the Trust is a party to any of those
agreements and no part of the compensation received by the participating
Institution flows to the Trust or to the Distributor or to any of their
affiliates either directly or indirectly. Information concerning those programs
and any related charges or fees is provided by the particular Institution prior
to purchases of the Class M Shares. Any fees charged by a participating
Institution effectively reduces the Fund's yield for those customers.
If a participating bank were prohibited from offering the "sweep" program,
it is expected that customers of the participating bank who seek to invest in
the Fund would have to purchase and redeem shares directly through the Trust's
transfer agent, State Street Bank and Trust Company ("State Street," or the
"transfer agent").
CHECK SERVICE
An investor may request in writing that the Trust establish a check service
("Check Service") with State Street as agent to draw against the investor's Fund
account. Upon receipt of such request, the Trust will provide checks ("Checks").
Checks may be made payable to the order of anyone in an amount of $500 or more.
Class M Shares held under retirement plans or IRAs are not eligible for the
Check Service. The Check Service is subject to State Street's customary rules
and regulations governing checking accounts, and the Trust and State Street each
reserve the right to change or suspend the Check Service. The Check Service may
be discontinued at any time or for any investor. The Check Service does not
create a checking or other bank account relationship between the shareholder and
State Street, the Trust or the Distributor.
When a Check is presented to State Street for payment, through normal
banking channels, State Street, as your agent, causes the Trust to redeem at the
net asset value a sufficient number of full and fractional Class M Shares to
cover the amount of the Check. If there is an insufficient number of shares in
your account, the Check is marked "insufficient funds" and is returned unpaid to
the presenting bank. Checks will only clear State Street if drawn against funds
which have been invested for at least 15 days, except for wire investments.
Cancelled (paid) Checks are returned to you; however, this practice may be
discontinued in the future or a charge for such service may be imposed. By
requesting the Check Service, you agree to indemnify and hold harmless State
Street, the Trust, the Distributor and any of their agents from any liability
for honoring Checks or for effecting or facilitating redemptions pursuant to the
Check Service or for returning Checks which have not been accepted. The Check
Service enables you to receive the daily dividends declared on the shares to be
redeemed until the day that the Check is presented to State Street for payment.
Since the aggregate amount in your account changes each day because of the daily
dividend, you should not attempt to withdraw the full amount in your account by
using the Check Service.
The Trust reserves the right in its sole discretion to reject any purchase
order in whole or in part for any reason that it deems sufficient and to change
the minimum investment and subsequent purchases in the Trust.
No stock certificates will be issued unless specifically requested in
writing by an investor. Instead, an account will be established for each
investor and all shares purchased or received, including those obtained through
reinvestment of distributions, will be registered on the books of the Trust and
credited to such account.
EXCHANGE OF SHARES
Class M Shares currently have no exchange feature, and may not be exchanged
for Class A, Class B or C Shares of the Fund, or shares of any other Series of
the Trust.
RETIREMENT PLANS
Shares may be purchased in connection with all types of tax-deferred
retirement plans. Shares of one or more Series of the Trust may be purchased in
a single application establishing a single plan account.
NET ASSET VALUE AND TAXES
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<PAGE> 96
The net asset value of the Class M Shares is determined at 2:00 p.m. New
York time and as of the close of regular trading on the New York Stock Exchange
("NYSE"), on each day the NYSE is open. The NYSE is closed on the following
holidays (or the weekdays on which these holidays are celebrated when they fall
on a weekend): New Year's Day, President's Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving and Christmas. The Board of Trustees
of the Trust (the "Board" or "Board of Trustees") has determined that it is in
the best interests of the Fund and its shareholders to seek to maintain a stable
net asset value per share, and that the appropriate method for valuing portfolio
securities of the Fund is the amortized cost method, provided that such method
continues to fairly reflect the market-based net asset value per share. The
Board shall continuously review this method of valuation and make changes that
may be necessary to assure that the Fund's instruments are valued at their fair
value as determined by the Board in good faith.
Class M Shares are entitled to dividends as declared by the Board and, on
liquidation of the Fund, are entitled to receive their share of the net assets
of the Fund. Shareholders have no preemptive rights. The Trust's fiscal year
ends on December 31.
The Board of Trustees has determined that the Fund will comply with the
conditions of Rule 2a-7 under the 1940 Act regarding the amortized cost method
of valuing portfolio securities. Under Rule 2a-7, the Board is obligated, as a
particular responsibility within the overall duty of care owed to the Fund's
shareholders, to establish procedures reasonably designed, taking into account
current market conditions and the Fund's investment objectives, to stabilize the
net asset value per share of the Fund for purposes of distribution and
redemption, at $1.00 per share. These procedures include periodically
monitoring, as the Board deems appropriate, at such intervals as are reasonable
in light of current market conditions, the relationship between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon available indications of market value. The
Board will consider what steps should be taken, if any, in the event of a
difference of more than 1/2 of 1% between the amortized cost value and the
market value per share. The Board will take such steps as it considers
appropriate (e.g., redemption in kind, selling portfolio instruments prior to
maturity to realize capital gains or losses, shortening the average portfolio
maturity, withholding dividends, or utilizing a net asset value per share
determined by using market quotations) to minimize any material dilution or
other unfair results that might arise from differences between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon market value.
Rule 2a-7 requires that a dollar-weighted average portfolio maturity of not
more than 90 days, appropriate to the objective of maintaining a stable net
asset value of $1.00 per share, be maintained, and precludes the purchase of any
instrument with a remaining time to maturity of more than 397 calendar days.
However, the underlying securities used as collateral for repurchase agreements
are not subject to these restrictions, because a repurchase agreement is deemed
to have a maturity equal to the period remaining until the date on which the
repurchase of the underlying securities is deemed to occur. Should the
disposition of a portfolio security result in a dollar-weighted average
portfolio maturity of more than 90 days, the Fund will invest its available cash
in a manner that will reduce such average maturity to 90 days or less as soon as
reasonably practicable. Rule 2a-7 also requires the Fund to limit its
investments to instruments that the Board determines present minimal credit
risks and that have been given one of the two highest rating categories by
nationally recognized statistical rating organizations, or, in the case of
instruments that are not so rated, are of comparable quality as determined under
procedures established by the Board.
It is the normal practice of the Fund to hold portfolio securities to
maturity and realize their par values, unless a prior sale or other disposition
thereof is mandated by redemption requirements or other extraordinary
circumstances. A debt security held to maturity is redeemable by its issuer at
its principal amount plus accrued interest. Under the amortized cost method of
valuation traditionally employed by institutions for valuation of money market
instruments, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of the
Fund (computed by dividing the annualized daily income on the Fund's portfolio
by the net asset value computed as above) may tend to be higher than a similar
computation made by utilizing a method of valuation based upon market prices and
estimates. The Fund may, to a limited extent, engage in short-term trading to
attempt to take advantage of short-term market variations, or may dispose of a
portfolio security prior to its maturity if the Manager believes such
disposition advisable, or necessary to generate cash to satisfy redemptions. In
such cases, the Fund may realize a gain or loss.
