<PAGE>
Zweig
Series Trust
1996 Annual Report
Dear fellow shareholder:
In 1996, the stock market did something that it had simply never done before.
<PAGE>
It set a new record for
-----------------------
2,273 days and counting
-----------------------
the longest and strongest
--------------
up 173 percent
--------------
bull market of all time.
(Source: Birinyi Associates. As measured by the Dow Jones
Industrial Average. Closing prices through 12/31/96.)
In fact, 1996 capped the single best 15-year period in the history of the Dow
Jones Industrial Average.
The Zweig Mutual Funds participated in the stock market rise of 1996 (see
chart). Our returns were restrained, however, by our 68% average market exposure
for the year. We maintained this exposure because our research was virtually
neutral throughout the year. Though stocks were still rising, we were unwilling
to contradict our time-tested research and become more fully invested.
I'd like now to summarize the state of our research as we entered 1997. We
continue to rely on three major sets of indicators:
Our monetary research is slightly positive. This area of our research focuses on
interest rates, which have risen but are not unduly high, and the actions of the
Federal Reserve, which has not done anything to slow the market or the economy.
As long as the economy does not heat up too much and interest rates stay where
they are, this most important area of our research will not turn negative.
Our sentiment research is poor. We see lots of optimism among investors. When
everyone is so positive, and throwing so much money into stocks, it's more
likely there won't be enough new money to fuel a continued rise in the markets.
Our momentum research is positive. Though this set of indicators carries the
least weight of the three, it has tended to keep us more fully invested than we
would otherwise have been, simply because the market's uptrend has been so
strong.
2
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- -----------------------------
1996 RETURNS through 12/31/96
- -----------------------------
========================================
13.0%
Zweig Strategy Fund
A Shares 68%
AVG. MARKET EXPOSURE
========================================
========================================
15.4%
Zweig Appreciation Fund
A Shares 68%
AVG. MARKET EXPOSURE
========================================
========================================
9.8%
Zweig Managed Assets
A Shares 78%
AVG. MARKET EXPOSURE
========================================
Zweig Government Fund
A Shares 4.1 Years
- -0.4% AVERAGE DURATION
"You hired us to participate in the growth of stocks while limiting losses. I
can assure you that we've never been less likely to abandon that strategy than
we are right now."
[PHOTO]
Six years into a record bull market, we have certainly felt the pressure to be
more fully invested than we are. A recent article in The Wall Street Journal
highlighted the predicament that we share with many of today's fund managers.
The article noted that portfolio managers feel pressure to remain fully invested
in stocks, even as they worry about this aging bull market. This is because only
funds with top-tier returns can hope to attract and retain today's performance-
hungry investor. "Am I worried about the market?" asked a fund manager from
another mutual fund company, "Yeah, I'm worried about the market. Am I fully
invested? Yeah. My investors want me to be." We will not deviate from our
mandate to protect your hard-earned money during a market decline. If our
research continues to indicate risk in the market, as it did in 1996, we will
remain cautiously postured.
Throughout my 34 years in the markets, I've found that success is not defined by
how much you make in bull markets as much as it's measured by what you keep over
the course of your investing lifetime. Moreover, in my experience, record levels
of public enthusiasm for stocks are not characteristic of low-risk market
environments. And while I don't have a crystal ball, I think you have to go back
to years like 1929, 1968 and 1987 to find investor enthusiasm as high as it is
today. You hired us to participate in the growth of stocks while limiting
losses. I can assure you that we've never been less likely to abandon that
strategy than we are right now.
Investors in our funds tend to need and want the growth that equities provide,
but with active risk management. To that end, we launched Zweig Growth & Income
Fund in November. A report on the fund appears on page 14. Our portfolio
managers, who are responsible for selecting the stocks and bonds for the funds,
discuss the results of each fund beginning on page 8.
We wish you and your family the best in 1997, and we thank you for your
continued confidence in us.
Sincerely,
/s/ Martin E. Zweig
MARTIN E. ZWEIG, Ph.D.
President
January 17, 1997
3
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Table of Contents
Shareholder Letter 1
A glossary of investment terms 5
Successful investing
through realistic expectations 6
Zweig Strategy Fund Review 8
Zweig Appreciation Fund Review 10
Zweig Managed Assets Review 12
Zweig Growth & Income Fund Review 14
Zweig Government Fund Review 15
Zweig Cash Fund Review 15
Standardized Performance 16
Statement of Net Assets 17
Statement of Operations 41
Statement of Changes in Net Assets 42
Notes to Financial Statements 43
Financial Highlights 48
Report of Independent Accountants 50
This report has been prepared for the information of shareholders of Zweig
Series Trust and is not authorized for use unless preceded or accompanied by a
current prospectus. The prospectus includes information regarding the Trust's
sales charges, expenses, objectives, policies, management, performance and other
information. Please read it carefully before you invest or send money. Call
Zweig at 1-800-272-2700 to obtain additional copies of the prospectus.
The performance data quoted represent past performance, which is no guarantee of
future results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. The shorter the time period of your investment, the greater the
possibility of loss. Fund shares are not deposits or obligations of, or insured
or guaranteed by, the U.S. government, any financial institution, the Federal
Deposit Insurance Corporation, or any other agency, entity or person.
4
<PAGE>
A glossary of investment terms
Benchmark: An appropriate index or average against which a mutual fund compares
its performance. For example, Zweig Strategy Fund, a growth fund, uses the
Standard & Poor's 500 Index as its benchmark, and seeks to equal or outperform
the Index over complete market cycles. The Dow Jones Industrial Average, which
consists of 30 of the largest stocks, is another popular benchmark.
Bull Market: A prolonged rise in the valuation of stocks, as measured by a
benchmark (typically the Dow Jones Industrial Average). The current bull market
is the longest and strongest ever, having reached a record six years in October.
The next longest bull market ran from 1923 to 1929, and was followed by the
infamous stock market crash.*
Correction: A decline of 10% or more in the valuation of stocks, as measured by
a benchmark (typically the Dow). There have been 65 years this century during
which the Dow has experienced a decline of 10% or more.+ However, the Dow has
now gone more than six years without a correction. July's market dip of 7% in
the Dow and the S&P 500, while sudden and shocking to many investors, did not
qualify as a correction.
Bear Market: A decline of 20% or more in the valuation of stocks, as measured by
a benchmark (typically the Dow). Bear markets have come along once every three
years, on average, this century. Yet there hasn't been a bear market in the Dow
or the S&P 500 in more than six years. The average loss by the time a bear
market has run its course has been -35%.*
Stock Index Futures: An agreement to buy or sell a specific stock index (such as
the S&P 500) at a specified price on a specified future date. The changes in the
value of these agreements closely mirror the changes in the underlying index. A
fund may sell stock index futures short in an attempt to offset, or hedge
against, a potential decline in a group of stocks the fund owns. In a market
decline, the portfolio's loss would be offset by the gain in the short position;
however, there may be an imperfect correlation between the changes in the index
and the price movements in the portfolio securities.
Cash Equivalents: Money market securities and other short-term instruments that
experience minimal price fluctuation. The portion of a fund that is "in cash" is
not vulnerable to stock market swings, i.e. is not part of a fund's market
exposure. The portfolio managers of the Zweig Mutual Funds often use stock index
futures to reduce market exposure.
Market Exposure: The percentage of a fund's assets that is exposed to changes in
the stock or bond markets. We continually adjust the market exposure of Zweig
Mutual Funds in an attempt to manage risk. We can reduce market exposure by
selling stocks and buying cash equivalents. An alternative is to hedge against
losses by selling stock index futures short.
Market Cycle: A bull market followed by a bear market, or a bear market followed
by a bull market. We believe the best way to judge a fund's performance is over
complete market cycles. The length of the current bull market is making this
difficult, since five-year returns now fail to include even a market correction.
CDA/Wiesenberger, an independent data company that measures returns over
complete market cycles, defines May 25, 1990, as the start of the current market
cycle.
Federal Reserve: The central bank of the United States, responsible for
determining monetary policy. The Fed, under current chairman Alan Greenspan,
tries to provide the economy with sufficient liquidity to grow at the highest
rate at which it is capable without generating inflationary pressures. The Fed
normally raises interest rates when it fears the economy is overheating, and
lowers rates when the economy needs a boost.
Fully Invested Funds: The prevalent mutual fund style. Although the name implies
a market exposure of 100%, in practice a small percentage of a fund's assets
remains in cash in order to redeem the shares of investors who leave the fund.
Fully invested funds generally stay 90% or more in stocks at virtually all
times, in bull and bear markets. For example, the average equity fund had a
market exposure of 94% at the end of November. Fully invested funds will
generally perform better than the Zweig Mutual Funds in bull markets, but can be
expected to suffer deep losses during bear markets.
*Source: Ned Davis Research. +Source: InvesTech Research.
5
<PAGE>
Successful investing through realistic expectations
An unprecedented six years into this bull market, most investors are well-versed
in the benefits of making regular investments in equities. As nearly every
mutual fund advertisement and brochure points out, a disciplined system of
investing has the potential to make your money grow over time well beyond the
reaches of inflation and taxes.
After such a long bull run, however, it is understandable that fewer investors
are as well-versed in the risks of stocks. At Zweig Mutual Funds, we believe
that the better informed investors are about the risks as well as the benefits
of investing, the more successful they'll be in the long run.
With that in mind, take a look at the chart below. It illustrates the frequency
and extent of declines in stocks from one year's high to the following year's
low. It also shows the unprecedented length of time since the last decline.
- --------------------------------------------------------------------------------
Frequency and extent of market declines from one year's high to the following
year's low--since 1900
- --------------------------------------------------------------------------------
Number of times in How often to Time since
DJIA LOSS the past 96 years expect this last occurrence
- -10% 65 every 1.5 years 6 years
- -20% 39 every 2.5 years 6 years
- -30% 21 every 4.6 years 9 years
- -40% 11 every 8.7 years 22 years
Source: InvesTech Research.
The Dow Jones Industrial Average has now gone more than six years without a
correction or a bear market--double the previous record. Further, 1996 ended the
strongest 15-year period for the Dow ever. The previous record 15-year period
ended in 1929--right before the stock market crash. The current bull market, the
longest and strongest in history, has created high expectations among investors.
We simply ask: does the length of this bull market make Zweig's flexible
approach more attractive or less attractive?
6
<PAGE>
Few investors realize the risk of giving back gains after a long bull market.
Paul Samuelson, a Nobel laureate in economics, notes that a longer investing
period can actually bring bigger losses when the inevitable bear market occurs.
The following chart illustrates a $5000 per year investment program. In the
first scenario, an investor earns 16.8% a year for 15 years (the actual
annualized return of the S&P 500 from 1982 to 1996). The 16.8% return continues
in year 16. The investor ends up with a nest egg of $381,913. In the second
scenario, the investor earns 16.8% per year for the first 15 years. In year 16,
however, a hypothetical 35% bear market occurs (the average bear market decline
this century).* The loss slices the nest egg to $212,555. Even with 15 years of
stellar returns, one bear market could have a severe impact.
- --------------------------------------------------------------------------------
RISK INCREASES AFTER A LONG BULL MARKET
$5,000 invested each year for 15 years
- --------------------------------------------------------------------------------
$381,913
$212,555
Bull Market in Bear market in
year 16 year 16
WE BELIEVE THAT YOU CAN EARN SUPERIOR LONG-TERM RETURNS BY PARTICIPATING SOLIDLY
IN RISING MARKETS WHILE LIMITING LOSSES DURING DECLINING MARKETS.
The solution isn't to avoid equities. Historically, they've been the best way to
achieve your long-term financial goals. We believe the solution is to be aware
of and understand the consequences of bear markets, and to do something to
protect yourself while still participating in the growth that equities can
offer.
Today, many investors are judging funds solely on recent past performance. But
the past six years do not include even a single correction, so past performance
can be misleading. There's a reason mutual fund ads contain the warning, "Past
performance is no guarantee of future results." We at Zweig Mutual Funds seek to
meet your need for growth, while making an effort to limit losses as well. We
believe that you can earn superior long-term returns by participating solidly in
rising markets while limiting losses during declining markets. While no one can
predict the timing or the dimensions of the next bear market, we believe the
length of the current bull market makes it more important than ever to have a
healthy respect for risk.
*Source: Ned Davis Research.
7
<PAGE>
Zweig Strategy Fund
A risk-averse approach to the growth potential of mid-sized and large-company
stocks
Quotron Symbols: ZSTAX / ZSTBX / ZSTCX
Assets as of 12/31/96: $ 1.25 Billion [PHOTO]
Portfolio Manager: David Katzen
--------------------------------------------------
The Fund's Class A and C Shares returned 13.0% and 12.2%, respectively, in 1996.
This compares with the Standard & Poor's 500 Index, which returned 23.0%, and
the Lipper Growth Fund Average, which was up 19.2%. The new Class B Shares,
which were launched on April 8, returned 7.9%. Though we don't expect to beat or
even match bull market returns in order to reach our ultimate objective of
better-than-average returns over a full market cycle, we would have hoped for
more significant participation in 1996's stock market advance.
Our performance lagged this year for two reasons. First, we maintained a
low market exposure (our average market exposure was 68% during 1996). Second,
our stock selection style, which favors lower-risk stocks, was temporarily out
of favor. Our stock picking was rewarded in the second half of 1996, however,
allowing the stocks in the portfolio to beat the S&P 500 (an achievement that
eluded most managers). Our five-year average annual return is 12.1% versus 13.0%
for the Lipper Growth Fund Average. That we achieved this return with an average
market exposure of 65% during an uninterrupted bull run speaks to the value our
stock selection has added over time.
The major differences between our equity holdings today and one year ago
are our exposure to the energy sector and our position in utilities. These
groups comprise 15.2% and 16.3%, respectively, of our equity exposure. That's up
from 3.8% and 9.1% at the end of 1995. Energy stocks have strong earnings trends
and, while their valuations aren't as compelling as when we began accumulating
them, they're still selling at low price-earnings ratios given how much they're
growing. The utilities, which include both oil and gas and electricity
companies, found their way into our portfolio by virtue of their low valuations.
Since we began buying them, however, their growth characteristics have improved
as well, owing to operating efficiencies realized through consolidation in the
industry.
As the essay on page 6 notes in more detail, we've just experienced the
best 15-year period ever for the Dow Jones Industrial Average. A nearly
uninterrupted bull market does not give a risk-averse strategy like ours much
chance to show its wares, but we have earned superior risk-adjusted returns for
our shareholders. That is, the returns we've earned with the smaller portion of
stocks that we kept exposed to market risk have been better than our peers'
returns.
Please see page 16 for additional performance information.
/s/ David Katzen
DAVID KATZEN
Senior Vice President
January 17, 1997
<PAGE>
The bottom line
- --------------------------------------------------------------------------------
Since its inception, the fund has captured 87% of the returns of its peers with
one of the lowest risk profiles in its category.
- --------------------------------------------------------------------------------
Performance for the year ended 12/31/96*
- --------------------------------------------------------------------------------
13.0% 12.2% 19.2% 23.0%
Zweig Strategy Fund Zweig Strategy Fund Lipper Growth
A Shares C Shares Fund Average S&P 500
68%
AVERAGE MARKET EXPOSURE
- --------------------------------------------------------------------------------
annualized since inception*
- --------------------------------------------------------------------------------
AVERAGE
MARKET
EXPOSURE
Zweig Strategy Fund (A Shares) 11.5% 66%
Lipper Growth Fund Average 13.2%+
S&P 500 Index 14.4%
- -----------------------------------------------------------
Zweig Strategy Fund (B Shares) 7.9%# 62%
Zweig Strategy Fund (C Shares) 11.3% 64%
- -----------------------------------------------------------
Inception dates:
A Shares--12/29/89, B Shares--4/8/96, C Shares--2/4/92
- --------------------------------------------------------------------------------
ASSET MIXES for 1996
- --------------------------------------------------------------------------------
January 1
Stocks 80%
Cash 20%
June 30
Stocks 64%
Cash 36%
December 31
Stocks 59%
Cash 41%
TOP INDUSTRY GROUPS as of 12/31/96**
Non-Bank Financial 22.0%
Utilities 16.3%
Energy Minerals 15.2%
Consumer Durables 7.0%
Transportation 7.0%
Process Industries 6.9%
Electronic Technology 5.3%
Producer Mfg. 5.1%
Retail Trade 4.9%
3.3% Non-Energy Minerals
* These are the returns to a shareholder throughout the period. The returns do
not include any initial or contingent deferred sales charges. The Lipper
Growth Fund Average is based on the total return of 669 funds.
+ The period measured is from 12/31/89 due to Lipper's weekly data.
For purposes of determining asset mix, the fund's stock futures position is
treated as reducing or increasing stock exposure and increasing or reducing
cash (see glossary on page 5).
# Cumulative return since inception.
** Percentage of the stock portion of the fund only; does not take into account
the fund's cash position.
9
<PAGE>
Zweig Appreciation Fund
A risk-averse approach to the growth potential of small-company stocks
Quotron Symbols: ZAPAX / ZAPBX / ZAPCX
Assets as of 12/31/96: $ 505 Million [PHOTO]
Portfolio Manager: David Katzen
---------------------------------------------
The fund was up 15.4% and 14.5% for the Class A and C Shares, respectively,
during the year. This performance compares with the Value Line Geometric Index,
which was up 15.4% (including our estimate for dividends), and the Russell 2000,
which was up 16.5%. The new Class B Shares returned 11.0% since their inception
on April 8. The Value Line and the Russell are better barometers of the broad
market and smaller-company stocks, respectively, than the more highly publicized
S&P 500, which measures the performance of larger-company issues. The
significant gap in results between these indexes -- the S&P was up 23% -- shows
how thoroughly large-company stocks dominated small-company stocks during the
year.