TAX STATUS
The Fund will be treated as a separate corporation for purposes of the
Internal Revenue Code of 1986, as amended (the "Code") (except for purposes of
the definitional requirements for regulated investment companies under Code
Section 851(a)). The Fund intends to pay dividends representing its investment
company taxable income within certain time periods specified in the Code and to
meet certain other requirements in order to qualify as a regulated investment
company under the Code. Since the Fund will distribute annually its investment
company taxable income,
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<PAGE> 97
net capital gains, and capital gain net income, it will not be subject to income
or excise taxes otherwise applicable to undistributed income of a regulated
investment company. If the Fund were to fail to distribute substantially all its
income and gains, it would be subject to income tax and, in certain
circumstances, a 4% excise tax.
TAXATION OF SHAREHOLDERS
Dividends from net investment income and distributions from short-term
capital gains are taxable to shareholders as ordinary income. Dividends from the
Fund are not expected to qualify for the 70% dividends received deduction
available to corporate shareholders, nor is it expected that there will be any
long-term capital gains distributions.
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on dividends and other distributions from the
Fund, if the Trust is not provided with the shareholder's correct taxpayer
identification number and certification that the shareholder is not subject to
such backup withholding, or if the Internal Revenue Service notifies the Trust
that the shareholder has failed to report proper interest or dividends. For most
individuals, the taxpayer identification number is the taxpayer's social
security number.
TRUSTEES AND OFFICERS OF THE TRUST
The trustees and officers of the Trust and their business affiliations for
the past five years are as follows:
<TABLE>
<CAPTION>
Name and Address Position With the Trust Principal Occupation During Past 5 Years
- ---------------- ----------------------- ----------------------------------------
<S> <C> <C>
Claire B. Benenson Trustee Consultant on Financial Conferences; Director of The
870 U.N. Plaza Burnham Fund Inc. Former Director of Financial
New York, NY 10017 Conferences and Chairman, Department of Business and
Financial Affairs, The New School for Social Research and
President of the Money Marketeers of New York
University, Trustee of Simms Global Fund and Former
Director of Zweig Tax-Free Fund Inc. and Zweig Cash
Fund Inc.
Richard E. Deems Trustee Director and Member of the Executive and Finance
959 Eighth Avenue Committees of The Hearst Corporation; Publishing
New York, NY 10019 Consultant to the Hearst Magazines Division of The Hearst
Corporation; Director of The Burnham Fund Inc., ISS
International Service System, Inc. and Oriole Homes
Corporation. Former Director of Zweig Tax-Free Fund Inc.
and Zweig Cash Fund Inc.
S. Leland Dill Trustee Retired; Director of Coutts & Co. Trust Holdings Limited,
5070 North Ocean Dr. Coutts & Co. Group, Coutts & Co. (USA) , Trustee of
Singer Island, FL BT Portfolios and BT Investment Funds. Former partner
33404 of Peat Marwick Mitchell & Co. and Director of Zweig Tax-
Free Fund Inc., Zweig Cash Fund Inc. and Vintners
International Company, Inc.
Eugene J. Glaser* Chairman, President of the Manager and President and Director of
5 Hanover Square Chief Executive the Distributor; Director of The Zweig Fund, Inc. Former
New York, NY 10004 Officer and Trustee Director of Zweig Tax-Free Fund Inc. and Zweig Cash
Fund Inc.
Donald B. Romans Trustee President of Romans & Company, Private Investors and
233 East Wacker Dr. Financial Consultants; Director of the Burnham Fund Inc.
Chicago, IL 60601 Former Consultant to and Executive Vice President and
Chief Financial Officer of Bally Manufacturing Corporation,
and Director of Zweig Tax-Free Fund Inc. and Zweig
Cash Fund Inc.
</TABLE>
7
<PAGE> 98
<TABLE>
<CAPTION>
Name and Address Position With the Principal Occupation During Past 5 Years
Trust
- ---------------- ----------------- ----------------------------------------
<S> <C> <C>
Trust
Martin E. Zweig President Chairman of the Manager; Chairman of the Board and
900 Third Avenue President of The Zweig Total Return Fund, Inc. and The
New York, NY 10022 Zweig Fund, Inc.; President and Director of Zweig Total
Return Advisors, Inc., Zweig Advisors Inc., Zweig-DiMenna
International Managers, Inc., and Zweig Securities Advisory
Service Inc.; Co-Chairman of Research of Avatar
Investors Associates Corp.; Managing General Partner of
Zweig-DiMenna Partners, L.P. and Zweig-Di Menna Special
Opportunities, L.P.; President and Director of Gotham
Advisors, Inc., Euclid Advisors, Inc. and Zanoba Asset
Management, Inc.; Member of the Undergraduate
Executive Board of the Wharton School, University of
Pennsylvania. Former President of Zweig Tax-Free Fund
Inc. and Zweig Cash Fund Inc.; General Partner of Zweig
Katzen Investors, L.P.; President and Director of
Davis/Zweig Futures, Inc., and Director of Zweig/Avatar
Capital Management, Inc.
David Katzen Senior Vice President Senior Vice President of the Manager; Formerly Vice
900 Third Avenue President of Zweig Advisors, Inc.; Executive Vice
New York, NY 10022 President of Euclid Advisors, Inc.; Director of
Quantitative Research at Avatar Investors Associates,
Corp. Formerly Assistant Vice President of Zweig Fund
Inc.; Vice President of ZZK Management, Inc.; Director
of Equity Research for Zweig Total Return Advisors,
Inc.; and Research Director of Zweig Advisors, Inc.
Barry Mandinach First Vice President Executive Vice President of the Distributor and Senior Vice
5 Hanover Square President of the Manager.
New York, NY 10004
Carlton Neel First Vice President First Vice President of the Manager; Former Vice President
900 Third Avenue of J.P. Morgan & Co., Inc.
New York, NY 10022
Alfred J. Ratcliffe First Vice President, First Vice President of the Manager. Former Vice President
5 Hanover Square Treasurer, Principal of The Bank of New York.
New York, NY 10004 Accounting Officer
and Assistant
Secretary
Charles I. Leone First Vice President Chief Financial Officer and First Vice President of the
5 Hanover Square and Assistant Manager and the Distributor. Former Assistant Treasurer
New York, NY 10004 Secretary of Zweig Cash Fund Inc.
Annemarie Gilly Vice President First Vice President of the Manager and the Distributor.
5 Hanover Square Former Vice President of Concord Financial Group.
New York, NY 10004 Former Executive Vice President and Chief Operating
Officer of The Gabelli Equity Trust, Inc.
</TABLE>
8
<PAGE> 99
<TABLE>
<CAPTION>
Name and Address Position With the Principal Occupation During Past 5 Years
- ---------------- ----------------- ----------------------------------------
<S> <C> <C>
Trust
Jeffrey Lazar Vice President Vice President, Treasurer and Secretary of The Zweig
900 Third Avenue Fund, Inc. and The Zweig Total Return Fund, Inc.; Vice
New York, NY 10022 President, Treasurer and Secretary of Zweig Advisors, Inc.
and Zweig Total Return Advisors, Inc.
Beth Abraham Assistant Vice Assistant Vice President of The Manager; former self-
900 Third Avenue President employed consultant to the mutual fund industry; former
New York, NY 10022 Senior Compliance Examiner in the New York Regional
Office of the U.S. Securities and Exchange Commission.
Maureen McQuaid Assistant Vice Portfolio Assistant for Zweig Managed Assets; former
900 Third Avenue President Research Assistant for the Zweig Organization. Former
New York, NY 10022 commercial insurance underwriter for American
International Group.
Tom Disbrow Assistant Treasurer Assistant Vice President of the Manager
5 Hanover Square
New York, NY 10004
Marc Baltuch Secretary First Vice President of the Manager; First
900 Third Avenue Vice President, Director, Chief Compliance Officer and
New York, NY 10022 Secretary of the Distributor.; Director and Vice President of
Watermark Securities, Inc. And Assistant Secretary of
Gotham Advisors, Inc., Zweig Total Return Advisors, Inc.
And Zweig Advisors. Former Chief of the Branch of
Investment Adviser Examiners and Chief Regional
Securities Examiner in the New York Regional Office of the
Securities and Exchange Commission and Secretary of
Zweig Cash Fund, Inc.
</TABLE>
*Designates a Trustee who is an "interested person" of the Trust within the
meaning of the 1940 Act.
Those trustees and officers of the Trust who are affiliated with the
Distributor or the Manager are not separately compensated for their services as
trustees or officers of the Trust per year. The Trust pays each of its
"disinterested" trustees a fee of $4,000 per year, plus $1,000 per meeting
attended and reimburses their expenses for attendance at meetings, all of which
is prorated on the basis of the assets of each Series, plus $1,000 for each
Series per year. For the fiscal year ended December 31, 1995, the fees and
expenses of disinterested trustees, as a group, were $59,397. As of December 31,
1995, except for Dr. Zweig , the trustees and officers of the Trust, as a group,
owned less than 1% of any Series of the Trust.
Trustees may be removed at any meeting of shareholders by a vote of
two-thirds of the outstanding shares of the Trust. Except as set forth above,
the trustees shall continue to hold office and may appoint their successors.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
To the Trust's knowledge, except for Dr. Martin E. Zweig (900 Third Avenue,
New York, NY 10022) and members of his immediate family, who own 16.43% of Zweig
Cash Fund Class M shares (of which he has shared voting and investment power as
to 1.06%, and disclaims beneficial ownership as to .11%), Prudential Securities
f/b/o Roger Markle (100 Gold Street, New York, NY 10292-0001), who owns 5.59% of
Zweig Cash Fund Class A shares (sole dispositive and voting power) and
Prudential Securities f/b/o Stanley E. Coleby and Sharon E. Coleby (100 Gold
Street, New York, NY 10292-001), who own 7.41% of Zweig Cash Fund Class C shares
(sole dispositive and voting power), no person is the beneficial owner of 5% or
more of the outstanding voting shares of any class of shares of any Series of
the Trust.
9
<PAGE> 100
INVESTMENT MANAGEMENT AND OTHER SERVICES
The Management Agreement
The Trust and the Manager entered into an amended management agreement,
dated April 29, 1994 (the "Management Agreement"), pursuant to which the Manager
reviews the portfolio of securities and investments of each Series, and advises
and assists each Series with respect to the selection, acquisition, holding or
disposal of securities and makes recommendations with respect to other aspects
and affairs of each Series. The Board of Trustees considered and approved the
adoption of the Management Agreement with respect to the Fund at a meeting held
on December 14, 1993. The initial shareholders of the Fund approved the
Management Agreement on April 25, 1994. The continuance of the management
agreement was last approved by the Trustees on June 22, 1995. The Manager also
furnishes the Trust with certain administrative services, office space and
equipment, and permits its officers and employees who may be elected trustees or
officers of the Trust to serve in the capacities to which they are elected.
The Management Agreement will continue in effect with respect to the Fund
for an initial two year period, and from year to year thereafter if specifically
approved annually by a majority of the Board of Trustees who are not parties to
such contract or "interested persons" of any such party. The Management
Agreement may be terminated without penalty by either of the parties on 60 days'
written notice and must terminate in the event of its assignment.
The Management Agreement provides that the Manager is liable only for its
acts or omissions caused by its willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Manager to render services to others and to engage in other activities.
The Manager is paid a management fee equal to 0.50% per annum of the average
daily net assets of the Fund. The Trust currently pays the Manager for its
services pursuant to the Management Agreement a monthly fee at the annual rate
of .60% of the average daily net assets of the Government Securities Series,
.75% of the average daily net assets of Zweig Strategy Fund and 1.00% of the
average daily net assets of Zweig Appreciation Fund and Zweig Managed Assets.
The Manager has voluntarily undertaken to limit expenses of the Fund
(exclusive of taxes, interest, brokerage commissions and transaction costs,
certain distribution fees described below and extraordinary expenses) to 0.35%
of its average net assets and reserves the right to discontinue this policy at
any time .
Except as described above for the Fund, the fee of a Series will be reduced,
or the Manager will reimburse the Series (up to the amount of its fee), by an
amount necessary to prevent the total expenses of the Series (excluding taxes,
interest, brokerage commissions or transaction costs, certain distribution fees,
certain custodial expenses and extraordinary expenses) from exceeding limits
applicable to the Series in any state in which its shares then are qualified for
sale. Currently, the most restrictive expense limitation is 2.5% of the first
$30 million of a Series' net assets, 2% of the next $70 million of a Series' net
assets and 1.5% of the remaining net assets. The expense limitation provision
applies separately to each Series. From time to time, the Manager may make
certain commitments which are more restrictive than any state-imposed
limitation. In such a case, the Manager will reserve the right to discontinue
any such commitment. These expense reimbursements, if any, are estimated,
reconciled and paid on a monthly basis to the Trust.
The Manager may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Trust. The Distributor or its
affiliates may provide the Manager (without charge to the Trust) with investment
information and recommendations which may serve as the principal basis for
investment decisions with respect to certain Series of the Trust.
The Manager has adopted a Code of Ethics ("the Code") which requires all
persons subject to the Code to pre- clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in
client accounts. In the event that a client of the Manager's affiliates also
owns such security, or its proposed that such client purchase such security,
available investments or opportunities for sales will be allocated in a manner
deemed to be equitable by the Manager.
THE DISTRIBUTOR AND DISTRIBUTION PLANS
Pursuant to its Distribution Agreement with the Trust (the "Distribution
Agreement"), Zweig Securities Corp. acts as distributor of the Trust's shares.
The Trust has adopted a Rule 12b-1 Plan for the Class M Shares (the "Class M
Plan"), which is described in the Prospectus under the heading "Organization and
management - The Distributor." The continuance and amendment of the Distribution
Agreement was last approved by the Trustees on June 22, 1995.