Though our objective is to post better-than-average returns over complete
market cycles, we are always pleased when our risk-averse funds match or nearly
match the market in a year of strong returns. Our fund's 1996 results equaled
those of the Value Line Geometric Index and were 93% of the Russell 2000's
return, yet we accomplished this with an average market exposure of only 68% and
one of the lowest risk profiles of any fund in our category.
The setback the market experienced in June and July began a period in which
small-company investing differed significantly from the experience in the first
part of the year. The Russell 2000 peaked on May 22. From that point through
year-end, the fund returned 6.8% versus 0.4% for the Russell 2000 and -3.7% for
Lipper's index of the 30 largest small-company funds. By contrast, during the
first five months of the year, the Russell 2000 was up 16% and the Lipper index
gained 18.9%, surpassing our fund's results. Thus, as the going got tougher, our
fund managed to outperform its peers.
Our superior performance in the second part of the year was a result of the
risk-averse nature of our stock selection. We stayed true to our discipline of
purchasing stocks with below-average valuations and above-average earnings
growth. As a result, the return on the invested portion of the fund exceeded the
gains of both the S&P 500 and the Russell 2000 in 1996. Moreover, we achieved
these returns despite losing ground early in the year to funds that invested in
more aggressive stocks.
Please see page 16 for additional performance information.
/s/ David Katzen
DAVID KATZEN
Senior Vice President
January 17, 1997
10
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The botton line
- --------------------------------------------------------------------------------
Since its inception, the fund has captured 76% of the returns of its peers with
one of the lowest risk profiles in its category.
- --------------------------------------------------------------------------------
PERFORMANCE for the year ended 12/31/96*
- --------------------------------------------------------------------------------
15.4% 14.5% 20.2% 15.4%
Zweig Zweig
Appreciation Fund Appreciation Fund Lipper Small-Company Value Line
A Shares C Shares Fund Average Geometric Index
68%
AVERAGE MARKET EXPOSURE
- --------------------------------------------------------------------------------
annualized since inception*
- --------------------------------------------------------------------------------
AVERAGE
MARKET
EXPOSURE
Zweig Appreciation Fund (A Shares) 12.7% 66%
Lipper Small-Company Fund Average 16.8%+
Value Line Geometric Index 10.4%
- -----------------------------------------------------------
Zweig Appreciation Fund (B Shares) 11.0%# 62%
Zweig Appreciation Fund (C Shares) 10.8% 65%
- -----------------------------------------------------------
Inception dates:
A Shares--10/7/91, B Shares--4/8/96, C Shares--2/4/92
- --------------------------------------------------------------------------------
ASSET MIXES for 1996
- --------------------------------------------------------------------------------
January 1
Stocks 80%
Cash 20%
June 30
Stocks 64%
Cash 36%
December 31
Stocks 60%
Cash 40%
TOP INDUSTRY GROUPS as of 12/31/96**
Non-Bank Financial 18.3%
Utilities 14.7%
Producer Manufacturing 9.6%
Banking 9.1%
Non-Energy Minerals 7.7%
Process Industries 6.8%
Electronic Technology 6.6%
Consumer Durables 6.1%
Energy Minerals 5.4%
Transportation 4.1%
* These are the returns to a shareholder throughout the period. The returns do
not include any initial or contingent deferred sales charges. The Lipper
Small-Company Fund Average is based on the total return of 385 funds.
+ The period measured is from 10/10/91 due to Lipper's weekly data.
The Value Line Geometric Index measures the returns of 1,700 stocks, ranging
from large-cap to small-cap, on an unweighted basis. The returns include an
estimate for dividends reinvested.
For purposes of determining asset mix, the fund's stock futures position is
treated as reducing or increasing stock exposure and increasing or reducing
cash (see glossary on page 5).
# Cumulative return since inception. ** Percentage of the stock portion of the
fund only; does not take into account the fund's cash position.
11
<PAGE>
Zweig Managed Assets
A risk-averse approach to
investing in domestic and
foreign stocks and bonds
Quotron Symbols: ZMAAX / ZMABX / ZMACX
Assets as of 12/31/96: $ 551 Million
Portfolio Manager: Carlton B. Neel [PHOTO]
------------------------------------------
The fund finished 1996 up 9.8% for the A Shares and 9.0% for the C Shares. The
Lipper Global Flexible Fund Average, a measure of the fund's peers, returned
13.5%. The new Class B Shares returned 9.1% from their inception on April 8.
While ZMA started the year slowly, the fund performed strongly in the fourth
quarter, earning 6.0% for the A Shares versus 4.9% for the Lipper average. The
fund's average market exposure for 1996 was 49% stocks, 29% bonds and 22% cash.
ZMA is the most conservative equity offering in the Zweig Family of Funds.
The fund is broadly diversified among U.S. and foreign stocks and bonds. We can
invest up to 50% of the fund's assets in foreign securities. When our research
indicates that risk is high, we can retreat to the sidelines in a particular
country, but we will not increase risk by moving a large percentage of assets
into or out of any one country. Up to 60% of the fund can be in stocks, and up
to 60% can be in bonds. We believe the fund's broad diversification will help
you earn solid returns over the long run, while reducing volatility.
From January to June, U.S. bonds suffered significant losses, with the
Lipper U.S. Government Bond Fund Average earning a miniscule return of 0.1%. The
loss in bonds, which occurred too quickly for our research to respond, had a
negative impact on ZMA. Foreign bonds performed poorly as well. While U.S. and
foreign stocks posted solid returns, the bond losses reduced our return for the
first half of 1996 to a mere 2.2%.
In July, the U.S. stock market, as measured by the Dow and the S&P 500,
experienced a brief downturn of 7%. We successfully minimized losses, declining
only 2.9%, which left the fund slightly down on the year. The return we've
earned since then is largely due to the strength of U.S. and foreign stocks
during the latter half of the year. Several foreign central banks, including
Germany's and Spain's, cut interest rates during the year. Since low interest
rates are normally good for stocks, we increased our foreign stock exposure and
participated in the significant gains that followed.
We continue to refine our bond research, seeking to shorten our response
time and avoid bond losses like those in the first half of the year. However, we
are pleased to have earned solid returns for you with much lower market exposure
than the funds in our Lipper category.
Please see page 16 for additional performance information.
/s/ Carlton B. Neel
CARLTON B. NEEL
First Vice President
January 17, 1997
12
<PAGE>
The bottom line
- --------------------------------------------------------------------------------
Since its inception, the fund has captured 82% of the returns of its peers with
one of the lowest risk profiles in its category.
Performance for the year ended 12/31/96*
- ----------------------------------------
Zweig Managed Assets
A Shares 9.8%
Zweig Managed Assets Stocks 49%
C Shares 9.0% Bonds 29%
Average Market Exposure
Lipper Global Flexible
Fund Average 13.5%
annualized since inception*
- ---------------------------
Average market exposure
Zweig Managed Assets (A Shares) 8.8% Stocks 32%
Zweig Managed Assets (C Shares) 8.0% Bonds 33%
Lipper Global Flexible Fund Avg. 10.8%+
- ---------------------------------------- Stocks 49%
Zweig Managed Assets (B Shares) 9.1%++ Bonds 26%
- ----------------------------------------
Inception dates:
A Shares-2/8/93, B Shares-4/8/96, C Shares-2/8/93
ASSET MIXES for 1996
- --------------------
[PIE CHART]
January 1
- ---------
Stocks 44%
Bonds 46%
Cash 10%
[PIE CHART]
June 30
- -------
Stocks 47%
Bonds 24%
Cash 29%
[PIE CHART]
Decmeber 31
- -----------
Stocks 45%
Bonds 23%
Cash 32%
Country allocations as of 12/31/96
----------------------------------
United States 19.9% 13.0%
Australia 2.2% 1.5%
Denmark 1.4%
Finland 2.3%
France 1.6%
Germany 3.1% 1.1%
Hong Kong 1.1%
Italy 2.7%
Japan 1.9%
New Zealand 2.3%
Singapore 1.6%
Spain 2.7% 3.3%
Sweden 2.5% 1.5%
United Kingdom 2.2%
Total STOCKS: 44.8% BONDS: 23.1% CASH: 32.1%
* These are the returns to a shareholder throughout the period. The returns do
not include any initial or contingent deferred sales charges. The Lipper
Global Flexible Fund Average is based on the total return of 71 funds.
+ The period measured is from 2/11/93 due to Lipper's weekly data.
++ Cumulative return since inception.
For purposes of determining asset mix, the fund's stock futures position is
treated as reducing or increasing stock exposure and increasing or reducing
cash (see glossary on page 5).
13
<PAGE>
Zweig Growth & Income Fund
A risk-averse approach
to growth stocks and
high dividend-yield stocks
Quotron Symbols: ZGIAX / ZGIBX / ZGICX
Assets as of 12/31/96: $ 10 Million
Portfolio Manager: David Katzen [PHOTO]
----------------------------------------------
Zweig Growth & Income, the newest member of the Zweig Family of Funds, was
launched on November 26, 1996. The fund relies on the time-tested research of
Martin E. Zweig, Ph.D., to determine market exposure. In addition, we use stock
selection models specifically designed to evaluate growth stocks (stocks of com-
panies whose earnings growth is above-average) and income stocks (stocks with
above-average dividend yields). Our intention is to maintain half of our equity
exposure in growth stocks and half in income stocks.
So far the fund is off to a solid start. From inception through year-end,
the Class A, B and C Shares earned returns of 0.4%, 0.3% and 0.4%. During this
period, the S&P 500 Index was down 1.8% and the Lipper Growth & Income Fund
Average was off 0.8%.
The minor market weakness in the last five weeks of the year afforded us
opportunities to start buying stocks for the fund at attractive prices. The high
dividend-yield stocks, which often outperform during choppy markets, had a mild
performance edge over the growth component of the portfolio during the short
period. Our largest sector holdings are the utilities, because they are
attractively priced, and manufacturing companies because their earnings are
improving. The fund is currently leaning more toward smaller companies, as this
segment of the market has recently exhibited strong earnings growth.
Please see page 16 for additional performance information.
/s/ David Katzen
DAVID KATZEN
Senior Vice President
January 17, 1997
Performance from inception (11/26/96) through 12/31/96*
[CHART]
* These are the returns to a shareholder throughout the period. The returns do
not include any initial or contingent deferred sales charges. The Lipper
Growth & Income Fund Average is based on the total return of 591 funds.
+ The period measured is from 11/27/96 due to Lipper's weekly data.
14
<PAGE>
Zweig Government Fund
Monthly income from
U.S. Government securities
Quotron Symbols: ZGVAX / ZGVBX / ZGVCX [PHOTO]
Assets as of 12/31/96: $ 49 Million
Portfolio Manager: Carlton B. Neel
--------------------------------------------------
Our style of management was sorely tested in 1996. The fund's A and C Shares
lost -0.4% and -0.8%, respectively. The Lipper U.S. Government Bond Fund Average
was up 1.7%. However, the new Class B Shares, which were launched on April 8 and
avoided the sharp declines that occurred in the bond market during the first
quarter, returned 4.2%.
The losses in the bond market early this year were mostly concentrated in a
series of severe one-day declines. These declines occurred when the government
released unemployment statistics indicating that the economy was stronger than
anticipated. Our research, which reacts to changing markets rather than
predicting them, and is designed to capture major trends in the market, is not
well-suited to such rapid changes.
Our style seeks to lower bond market risk through a strategy called active
duration management. Duration measures a bond's sensitivity to changes in
interest rates. The longer the duration, the more a bond's price will fluctuate.
In early January, our research indicated that risk was low, and our duration was
7.1 years as a result. By comparison, the Lipper U.S. Government Fund Average
maintains a duration of approximately 5.3 years regardless of market conditions.
As bonds declined and our risk measures rose, we lowered the fund's duration to
three years by mid-year. At year-end, our duration was a neutral 4.1 years.
We continue to refine our bond research in an attempt to increase its
responsiveness and speed its reaction time. We remain convinced of the validity
of our core strategy, and believe that only by adhering to our disciplines can
we achieve long-term success.
Please see page 16 for additional performance information.
/s/ Carlton B. Neel
CARLTON B. NEEL
First Vice President
January 17, 1997
PERFORMANCE through 12/31/96*
ONE ANNUALIZED
YEAR SINCE INCEPTION
Zweig Government Fund (A Shares) -0.4% 7.1%
Lipper U.S. Gov't. Bond Fund Avg. 1.7% 8.3%+
- --------------------------------------------------------------
Zweig Government Fund (B Shares) N/A 4.2%++
Zweig Government Fund (C Shares) -0.8% 4.9%
Inception dates:
A Shares--3/25/85**, B Shares--4/8/96, C Shares--2/4/92
ZWEIG CASH FUND
The net yield of Zweig Cash Fund for the year ended December 31, 1996, was 4.83%
for Class A and C Shares, and 5.09% for Class M Shares. The annualized net yield
of the new Class B Shares was 4.13% from their inception on April 8, 1996,
through year-end.
* These are the returns to a shareholder throughout the period. The returns do
not include any initial or contingent deferred sales charges. The Lipper U.S.
Government Fund Average is based on the total return of 170 funds.
+ The period measured is from 3/31/85 due to Lipper's weekly data.
++ Cumulative return since inception. **Zweig/Glaser Advisers assumed
responsibility for managing the fund on September 1, 1989.
15
<PAGE>
PERFORMANCE average annual returns through 12/31/96
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Zweig Strategy Fund Class A Shares (ZSTAX) Class B Shares (ZSTBX) Class C Shares (ZSTCX)
from inception from inception from inception
(12/29/89) five year one year (4/8/96) (2/4/92) one year
Before sales charges 11.5% 12.1% 13.0% 7.9% 11.3% 12.2%
After all charges and
expenses 10.6% 10.8% 6.8% 2.5% 11.3% 10.8%
Zweig Appreciation Fund Class A Shares (ZAPAX) Class B Shares (ZAPBX) Class C Shares (ZAPCX)
from inception from inception from inception
(10/7/91) five year one year (4/8/96) (2/4/92) one year
Before sales charges 12.7% 12.0% 15.4% 11.0% 10.8% 14.5%
After all charges and
expenses 11.5% 10.7% 9.1% 5.5% 10.8% 13.1%
Zweig Managed Assets Class A Shares (ZMAAX) Class B Shares (ZMABX) Class C Shares (ZMACX)
from inception from inception from inception
(2/8/93) one year (4/8/96) (2/8/93) one year
Before sales charges 8.8% 9.8% 9.1% 8.0% 9.0%
After all charges and
expenses 7.2% 3.8% 3.7% 8.0% 7.7%
Zweig Growth & Income Fund Class A Shares (ZGIAX) Class B Shares (ZGIBX) Class C Shares (ZGICX)
from inception from inception from inception
(11/26/96) (11/26/96) (11/26/96)
Before sales charges 0.4% 0.3% 0.4%
After all charges and
expenses -5.1% -4.7% -0.8%
Zweig Government Fund Class A Shares (ZGVAX) Class B Shares (ZGVBX) Class C Shares (ZGVCX)
from inception from inception
10 year five year one year (4/8/96) (2/4/92) one year
Before sales charges 5.9% 4.9% -0.4% 4.2% 4.9% 0.8%
After all charges and
expenses 5.4% 3.9% -5.2% -1.1% 4.9% -2.1%
</TABLE>
Returns assume that all dividends and capital gains are reinvested. Class A
Share returns reported above include the effect of the 5.5% maximum initial
sales charge (4.75% for Zweig Government Fund). Class B Share returns include
the maximum contingent deferred sales charge (CDSC) of 5.0% for redemptions made
one year or less from date of purchase. Class C Shares, sold with no initial
sales charge, are subject to a 1.25% CDSC if sold within 12 months of purchase.
Class C Share one-year returns reported above assume that a 1.25% CDSC was paid.
Aggregate annual service and distribution fees are 0.30% for Class A Shares,
1.0% for Class B Shares, and 1.0% for Class C Shares (0.75% for Zweig Government
Fund).