The Trust has also adopted a distribution plan for the Class A, Class B, and
Class C Shares of each Series of the Trust (the "Plan"), including the Class A,
Class B and C Shares of the Fund, in accordance with Rule 12b-1 under the 1940
Act, to compensate the Distributor for the services it provides and for the
expenses it bears under the
10
<PAGE> 101
Distribution Agreement. The Class A Shares, pursuant to the Plan, are subject to
a distribution fee at the rate of .30% per annum of the average daily net asset
value of the Fund. Under the Plan, the Distributor, as the distributor of Class
C Shares, receives a distribution fee with respect to the Class C Shares at a
rate of .05% per annum, and a service fee at a rate of .25% per annum, of the
average daily net asset value of the Fund. The Distributor may use the
distribution charge to compensate outside brokers. With respect to the Class C
Shares, the Distributor retains the .05% distribution fee. The service fees
payable by the Class C Shares are payments to National Association of Securities
Dealers, Inc. member firms for the provision by such members of personal,
continuing service to investors, similar to an account maintenance fee.
A report of the amounts expended under the Class M Plan and the Plan
(collectively, the "Plans") must be made to the Board of Trustees and reviewed
by the Board at least quarterly. In addition, the Plans provide that they may
not be amended to increase materially the costs which the Trust may bear for
distribution pursuant to the Plans without shareholder approval and that other
material amendments to the Plans must be approved by a majority of the Board,
including a majority of the Board who are neither "interested persons" of the
Trust (as defined in the 1940 Act) nor have any direct or indirect financial
interest in the operation of the Plans (the "Qualified Trustees"), by vote cast
in person at a meeting called for the purpose of considering such amendments.
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans. The Plans may not be
amended to increase materially the amount to be spent for the services described
therein without the requisite approval of shareholders, and all material
amendments of the Plans must also be approved by the Board in the manner
described above. The Plans are terminable at any time by vote of a majority of
the Qualified Trustees or, with respect to any Class of a Series, by vote of a
majority of the shares of such Class. Pursuant to the Plans, any new trustees
who are not "interested persons" must be nominated by existing trustees who are
not "interested persons." If the Plans are terminated (or not renewed) with
respect to one or more Classes of shares, they may continue in effect with
respect to any Class or Series as to which they have not been terminated (or
have been renewed).
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
Benefits from the Plans may accrue to the Trust and its shareholders from
the growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Series' net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Series' assets, and facilitating
economies of scale (e.g., block purchases) in the Series' securities
transactions. Under their terms, the Plans will continue from year to year,
provided that such continuance is approved annually by a vote of the Trustees in
the manner described above.
The continuance of the Plan was last approved by the Board of Trustees,
including a majority of the Qualified Trustees, at a meeting held on June 22,
1995. The adoption of the Class M Plan was approved by the Board of Trustees at
a meeting held on December 14, 1993, and was approved by the initial
shareholders of the Class M Shares on April 25, 1994. Prior to approving the
continuance of the Plan and the adoption of the Class M Plan, the Board
requested and received from the Distributor all the information which it deemed
necessary to arrive at an informed determination as to such continuance and
adoption of the Plans. In making its determination to continue the Plan and
adopt the Class M Plan, the Board considered, among other factors: (1) the
Trust's experience under the Plan and the previous Rule 12b-1 Plan for the Class
A Shares of the Trust, and whether such experience indicates that the Plans
would operate as anticipated; (2) the benefits the Trust had obtained under the
Plan and the previous Class A Rule 12b-1 Plan and would be likely to obtain
under the Plans; (3) what services would be provided under the Plans by the
Distributor to the Trust and its shareholders; and (4) the reasonableness of the
fees to be paid to the Distributor for its services under the Plans. Based upon
its review, the Board, including each of the Qualified Trustees, determined that
the continuance of the Plan and the adoption of the Class M Plan would be in the
best interest of the Trust, and that there was a reasonable likelihood that the
Plans would benefit the Trust and its shareholders. In the Board's quarterly
review of the Plans, they will consider their continued appropriateness and the
level of compensation provided therein.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
The Trust acknowledges that it has obtained its name by consent of Dr.
Martin E. Zweig and agrees that if (i) the Manager should cease to be the
Trust's investment Manager or (ii) if Dr. Zweig should no longer be affiliated
with the Manager, the Trust, upon request of Zweig Securities Corp. or Dr.
Zweig, shall submit to the Trustees for their vote a proposal to delete the word
"Zweig" from its name and cease to use the name "Zweig Series Trust" or any
11
<PAGE> 102
component or combination thereof or any name deceptively similar thereto, and
indicate on all letterheads and other promotional material that the Manager is
no longer the Trust's investment Manager or Dr. Zweig is no longer affiliated
with the Manager, as the case may be. The Trust has agreed that Dr. Zweig or
Zweig Securities Corp. or any of its successors or assigns may use or permit the
use of the word "Zweig," alone or with any other words, for, by or in connection
with any other entity or business, other than the Trust and its business,
whether or not the same directly or indirectly competes or conflicts with the
Trust or its business in any manner.
Custodian, Transfer Agent and Dividend Paying Agent
The Bank of New York, 48 Wall Street, New York, New York 10286 serves as
custodian and State Street Bank and Trust Company, P.O. Box 8505, Boston,
Massachusetts 02260-8505, serves as the transfer agent and dividend paying agent
for the Trust. Compensation for such services is based on schedules of charges
agreed on by the Trust and the custodian and the Trust and the transfer agent.
For the convenience of shareholders, the transfer agent maintains in book
account form the records of shares owned by Trust shareholders. Shareholders may
request that the transfer agent issue to them certificates representing their
ownership of Trust shares.
Independent Accountants
Coopers & Lybrand L.L.P., 1301 Avenue of the Americas, New York, New York
10019, serves as independent accountants for the Trust. In addition to reporting
annually on the financial statements of the Trust, the Trust's accountants also
review certain filings of the Trust with the Securities and Exchange Commission.
Counsel
Shearman & Sterling, 599 Lexington Avenue, New York, New York 10022, is
counsel to the Trust. The firm also acts as counsel to the Manager and the
Distributor.
PORTFOLIO TRANSACTIONS
The Manager places orders for the purchase and sale of securities for the
Zweig Cash Fund. All of the Zweig Cash Fund's portfolio transactions are
principal transactions with major dealers in money market instruments, on which
no brokerage commission is paid. Purchases from or sales to dealers serving as
market-makers include the spread between the bid and asked prices. Transactions
are allocated to various dealers according to the best judgment of the Manager
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt and effective execution of orders at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research, statistical or other services to the Manager may receive
orders for transactions by the Fund. Information so received will enable the
Manager to supplement its own research and analysis with the views and
information of other securities firms. Such information may be useful and of
value to the Manager in servicing other clients as well as the Trust; however,
information obtained by the Manager in servicing other clients may be useful and
of value to the Manager in servicing the Trust.
YIELD AND PERFORMANCE INFORMATION
From time to time, the Trust issues a "current yield" and "effective yield"
for the shares of the Fund. The Trust will include performance data for Class M
Shares, Class A Shares and Class C Shares of the Fund in its advertisements,
sales literature and other information distributed to the public that includes
performance data of the Fund. For a further discussion of how the Trust
calculates yield, see "Performance Information" in the Prospectus.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. These yields are each computed in accordance
with a standard method prescribed by the rules of the Commission, by first
determining the "net change in account value" for a hypothetical account having
a share balance of one share at the beginning of a seven-day period (the
"beginning account value"). The net change in account value equals the value of
additional shares purchased with dividends from the original share and dividends
declared on both the original share and any such additional shares. The
unannualized "base period return" equals the net change in account value divided
by the beginning account value. Realized gains or losses or changes in
unrealized appreciation or depreciation are not taken into account in
determining the net change in account value.
The yields are then calculated as follows
Current Yield = Net Change in Account Value X 365
---------------------------- ---
Beginning Account Value 7
Effective Yield = [(1 + Base Period Return) 365/7 ] - 1
For the seven days ended December 31, 1995, the effective (compounded) and
current yields of the Class M Shares of the Fund, were 5.45% and 5.32%,
respectively.
12
<PAGE> 103
Yield is a function of portfolio quality and composition, portfolio maturity
and operating expenses. Yields fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments or other investment companies that may use a different
method of calculating yield.
The Fund also may include in its advertisements data from Age Wave, Inc.;
the American Association of Retired Persons; Barron's; Business Week;
CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's Money
Fund Report; Financial Planning; Financial World; Forbes; Fortune; Hulbert
Financial Digest; Ibbotson Associates; Individual Investor; Investment Advisor;
Investors Business Daily; The Liscio Report; Lipper Analytical Services, Inc.;
Micropal Inc.; Money; Morningstar Mutual Funds; Mutual Fund Forecaster; Mutual
Funds Magazine; The National Center for Education Statistics; The New York
Times; The Philatelic Foundation; Smart Money; USA Today; U.S. News & World
Report; The Wall Street Journal; Worth and other industry publications.
REGISTRATION STATEMENT
This Statement of Additional Information and the Prospectus do not contain
all the information included in the Registration Statement filed with the
Commission under the Securities Act of 1933 with respect to the securities
offered by the Prospectus. The Registration Statement, including the exhibits
filed therewith, may be examined at the office of the Commission in Washington,
D.C.
Statements contained in this Statement of Additional Information and the
Prospectus as to the contents of any contract or other document are not complete
and, in each instance, reference is made to the copy of such contract or other
document filed as an exhibit to the Registration Statement of which this
Statement of Additional Information and the Prospectus form a part, each such
statement being qualified in all respects by such reference.
FINANCIAL STATEMENTS
The audited financial statements of Zweig Cash Fund for the year ended
December 31, 1995 and the report of the Trust's independent accountants in
connection therewith are included in the 1995 Annual Report to Shareholders of
the Trust, which is incorporated by reference into this Statement of Additional
Information.
13
<PAGE> 104
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The following report and financial statements for Zweig Series
Trust (the "Trust") are incorporated in Part B by reference to
the Trust's Annual Report to Shareholders for the year ended
December 31, 1995: Report of Coopers & Lybrand L.L.P.,
Independent Accountants; Statement of Assets and Liabilities,
dated December 31, 1995; Statement of Operations for the year
ended December 31, 1995; Statements of Changes in Net Assets
for each of the two years in the period ended December 31,
1995; Statement of Net Assets for each Series dated December
31, 1995; and Notes to Financial Statements.
[continued on next page]
C-1
<PAGE> 105
(b) Exhibits:
(1) *(a) Amended and Restated Agreement and
Declaration of Trust (predecessor
Massachusetts Trust).
**(b) Further Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
***(c) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
+++(d) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
*****(e) Agreement and Declaration of Trust
(Delaware Trust).
(2) ****(a) Amended By-Laws of the Trust (predecessor
Massachusetts Trust).
*****(b) Bylaws of the Trust (Delaware Trust).
(3) Inapplicable.
(4) +(a) Specimen stock certificate for shares of
beneficial interest in Zweig Strategy Fund,
Zweig Managed Assets, Priority Selection
List Series and Government Securities Series
(predecessor Massachusetts Trust).
+++(b) Forms of specimen stock certificates for
Class A and C (f/k/a B Shares) Shares of
beneficial interest of the Trust
(predecessor Massachusetts Trust).
++(c) Forms of specimen stock certificate for
shares of beneficial interest of Zweig
Appreciation Fund (predecessor Massachusetts
Trust).
++++(d) Form of specimen stock certificate for
shares of beneficial interest of Zweig
Managed Assets (predecessor Massachusetts
Trust).
_____________________
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A, filed previously on October 4,
1991.
**** Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 1, 1990.
***** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement of the Trust on Form N-1A, filed previously on
June 20, 1991.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 36 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 8, 1992.
C-2
<PAGE> 106
*(e) Forms of specimen stock certificates for
shares of beneficial interest of Zweig Cash
Fund (predecessor Massachusetts Trust).
+++++(f) Forms of specimen stock certificates for
Class B Shares of beneficial interest of the
Trust (predecessor Massachusetts Trust).
*****(g) Forms of specimen stock certificates for
shares of beneficial interest of the Trust
(Delaware Trust).
(5) **(a) Amended Management Agreement between the
Trust and Zweig/Glaser Advisers.
*(b) Form of Amended Management Agreement (to
include Zweig Cash Fund).
+++(c) Subadvisory Agreement between Zweig/Glaser
Advisers and Ned Davis Research, Inc.
(6) (a) *****(i) Amended Distribution Agreement.
***(ii) Purchase Agreement (Underwriting
Agreement) for Zweig Strategy Fund.
****(iii) Purchase Agreement (Underwriting
Agreement) for Zweig Appreciation
Fund.
**(iv) Purchase Agreement (Underwriting
Agreement) for Zweig Managed Assets.
++++(b) Selling Agreement.
(7) Inapplicable.
++(8) Custodian Agreement.
+(9) Transfer Agency Agreement.
(10) Consent of independent accountants.
_____________________
* Incorporated by reference to the Registration Statement of the Trust
on Form N-14, filed previously on January 18, 1994.
** Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
*** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
**** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 4, 1991.
***** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 28, 1986.
+++ Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement of the Trust on Form N-1A, filed previously on
May 2, 1990.
++++ Incorporated by reference to Post-Effective Amendment No. 38 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1994.
+++++ Incorporated by reference to Post-Effective Amendment No. 40 to
the Registration Statement of the Trust on Form N-1A, filed
previously on July 5, 1995.
C-3
<PAGE> 107
(11) Inapplicable.
(12) ++ (a) Subscription Agreement for Shares of the
Government Securities Series.
* (b) Subscription Agreement for Shares of the Priority
Selection List Series.
** (c) Subscription Agreement for Shares of the Zweig
Strategy Fund.
*** (d) Subscription Agreement for Shares of the Zweig
Global Bond Fund.
**** (e) Subscription Agreement for Shares of the Zweig
Appreciation Fund.
+++ (f) Subscription Agreement for Class C (f/k/a B
Shares) Shares of the Trust.
++++ (g) Subscription Agreement for Shares of Zweig
Managed Assets.
(13) + (a) Individual Retirement Account.
+ (b) Paired Defined Contribution Prototype Plan.
+ (c) 401(k) Prototype Plan.
+ (d) 403(b)(7) Custodial Account.
(14) ******(a) Amended Rule 12b-1 Distribution Plan.
+++++ (b) Form of Rule 12b-1 Plan for the Class M Shares of
Zweig Cash Fund.
** (15) Schedule for Computation of Performance Quotations.
- -------------------------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously
on July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to
the Registration Statement of the Trust on Form N-1A, filed
previously on October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to
the Registration Statement on Form 1-A, filed previously on
October 4, 1991.