16
<PAGE>
ZWEIG STRATEGY FUND
Statement of Net Assets as of December 31, 1996
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 85.10%
Advertising: 0.02%
*Valassis Communications Inc........................... 8,700 $ 183,787
--------------
Airlines: 5.23%
*Alaska Air Group Inc.................................. 247,400 5,195,400
*AMR Corp.............................................. 364,400 32,112,750
British Airways Plc., ADR.............................. 38,100 3,914,775
KLM Royal Dutch Airlines N.V., ADR..................... 93,214 2,598,340
*UAL Corp.............................................. 163,600 10,225,000
*USAir Group Inc....................................... 475,700 11,119,488
--------------
65,165,753
--------------
Automobiles: 5.40%
Chrysler Corp.......................................... 1,035,700 34,178,100
Ford Motor Co.......................................... 130,300 4,153,313
General Motors Corp.................................... 513,800 28,644,350
Volvo AB, ADR.......................................... 16,000 348,000
--------------
67,323,763
--------------
Automotive Parts and Equipment: 0.65%
Arvin Industries Inc................................... 40,200 994,950
Dana Corp.............................................. 79,000 2,577,375
*Desc S.A., ADS........................................ 95,200 2,094,400
Johnson Controls Inc................................... 30,000 2,486,250
--------------
8,152,975
--------------
Banks: 2.66%
Bancorp Hawaii Inc..................................... 88,900 3,733,800
Banponce Corp.......................................... 7,900 266,625
City National Corp..................................... 145,500 3,146,437
Haven Bancorp Inc...................................... 26,800 767,150
*Imperial Bancorp...................................... 32,700 784,800
NationsBank Corp....................................... 93,000 9,090,750
North Fork Bancorp..................................... 84,900 3,024,562
Peoples Heritage Financial Group....................... 99,600 2,788,800
Republic New York Corp................................. 105,000 8,570,625
Riggs National Corp.................................... 58,700 1,012,575
--------------
33,186,124
--------------
Building Materials and Products: 0.53%
Lone Star Industries Inc............................... 43,700 1,611,437
Schuller Corp.......................................... 231,000 2,454,375
*USG Corp.............................................. 75,900 2,571,113
--------------
6,636,925
--------------
Casino Operators: 0.19%
*MGM Grand Inc......................................... 66,900 2,333,137
--------------
Chemicals: 1.56%
*Cytec Industries Inc.................................. 187,100 7,600,938
*International Specialty Products Inc.................. 44,400 543,900
Rohm & Haas Co......................................... 99,500 8,121,687
Terra Industries Inc................................... 216,500 3,193,375
--------------
19,459,900
--------------
Coal Mining: 0.12%
Zeigler Coal Holdings Co............................... 71,300 1,524,038
--------------
Computer Components and
Software: 2.09%
*Data General Corp..................................... 192,600 2,792,700
*Storage Technology Corp............................... 409,700 19,511,963
*Tandem Computers Inc.................................. 273,300 3,757,875
--------------
26,062,538
--------------
Conglomerates: 3.40%
Canadian Pacific Ltd................................... 529,100 14,021,150
Loews Corp............................................. 300,800 28,350,400
--------------
42,371,550
--------------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Construction Equipment: 1.92%
Case Corp.............................................. 115,300 $ 6,283,850
Caterpillar Inc........................................ 220,800 16,615,200
JLG Industries Inc..................................... 64,400 1,030,400
--------------
23,929,450
--------------
Containers and Packaging: 0.53%
Caraustar Industries Inc............................... 66,700 2,217,775
*Owens-Illinois Inc.................................... 193,400 4,399,850
--------------
6,617,625
--------------
Electronics: 2.45%
*Applied Magnetics Corp................................ 196,000 5,855,500
*Hadco Corp............................................ 67,200 3,292,800
Harris Corp............................................ 166,600 11,432,925
Innovex Inc............................................ 128,200 3,461,400
*SCI Systems Inc....................................... 144,300 6,439,388
--------------
30,482,013
--------------
Finance: 2.89%
Aames Financial Corp................................... 100,800 3,616,200
*Americredit Corp...................................... 81,900 1,678,950
Equitable Companies, Inc............................... 75,300 1,854,263
*Olympic Financial Ltd................................. 362,900 5,216,688
Travelers Group Inc.................................... 520,133 23,601,035
--------------
35,967,136
--------------
Forest and Paper Products: 0.85%
James River Corp....................................... 137,300 4,548,062
Potlatch Corp.......................................... 14,315 615,545
Rayonier Inc........................................... 142,075 5,452,128
--------------
10,615,735
--------------
Healthcare Facilities and Products: 0.14%
*OrNda Healthcorp...................................... 32,400 947,700
*Universal Health Services Inc., Class B............... 28,900 827,263
--------------
1,774,963
--------------
Homebuilding and Land
Development: 0.33%
Centex Corp............................................ 64,200 2,415,525
*U.S.Home Corp......................................... 66,200 1,721,200
--------------
4,136,725
--------------
Household Furnishings and Products: 0.15%
*Furniture Brands International Inc.................... 54,700 765,800
*Mohawk Industries Inc................................. 42,500 935,000
Toro Co................................................ 5,800 211,700
--------------
1,912,500
--------------
Insurance: 4.83%
Ace Ltd................................................ 131,600 7,912,450
Allmerica Financial Corp............................... 48,300 1,618,050
AMBAC Inc.............................................. 75,500 5,011,313
American Bankers Insurance Group....................... 53,400 2,730,075
American Financial Group Inc........................... 4,600 173,650
Capital Re Corp........................................ 23,000 1,072,375
CIGNA Corp............................................. 41,800 5,710,925
Conseco Inc. .......................................... 73,600 4,692,000
*Delphi Financial Group Inc., Class A.................. 33,240 980,580
Equitable of Iowa Companies Inc. ...................... 24,100 1,105,587
Fremont General Corp. ................................. 115,400 3,577,400
Old Republic International Corp. ...................... 233,700 6,251,475
Penncorp Financial Group Inc. ......................... 14,400 518,400
Presidential Life Corp. ............................... 11,100 133,894
Providian Corp. ....................................... 175,200 9,000,900
Reliance Group Holdings Inc. .......................... 147,800 1,348,675
Reliastar Financial Corp. ............................. 56,100 3,239,775
TIG Holdings Inc. ..................................... 149,200 5,054,150
--------------
60,131,674
--------------
</TABLE>
17
<PAGE>
ZWEIG STRATEGY FUND
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Investment Banking and Brokerage: 9.13%
Alex Brown Inc. ....................................... 86,660 $ 6,282,850
Bear, Stearns & Co. Inc. .............................. 279,060 7,778,798
BHC Financial Inc. .................................... 8,000 126,000
Edwards (A.G.) & Sons, Inc. ........................... 114,000 3,833,250
Lehman Brothers Holdings Inc. ......................... 507,800 15,932,225
Merrill Lynch & Co., Inc. ............................. 397,400 32,388,100
Morgan Stanley Group Inc. ............................. 339,600 19,399,650
Paine Webber Group Inc. ............................... 200,000 5,625,000
Quick & Reilly Group Inc. ............................. 93,105 2,781,512
Salomon Inc. .......................................... 414,700 19,542,737
--------------
113,690,122
--------------
Manufacturing: 0.95%
Olin Corp. ............................................ 166,300 6,257,037
Trinity Industries Inc. ............................... 148,400 5,565,000
--------------
11,822,037
--------------
Marine Transportation: 0.08%
Alexander & Baldwin Inc. .............................. 42,000 1,050,000
--------------
Medical Technology: 0.20%
*Advanced Technology Lab Inc. ......................... 80,300 2,489,300
--------------
Metal Fabrication: 0.86%
Kaydon Corp. .......................................... 34,400 1,621,100
*Mueller Industries Inc. .............................. 42,525 1,637,212
Timken Co. ............................................ 161,000 7,385,875
--------------
10,644,187
--------------
Metals and Mining: 0.65%
*Alumax Inc. .......................................... 241,400 8,056,725
--------------
Oil and Gas: 14.95%
Amerada Hess Corp. .................................... 126,300 7,309,613
Atlantic Richfield Co. ................................ 60,100 7,963,250
*Benton Oil & Gas Co. ................................. 172,800 3,909,600
British Petroleum Plc., ADR ........................... 25,186 3,560,671
Coastal Corp. ......................................... 376,300 18,391,662
Columbia Gas Systems Inc. ............................. 97,100 6,177,987
Elf Aquitaine S.A., ADR ............................... 168,700 7,633,675
Eni S.P.A., ADS ....................................... 95,200 4,914,700
Helmerich & Payne, Inc. ............................... 12,000 625,500
Kerr-McGee Corp. ...................................... 98,900 7,120,800
Murphy Oil Corp. ...................................... 75,200 4,183,000
Occidental Petroleum Corp. ............................ 266,600 6,231,775
*Oryx Energy Co. ...................................... 359,100 8,887,725
Parker & Parsley Petroleum Co. ........................ 110,100 4,046,175
Pennzoil Co. .......................................... 43,900 2,480,350
Phillips Petroleum Co. ................................ 329,800 14,593,650
Repsol S.A., ADR ...................................... 397,400 15,150,875
*Santa Fe Energy Resources ............................ 85,300 1,183,537
Texaco Inc. ........................................... 239,600 23,510,750
*Tuboscope Vetco International Co. .................... 42,100 652,550
Union Texas Petroleum Holdings Inc. ................... 132,900 2,973,638
Unocal Corp. .......................................... 263,600 10,708,750
USX-Marathon Group .................................... 621,500 14,838,312
Williams Cos. Inc. .................................... 16,550 620,625
YPF Sociedad Anonima, ADR ............................. 340,800 8,605,200
--------------
186,274,370
--------------
Railroads: 0.64%
CSX Corp. ............................................. 188,200 7,951,450
--------------
Real Estate Investment Trusts: 0.12%
General Growth Properties Inc. ........................ 10,500 338,625
Thornburg Mortgage Asset Corp. ........................ 55,800 1,192,725
--------------
1,531,350
--------------
Recreational Products: 0.08%
Brunswick Corp. ....................................... 37,800 907,200
--------------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Rental and Leasing: 0.61%
Comdisco Inc. ......................................... 104,200 $ 3,308,350
GATX Corp. ............................................ 34,000 1,649,000
PHH Corp. ............................................. 60,400 2,597,200
--------------
7,554,550
--------------
Restaurants: 0.08%
*Foodmaker Inc. ....................................... 115,600 1,025,950
--------------
Retail Trade: 4.14%
Dayton Hudson Corp. ................................... 236,800 9,294,400
*Federated Department Stores Inc. ..................... 381,400 13,015,275
Great Atlantic & Pacific Tea Co. ...................... 67,500 2,151,562
Mercantile Stores Inc. ................................ 76,800 3,792,000
*Meyer (Fred) Inc. .................................... 44,400 1,576,200
Ross Stores Inc. ...................................... 205,900 10,295,000
Shopko Stores Inc. .................................... 68,500 1,027,500
*Woolworth Corp. ...................................... 356,400 7,796,250
*Zale Corp. ........................................... 132,500 2,534,063
--------------
51,482,250
--------------
Savings and Loan Associations: 1.16%
Astoria Financial Corp. ............................... 89,200 3,289,250
*California Federal Bank Corp. ........................ 329,000 8,060,500
*Glendale Federal Bank Corp. .......................... 7,700 179,025
RCSB Financial Inc. ................................... 63,000 1,827,000
T.R. Financial Corp.................................... 31,000 1,100,500
--------------
14,456,275
--------------
Steel: 1.20%
AK Steel Holdings Corp. ............................... 171,000 6,775,875
British Steel Plc, ADS ................................ 188,400 5,181,000
Pohang Iron & Steel Co., ADS .......................... 86,200 1,745,550
Quanex Corp. .......................................... 27,195 744,463
*Tubos De Acero de Mexico, ADR ........................ 31,625 502,047
--------------
14,948,935
--------------
Telecommunications: 3.52%
British Telecommunications Plc, ADR ................... 51,700 3,547,913
Portugal Telecommunications S.A., ADS ................. 44,500 1,257,125
Tele Danmark A.S., ADS ................................ 279,400 7,613,650
Telefonica de Espana S.A., ADS ........................ 267,300 18,510,525
Telefonos De Mexico S.A., ADS ......................... 389,800 12,863,400
--------------
43,792,613
--------------
Tobacco: 2.48%
RJR Nabisco Holdings Corp.............................. 853,100 29,005,400
Universal Corp......................................... 59,000 1,895,375
--------------
30,900,775
--------------
Utilities: 8.31%
Baltimore Gas & Electric Co............................ 216,000 5,778,000
Centerior Energy Corp.................................. 9,000 96,750
CMS Energy Corp........................................ 196,800 6,617,400
Commonwealth Energy Systems Corp....................... 7,200 169,200
Eastern Enterprises Inc................................ 24,700 873,763
Edison International................................... 303,700 6,036,038
Enersis S.A., ADS...................................... 97,200 2,697,300
Entergy Corp........................................... 630,400 17,493,600
*Huaneng Power International, ADS...................... 44,700 1,005,750
Illinova Corp.......................................... 235,100 6,465,250
IPALCO Enterprises Inc................................. 58,100 1,583,225
Korea Electric Power Co., ADR.......................... 45,400 930,700
Long Island Lighting Co. .............................. 180,900 4,002,412
MidAmerican Energy Holdings Co. ....................... 97,600 1,549,400
National Fuel & Gas Co................................. 45,800 1,889,250
NorAm Energy Corp...................................... 489,700 7,529,137
Peoples Energy Corp.................................... 40,900 1,385,487
Pinnacle West Capital Corp............................. 285,200 9,055,100
Portland General Corp. ................................ 169,400 7,114,800
PP&L Resources Inc..................................... 11,700 269,100
Sierra Pacific Resources Inc. ......................... 55,600 1,598,500
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
Utilities (Continued)
Texas Utilities Co.............................. 344,500 $ 14,038,375
United Illuminating Co. ........................ 38,400 1,204,800
Washington Gas Light Co. ....................... 51,300 1,160,663
Washington Water Power Co....................... 81,500 1,517,937
Westcoast Energy Inc............................ 87,300 1,462,275
--------------
103,524,212
--------------
Total Common Stocks
(Cost $913,707,546)......................................... 1,060,070,612
--------------
<CAPTION>
Principal
Amount
-----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS: 2.88%
Federal National Mortgage Assn., Discount Notes:
1.60%
5.51%, 1/14/97................................. $10,000,000 9,978,572
5.48%, 1/15/97................................. 10,000,000 9,977,167
--------------
19,955,739
--------------
United States Treasury Bills: 1.28%
4.975%, 1/16/97................................ 3,000,000(a) 2,993,629
4.99%, 1/16/97................................. 1,000,000(a) 997,876
4.995%, 1/23/97................................ 1,000,000(a) 996,917
4.80%, 2/6/97.................................. 1,000,000(a) 995,030
5.00%, 2/13/97................................. 7,000,000(a) 6,960,939
4.84%, 3/6/97.................................. 1,000,000(a) 991,355
4.91%, 3/6/97.................................. 1,000,000(a) 991,355
4.94%, 3/6/97.................................. 1,000,000(a) 991,355
--------------
15,918,456
--------------
Total Short-Term Obligations
(Cost $35,874,720)......................................... 35,874,195
--------------
REPURCHASE AGREEMENTS: 6.82%
With Morgan Stanley & Co., Inc., (dated
12/31/96), 6.625%, due 1/2/97 (Repurchase
proceeds $42,015,458); collateralized by:
$42,817,672 Federal Home Loan Mortgage
Corporation, 5.50%-9.00%, 9/1/99-1/1/2026
(Market value $43,392,217)...................... 42,000,000 42,000,000
With Prudential Securities Inc., (dated
12/31/96), 6.625%, due 1/2/97 (Repurchase
proceeds $42,930,795); collateralized by:
$41,714,901 Federal Home Loan Mortgage
Corporation, 5.64%-9.50% , 1/1/2017-9/1/2026
(Market value $43,773,300)...................... 42,915,000 42,915,000
--------------
Total Repurchase Agreements
(Cost $84,915,000).......................................... 84,915,000
--------------
Total Investments in Securities
(Cost $1,034,497,266)....................................... 1,180,859,807
--------------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Contracts (Note 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
Unrealized Depreciation on Futures Contracts: (0.30)%
Standard & Poor's 500
March 1997 Short futures ................................. (528) $(3,097,263)
Mid-Cap 400 March 1997 Short futures ..................... (961) (577,512)
-----------
Total Unrealized Depreciation on
Futures Contracts (b).......................................... (3,674,775)
-----------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(Cost $1,034,497,266)................................... 94.50% 1,177,185,032
Other Assets............................................ 5.77 71,881,741
------ --------------
Total Assets........................................... 100.27% 1,249,066,773
Total Liabilities (Note 6)............................. (0.27) (3,363,578)
------ --------------
Net Assets (Note 7)..................................... 100.00% $1,245,703,195
====== ==============
</TABLE>
*Non-income producing security.
(a)Pledged as collateral for futures transactions.
(b) The market value represented by the short futures was $319,844,300
(representing 25.68% of the Fund's net assets) with proceeds of
$316,169,525.
For Federal income tax purposes, the tax basis of investments owned at
December 31, 1996 was $1,034,978,434 and net unrealized appreciation on
investments consisted of :
<TABLE>
<S> <C>
Gross unrealized appreciation..................................... $153,732,924
Gross unrealized depreciation..................................... (11,526,326)
------------
Net unrealized appreciation....................................... $142,206,598
============
</TABLE>
See notes to financial statements.
19
<PAGE>
ZWEIG STRATEGY FUND
Statement of Assets and Liabilities
December 31, 1996 (in thousands)
<TABLE>
<S> <C>
Assets:
Investments in securities at value (identified cost $1,034,497--
Note 1) .......................................................... $1,180,860
Cash............................................................... 233
Receivables:
Investment securities sold....................................... 59,492
Capital shares sold.............................................. 1,269
Dividends and interest........................................... 2,453
Variation margin................................................. 4,760
- --------------------------------------------------------------------------------
Total Assets................................................... 1,249,067
- --------------------------------------------------------------------------------
Liabilities:
Payables:
Capital shares redeemed.......................................... 2,121
Advisory fee..................................................... 51
Distribution and service fees.................................... 707
Accrued expenses................................................. 485
- --------------------------------------------------------------------------------
Total Liabilities.............................................. 3,364
- --------------------------------------------------------------------------------
Net Assets......................................................... $1,245,703
- --------------------------------------------------------------------------------
Net Assets Consist of:
Capital paid-in.................................................... $1,073,247
Accumulated net investment loss.................................... (172)
Undistributed net realized gain.................................... 29,940
Net unrealized appreciation of investments......................... 142,688
- --------------------------------------------------------------------------------
Net Assets......................................................... $1,245,703
- --------------------------------------------------------------------------------
Class A Shares
Net asset value ("NAV") and redemption price per share
($581,148,865/38,726,809 shares).................................. $ 15.01
==========
Maximum public offering price per share-NAV/(1-maximum sales
charge) ($15.01/.945)............................................. $ 15.88
==========
Class B Shares
Net asset value and offering price per share ($42,317,298/2,808,293
shares)........................................................... $ 15.07
==========
Redemption price per share......................................... *
==========
Class C Shares
Net asset value and offering price per share
($621,333,957/41,324,620 shares).................................. $ 15.04
==========
Redemption price per share......................................... *
==========
Class I Shares
Net asset value, offering and redemption price per share
($903,075/59,914 shares).......................................... $ 15.07
==========
</TABLE>
* Varies by length of time shares are held. (Note 3b)
See notes to financial statements.