**** Incorporated by reference to the Trust's Registration Statement on
Form N-1A, filed previously on September 28, 1984.
***** Incorporated by reference to Post-Effective Amendment No. 40 to
the Registration Statement of the Trust on Form N-1A, filed
previously on July 5, 1995.
****** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to
the Registration Statement of the Trust on Form N-1A, filed
previously on April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement of the Trust on Form N-1A, filed previously
on November 27, 1985.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to
the Registration Statement of the Trust on Form N-1A, filed
previously on March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 37 to
the Registration Statement of the Trust on Form N-1A, filed
previously on February 26, 1993.
+++++ Incorporated by reference to the Registration Statement of the
Trust on Form N-14, filed previously on January 18, 1994.
C-4
<PAGE> 108
* (16) Powers of Attorney.
**(17) Rule 18f-3 Plan.
(18) Financial Data Schedules
(18)(a) Zweig Strategy Fund - Class A
(18)(b) Zweig Strategy Fund - Class C
(18)(c) Zweig Appreciation Fund - Class A
(18)(d) Zweig Appreciation Fund - Class C
(18)(e) Zweig Managed Assets - Class A
(18)(f) Zweig Managed Assets - Class C
(18)(g) Zweig Government Fund - Class A
(18)(h) Zweig Government Fund - Class C
(18)(i) Zweig Cash Fund - Class A
(18)(j) Zweig Cash Fund - Class C
(18)(k) Zweig Cash Fund - Class M
* Incorporated by reference to Post-Effective Amendment No. 37 to
the Registration Statement of the Trust on Form N-1A, filed
previously on February 26, 1993.
** Incorporated by reference to Post-Effective Amendment No. 40 to
the Registration Statement of the Trust on Form N-1A, filed
previously on July 5, 1995.
C-5
<PAGE> 109
Item 25. Persons Controlled by or Under Common Control with the Trust
The Trust does not control and is not under common control with
any other person.
Item 26. Number of Holders of Securities
<TABLE>
<CAPTION>
Number of Record Holders as of
Shares of Beneficial Interest of: January 31, 1996
<S> <C>
Zweig Appreciation Fund
Class A 21,698
Class C 14,693
Zweig Strategy Fund
Class A 39,235
Class C 32,172
Government Securities Series
Class A 3,393
Class C 917
Zweig Managed Assets
Class A 8,882
Class C 32,639
Zweig Cash Fund
Class A 435
Class C 232
Class M 1,039
</TABLE>
Item 27. Indemnification
All officers, trustees, employees and agents of the Trust are to
be indemnified as set forth in Article VII of the Agreement and
Declaration of Trust filed herewith. To this end, the Trust
maintains an Officers' and Trustees' Errors and Omissions
Insurance Policy.
Insofar as indemnification for liability arising under the
Securities Act of 1933, as amended (the "1933 Act"), may be
permitted to trustees, officers and controlling persons of the
Trust pursuant to the foregoing provisions, or otherwise, the
Trust has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Trust of expenses incurred or paid
by a trustee, officer or controlling person of the Trust in the
successful defense of any action, suit or proceeding) is asserted
by such trustee, officer or controlling person in connection with
the securities being registered, the Trust will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
C-6
<PAGE> 110
Item 28. Business and Other Connections of Investment Manager
The investment manager of the Trust, Zweig/Glaser Advisers, a
general partnership ("ZGA"), engages in no business other than
that of investment counselling for clients, including the Trust.
The Officers and Directors of ZGA and their relationships with
Zweig Securities Corp. (the "Distributor") are as follows:
<TABLE>
<CAPTION>
Position with Position Positions with the
Name ZGA with the Trust Distributor
<S> <C> <C> <C>
Eugene J. Glaser President Chairman, Chief President and Director
Executive Officer
and Trustee
Dr. Martin E. Zweig Chairman President None
Barry Mandinach Senior Vice President First Vice President Executive Vice President
and Director
David J. Malat First Vice President None None
Marc Baltuch First Vice President Secretary First Vice President,
Chief Compliance Officer,
Secretary and Director
Carlton Neel First Vice President First Vice President None
David Katzen Senior Vice President Senior Vice President None
Annemarie Gilly First Vice President Vice President First Vice President
Charles I. Leone Chief Financial Officer First Vice President and Chief Financial Officer
and First Vice President Assistant Secretary and First Vice President
Alfred J. Ratcliffe First Vice President First Vice President , None
Treasurer, Principal
Accounting Officer and
Assistant Secretary
Fran Renzi Assistant Vice President None None
Mona Lee Assistant Vice President None None
Toni Ann Stapleton Controller and None None
Vice President
Beth Abraham Assistant Vice President Assistant Vice President None
Tom Disbrow Assistant Vice President Assistant Treasurer None
</TABLE>
The principal occupation of all of such persons other than Dr. Zweig, Mr. Malat
and Mr. Baltuch is with Zweig/Glaser Advisers and the common business address of
such persons is 5 Hanover Square, New York, New York 10004. Dr. Zweig's
principal occupation is as an investment adviser and analyst, Mr. Malat's
principal
C-7
<PAGE> 111
occupation is Executive Financial Officer of various Zweig affiliates, Mr.
Katzen's principal occupation is portfolio manager and analyst for ZGA and Mr.
Baltuch's principal occupation is Chief Compliance Officer of the Distributor
and the Trust; their place of business is 900 Third Avenue, New York, New York
10022.
C-8
<PAGE> 112
Item 29. Principal Underwriters
(a) Zweig Securities Corp., the Distributor, acts as principal
distributor of the Trust's shares.
(b) The officers and directors of the Distributor who also serve
on behalf of the Trust are as follows:
<TABLE>
<CAPTION>
Name Position with the Distributor Position with the Trust
<S> <C> <C>
Eugene J. Glaser President and Director Chairman, Chief Executive Officer and
Trustee
Barry Mandinach Executive Vice President First Vice President
and Director
Gerard T. Morda Senior Vice President None
Marc Baltuch First Vice President, Secretary
Chief Compliance Officer,
Secretary and Director
Annemarie Gilly First Vice President Vice President
Charles I. Leone Chief Financial Officer First Vice President and Assistant
and First Vice President Secretary
</TABLE>
The principal business address of all such persons is 5 Hanover
Square, New York, New York 10004, except that Mr. Baltuch's
address is 900 Third Avenue, New York, New York 10022.
(c) Not applicable.
Item 30. Location of Accounts and Records
Zweig Series Trust
5 Hanover Square
New York, New York 10004
State Street Bank and Trust Company
225 Franklin Street
Boston, Massachusetts 02266
Item 31. Management Services
The Trust has not entered into any management-related service
contracts.
Item 32. Not Applicable.
C-9
<PAGE> 113
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the Registrant has
duly caused this Post-Effective Amendment No. 41 on Form N-1A to be signed on
its behalf by the undersigned, thereunto duly authorized in the City and State
of New York on the 29th day of February, 1996.