20
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of December 31, 1996
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 84.55%
Advertising: 0.01%
Ackerley Communications Inc. ............................ 3,200 $ 37,600
------------
Aerospace: 1.00%
*Moog Inc., Class A...................................... 21,600 504,900
*RMI Titanium Co. ....................................... 93,500 2,629,687
*Sequa Corp., Class A.................................... 20,990 823,858
*Wyman-Gordon Co. ....................................... 48,300 1,074,675
------------
5,033,120
------------
Airlines: 2.78%
*Alaska Air Group Inc. .................................. 59,200 1,243,200
*America West Airlines Inc., Class B..................... 2,600 41,275
*AMR Corp. .............................................. 40,800 3,595,500
British Airways Plc., ADR................................ 26,300 2,702,325
Delta Air Lines Inc. .................................... 38,800 2,749,950
KLM Royal Dutch Airlines N.V., ADR....................... 51,141 1,425,555
*UAL Corp. .............................................. 16,800 1,050,000
*USAir Group Inc. ....................................... 53,400 1,248,225
------------
14,056,030
------------
Automobiles: 1.21%
Chrysler Corp. .......................................... 108,904 3,593,832
Ford Motor Co. .......................................... 13,000 414,375
General Motors Corp. .................................... 36,500 2,034,875
Volvo AB, ADR............................................ 3,900 84,825
------------
6,127,907
------------
Automotive Parts and Equipment: 1.46%
Apogee Enterprises Inc. ................................. 27,200 1,081,200
Arvin Industries Inc. ................................... 7,200 178,200
Barnes Group Inc. ....................................... 21,500 1,290,000
Borg-Warner Automotive Inc. ............................. 8,500 327,250
Carlisle Companies Inc. ................................. 8,000 484,000
Dana Corp. .............................................. 25,400 828,675
*Desc S.A., ADS.......................................... 21,400 470,800
Johnson Controls Inc. ................................... 15,100 1,251,413
Smith (A.O.) Corp. ...................................... 9,200 274,850
SPX Corp. ............................................... 5,100 197,625
Wynn's International Inc. ............................... 31,800 1,005,675
------------
7,389,688
------------
Banks: 7.66%
Allied Irish Banks Plc, ADR.............................. 4,400 172,700
Banco Latinoamericana de Export "E'...................... 11,100 563,325
Bancorp Hawaii Inc. ..................................... 14,600 613,200
Bank Of Montreal, ADR.................................... 32,100 1,023,187
BankAmerica Corp. ....................................... 38,000 3,790,500
Banponce Corp. .......................................... 104,500 3,526,875
Barclays Plc., ADR....................................... 2,300 158,125
City National Corp. ..................................... 42,300 914,738
Community First Bankshares Inc. ......................... 15,800 434,500
Corporacion Banc Espana, ADS............................. 400 9,000
Corus Bankshares Inc. ................................... 13,400 432,150
Cullen Frost Bankers Inc. ............................... 19,300 641,725
CVB Financial Corp. ..................................... 1,381 28,828
FNB Corp. ............................................... 2,500 57,500
First American Corp. Tennessee........................... 3,200 184,400
First Citizens BancShares Inc., Class A.................. 2,000 154,000
First Empire State Corp. ................................ 4,100 1,180,800
First Union Corp. ....................................... 11,784 872,016
Firstbank Puerto Rico.................................... 24,212 629,512
Hibernia Corp., Class A.................................. 114,400 1,515,800
*Imperial Bancorp........................................ 32,532 780,768
NationsBank Corp. ....................................... 36,700 3,587,425
North Fork Bancorp....................................... 80,856 2,880,495
Peoples Heritage Financial Group......................... 54,000 1,512,000
Provident Bancorp........................................ 525 17,850
Provident Bankshares Corp. .............................. 11,600 452,400
Republic New York Corp. ................................. 30,100 2,456,913
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Riggs National Corp. .................................... 100,200 $ 1,728,450
Santa Monica Bank........................................ 24,180 411,060
Security Capital Corp. .................................. 800 59,000
*Silicon Valley Bancshares............................... 25,600 825,600
SouthTrust Corp. ........................................ 29,925 1,043,634
Sterling Bancorp......................................... 33,730 497,517
Sumitomo Bank Of California.............................. 4,900 122,500
Trust Company of New Jersey.............................. 11,100 155,400
UMB Financial Corp. ..................................... 1,890 76,545
Union Planters Corp. .................................... 12,802 499,278
UnionBancal Corp. ....................................... 26,800 1,420,400
UST Corp. ............................................... 78,700 1,623,187
Westamerica Bancorp...................................... 24,300 1,403,325
Westpac Banking Corp., ADR............................... 7,600 216,600
------------
38,673,228
------------
Building Materials and Products: 2.74%
Ameron International Inc. ............................... 15,200 784,700
Centex Construction Products Inc. ....................... 38,044 684,792
Florida Rock Industries Inc. ............................ 21,500 704,125
Lafarge Corp. ........................................... 47,600 957,950
*Lamson & Sessions Co. .................................. 79,300 574,925
*Lone Star Industries Inc. .............................. 55,100 2,031,812
Medusa Corp. ............................................ 21,600 742,500
*Mestek Inc. ............................................ 44,200 729,300
*NCI Building Systems Inc. .............................. 19,400 669,300
*Nortek Inc. ............................................ 42,500 850,000
Puerto Rican Cement Inc. ................................ 11,200 350,000
Republic Group Inc. ..................................... 48,800 762,500
Schuller Corp. .......................................... 49,200 522,750
Shelter Components Corp. ................................ 66,858 819,011
Southdown Inc. .......................................... 46,400 1,444,200
*USG Corp. .............................................. 17,400 589,425
Vulcan Materials Co. .................................... 10,300 627,013
------------
13,844,303
------------
Casino Operators: 0.10%
*MGM Grand Inc. ......................................... 14,600 509,175
------------
Catalog Distribution: 0.00%
*National Media Corp. ................................... 1,200 8,400
------------
Chemicals: 1.39%
*AEP Industries Inc. .................................... 14,849 816,695
Akzo Nobel, ADR.......................................... 7,800 526,500
Cambrex Corp. ........................................... 40,800 1,336,200
*Cytec Industries Inc. .................................. 18,600 755,625
*International Specialty Products Inc. .................. 26,900 329,525
Rohm & Haas Co. ......................................... 18,700 1,526,387
Shanghai Petrochemical, ADR.............................. 5,500 161,562
Stepan Co. .............................................. 16,500 336,188
Terra Industries Inc. ................................... 82,900 1,222,775
------------
7,011,457
------------
Coal Mining: 0.07%
Zeigler Coal Holdings Co. ............................... 17,300 369,787
------------
Commercial Services: 0.33%
*Berlitz International Inc. ............................. 22,922 478,497
*Pinkertons Inc. ........................................ 2,900 72,862
*Volt Information Sciences Inc. ......................... 5,100 223,125
World Fuel Services Corp. ............................... 41,150 915,588
------------
1,690,072
------------
Computers and Software: 1.53%
*Advanced Logic Research Inc. ........................... 28,700 355,162
*CACI International Inc., Class A........................ 13,500 283,500
*Chips & Technologies Inc. .............................. 67,300 1,228,225
Computer Data Systems Inc. .............................. 22,600 683,650
Computervision Corp. .................................... 60,700 561,475
*Data General Corp. ..................................... 42,800 620,600
*Platinum Software Corp. ................................ 56,300 668,562
*Siliconix Inc. ......................................... 17,400 408,900
</TABLE>
21
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Computers and Software (Continued)
*Standard Microsystems Corp. ............................ 5,700 $ 54,150
*Storage Technology Corp. ............................... 29,400 1,400,175
*Tandem Computers Inc. .................................. 51,500 708,125
*Xicor Inc. ............................................. 72,200 740,050
------------
7,712,574
------------
Conglomerates: 1.28%
Canadian Pacific Ltd. ................................... 76,900 2,037,850
Loews Corp. ............................................. 45,200 4,260,100
Montedison S.P.A., ADR................................... 25,114 163,241
------------
6,461,191
------------
Construction Equipment: 1.03%
AGCO Corp. .............................................. 13,100 374,987
Cascade Corp. ........................................... 55,800 899,775
Case Corp. .............................................. 7,700 419,650
Caterpillar Inc. ........................................ 6,800 511,700
*Gardner Denver Machinery Inc. .......................... 47,200 1,616,600
Lindsay Manufacturing Co. ............................... 11,100 518,925
Manitowoc Company Inc. .................................. 5,000 202,500
Oshkosh Truck Corp., Class B............................. 44,300 470,687
PACCAR Inc. ............................................. 3,100 210,800
------------
5,225,624
------------
Containers and Packaging: 0.51%
Caraustar Industries Inc. ............................... 38,800 1,290,100
*Grupo Indl Durango ADS.................................. 43,266 459,701
*Owens-Illinois Inc. .................................... 18,600 423,150
Rock-Tenn Company........................................ 19,780 390,655
------------
2,563,606
------------
Electrical Products: 0.42%
*Genlyte Group Inc. ..................................... 57,900 723,750
Kollmorgen Corp. ........................................ 32,640 359,040
Kuhlman Corp. ........................................... 27,300 528,938
*Powell Industries Inc. ................................. 3,300 45,787
Thomas Industries Inc. .................................. 21,760 454,240
------------
2,111,755
------------
Electronic Distributors: 0.21%
Avnet Inc. .............................................. 300 17,475
*Bell Industries Inc. ................................... 14,335 306,411
*Inacom Corp. ........................................... 16,700 668,000
Wyle Electronics Inc. ................................... 1,900 75,050
------------
1,066,936
------------
Electronics: 2.40%
*Applied Magnetics Corp. ................................ 23,100 690,112
*Bel Fuse Inc. .......................................... 28,700 405,388
*Computer Products Inc. ................................. 76,000 1,482,000
CTS Corp. ............................................... 21,900 936,225
*Electro Scientific Industries Inc. ..................... 14,300 371,800
*Esterline Technologies Inc. ............................ 38,700 1,011,037
*Hadco Corp. ............................................ 50,300 2,464,700
Harris Corp. ............................................ 21,400 1,468,575
Hitachi Ltd., ADR........................................ 800 74,000
Innovex Inc. ............................................ 55,400 1,495,800
*Jabil Circuit Inc. ..................................... 16,200 648,000
*LTX Corp. .............................................. 28,800 169,200
*Novellus Systems Inc. .................................. 5,700 308,869
*Orbotech Ltd. .......................................... 26,000 373,750
Sony Corp., ADR.......................................... 2,200 144,375
*Tech-Sym Corp. ......................................... 2,800 83,300
------------
12,127,131
------------
Engineering: 0.49%
Butler Manufacturing Company............................. 34,150 1,383,075
Granite Construction Inc. ............................... 42,800 813,200
*Layne Christensen Co. .................................. 18,400 280,600
------------
2,476,875
------------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Entertainment: 0.08%
*King World Productions Inc. ........................... 11,000 $ 405,625
-------------
Environmental Services: 0.36%
*Destec Energy Inc. .................................... 40,100 626,563
*Tetra Technologies Inc. ............................... 28,800 727,200
*York Research Corp. ................................... 51,000 484,500
-------------
1,838,263
-------------
Farming and Milling: 0.05%
Orange Co Inc. ......................................... 34,100 264,275
-------------
Finance: 1.33%
*Americredit Corp. ..................................... 20,900 428,450
Credicorp Ltd. ......................................... 7,900 143,188
Equitable Companies Inc. ............................... 34,500 849,563
FINOVA Group Inc. ...................................... 5,400 346,950
Fund American Enterprises Holdings...................... 4,000 383,000
Investors Financial Services Corp. ..................... 387 10,739
Liberty Financial Companies Inc. ....................... 16,700 649,212
*Olympic Financial Ltd. ................................ 38,000 546,250
Travelers Group Inc. ................................... 74,000 3,357,750
-------------
6,715,102
-------------
Fluid Controls: 0.52%
Graco Inc. ............................................. 33,450 819,525
Robbins & Myers Inc. ................................... 71,500 1,787,500
-------------
2,607,025
-------------
Food and Beverages: 0.24%
Golden Poultry Inc. .................................... 48,700 526,569
Hudson Foods Inc., Class A.............................. 4,250 80,750
IBP Inc. ............................................... 11,300 274,025
*Seneca Foods Corp., Class A............................ 12,600 198,450
*Seneca Foods Corp., Class B............................ 8,000 122,000
-------------
1,201,794
-------------
Forest and Paper Products: 2.65%
Abitibi Price Inc. ..................................... 6,200 97,650
Bowater Inc. ........................................... 26,500 997,063
Champion International Corp. ........................... 18,700 808,775
Consolidated Papers Inc. ............................... 2,300 112,988
*Fibreboard Corp. ...................................... 23,783 802,676
Glatfelter (P.H.) & Co. ................................ 4,900 88,200
James River Corp. ...................................... 19,600 649,250
MacMillan Bloedel, Ltd. ................................ 117,800 1,531,400
Mead Corp. ............................................. 38,500 2,237,812
Mosinee Paper Corp. .................................... 22,780 808,690
Potlatch Corp. ......................................... 16,300 700,900
Rayonier Inc. .......................................... 33,400 1,281,725
Universal Forest Products Inc. ......................... 53,700 711,525
Westvaco Corp. ......................................... 88,400 2,541,500
-------------
13,370,154
-------------
Healthcare Facilities and Products: 0.67%
Bindley Western Industries Inc. ........................ 10,700 207,312
Cardinal Health Inc. ................................... 2,089 121,684
Health Images Inc. ..................................... 68,200 1,133,825
ICN Pharmaceuticals Inc. ............................... 18,000 353,250
*OrNda Healthcorp....................................... 40,400 1,181,700
*Sierra Health Services Inc. ........................... 3,000 73,875
*Universal Health Services Inc., Class B................ 11,700 334,912
-------------
3,406,558
-------------
Homebuilding and Land Development: 1.28%
Centex Corp. ........................................... 16,800 632,100
*Champion Enterprises Inc. ............................. 112,536 2,194,452
Continental Homes Holding Corp. ........................ 41,700 886,125
Forest City Enterprises., Class A....................... 6,500 393,250
M.D.C. Holdings Inc. ................................... 76,000 655,500
Skyline Corp. .......................................... 22,075 546,356
*Southern Energy Homes Inc. ............................ 29,700 341,550
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Homebuilding and Land Development (Continued)
*U.S. Home Corp. ........................................ 27,700 $ 720,200
U.S. Home Corp., Warrants................................ 7,529 60,232
Webb (Del) Corp. ........................................ 1,700 27,838
------------
6,457,603
------------
Household Furnishings and Products: 1.24%
Ab Electrolux., ADR...................................... 5,900 340,725
Bush Industries Inc., Class A............................ 32,250 620,812
Ethan Allen Interiors Inc. .............................. 14,700 565,950
Fedders Corp. ........................................... 71,300 445,625
*Furniture Brands International Inc. .................... 5,200 72,800
Harman International Industries Inc. .................... 16,130 897,231
*Helen Of Troy Corp., Ltd. .............................. 53,300 1,172,600
Oneida Ltd. ............................................. 42,700 768,600
Starrett (L.S.) Co., Class A............................. 24,800 703,700
*Syratech Corp. ......................................... 9,000 283,500
Toro Co. ................................................ 10,800 394,200
------------
6,265,743
------------
Industrial Products, Services and Machinery: 1.91%
American Filtrona Corp. ................................. 6,100 258,488
Ampco-Pittsburgh Corp. .................................. 60,900 730,800
Applied Power Inc., Class A.............................. 24,400 966,850
Commercial Intertech Co. ................................ 24,100 328,363
Furon Co. ............................................... 16,200 344,250
Gleason Corp. ........................................... 39,000 1,291,875
Green (A.P.) Industries Inc. ............................ 2,000 19,500
Katy Industries Inc. .................................... 50,500 732,250
Kysor Industrial Corp. .................................. 35,600 1,161,450
Lincoln Electric Co. .................................... 8,000 263,000
MacDermid Inc. .......................................... 67,500 1,856,250
Spartech Corp. .......................................... 20,100 223,613
*Specialty Equipment Companies Inc. ..................... 26,300 328,750
Tecumseh Products Co., Class A........................... 20,100 1,153,238
------------
9,658,677
------------
Insurance: 4.74%
Ace Ltd. ................................................ 18,700 1,124,337
Allmerica Financial Corp. ............................... 10,400 348,400
AMBAC Inc. .............................................. 21,600 1,433,700
American Annuity Group .................................. 75,100 1,060,787
American Bankers Insurance Group......................... 24,000 1,227,000
American Financial Group Inc. ........................... 6,500 245,375
*Bankers Life Holdings Corp. ............................ 8,300 207,500
Capital Re Corp. ........................................ 8,400 391,650
CIGNA Corp. ............................................. 3,700 505,513
Citizens Corp. .......................................... 29,300 659,250
*CNA Financial Corp. .................................... 19,800 2,118,600
Conseco Inc. ............................................ 500 31,875
*Delphi Financial Group Inc., Class A.................... 21,200 625,400
Enhance Financial Services Group......................... 1,800 65,700
Equitable of Iowa Companies Inc. ........................ 9,500 435,812
EXEL Limited............................................. 25,200 954,450
First American Financial Corp. .......................... 20,128 827,764
Fremont General Corp. ................................... 29,500 914,500
Life Re Corp. ........................................... 6,400 247,200
*MAIC Holdings, Inc. .................................... 5,900 199,863
MMI Companies Inc. ...................................... 20,850 672,413
NAC Re Corp. ............................................ 2,100 71,137
*National Western Life Insurance Co., Class A............ 1,700 147,900
Nymagic Inc. ............................................ 25,926 466,668
Old Republic International Corp. ........................ 91,050 2,435,587
Orion Capital Corp. ..................................... 6,100 372,863
Penncorp Financial Group Inc. ........................... 17,800 640,800
Pioneer Financial Services Inc. ......................... 50,500 1,262,500
Presidential Life Corp. ................................. 36,100 435,456
Providian Corp. ......................................... 20,400 1,048,050
PXRE Corp. .............................................. 10,500 259,875
Reliance Group Holdings Inc. ............................ 45,900 418,838
Reliastar Financial Corp. ............................... 5,183 299,318
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
TIG Holdings Inc. ....................................... 16,200 $ 548,775
Transatlantic Holdings Inc. ............................. 11,000 885,500
20th Century Industries Inc. ............................ 4,400 74,250
United Fire & Casualty Co. .............................. 1,600 56,400
USLife Corp. ............................................ 6,600 219,450
------------
23,940,456
------------
Investment Banking and Brokerage: 4.87%
Alex Brown Inc. ......................................... 46,400 3,364,000
Bear, Stearns & Co. Inc. ................................ 62,760 1,749,435
Donaldson Lufkin & Jenrette Co., Inc. ................... 7,400 266,400
Edwards (A.G.) & Sons, Inc. ............................. 27,700 931,412
Fahnestock Viner Holdings Inc., Class A.................. 45,100 653,950
Inter-Regional Financial Group Inc. ..................... 21,416 754,914
*Investment Technology Group Inc. ....................... 3,500 67,375
Jefferies Group Inc. .................................... 46,200 1,865,325
Legg Mason Inc. ......................................... 3,400 130,900
Lehman Brothers Holdings Inc. ........................... 74,600 2,340,575
McDonald & Company Securities, Inc. ..................... 31,000 1,077,250
Merrill Lynch & Co., Inc. ............................... 22,200 1,809,300
Morgan Stanley Group Inc. ............................... 38,100 2,176,462
Paine Webber Group Inc. ................................. 28,100 790,312
Quick & Reilly Group Inc. ............................... 95,074 2,840,336
Raymond James Financial Corp. ........................... 26,097 786,172
Salomon Inc. ............................................ 59,800 2,818,075
Southwest Securities Group Inc. ......................... 12,700 190,500
------------
24,612,693
------------
Investment Management: 0.00%
Atalanta/Sosnoff Capital Co. ............................ 1,004 8,911
------------
Manufacturing: 0.78%
Blount International Inc., Class A....................... 3,750 143,906
Core Industries Inc. .................................... 19,200 316,800
*Global Industrial Technologies Inc. .................... 5,600 123,900
Transtechnology Corp. ................................... 33,700 661,362
Tredegar Industries Inc. ................................ 43,400 1,741,425
Trinity Industries Inc. ................................. 20,100 753,750
Valmont Industries Inc. ................................. 4,800 198,000
------------
3,939,143
------------
Marine Transportation: 0.35%
Oglebay Norton Co. ...................................... 9,900 433,125
*OMI Corp. .............................................. 74,400 651,000
Stolt-Nielsen S.A. ...................................... 35,000 660,625
------------
1,744,750
------------
Medical Technology: 0.58%
*Advanced Technology Labs Inc. .......................... 25,600 793,600
*Bio-Radiology Labs Inc., Class A........................ 25,050 751,500
Collagen Corp. .......................................... 1,900 34,675
*Cooper Companies Inc. .................................. 78,900 1,361,025
------------
2,940,800
------------
Metal Fabrication: 2.40%
*Avondale Industries Inc. ............................... 39,800 855,700
Commercial Metals Co. ................................... 21,533 648,682
*Gibraltar Steel Corp. .................................. 28,500 748,125
Harsco Corp. ............................................ 4,200 287,700
Intermet Corp. .......................................... 134,400 2,167,200
Kaydon Corp. ............................................ 9,100 428,838
*Mueller Industries Inc. ................................ 45,400 1,747,900
Oregon Metallurgical Corp. .............................. 21,000 677,250
Pitt-Des Moines Inc. .................................... 15,100 628,538
Reliance Steel & Aluminum Co. ........................... 17,800 623,000
*Shiloh Industries Inc. ................................. 40,500 658,125
*SPS Technologies Inc. .................................. 21,100 1,355,675
Timken Co. .............................................. 26,900 1,234,038
*Todd Shipyards Corp. ................................... 6,836 44,434
------------
12,105,205
------------
</TABLE>
23
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Metals and Mining: 0.54%
*Alumax Inc. ............................................ 40,500 $ 1,351,687
Brush Wellman Inc. ...................................... 5,400 88,425
Cyprus Amax Minerals Co. ................................ 9,900 231,413
Free State Consolidated Gold Mines, ADR.................. 48,000 345,000
Kloof Gold Mining Co. Ltd., ADR.......................... 50,800 396,875
Phelps Dodge Corp. ...................................... 1,500 101,250
*Tremont Corp. .......................................... 6,000 216,750
------------
2,731,400
------------
Newspapers: 0.09%
Media General, Class A................................... 15,000 453,750
------------
Oil and Gas: 7.57%
Amerada Hess Corp. ...................................... 9,000 520,875
Aquila Gas Pipeline Corp. ............................... 40,700 646,113
Atlantic Richfield Co. .................................. 3,900 516,750
*Basic Petroleum International Ltd. ..................... 10,500 346,500
*Belden & Blake Corp. ................................... 44,400 1,132,200
*Benton Oil & Gas Co. ................................... 26,900 608,613
*Cliffs Drilling Co. .................................... 34,400 2,175,800
Coastal Corp. ........................................... 74,800 3,655,850
Columbia Gas Systems Inc. ............................... 50,600 3,219,425
Cross Timbers Oil Co. ................................... 7,900 198,488
El Paso Natural Gas Co. ................................. 13,500 681,750
Elf Aquitaine S.A., ADR.................................. 39,700 1,796,425
Eni S.P.A., ADS ......................................... 14,600 753,725
Fina Inc., Class A....................................... 8,000 386,000
Helmerich & Payne Co. ................................... 10,400 542,100
Kerr-McGee Corp. ........................................ 13,900 1,000,800
Lufkin Industries Inc. .................................. 26,800 670,000
Murphy Oil Corp. ........................................ 4,200 233,625
Occidental Petroleum Corp. .............................. 20,800 486,200
*Oryx Energy Co. ........................................ 58,000 1,435,500
Parker & Parsley Petroleum Co. .......................... 18,200 668,850
Pennzoil Co. ............................................ 6,900 389,850
Phillips Petroleum Co. .................................. 36,900 1,632,825
*Plains Resources Inc. .................................. 19,200 300,000
Repsol S.A., ADR......................................... 56,700 2,161,688
*RPC Energy Services Inc. ............................... 72,860 1,092,900
*Santa Fe Energy Resources Inc. ......................... 23,800 330,225
*Tesoro Petroleum Corp. ................................. 89,000 1,246,000
Texaco Inc. ............................................. 5,200 510,250
Tosco Corp. ............................................. 6,300 498,487
*Tuboscope Vetco International Co. ...................... 60,100 931,550
Union Texas Petroleum Holdings Inc. ..................... 29,900 669,013
Unocal Corp. ............................................ 26,700 1,084,688
USX-Marathon Group ...................................... 88,300 2,108,163
*Veritas DGC Inc. ....................................... 65,455 1,210,917
Vintage Petroleum Inc. .................................. 5,200 179,400
Williams Companies Inc. ................................. 14,700 551,250
YPF Sociedad Anonima, ADR ............................... 66,100 1,669,025
------------
38,241,820
------------
Pollution Control Equipment: 0.23%
BHA Group Inc., Class A.................................. 23,870 384,904
*Gundle/SLT Environmental Corp. ......................... 76,900 509,462
Met Pro Corp. ........................................... 21,420 286,493
------------
1,180,859
------------
Precision Instruments: 0.93%
*Coherent Inc. .......................................... 28,600 1,208,350
Fluke Corp. ............................................. 4,700 209,737
*Galileo Corp. .......................................... 57,500 1,444,688
*Genrad Inc. ............................................ 15,400 358,050
Measurex Corp. .......................................... 18,200 436,800
MTS Systems Corp. ....................................... 32,000 640,000
Technitrol Inc. ......................................... 10,400 399,100
------------
4,696,725
------------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Printing and Forms: 0.67%
American Business Products Inc. ......................... 1,875 $ 47,109
*Gibson Greetings Inc. .................................. 36,800 722,200
Graphic Industries Inc. ................................. 109,000 1,103,625
Quebecor Inc., Class A................................... 46,800 783,900
Standard Register Co. ................................... 22,206 721,695
------------
3,378,529
------------
Publishing: 0.17%
Value Line Inc. ......................................... 19,900 880,575
------------
Railroads: 0.33%
CSX Corp. ............................................... 39,900 1,685,775
------------
Real Estate Investment Trusts: 0.48%
CWM Mortgage Holdings Inc. .............................. 29,800 640,700
HRE Properties Inc. ..................................... 695 12,510
Koger Equity Inc. ....................................... 39,248 735,900
Public Storage Inc. ..................................... 15,600 483,600
Thornburg Mortgage Asset Corp. .......................... 26,500 566,438
------------
2,439,148
------------
Recreational Products: 0.65%
Brunswick Corp. ......................................... 24,600 590,400
Coachmen Industries Inc. ................................ 84,000 2,383,500
Russ Berrie & Co., Inc. ................................. 7,300 131,400
*Tyco Toys Inc. ......................................... 13,600 159,800
------------
3,265,100
------------
Rental and Leasing: 1.93%
*Amerco.................................................. 18,000 630,000
Comdisco Inc. ........................................... 92,450 2,935,288
*Electro Rent Corp. ..................................... 123,675 3,076,416
GATX Corp. .............................................. 11,800 572,300
Interpool Inc. .......................................... 7,700 179,987
PHH Corp. ............................................... 42,300 1,818,900
PS Group Holdings Inc. .................................. 38,075 514,012
------------
9,726,903
------------
Restaurants: 0.23%
CKE Restaurants Inc. .................................... 9,200 331,200
*Foodmaker Inc. ......................................... 92,300 819,163
------------
1,150,363
------------
Retail Trade: 2.50%
*Carson Pirie Scott & Co. ............................... 10,400 262,600
*Cole National Corp., Class A............................ 26,242 688,853
Dayton Hudson Corp. ..................................... 27,300 1,071,525
*Fabri-Centers of America Inc., Class A ................. 41,000 661,125
*Federated Department Stores Inc. ....................... 26,600 907,725
*Genesco Inc. ........................................... 23,000 212,750
Great Atlantic & Pacific Tea Co. ........................ 33,700 1,074,187
*Jenny Craig Inc. ....................................... 11,100 98,513
Mercantile Stores Inc. .................................. 10,800 533,250
*Meyer (Fred) Inc. ...................................... 22,200 788,100
Riser Foods Inc., Class A ............................... 57,700 1,831,975
Ross Stores Inc. ........................................ 39,000 1,950,000
Shopko Stores Inc. ...................................... 27,200 408,000
*Smiths Food & Drug Centers Inc., Class B................ 1,019 31,589
*Waban Inc. ............................................. 16,700 434,200
*Wet Seal Inc., Class A.................................. 23,500 502,312
*Woolworth Corp. ........................................ 40,200 879,375
*Zale Corp. ............................................. 16,200 309,825
------------
12,645,904
------------
Savings and Loan Associations: 2.09%
Astoria Financial Corp. ................................. 31,600 1,165,250
*California Federal Bank Corp. .......................... 78,400 1,920,800
Coast Savings Financial Inc. ............................ 6,900 252,713
Commercial Federal Corp. ................................ 7,000 336,000
*Dime Bancorp Inc. ...................................... 27,200 401,200
*Firstfed Financial Corp. ............................... 27,400 602,800
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Savings and Loan Associations (Continued)
Golden West Financial Corp. ............................. 5,600 $ 353,500
MAF Bancorp Inc. ........................................ 15,000 521,250
New York Bancorp Inc. ................................... 4,500 174,375
RCSB Financial Inc. ..................................... 48,800 1,415,200
Sovereign Bancorp Inc. .................................. 59,300 778,313
T.R. Financial Corp. .................................... 35,000 1,242,500
TCF Financial Corp. ..................................... 900 39,150
Washington Mutual Inc. .................................. 12,800 554,400
Westcorp Inc. ........................................... 37,590 822,281
------------
10,579,732
------------
Shoes: 0.02%
*Vans Inc. .............................................. 5,000 62,500
Weyco Group Inc. ........................................ 800 32,200
------------
94,700
------------
Steel: 3.08%
AK Steel Holdings Corp. ................................. 46,100 1,826,712
British Steel Plc, ADS................................... 101,700 2,796,750
Carpenter Technology Corp. .............................. 18,600 681,225
Chaparral Steel Co. ..................................... 69,200 839,050
Cleveland Cliffs Inc. ................................... 29,600 1,343,100
Lone Star Technologies Inc. ............................. 61,200 1,040,400
Oregon Steel Mills Inc. ................................. 11,100 185,925
Pohang Iron & Steel Co., ADR............................. 24,100 488,025
Quanex Corp. ............................................ 46,100 1,261,988
Roanoke Electric Steel Corp. ............................ 45,100 755,425
Texas Industries Inc. ................................... 40,700 2,060,437
*Tubos De Acero de Mexico, ADR........................... 137,500 2,182,812
*WHX Corp. .............................................. 10,700 94,963
------------
15,556,812
------------
Telecommunications: 2.10%
*Atlantic Tele-Network Inc. ............................. 41,800 637,450
British Telecommunications Plc., ADR..................... 16,600 1,139,175
Portugal Telecommunications S.A., ADR.................... 5,400 152,550
Tadiran Ltd., ADR........................................ 33,000 928,125
Tele Danmark A.S., ADS................................... 81,000 2,207,250
Telefonica de Espana S.A., ADS........................... 48,700 3,372,475
Telefonos de Mexico S.A., ADS............................ 65,600 2,164,800
------------
10,601,825
------------
Textiles: 0.20%
Guilford Mills Inc. ..................................... 24,400 649,650
Johnston Industries Inc. ................................ 3,506 25,418
Springs Industries Inc., Class A......................... 8,000 344,000
------------
1,019,068
------------
Tobacco: 0.67%
*Culbro Corp. ........................................... 528 34,254
RJR Nabisco Holdings Corp. .............................. 79,800 2,713,200
Universal Corp. ......................................... 19,900 639,287
------------
3,386,741
------------
Utilities: 8.80%
Allegheny Power Systems Inc. ............................ 27,000 820,125
American Water Works Inc. ............................... 9,800 202,125
Atmos Energy Corp. ...................................... 2,900 69,238
Baltimore Gas & Electric Co. ............................ 39,800 1,064,650
Boston Edison Co. ....................................... 32,200 865,375
California Water Service Co. ............................ 16,500 693,000
Centerior Energy Corp. .................................. 48,700 523,525
Central Maine Power Co. ................................. 9,600 111,600
Citizens Utilities Co. .................................. 15,646 174,062
CMS Energy Corp. ........................................ 36,400 1,223,950
Commonwealth Energy Systems Corp. ....................... 19,500 458,250
DQE Inc. ................................................ 10,200 295,800
Eastern Enterprises Inc. ................................ 15,700 555,387
Edison International Inc. ............................... 174,700 3,472,163
Empresa Nacionale de Electricidad, ADR................... 3,900 273,000
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Enersis S.A., ADS.................................... 16,200 $ 449,550
Entergy Corp. ....................................... 129,600 3,596,400
GPU Inc. ............................................ 16,300 548,088
*Huaneng Power International Inc., ADR .............. 31,200 702,000
Illinova Corp. ...................................... 55,200 1,518,000
Interstate Power Co. ................................ 30,600 887,400
IPALCO Enterprises Inc. ............................. 37,400 1,019,150
Korea Electric Power Co., ADR........................ 20,500 420,250
KU Energy Corp. ..................................... 5,700 171,000
Laclede Gas Co. ..................................... 2,400 57,900
Long Island Lighting Co. ............................ 51,300 1,135,012
MidAmerican Energy Holdings Co. ..................... 34,600 549,275
National Fuel Gas Co. ............................... 19,700 812,625
New England Electric Systems Co. .................... 22,500 784,687
New York State Electric & Gas Co. ................... 39,600 856,350
NorAm Energy Corp. .................................. 65,400 1,005,525
NUI Corp. ........................................... 37,100 839,388
ONEOK Inc. .......................................... 8,200 246,000
Pacific Gas & Electric Co. .......................... 23,000 483,000
Pacificorp .......................................... 23,300 477,650
Peoples Energy Corp. ................................ 23,400 792,675
Pinnacle West Capital Corp. ......................... 67,100 2,130,425
Portland General Corp. .............................. 73,700 3,095,400
Powergen Plc, ADR.................................... 4,500 177,750
PP&L Resources Inc. ................................. 19,600 450,800
Public Service Co. of New Mexico..................... 19,300 378,762
Public Services Enterprise Group .................... 18,500 504,125
Shandong Huaneng Ltd., ADR .......................... 61,916 603,681
Sierra Pacific Resources Inc. ....................... 14,400 414,000
Texas Utilities Co. ................................. 43,700 1,780,775
TNP Enterprises Inc. ................................ 66,200 1,812,225
Unicom Corp. ........................................ 52,800 1,432,200
United Illuminating Co. ............................. 21,900 687,113
UtiliCorp United Inc. ............................... 19,000 513,000
Washington Gas Light Co. ............................ 23,300 527,162
Washington Water Power Co. .......................... 15,900 296,137
Westcoast Energy Inc. ............................... 36,100 604,675
WICOR Inc. .......................................... 5,700 204,487
WPL Holdings Inc. ................................... 24,600 691,875
------------
44,458,767
------------
Wholesale Distributors: 0.60%
Bearings Inc. ....................................... 15,300 426,488
Hughes Supply Inc. .................................. 35,400 1,526,625
*Rexel Inc. ......................................... 19,400 307,975
*United Stationers Inc. ............................. 38,400 748,800
------------
3,009,888
------------
Total Common Stocks
(Cost $331,555,019)............................................. 427,163,620
------------
<CAPTION>
Principal
Amount
----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS: 0.99%
United States Treasury Bills: 0.99%
4.975%, 1/16/97..................................... $2,000,000(a) 1,995,753
4.99%, 1/16/97...................................... 1,000,000(a) 997,876
5.00%, 2/13/97...................................... 1,000,000(a) 994,420
4.91%, 3/6/97....................................... 1,000,000(a) 991,355
------------
4,979,404
------------
Total Short-Term Obligations
(Cost $4,979,074).............................................. 4,979,404
------------
</TABLE>
25
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of December 31, 1996
(Concluded)
<TABLE>
<CAPTION>
Principal
Amount
or Number Value
of Contracts (Note 2)
- ---------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS: 14.07%
With Morgan Stanley & Co., Inc., (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds
$36,084,276); collateralized by: $36,381,893 Federal
Home Loan Mortgage Corporation, 6.50%-9.50%,
2/1/2003-9/1/2033 (Market value $38,059,077)........ $36,071,000 $ 36,071,000
With Prudential Securities Inc., (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds
$35,012,882); collateralized by: $34,790,310 Federal
National Mortgage Association, 6.089%-8.00% ,
10/1/2016-4/1/2035 (Market value $35,700,000)....... 35,000,000 35,000,000
------------
Total Repurchase Agreements
(Cost $71,071,000)............................................... 71,071,000
------------
Unrealized Appreciation (Depreciation) on Futures
Contracts: (0.11)%
Standard & Poor's 500
March 1997 Short futures ........................... (200) (567,471)
Mid-Cap 400 March 1997 Short futures ............... (391) 32,364
------------
Net Unrealized Depreciation on Futures Contracts (b)............. (535,107)
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(Cost $407,605,093)....................................... 99.50% 502,678,917
Other Assets.............................................. 0.76 3,825,905
------ ------------
Total Assets............................................. 100.26% 506,504,822
Total Liabilities (Note 6)............................... (0.26) (1,303,980)
------ ------------
Net Assets (Note 7)....................................... 100.00% $505,200,842
====== ============
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Class A Shares
Net asset value ("NAV") and redemption price per share
($275,934,628/17,354,136 shares)........................................ $15.90
======
Maximum public offering price per share-NAV/(1-maximum
sales charge) ($15.90/.945)............................................. $16.83
======
Class B Shares
Net asset value and offering price per share
($8,350,453/527,888 shares)............................................. $15.82
======
Redemption price per share.............................................. **
======
Class C Shares
Net asset value and offering price per share
($218,713,920/13,848,715 shares)........................................ $15.79
======
Redemption price per share.............................................. **
======
Class I Shares
Net asset value, offering and redemption price per share
($2,201,841/137,303 shares)............................................ $16.04
======
</TABLE>
- -------------------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held. (Note 3b)
(a) Pledged as collateral for futures transactions.