ZWEIG SERIES TRUST
By /s/ EUGENE J. GLASER
------------------------
Eugene J. Glaser
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 41 to the Registration Statement of
the Trust on Form N-1A has been signed below by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ EUGENE J. GLASER Chairman, Chief Executive February 29, 1996
- --------------------------------- Officer and Trustee
Eugene J. Glaser
/s/ ALFRED J. RATCLIFFE First Vice President, February 29, 1996
- --------------------------------- Treasurer, Principal
Alfred J. Ratcliffe Accounting Officer and
Assistant Secretary
* Trustee February 29, 1996
- ---------------------------------
Claire B. Benenson
* Trustee February 29, 1996
- ---------------------------------
Richard E. Deems
* Trustee February 29, 1996
- ---------------------------------
Donald B. Romans
* Trustee February 29, 1996
- ---------------------------------
S. Leland Dill
</TABLE>
*By /s/ EUGENE J. GLASER
-----------------------------
Eugene J. Glaser
Attorney-in-fact under powers previously filed.
C-10
<PAGE> 114
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 41
TO THE
REGISTRATION STATEMENT
ON
FORM N-1A
<PAGE> 115
Exhibits:
(1) *(a) Amended and Restated Agreement and
Declaration of Trust (predecessor
Massachusetts Trust).
**(b) Further Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
***(c) Additional Amendment to the Amended and
Restated Agreement and Declaration of Trust
(predecessor Massachusetts Trust).
+++(d) Additional Amendment to the Amended and
Restated Agreement and Declaration of
Trust (predecessor Massachusetts Trust).
*****(e) Agreement and Declaration of Trust
(Delaware Trust).
(2) ****(a) Amended By-Laws of the Trust (predecessor
Massachusetts Trust).
*****(b) Bylaws of the Trust (Delaware Trust).
(3) Inapplicable.
(4) +(a) Specimen stock certificate for shares of
beneficial interest in Zweig Strategy Fund,
Zweig Managed Assets, Priority Selection
List Series and Government Securities Series
(predecessor Massachusetts Trust).
+++(b) Forms of specimen stock certificates for
Class A and C (f/k/a B Shares) Shares of
beneficial interest of the Trust
(predecessor Massachusetts Trust).
++(c) Forms of specimen stock certificate for
shares of beneficial interest of Zweig
Appreciation Fund (predecessor Massachusetts
Trust).
++++(d) Form of specimen stock certificate for
shares of beneficial interest of Zweig
Managed Assets (predecessor Massachusetts
Trust).
_____________________
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form N-1A, filed previously on October 4,
1991.
**** Incorporated by reference to Post-Effective Amendment No. 21 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 1, 1990.
***** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 26 to the
Registration Statement of the Trust on Form N-1A, filed previously on
June 20, 1991.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 36 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 8, 1992.
C-12
<PAGE> 116
*(e) Forms of specimen stock certificates for
shares of beneficial interest of Zweig Cash
Fund (predecessor Massachusetts Trust).
+++++(f) Forms of specimen stock certificates for
Class B Shares of beneficial interest of the
Trust (predecessor Massachusetts Trust).
*****(g) Forms of specimen stock certificates for
shares of beneficial interest of the Trust
(Delaware Trust).
(5) **(a) Amended Management Agreement between the
Trust and Zweig/Glaser Advisers.
*(b) Form of Amended Management Agreement (to
include Zweig Cash Fund).
+++(c) Subadvisory Agreement between Zweig/Glaser
Advisers and Ned Davis Research, Inc.
(6) (a) *****(i) Amended Distribution Agreement.
***(ii) Purchase Agreement (Underwriting
Agreement) for Zweig Strategy Fund.
****(iii) Purchase Agreement (Underwriting
Agreement) for Zweig Appreciation
Fund.
**(iv) Purchase Agreement (Underwriting
Agreement) for Zweig Managed Assets.
++++(b) Selling Agreement.
(7) Inapplicable.
++(8) Custodian Agreement.
+(9) Transfer Agency Agreement.
(10) Consent of independent accountants.
_____________________
* Incorporated by reference to the Registration Statement of the Trust
on Form N-14, filed previously on January 18, 1994.
** Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
*** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
**** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 4, 1991.
***** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 3 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 28, 1986.
+++ Incorporated by reference to Post-Effective Amendment No. 23 to the
Registration Statement of the Trust on Form N-1A, filed previously on
May 2, 1990.
++++ Incorporated by reference to Post-Effective Amendment No. 38 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1994.
+++++ Incorporated by reference to Post-Effective Amendment No. 40 to
the Registration Statement of the Trust on Form N-1A, filed
previously on July 5, 1995.
C-13
<PAGE> 117
(11) Inapplicable.
(12) ++ (a) Subscription Agreement for Shares of the
Government Securities Series.
* (b) Subscription Agreement for Shares of the Priority
Selection List Series.
** (c) Subscription Agreement for Shares of the Zweig
Strategy Fund.
*** (d) Subscription Agreement for Shares of the Zweig
Global Bond Fund.
**** (e) Subscription Agreement for Shares of the Zweig
Appreciation Fund.
+++ (f) Subscription Agreement for Class C (f/k/a B
Shares) Shares of the Trust.
++++ (g) Subscription Agreement for Shares of Zweig
Managed Assets.
(13) + (a) Individual Retirement Account.
+ (b) Paired Defined Contribution Prototype Plan.
+ (c) 401(k) Prototype Plan.
+ (d) 403(b)(7) Custodial Account.
(14) ******(a) Amended Rule 12b-1 Distribution Plan.
+++++ (b) Form of Rule 12b-1 Plan for the Class M Shares of
Zweig Cash Fund.
** (15) Schedule for Computation of Performance Quotations.
- -----------------------------
* Incorporated by reference to Post-Effective Amendment No. 8 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 20, 1987.
** Incorporated by reference to Post-Effective Amendment No. 18 to the
Registration Statement of the Trust on Form N-1A, filed previously on
October 20, 1989.
*** Incorporated by reference to Post-Effective Amendment No. 29 to the
Registration Statement on Form 1-A, filed previously on October 4,
1991.
**** Incorporated by reference to the Trust's Registration Statement on
Form N-1A, filed previously on September 28, 1984.
***** Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
****** To be filed.
+ Incorporated by reference to Post-Effective Amendment No. 22 to the
Registration Statement of the Trust on Form N-1A, filed previously on
April 20, 1990.
++ Incorporated by reference to Post-Effective Amendment No. 2 to the
Registration Statement of the Trust on Form N-1A, filed previously on
November 27, 1985.
+++ Incorporated by reference to Post-Effective Amendment No. 34 to the
Registration Statement of the Trust on Form N-1A, filed previously on
March 2, 1992.
++++ Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
+++++ Incorporated by reference to the Registration Statement of the Trust
on Form N-14, filed previously on January 18, 1994.
C-14
<PAGE> 118
* (16) Powers of Attorney.
**(17) Rule 18f-3 Plan.
(18) Financial Data Schedules
(18)(a) Zweig Strategy Fund - Class A
(18)(b) Zweig Strategy Fund - Class C
(18)(c) Zweig Appreciation Fund - Class A
(18)(d) Zweig Appreciation Fund - Class C
(18)(e) Zweig Managed Assets - Class A
(18)(f) Zweig Managed Assets - Class C
(18)(g) Zweig Government Fund - Class A
(18)(h) Zweig Government Fund - Class C
(18)(i) Zweig Cash Fund - Class A
(18)(j) Zweig Cash Fund - Class C
(18)(k) Zweig Cash Fund - Class M
- ------------------------
* Incorporated by reference to Post-Effective Amendment No. 37 to the
Registration Statement of the Trust on Form N-1A, filed previously on
February 26, 1993.