(b) The market value represented by the short futures was $124,615,300
(repesenting 24.67% of the Fund's net assets) with proceeds of
$124,080,193.
For Federal income tax purposes, the tax basis of investments owned at
December 31, 1996 was $407,702,282 and net unrealized appreciation on
investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation...................................... $99,748,066
Gross unrealized depreciation...................................... (4,771,431)
-----------
Net unrealized appreciation........................................ $94,976,635
===========
</TABLE>
26
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of December 31, 1996
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 46.41%
UNITED STATES: 21.62%
Aerospace: 0.34%
Textron Inc. ......................................... 6,400 $ 603,200
United Technologies Corp. ............................ 19,000 1,254,000
------------
1,857,200
------------
Airlines: 0.07%
Southwest Airlines Corp. ............................. 16,800 371,700
------------
Automobiles: 0.74%
Ford Motor Co. ....................................... 60,400 1,925,250
General Motors Corp. ................................. 38,500 2,146,375
------------
4,071,625
------------
Banks: 1.50%
BankAmerica Corp. .................................... 32,000 3,192,000
Bankers Trust NY Corp. ............................... 6,000 517,500
Mellon Bank Corp. .................................... 12,100 859,100
Morgan (J.P.) & Co. .................................. 17,500 1,708,437
PNC Bank Corp. ....................................... 31,700 1,192,712
US Bancorp ........................................... 17,000 763,938
------------
8,233,687
------------
Biotechnology: 0.06%
*Chiron Corp. ........................................ 17,800 331,525
------------
Broadcasting: 0.23%
Comcast Corp., Class A................................ 17,800 313,725
*Viacom Inc., Class B................................. 27,700 966,038
------------
1,279,763
------------
Chemicals: 0.70%
IMC Global Inc. ...................................... 13,500 528,187
Olin Corp. ........................................... 7,300 274,662
PPG Industries Inc. .................................. 26,800 1,504,150
Rohm & Haas Co. ...................................... 9,500 775,438
Union Carbide Corp. .................................. 18,600 760,275
------------
3,842,712
------------
Computers and Software: 0.75%
*Compaq Computer Corp. ............................... 2,600 193,050
*Dell Computer Corp. ................................. 12,000 637,500
*Oracle Corp. ........................................ 67,600 2,822,300
*Sybase Inc. ......................................... 15,000 250,313
*Unisys Corp. ........................................ 33,000 222,750
------------
4,125,913
------------
Conglomerates: 0.16%
Tenneco Inc. ......................................... 19,700 888,962
------------
Construction Equipment: 0.06%
Stewart & Stevenson Inc. ............................. 10,700 311,638
------------
Containers: 0.15%
Stone Container Corp. ................................ 17,500 260,312
Temple-Inland Inc. ................................... 9,900 535,838
------------
796,150
------------
Electrical Equipment: 0.64%
*American Power Conversion Corp....................... 30,300 825,675
Westinghouse Electric Corp. .......................... 78,600 1,562,175
Whirlpool Corp. ...................................... 24,100 1,123,663
------------
3,511,513
------------
Electronics: 1.88%
Intel Corp. .......................................... 47,000 6,154,063
Micron Technology Corp. .............................. 13,900 404,837
Motorola Inc. ........................................ 33,800 2,074,475
Tyco International Ltd. .............................. 22,500 1,189,688
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
*Western Digital Corp. .................................. 3,000 $ 170,625
Xilinx Inc. ............................................. 10,200 375,488
------------
10,369,176
------------
Engineering: 0.26%
Harnischfeger Industries Inc. ........................... 30,200 1,453,375
------------
Entertainment: 0.39%
Time Warner Inc. ........................................ 57,200 2,145,000
------------
Finance: 1.52%
Federal National Mortgage Association.................... 106,400 3,963,400
Greentree Financial Corp. ............................... 11,500 444,187
MBNA Corp. .............................................. 21,700 900,550
Travelers Group Inc. .................................... 67,400 3,058,275
------------
8,366,412
------------
Food and Beverages: 1.20%
ConAgra Inc. ............................................ 28,800 1,432,800
Coors (Adolph) Co., Class B.............................. 16,200 307,800
Lancaster Colony Inc. ................................... 5,300 243,800
Pepsico Inc. ............................................ 133,200 3,896,100
Tyson Foods Inc., Class A................................ 20,900 715,825
------------
6,596,325
------------
Forest and Paper Products: 0.70%
Boise Cascade Corp. ..................................... 55,600 1,765,300
Weyerhaeuser Co. ........................................ 29,500 1,397,563
Willamette Industries Inc. .............................. 9,800 682,325
------------
3,845,188
------------
Hospitals and Healthcare: 1.28%
*Foundation Health Corp. ................................ 20,700 657,225
Oxford Health Plans Inc. ................................ 56,200 3,291,212
*Tenet Healthcare Corp. ................................. 64,100 1,402,188
*United Healthcare Corp. ................................ 37,900 1,705,500
------------
7,056,125
------------
Household Products: 0.62%
Gillette Co. ............................................ 38,900 3,024,475
Newell Co. .............................................. 12,900 406,350
------------
3,430,825
------------
Insurance: 0.38%
Conseco Inc. ............................................ 14,700 937,125
UNUM Corp. .............................................. 16,000 1,156,000
------------
2,093,125
------------
Investment Banking and Brokerage: 0.16%
Merrill Lynch & Co., Inc................................. 7,500 611,250
Paine Webber Group Inc. ................................. 9,800 275,625
------------
886,875
------------
Metals and Mining: 0.19%
Allegheny Teledyne Inc. ................................. 25,892 595,516
Reynolds Metals Inc. .................................... 7,500 422,813
------------
1,018,329
------------
Natural Gas: 0.11%
Sonat Inc. .............................................. 12,300 633,450
------------
Office Automation and Equipment: 0.07%
Xerox Corp............................................... 7,500 394,688
------------
Oil and Gas: 1.03%
Enron Corp. ............................................. 36,100 1,556,812
Exxon Corp. ............................................. 10,800 1,058,400
Mobil Corp. ............................................. 3,400 415,650
Union Texas Petroleum Holdings Inc....................... 25,900 579,512
USX-Marathon Group....................................... 85,400 2,038,925
------------
5,649,299
------------
</TABLE>
27
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
Pharmaceuticals: 2.50%
Merck & Co. .......................................... 78,900 $ 6,252,825
Pfizer Inc. .......................................... 52,000 4,309,500
Pharmacia & Upjohn Inc. .............................. 30,000 1,188,750
Schering-Plough Inc. ................................. 30,800 1,994,300
------------
13,745,375
------------
Printing and Publishing: 0.07%
Knight-Ridder Inc. ................................... 10,000 382,500
------------
Railroads: 0.19%
Conrail Inc. ......................................... 10,400 1,036,100
------------
Retail Trade: 0.25%
Nike Inc., Class B.................................... 12,700 758,825
Sears, Roebuck and Co. ............................... 4,500 207,562
Wal-Mart Stores Co. .................................. 18,200 416,325
------------
1,382,712
------------
Savings and Loan Associations: 0.09%
Ahmanson (H.F.) & Co. ................................ 7,700 250,250
Great Western Financial Corp. ........................ 9,000 261,000
------------
511,250
------------
Telecommunications: 1.77%
Bay Networks Inc. .................................... 68,100 1,421,587
MCI Communications Corp. ............................. 198,500 6,488,469
*Tele-Communications Corp., Class A................... 54,300 709,294
*Worldcom Inc. ....................................... 43,400 1,131,112
------------
9,750,462
------------
Tobacco: 0.39%
Philip Morris Companies............................... 16,900 1,903,363
UST Inc. ............................................. 7,000 226,625
------------
2,129,988
------------
Utilities: 1.17%
Centerior Energy Corp. ............................... 42,900 461,175
CMS Energy Corp. ..................................... 32,700 1,099,537
Northeast Utilities Corp. ............................ 37,000 490,250
Public Service Co. of Colorado........................ 22,200 863,025
Texas Utilities Co. .................................. 77,700 3,166,275
UtiliCorp United Inc. ................................ 13,500 364,500
------------
6,444,762
------------
Total United States (Cost $103,354,794)......................... 118,943,729
------------
FOREIGN STOCKS: 24.79%
Australia: 2.20%
Banks: 0.40%
Australia & New Zealand Banking Group Ltd. ........... 85,500 538,516
National Australia Bank Ltd. ......................... 90,900 1,068,527
Westpac Banking Corp. ................................ 108,500 617,025
------------
2,224,068
------------
Building Materials and Products: 0.12%
CSR Ltd. ............................................. 54,000 188,715
Hardie (James) Industries Ltd. ....................... 104,000 327,106
Pioneer International Ltd. ........................... 50,000 148,923
------------
664,744
------------
Chemicals: 0.03%
ICI Australia Ltd. ................................... 16,500 178,886
------------
Conglomerates: 0.50%
Broken Hill Proprietary Ltd. ......................... 95,500 1,359,256
CRA Ltd. ............................................. 30,600 480,008
Pacific Dunlop Ltd. .................................. 182,000 462,574
Southcorp Holdings ................................... 132,000 419,367
------------
2,721,205
------------
Engineering: 0.02%
Australia National Industries Ltd. ................... 106,000 105,239
------------
Food and Beverages: 0.05%
Fosters Brewing Group................................. 136,000 $ 275,447
------------
Forest and Paper Products: 0.05%
Amcor Ltd. Co. ....................................... 46,500 298,787
------------
Insurance: 0.04%
QBE Insurance Group Ltd. ............................. 44,000 231,700
------------
Metals and Mining: 0.25%
Comalco Ltd. ......................................... 44,000 229,953
Normandy Mining Ltd. ................................. 386,000 533,453
WMC Ltd. ............................................. 93,000 585,755
------------
1,349,161
------------
Newspapers: 0.18%
News Corp. Ltd. ...................................... 190,300 1,003,614
------------
Oil and Gas: 0.13%
Australia Gas Light Co. .............................. 51,900 295,148
Woodside Petroleum Ltd. .............................. 54,000 394,157
------------
689,305
------------
Real Estate: 0.16%
Lend Lease Corp. ..................................... 21,200 410,852
Westfield Trust Ltd. ................................. 244,000 461,239
------------
872,091
------------
Retail Trade: 0.13%
Coles Myer Ltd. ...................................... 105,000 431,995
Woolworths Ltd. ...................................... 112,000 269,538
------------
701,533
------------
Tourism: 0.06%
Tabcorp Holdings Ltd. ................................ 69,000 328,821
------------
Transportation: 0.08%
Brambles Industries Ltd. ............................. 23,000 448,476
------------
Total Australia................................................. 12,093,077
------------
Denmark: 1.40%
Banks: 0.22%
Den Danske Bank....................................... 9,045 728,334
Unidanmark AS, Class A................................ 9,060 468,443
------------
1,196,777
------------
Conglomerates: 0.09%
Sophus Berendsen, Class B............................. 3,783 486,109
------------
Consumer Products and Services: 0.03%
ISS International Service Systems, Class B............ 5,377 141,286
------------
Food and Beverages: 0.24%
Carlsberg, Class A.................................... 10,425 703,376
Danisco............................................... 10,452 634,324
------------
1,337,700
------------
Hospital and Healthcare: 0.22%
Novo-Nordisk AS, Class B.............................. 6,600 1,241,925
------------
Machinery and Equipment: 0.04%
FLS Industries AS, Class B............................ 1,694 216,815
------------
Telecommunications: 0.23%
Tele Danmark AS, Class B.............................. 23,442 1,291,536
------------
Transportation: 0.33%
D/S 1912, Class B..................................... 71 1,823,473
------------
Total Denmark................................................... 7,735,621
------------
Finland : 2.26%
Banks: 0.18%
*Merita Ltd., Class A................................. 327,700 1,016,728
------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
Conglomerates: 0.08%
Metra OY, Class B..................................... 8,400 $ 470,209
------------
Electronics: 1.08%
Nokia AB, Class A..................................... 102,600 5,939,167
------------
Food and Beverages: 0.11%
Cultor OY 1........................................... 10,800 585,809
------------
Forest and Paper Products: 0.39%
*UPM-Kymmen OY........................................ 101,700 2,129,318
------------
Insurance: 0.11%
Sampo Insurance Co., Class A.......................... 7,800 614,319
------------
Machinery and Equipment: 0.05%
Kone Corp., Class B................................... 2,300 253,504
------------
Metals and Mining: 0.15%
Outokumpu OY, Class A................................. 49,200 837,967
------------
Wholesale Distributors: 0.11%
Kesko................................................. 42,000 591,407
------------
Total Finland................................................... 12,438,428
------------
France: 1.59%
Automobiles: 0.05%
Peugeot S.A. ......................................... 1,362 153,000
Renault Ord. ......................................... 6,328 135,720
------------
288,720
------------
Banks: 0.19%
Banque Nationale De Paris............................. 5,200 200,849
Cie Fin Paribas....................................... 3,593 242,517
Compagnie De Suez..................................... 4,522 191,884
Credit Commercial De France........................... 2,556 117,998
Societe Generale Paris................................ 2,526 272,583
------------
1,025,831
------------
Broadcasting: 0.03%
Canal Plus............................................ 714 157,393
------------
Building Materials and Products: 0.04%
LaFarge Coppee........................................ 3,107 186,047
------------
Chemicals: 0.11%
L'air Liquide Co. .................................... 2,040 317,846
Rhone Poulenc SA ..................................... 8,700 296,039
------------
613,885
------------
Conglomerates: 0.08%
AXA................................................... 4,112 261,017
Lyonnais Des Eaux- Dumez.............................. 1,861 172,865
Lyonnais Des Eaux- Dumez, New Shares.................. 78 7,245
------------
441,127
------------
Consumer Products and Services: 0.39%
Cie Generale Des Eaux................................. 3,202 396,036
Groupe Danone Co. .................................... 2,198 305,681
Loreal Co. ........................................... 1,705 640,842
Pinault-Printemps..................................... 800 316,692
*Promodes ............................................ 658 185,424
Sanofi SA............................................. 3,073 305,010
------------
2,149,685
------------
Electronics: 0.15%
Alcatel Alsthom....................................... 3,954 317,005
*Legrand Inc. ........................................ 798 135,693
Michelin Inc., Class B................................ 3,162 170,364
Michelin Inc., New Shares............................. 61 3,287
*Schneider SA......................................... 3,667 169,217
------------
795,566
------------
Food and Beverages: 0.12%
LVMH Moet Hennessy.................................... 2,395 $ 667,538
------------
Insurance: 0.03%
Compagnie UAP......................................... 7,291 181,618
------------
Oil and Gas: 0.11%
Societe Nationale Elf Aquitaine....................... 6,857 622,952
------------
Retail Trade: 0.18%
Carrefour............................................. 987 640,946
Cie De St. Gobain..................................... 2,399 338,710
------------
979,656
------------
Tourism: 0.02%
*Havas................................................ 1,695 118,679
------------
Utilities: 0.09%
Total SA, Class B..................................... 6,322 513,179
------------
Total France.................................................... 8,741,876
------------
Germany: 3.13%
Automobiles: 0.44%
Daimler-Benz AG....................................... 22,000 1,513,196
Volkswagen AG......................................... 2,200 913,628
------------
2,426,824
------------
Banks: 0.55%
*Bayerische Hypotheken-Und............................ 26,800 809,508
Deutsche Bank AG...................................... 26,200 1,222,354
Dresdner Bank AG...................................... 32,400 969,198
------------
3,001,060
------------
Chemicals: 0.74%
Bayer AG.............................................. 48,650 1,982,481
Hoechst AG............................................ 43,900 2,070,931
------------
4,053,412
------------
Conglomerates: 0.09%
Viag AG............................................... 1,300 509,503
------------
Consumer Products and Services: 0.05%
Karstadt AG........................................... 750 253,064
------------
Electronics: 0.27%
Siemens AG............................................ 32,100 1,510,114
------------
Insurance: 0.36%
Allianz AG Holding.................................... 1,100 1,998,561
------------
Machinery and Equipment: 0.36%
Mannesmann AG......................................... 4,550 1,969,264
------------
Telecommunications: 0.06%
Deutsche Telekom AG................................... 15,000 312,437
------------
Utilities: 0.21%
RWE AG................................................ 27,700 1,171,909
------------
Total Germany................................................... 17,206,148
------------
Hong Kong: 1.06%
Banks: 0.27%
HSBC Holdings Plc..................................... 68,800 1,472,063
------------
Broadcasting: 0.01%
Television Broadcast Ltd. ............................ 20,000 79,897
------------
Conglomerates: 0.22%
First Pacific Co., Ltd. .............................. 120,000 155,915
Guangdong Investment Co. ............................. 222,000 213,820
Hutchison Whampoa Ltd. .............................. 75,000 589,043
Swire Pacific Ltd., Class A........................... 28,500 271,736
------------
1,230,514
------------
</TABLE>
29
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
Newspapers: 0.02%
South China Morning Post.............................. 104,000 $ 86,050
------------
Real Estate: 0.42%
Amoy Properties Ltd. ................................. 131,000 188,836
Cheung Kong Holdings.................................. 69,000 613,284
Hysan Development Co. ................................ 44,000 175,204
New World Development Co. ............................ 61,000 412,056
Sun Hung Kai Properties............................... 55,000 673,724
Wharf Holdings........................................ 52,000 259,496
------------
2,322,600
------------
Telecommunications: 0.07%
Hong Kong Telecommunications.......................... 240,000 386,296
------------
Utilities: 0.05%
China Light & Power Co. .............................. 29,000 128,972
Hong Kong Electric Holdings........................... 38,500 127,919
------------
256,891
------------
Total Hong Kong................................................. 5,834,311
------------
Japan: 1.88%
Airlines: 0.02%
All Nippon Airways Co., Ltd. ......................... 13,000 97,889
------------
Apparel: 0.05%
Mitsukoshi Ltd. ...................................... 16,000 113,311
Nisshinbo Industries.................................. 22,000 170,966
------------
284,277
------------
Automobiles: 0.09%
Honda Motor Co. ...................................... 7,000 199,621
Suzuki Motor Co., Ltd. ............................... 7,000 63,927
Toyota Motor Corp. ................................... 7,000 200,827
------------
464,375
------------
Banks: 0.13%
Dai-ichi Kangyo Bank Ltd. ............................ 11,000 158,267
Fuji Bank Ltd. ....................................... 9,000 131,042
Mitsubishi Trust & Banking............................ 10,000 133,540
Mitsui Trust & Banking................................ 8,000 62,376
Sumitomo Bank......................................... 9,000 129,491
The Bank of Tokyo-Mitsubishi.......................... 6,000 111,140
------------
725,856
------------
Building Materials and Products: 0.06%
Kajima Corp. ......................................... 24,000 171,207
Toto Ltd. ............................................ 14,000 159,214
------------
330,421
------------
Chemicals: 0.16%
Asahi Denka Kogyo KK.................................. 18,000 132,748
Kuraray Co. .......................................... 14,000 129,060
Kyowa Hakko Kogyo..................................... 21,000 159,938
Nippon Chemical Industries............................ 14,000 120,617
Shin-Etsu Chemical Co. ............................... 13,000 236,323
Takeda Chemical Industries............................ 6,000 125,614
------------
904,300
------------
Electronics: 0.31%
Hitachi Ltd. ......................................... 14,000 130,266
*Matsushita Electric Industrial Co. .................. 4,000 65,133
NEC Corp. ............................................ 8,000 96,494
*Nippon Denso Corp. .................................. 10,000 240,372
Pioneer Electronics Corp. ............................ 9,000 171,362
*Sankyo Co., Ltd. .................................... 5,000 141,294
*Sharp Corp. ......................................... 11,000 156,371
Sony Corp. ........................................... 6,000 392,349
Sumitomo Electric Industries Inc. .................... 14,000 195,399
Yokogawa Electric Industries Inc. .................... 13,000 112,001
------------
1,701,041
------------
Entertainment: 0.06%
Noritake Co., Ltd. ................................... 16,000 $ 133,161
*Tokyo Dome Corp. .................................... 12,000 208,840
------------
342,001
------------
Finance: 0.08%
*Japan Securities Finance............................. 17,000 197,725
Nikko Securities Co. ................................. 17,000 126,544
*Nomura Securities Co., Ltd. ......................... 8,000 119,928
------------
444,197
------------
Food and Beverages: 0.10%
Ajinomoto Inc. ....................................... 15,000 152,494
Kirin Brewery Co., Ltd. .............................. 6,000 58,930
*Nisshin Flour Milling Corp. ......................... 15,000 155,079
Sapporo Breweries..................................... 15,000 124,063
Takara Shuzo.......................................... 8,000 56,173
------------
546,739
------------
Forest and Paper Products: 0.02%
Hokuetsu Paper Mills.................................. 22,000 127,182
------------
Homebuilders: 0.05%
*Daiwa House Industries Inc. ......................... 11,000 141,208
Shimizu Corp. ........................................ 19,000 141,596
------------
282,804
------------
Industrial Products: 0.08%
Asahi Glass Co., Ltd. ................................ 14,000 131,472
Bridgestone Corp. .................................... 9,000 170,587
Fujikura Ltd. ........................................ 17,000 135,918
------------
437,977
------------
Machinery and Equipment: 0.15%
Ebara Corp. .......................................... 17,000 221,160
Komatsu Ltd. ......................................... 13,000 106,401
*Mitsubishi Corp. .................................... 24,000 248,126
*Nippon Sharyo Ltd. .................................. 11,000 78,660
*Okuma Corp. ......................................... 24,000 191,057
------------
845,404
------------
Manufacturing: 0.13%
*NGK Insulators....................................... 21,000 199,018
Shinagawa Refractories................................ 11,000 143,103
*Toyo Seikan Kaisha................................... 9,000 216,335
*Yamaha Corp. ........................................ 9,000 152,753
------------
711,209
------------
Metals and Mining: 0.05%
*Chiyoda Corp. ....................................... 22,000 142,345
*Mitsubishi Steel Manufacturing....................... 15,000 64,745
*Sumitomo Metal Mining................................ 11,000 74,016
------------
281,106
------------
Pharmaceuticals: 0.06%
Dainippon Pharmaceutical Co., Ltd. ................... 23,000 194,193
Yamanouchi Pharmaceuticals............................ 6,000 123,029
------------
317,222
------------
Photographic Products: 0.10%
Canon Inc. ........................................... 7,000 154,390
Fuji Photo Film Ltd. ................................. 5,000 164,556
*Nikkon Corp. ........................................ 8,000 99,250
*Ricoh Corp., Ltd. ................................... 9,000 103,127
------------
521,323
------------
Printing and Publishing: 0.04%
Dai Nippon Printing Co., Ltd. ........................ 9,000 157,405
Toppan Printing Co., Ltd. ............................ 6,000 74,955
------------
232,360
------------
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
Railroads: 0.03%
*Keisei Electric Railway Co. ......................... 22,000 $ 152,580
------------
Real Estate: 0.01%
*Mitsui Fudosan Corp. ................................ 2,000 19,988
------------
Retail Trade: 0.02%
*Marui Co., Ltd. ..................................... 6,000 108,038
------------
Transportation: 0.04%
*Mitsubishi Warehouse & Transportation Corp. ......... 10,000 129,232
*Nippon Express Co., Ltd. ............................ 15,000 102,611
------------
231,843
------------
Utilities: 0.03%
Showa Shell Sekiyu.................................... 11,000 91,453
Tonen Corp. .......................................... 7,000 81,416
------------
172,869
------------
Wholesale Distributors: 0.01%
Sumitomo Corp. ....................................... 5,000 39,330
------------
Total Japan..................................................... 10,322,331
------------
New Zealand: 2.29%
Airlines: 0.12%
Air New Zealand Ltd., Class B......................... 252,000 683,701
------------
Broadcasting: 0.11%
Wilson & Horton Ltd. ................................. 74,000 601,262
------------
Building Materials and Products: 0.16%
Fletcher Challenge Building........................... 288,000 885,148
------------
Electrical Equipment: 0.11%
Fisher & Paykel Industries............................ 151,400 593,681
------------
Finance: 0.27%
Brierley Investments Ltd. ............................ 1,628,000 1,506,815
------------
Forest and Paper Products: 0.44%
Carter Holt Harvey.................................... 670,000 1,519,547
Fletcher Challenge Paper.............................. 430,000 884,088
------------
2,403,635
------------
Telecommunications: 0.61%
Telecom Corp. of New Zealand.......................... 657,000 3,351,482
------------
Tobacco: 0.10%
Lion Nathan Ltd. ..................................... 235,000 562,862
------------
Tourism: 0.08%
Sky City Ltd. ........................................ 83,000 452,134
------------
Utilities: 0.29%
Fletcher Challenge Energy............................. 550,000 1,593,239
------------
Total New Zealand............................................... 12,633,959
------------
Singapore: 1.60%
Airlines: 0.19%
Singapore Airlines Corp. ............................. 117,000 1,062,253
------------
Automobiles: 0.04%
Cycle & Carriage Corp. ............................... 20,000 244,492
------------
Banks: 0.53%
Development Bank Singapore............................ 63,000 851,218
Overseas Chinese Banking Corp. ....................... 90,000 1,119,516
United Overseas Bank Corp. ........................... 85,000 947,943
------------
2,918,677
------------
Conglomerates: 0.13%
Keppel Corp. ......................................... 77,000 600,006
Singapore Technologies Corp. ......................... 49,000 122,603
------------
722,609
------------
Electronics: 0.03%
*Creative Technology Ltd. ............................ 13,000 $ 135,686
------------
Food and Beverages: 0.06%
Fraser & Neave Corp. ................................. 30,000 308,832
------------
Metals and Mining: 0.03%
Straits Trading Co. .................................. 77,000 187,158
------------
Printing and Publishing: 0.11%
Singapore Press Holdings Co. ......................... 30,000 591,928
------------
Real Estate: 0.23%
City Development Corp. ............................... 75,000 675,570
DBS Land Corp. ....................................... 67,000 246,672
Parkway Holdings Ltd. ................................ 37,000 145,480
United Industrial Corp. .............................. 138,000 116,413
United Overseas Land Ltd. ............................ 60,000 91,363
------------
1,275,498
------------
Telecommunications: 0.25%
Singapore Telecommunications Ltd...................... 574,000 1,354,142
------------
Total Singapore................................................. 8,801,275
------------
Spain: 2.67%
Banks: 0.79%
*Argentaria SA........................................ 18,600 830,797
Banco Bilbao Vizcaya SA............................... 23,700 1,277,240
Banco Central Hispano................................. 18,800 482,014
Banco De Santander SA................................. 17,100 1,092,454
*Banco Espanol Credito................................ 85,100 657,509
------------
4,340,014
------------
Business Services: 0.07%
Autopistas Cesa Co. .................................. 28,400 390,821
------------
Energy: 0.22%
Repsol Petroleo SA.................................... 31,300 1,198,339
------------
Engineering: 0.04%
Dragados & Construcciones............................. 15,100 232,174
------------
Finance: 0.05%
Corporacion Financiera................................ 2,900 292,508
------------
Homebuilders: 0.05%
Fomento De Construcion................................ 2,600 241,860
------------
Insurance: 0.05%
Mapfre................................................ 4,200 255,407
------------
Retail Trade: 0.09%
*Centros Com. Pryca SA................................ 23,100 488,372
------------
Steel: 0.05%
Acerinox SA........................................... 2,000 288,449
------------
Telecommunications: 0.38%
Telefonica De Espana.................................. 90,800 2,104,647
------------
Tobacco: 0.03%
Tabacalera SA, Class A................................ 4,100 176,198
------------
Utilities: 0.85%
Empresa Nacionale de Electricidad..................... 27,000 1,917,970
General De Aguas D'Barcelona.......................... 6,800 282,299
Iberdrola I SA........................................ 130,300 1,843,182
Sevillana De Electricidad............................. 28,300 320,911
Union Electrica Fenosa................................ 30,000 321,737
------------
4,686,099
------------
Total Spain..................................................... 14,694,888
------------
</TABLE>
31
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- ----------------------------------------------------------------------------
<S> <C> <C>
Sweden: 2.55%
Automobiles: 0.22%
Volvo AB, Class A.................................... 18,000 $ 392,793
Volvo AB, Class B.................................... 35,600 784,678
------------
1,177,471
------------
Banks: 0.11%
Svenska Handelsbanken, Class A....................... 21,700 622,903
------------
Building Materials and Products: 0.16%
Scancem AB, Class A.................................. 8,400 307,556
Skanska AB, Class B.................................. 12,600 556,369
------------
863,925
------------
Business Services: 0.03%
Esselte AB, Class A.................................. 6,800 154,364
------------
Chemicals: 0.05%
AGA AB, Class A...................................... 18,400 277,562
------------
Conglomerates: 0.05%
Trelleborg AB, Class B............................... 20,500 271,711
------------
Consumer Products and Services: 0.17%
Hennes & Mauritz AB, Class B......................... 4,800 663,618
Securitas AB, Class B................................ 9,700 281,992
------------
945,610
------------
Electronics: 0.73%
Asea AB, Class B..................................... 4,500 508,785
Electrolux AB, Class B............................... 9,900 574,163
Ericsson LM, Class B................................. 94,500 2,920,244
------------
4,003,192
------------
Finance: 0.13%
Stadshypotek AB...................................... 27,000 739,452
------------
Forest and Paper Products: 0.11%
Svenska Cellulosa AB, Class B........................ 31,000 628,806
------------
Hospital and Healthcare: 0.60%
Astra AB, Class A.................................... 52,100 2,571,417
Astra AB, Class B.................................... 14,700 708,301
------------
3,279,718
------------
Industrial Products: 0.05%
Autoliv AB........................................... 6,600 289,015
------------
Insurance: 0.06%
Skandia Forsakrings AB............................... 11,900 336,364
------------
Machinery and Equipment: 0.08%
Atlas Copco AB, Class A.............................. 18,100 437,389
------------
Total Sweden................................................... 14,027,482
------------
United Kingdom: 2.16%
Banks: 0.38%
Abbey National Plc................................... 33,500 438,563
HSBC Holdings........................................ 26,200 570,315
HSBC Holdings, Class A............................... 17,500 391,118
National Westminster Bank Plc........................ 46,800 549,009
Royal Bank of Scotland............................... 12,772 123,163
------------
2,072,168
------------
Broadcasting: 0.07%
Reed International Corp. ............................ 21,800 410,929
------------
Building Materials and Products: 0.08%
Redland Corp. ....................................... 16,100 100,978
RMC Group Inc. ...................................... 8,500 145,097
Williams Holdings Co. ............................... 37,514 220,519
------------
466,594
------------
Chemicals: 0.07%
BOC Group............................................ 16,077 $ 240,322
Imperial Chemical Industries Inc. ................... 11,200 147,295
------------
387,617
------------
Conglomerates: 0.09%
Hanson Co. .......................................... 80,974 112,935
Siebe Plc............................................ 11,300 209,234
TI Group............................................. 17,900 178,280
------------
500,449
------------
Consumer Products and Services: 0.24%
BAA Plc.............................................. 13,400 111,561
Caradon Plc.......................................... 12,600 51,534
De La Rue Plc........................................ 4,600 45,067
Glaxo Holdings Plc................................... 40,600 658,659
Smithkline Beecham, Class A.......................... 21,211 293,836
Tomkins Corp. ....................................... 31,400 144,278
------------
1,304,935
------------
Finance: 0.01%
Mercury Asset Management............................. 3,600 76,608
------------
Food and Beverages: 0.38%
Allied Domecq Plc.................................... 24,500 191,396
BASS Plc............................................. 21,408 300,778
B.A.T. Industries Inc. .............................. 47,500 393,834
Cadbury Schweppes Inc. .............................. 86,200 726,507
Unilever Plc......................................... 15,700 380,577
United Biscuits Corp. ............................... 33,200 119,312
------------
2,112,404
------------
Insurance: 0.12%
Prudential Corp. .................................... 41,700 350,740
Royal & Sun Alliance Insurance Co. .................. 37,900 288,295
------------
639,035
------------
Oil and Gas: 0.26%
British Petroleum Plc................................ 61,600 738,440
Shell Transport & Trading............................ 40,000 692,392
------------
1,430,832
------------
Retail Trade: 0.24%
Boots Co. ........................................... 26,764 275,952
Great Universal Stores Inc. ......................... 15,800 165,476
Marks & Spencer Corp. ............................... 57,500 483,143
Sears Plc............................................ 52,700 85,676
Tesco Corp. ......................................... 47,600 288,768
------------
1,299,015
------------
Telecommunications: 0.16%
British Telecommunications Corp. .................... 94,100 635,277
Cable & Wireless Plc................................. 30,200 250,913
------------
886,190
------------
Tobacco: 0.01%
Imperial Tobacco Group Plc........................... 8,097 52,239
------------
Tourism: 0.03%
Ladbroke Group....................................... 18,800 74,318
Rank Group Plc....................................... 10,000 74,527
------------
148,845
------------
Utilities: 0.02%
National Power Corp. ................................ 13,500 112,972
------------