** Incorporated by reference to Post-Effective Amendment No. 40 to the
Registration Statement of the Trust on Form N-1A, filed previously on
July 5, 1995.
C-15
<PAGE> 1
[COOPERS & LYBRAND L.L.P. LETTERHEAD]
CONSENT OF INDEPENDENT ACCOUNTANTS
--------------------------
We consent to the incorporation by reference in Post-Effective Amendment No. 41
to the Registration Statement of Zweig Series Trust on Form N-1A (File No.
2-93538), to be filed with the Securities and Exchange Commission under the
provisions of the Securities Act of 1933 and the Investment Company Act of 1940,
as amended, of our report dated February 22, 1996 included in the December 31,
1995 Annual Report to Shareholders of Zweig Series Trust.
We also consent to the reference to our firm under the captions, "Financial
Highlights" in the prospectus and "Independent Accountants" in the Statement of
Additional Information.
/s/ COOPERS & LYBRAND L.L.P.
---------------------------
COOPERS & LYBRAND L.L.P.
New York, New York
February 28, 1996
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000754363
<NAME> ZWEIG SERIES TRUST
<SERIES>
<NUMBER> 1
<NAME> ZSAFDS95
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,015,840
<INVESTMENTS-AT-VALUE> 1,110,768
<RECEIVABLES> 34,295
<ASSETS-OTHER> 154
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,145,217
<PAYABLE-FOR-SECURITIES> (53,959)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (2,672)
<TOTAL-LIABILITIES> (56,631)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 953,822
<SHARES-COMMON-STOCK> 38,468
<SHARES-COMMON-PRIOR> 34,360
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 40,435
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 94,354
<NET-ASSETS> 1,088,586
<DIVIDEND-INCOME> 10,793
<INTEREST-INCOME> 17,768
<OTHER-INCOME> 0
<EXPENSES-NET> (14,192)
<NET-INVESTMENT-INCOME> 14,369
<REALIZED-GAINS-CURRENT> 88,379
<APPREC-INCREASE-CURRENT> 81,614
<NET-CHANGE-FROM-OPS> 184,362
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (13,218)
<DISTRIBUTIONS-OF-GAINS> (20,001)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,877
<NUMBER-OF-SHARES-REDEEMED> (5,617)
<SHARES-REINVESTED> 1,848
<NET-CHANGE-IN-ASSETS> 356,770
<ACCUMULATED-NII-PRIOR> 5,218
<ACCUMULATED-GAINS-PRIOR> (6,257)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,192
<AVERAGE-NET-ASSETS> 489,130
<PER-SHARE-NAV-BEGIN> 12.36
<PER-SHARE-NII> .27
<PER-SHARE-GAIN-APPREC> 2.80
<PER-SHARE-DIVIDEND> (.37)
<PER-SHARE-DISTRIBUTIONS> (.55)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.51
<EXPENSE-RATIO> 1.27
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000754363
<NAME> ZWEIG SERIES TRUST
<SERIES>
<NUMBER> 1
<NAME> ZSCFDS95
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 1,015,840
<INVESTMENTS-AT-VALUE> 1,110,768
<RECEIVABLES> 34,295
<ASSETS-OTHER> 154
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 1,145,217
<PAYABLE-FOR-SECURITIES> (53,959)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (2,672)
<TOTAL-LIABILITIES> (56,631)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 953,822
<SHARES-COMMON-STOCK> 36,430
<SHARES-COMMON-PRIOR> 24,856
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (25)
<ACCUMULATED-NET-GAINS> 40,435
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 94,354
<NET-ASSETS> 1,088,586
<DIVIDEND-INCOME> 10,793
<INTEREST-INCOME> 17,768
<OTHER-INCOME> 0
<EXPENSES-NET> (14,192)
<NET-INVESTMENT-INCOME> 14,369
<REALIZED-GAINS-CURRENT> 88,379
<APPREC-INCREASE-CURRENT> 81,614
<NET-CHANGE-FROM-OPS> 184,362
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (6,393)
<DISTRIBUTIONS-OF-GAINS> (18,613)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 15,068
<NUMBER-OF-SHARES-REDEEMED> (4,816)
<SHARES-REINVESTED> 1,322
<NET-CHANGE-IN-ASSETS> 356,770
<ACCUMULATED-NII-PRIOR> 5,218
<ACCUMULATED-GAINS-PRIOR> (6,257)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 6,702
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 14,192
<AVERAGE-NET-ASSETS> 405,753
<PER-SHARE-NAV-BEGIN> 12.35
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> 2.82
<PER-SHARE-DIVIDEND> (.22)
<PER-SHARE-DISTRIBUTIONS> (.55)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 14.56
<EXPENSE-RATIO> 1.97
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000754363
<NAME> ZWEIG SERIES TRUST
<SERIES>
<NUMBER> 2
<NAME> ZAAFDS95
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<INVESTMENTS-AT-COST> 379,438
<INVESTMENTS-AT-VALUE> 468,316
<RECEIVABLES> 1,408
<ASSETS-OTHER> 260
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 469,984
<PAYABLE-FOR-SECURITIES> (1,146)
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> (1,044)
<TOTAL-LIABILITIES> (2,190)
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 370,165
<SHARES-COMMON-STOCK> 17,313
<SHARES-COMMON-PRIOR> 15,762
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (214)
<ACCUMULATED-NET-GAINS> 8,588
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 89,255
<NET-ASSETS> 467,794
<DIVIDEND-INCOME> 6,288
<INTEREST-INCOME> 4,996
<OTHER-INCOME> 0
<EXPENSES-NET> (7,895)
<NET-INVESTMENT-INCOME> 3,389
<REALIZED-GAINS-CURRENT> 17,192
<APPREC-INCREASE-CURRENT> 68,145
<NET-CHANGE-FROM-OPS> 88,726
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5,429)
<DISTRIBUTIONS-OF-GAINS> (8,373)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,345
<NUMBER-OF-SHARES-REDEEMED> (3,758)
<SHARES-REINVESTED> 756
<NET-CHANGE-IN-ASSETS> 114,997
<ACCUMULATED-NII-PRIOR> 3,041
<ACCUMULATED-GAINS-PRIOR> 7,117
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> (4,141)
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> (7,895)
<AVERAGE-NET-ASSETS> 248,679
<PER-SHARE-NAV-BEGIN> 13.54
<PER-SHARE-NII> .16
<PER-SHARE-GAIN-APPREC> 3.05
<PER-SHARE-DIVIDEND> (.33)
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> ZWEIG SERIES TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> ZWEIG SERIES TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000754363
<NAME> SZEIG SERIES TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000754363
<NAME> ZWEIG SERIES TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
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<NAME> ZWEIG SERIES TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000754363
<NAME> ZWEIG SERIES TRUST
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WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<NAME> ZWEIG SERIES TRUST
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