Total United Kingdom........................................... 11,900,832
------------
Total Foreign Stocks
(Cost $121,098,937)............................................ 136,430,228
------------
Total Common Stocks
(Cost $224,453,731)............................................ 255,373,957
------------
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
- ----------------------------------------------------------------------------
<S> <C> <C>
BONDS: 23.16%
UNITED STATES GOVERNMENT OBLIGATIONS: 13.03%
United States Treasury Bonds: 6.82%
10.75%, 5/15/2003.................... $ 7,000,000 $ 8,614,382
7.50%, 2/15/2005..................... 11,200,000 11,984,010
7.25%, 8/15/2022..................... 8,000,000 8,465,007
7.50%, 11/15/2024.................... 2,200,000 2,406,252
7.625%, 2/15/2025.................... 4,200,000 4,664,629
6.875%, 8/15/2025.................... 1,400,000 1,427,126
--------------
37,561,406
--------------
United States Treasury
Notes: 6.21%
6.25%, 8/31/2000..................... 28,600,000 28,716,201
6.50%, 5/15/2005..................... 5,400,000 5,440,505
--------------
34,156,706
--------------
Total United States Government Obligations
(Cost $70,993,032)........................................ 71,718,112
--------------
FOREIGN GOVERNMENT
OBLIGATIONS: 10.13%
Australian Commonwealth
Government Bonds: 1.51%
10.00%, 10/15/2007................... A$ 8,813,000 8,291,573
--------------
Deutschland Republic
Government Bonds: 1.11%
6.25%, 4/26/2006..................... DM 9,150,000 6,136,776
--------------
Italian Government Bonds: 2.73%
9.50%, 2/1/2006...................... Lira20,000,000,000 14,995,066
--------------
Spanish Government Bonds: 3.28%
8.80%, 4/30/2006..................... Pta 2,100,000,000 18,041,510
--------------
Swedish Government Bonds: 1.50%
6.50%, 10/25/2006.................... SKr 58,000,000 8,272,700
--------------
Total Foreign Government Obligations
(Cost $53,380,478 )....................................... 55,737,625
--------------
Total Bonds
(Cost $124,373,510)....................................... 127,455,737
--------------
UNITED STATES SHORT-TERM OBLIGATIONS:
9.60%
Federal Home Loan Mortgage Corp.,
Discount Notes: 1.81%
5.38%, 1/17/97....................... $ 10,000,000 9,974,594
--------------
Federal National Mortgage Assn.,
Discount Notes: 7.24%
5.52%, 1/14/97....................... 10,000,000 9,978,533
5.48%, 1/15/97....................... 10,000,000 9,977,167
5.51%, 1/24/97....................... 10,000,000 9,963,266
5.33%, 2/27/97....................... 10,000,000 9,916,783
--------------
39,835,749
--------------
United States
Treasury Bills: 0.55%
4.97%, 1/16/97....................... 1,000,000(a) 997,876
4.98%, 1/16/97....................... 1,000,000(a) 997,876
4.99%, 1/16/97....................... 1,000,000(a) 997,877
--------------
2,993,629
--------------
Total United States Short-Term Obligations
(Cost $52,809,025)........................................ 52,803,972
--------------
</TABLE>
<TABLE>
<CAPTION>
Principal
Amount
or Number Value
of Contracts (Note 2)
- ---------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES REPURCHASE
AGREEMENTS: 20.32%
With Morgan Stanley & Co., Inc. (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds
$55,020,243); collateralized by: $55,068,179 various
United States Government Agency Obligations, 7.00%-
11.50%, 2/1/98-5/1/2026 (Market value $56,846,953).. $55,000,000 $ 55,000,000
With Prudential Securities Inc., (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds
$56,826,908); collateralized by: $57,426,298 various
United States Government Agency Obligations, 6.069%-
7.50%, 9/1/2013-4/1/2035 (Market value $57,942,120). 56,806,000 56,806,000
------------
Total United States Repurchase Agreements
(Cost $111,806,000).............................................. 111,806,000
------------
Net Unrealized Depreciation on Foreign Forward Currency Contracts
(Note 5): (0.17)% (913,731)
------------
Unrealized Depreciation on Futures Contracts:
(0.04)%
Standard & Poor's 500 March 1997 Short Futures (b).. (25) (191,250)
------------
Total Investments
(Cost $513,442,266)................................. 99.29% 546,344,685
Other Assets........................................ 1.04 5,761,377
----------- ------------
Total Assets....................................... 100.33% 552,096,062
Total Liabilities (Note 6)......................... (0.33) (1,831,820)
----------- ------------
Net Assets (Note 7)................................. 100.00% $550,264,242
=========== ============
</TABLE>
33
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of December 31, 1996
(Concluded)
<TABLE>
<S> <C> <C> <C>
Class A Shares
Net asset value ("NAV")
and redemption price per
share
($114,837,385/9,008,602
shares)................... $12.75
======
Maximum public offering
price per share-NAV/(1-
Maximum sales charge)
($12.75/.945)............. $13.49
======
Class B Shares
Net asset value and
offering price per share
($6,339,140/491,478
shares)................... $12.90
======
Redemption price per
share..................... **
======
Class C Shares
Net asset value and
offering price per share
($426,194,230/33,408,244
shares)................... $12.76
======
Redemption price per
share..................... **
======
Class I Shares
Net asset value, offering
and redemption price per
share
($2,893,487/222,672
shares)................... $12.99
======
</TABLE>
- --------------------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held (Note 3b).
(a) Pledged as collateral for futures transactions.
(b) The market value represented by the short futures was $9,306,250
(representing 1.69 % of the Fund's net assets) with proceeds of $9,115,000.
For Federal income tax purposes, the tax basis of investments owned at
December 31, 1996 was $514,272,216 and net unrealized appreciation on
investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation...................................... $41,537,186
Gross unrealized depreciation...................................... (9,500,456)
-----------
Net unrealized appreciation........................................ $32,036,730
===========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
Industry Breakdown-- % of
Common Stock Value Net Assets
- -------------------------------------------------------------------------------
<S> <C> <C>
Aerospace.............................................. $ 1,857,200 0.34%
Airlines............................................... 2,215,543 0.40
Apparel................................................ 284,277 0.05
Automobiles............................................ 8,673,507 1.58
Banks.................................................. 28,849,832 5.24
Biotechnology.......................................... 331,525 0.06
Broadcasting........................................... 2,529,244 0.46
Building Materials and Products........................ 3,396,879 0.62
Business Services...................................... 545,185 0.10
Chemicals.............................................. 10,258,374 1.86
Computers and Software................................. 4,125,913 0.75
Conglomerates.......................................... 8,242,398 1.50
Construction Equipment................................. 311,638 0.06
Consumer Products and Services......................... 4,794,580 0.87
Containers............................................. 796,150 0.14
Electrical Equipment................................... 4,105,194 0.75
Electronics............................................ 24,453,942 4.44
Energy................................................. 1,198,339 0.22
Engineering............................................ 1,790,788 0.33
Entertainment.......................................... 2,487,001 0.45
Finance................................................ 11,425,992 2.08
Food and Beverages..................................... 12,430,794 2.26
Forest and Paper Products.............................. 9,432,916 1.71
Homebuilders........................................... 524,664 0.10
Hospital and Healthcare................................ 11,577,768 2.10
Household Products..................................... 3,430,825 0.62
Industrial Products.................................... 726,992 0.13
Insurance.............................................. 6,350,129 1.15
Investment Banking and Brokerage....................... 886,875 0.16
Machinery and Equipment................................ 3,722,376 0.68
Manufacturing.......................................... 711,209 0.13
Metals and Mining...................................... 3,673,721 0.67
Natural Gas............................................ 633,450 0.12
Newspapers............................................. 1,089,664 0.20
Office Automation and Equipment........................ 394,688 0.07
Oil and Gas............................................ 8,392,388 1.53
Pharmaceuticals........................................ 14,062,597 2.56
Photographic Products.................................. 521,323 0.09
Printing and Publishing................................ 1,206,788 0.22
Railroads.............................................. 1,188,680 0.22
Real Estate............................................ 4,490,177 0.82
Retail Trade........................................... 4,959,326 0.90
Savings and Loan Associations.......................... 511,250 0.09
Steel.................................................. 288,449 0.05
Telecommunications..................................... 19,437,192 3.53
Tobacco................................................ 2,921,287 0.53
Tourism................................................ 1,048,479 0.19
Transportation......................................... 2,503,792 0.46
Utilities.............................................. 14,951,920 2.72
Wholesale Distributors................................. 630,737 0.10
------------ -----
$255,373,957 46.41%
============ =====
</TABLE>
34
<PAGE>
ZWEIG GROWTH & INCOME FUND
Statement of Net Assets as of December 31, 1996
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 62.44%
Aerospace: 0.65%
McDonnell Douglas Corp. .................................. 200 $ 12,800
*Moog Inc., Class A....................................... 1,300 30,387
*Rohr Inc................................................. 900 20,363
----------
63,550
----------
Airlines: 1.11%
*Alaska Air Group Inc..................................... 1,000 21,000
*AMR Corp................................................. 300 26,438
British Airways Plc., ADR................................. 300 30,825
KLM Royal Dutch Airlines N.V., ADR........................ 1,100 30,662
----------
108,925
----------
Apparel: 0.35%
Kellwood Co............................................... 800 16,000
Oshkosh B'Gosh Inc., Class A.............................. 1,200 18,300
----------
34,300
----------
Automobiles: 1.15%
Chrysler Corp............................................. 1,300 42,900
Ford Motor Co. ........................................... 800 25,500
General Motors Corp....................................... 200 11,150
Honda Motor Co. Ltd., ADR................................. 400 22,650
Volvo AB, ADR............................................. 500 10,875
----------
113,075
----------
Automotive Parts and Equipment: 2.26%
Apogee Enterprises Inc.................................... 600 23,850
Arvin Industries Inc...................................... 1,200 29,700
Barnes Group Inc.......................................... 200 12,000
Carlisle Companies Inc.................................... 100 6,050
Excel Industries Inc...................................... 1,300 21,613
Simpson Industries Inc.................................... 2,600 28,316
Smith (A.O.) Corp......................................... 700 20,912
SPX Corp.................................................. 500 19,375
Standard Products Co. .................................... 600 15,300
Walbro Corp. ............................................. 700 12,775
Wynn's International Inc. ................................ 1,000 31,625
----------
221,516
----------
Banks: 0.53%
City National Corp........................................ 2,400 51,900
----------
Building Materials and Products: 2.10%
Ameron International, Inc................................. 600 30,975
Florida Rock Industries Inc............................... 300 9,825
*Lamson & Sessions Co..................................... 3,000 21,750
Medusa Corp............................................... 800 27,500
Republic Group Inc........................................ 2,900 45,312
Southdown Inc............................................. 1,300 40,462
Vulcan Materials Co....................................... 500 30,438
----------
206,262
----------
Chemicals: 0.96%
duPont (E.I.) De Nemours & Co............................. 300 28,313
Morton International Inc.................................. 300 12,225
PPG Industries Inc........................................ 200 11,225
Quaker Chemical Corp...................................... 600 9,825
Rohm & Haas Co............................................ 400 32,650
----------
94,238
----------
Commercial Services: 0.06%
*CDI Corp................................................. 200 5,675
----------
Computer Components and Software: 1.20%
*Cadence Design Systems Inc............................... 300 11,925
*Compaq Computer Corp..................................... 300 22,275
*Dell Computer Corp....................................... 700 37,188
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
*Storage Technology Corp.................................. 700 $ 33,338
*Sun Microsystems Inc..................................... 500 12,844
-----------
117,570
-----------
Conglomerates: 0.85%
Crane Co. ................................................ 750 21,750
Grand Metropolitian, ADS.................................. 700 22,137
Kaman Corp, Class A....................................... 900 11,700
Loews Corp................................................ 300 28,275
-----------
83,862
-----------
Construction Equipment: 1.02%
Caterpillar Inc. ......................................... 300 22,575
Deere & Co................................................ 300 12,188
JLG Industries Inc........................................ 1,700 27,200
Lindsay Manufacturing Co. ................................ 400 18,700
Raymond Corp. ............................................ 1,100 19,112
-----------
99,775
-----------
Containers and Packaging: 0.14%
*Owens-Illinois Inc....................................... 600 13,650
-----------
Electrical Products: 0.41%
*American Power Conversion Inc............................ 1,200 32,700
Raychem Corp.............................................. 100 8,012
-----------
40,712
-----------
Electronics: 0.43%
Cubic Corp................................................ 400 9,250
Logicon Inc. ............................................. 300 10,950
*SCI Systems Inc. ........................................ 500 22,312
-----------
42,512
-----------
Engineering: 0.22%
Butler Manufacturing Co................................... 300 12,150
*Jacobs Engineering Group Inc............................. 400 9,450
-----------
21,600
-----------
Entertainment: 0.26%
*King World Productions Inc............................... 700 25,813
-----------
Finance: 0.63%
Equitable Companies Inc................................... 1,000 24,625
Finova Group Inc. ........................................ 200 12,850
Money Store Inc........................................... 900 24,863
-----------
62,338
-----------
Fluid Controls: 0.45%
Duriron Co Inc............................................ 1,000 27,125
Graco Inc................................................. 700 17,150
-----------
44,275
-----------
Food and Beverages: 1.21%
Coors (Adolph) Co., Class B............................... 700 13,300
Fleming Companies Inc..................................... 1,500 25,875
*Morningstar Group Inc. .................................. 1,700 33,362
Nash Finch Co............................................. 1,500 31,875
Supervalu Inc............................................. 500 14,187
-----------
118,599
-----------
Forest and Paper Products: 0.84%
Mosinee Paper Corp........................................ 1,500 53,250
Pope & Talbot Inc. ....................................... 1,100 17,463
Rayonier Inc.............................................. 300 11,512
-----------
82,225
-----------
Healthcare Facilities and Products: 0.35%
ICN Pharmaceuticals Inc................................... 1,100 21,587
*Rotech Medical Corp...................................... 600 12,600
-----------
34,187
-----------
</TABLE>
35
<PAGE>
ZWEIG GROWTH & INCOME FUND
Statement of Net Assets as of December 31, 1996
(Continued)
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Homebuilding and Land Development: 1.20%
*Champion Enterprises Inc.................................. 1,700 $ 33,150
Fleetwood Enterprises Inc. ................................ 500 13,750
Kaufman & Broad Home Corp.................................. 1,500 19,313
Lennar Corp................................................ 600 16,350
Oakwood Homes Corp......................................... 1,100 25,162
Ryland Group Inc........................................... 700 9,625
----------
117,350
----------
Hotels and Resorts: 0.29%
Hilton Hotels Corp......................................... 900 23,513
Royal Caribbean Cruises Ltd................................ 200 4,675
----------
28,188
----------
Household Furnishings and Products: 0.36%
*Helen Of Troy Corp., Ltd.................................. 600 13,200
Toro Co.................................................... 600 21,900
----------
35,100
----------
Industrial Products, Services and Machinery: 1.68%
Ampco-Pittsburgh Corp...................................... 1,400 16,800
Applied Power Inc., Class A................................ 500 19,813
Commercial Intertech Co.................................... 2,000 27,250
Furon Co. ................................................. 500 10,625
Harnischfeger Industries Inc. ............................. 700 33,687
Ingersoll-Rand Co.......................................... 200 8,900
Kysor Industrial Corp...................................... 900 29,362
Pittway Corp., Class A..................................... 300 16,050
Scotsman Industries Inc.................................... 100 2,363
----------
164,850
----------
Insurance: 2.81%
CIGNA Corp. ............................................... 200 27,325
*CNA Financial Corp. ...................................... 300 32,100
Equitable of Iowa Companies Inc............................ 300 13,762
Fremont General Corp....................................... 400 12,400
NAC Re Corp................................................ 300 10,162
Orion Capital Corp......................................... 400 24,450
Pioneer Financial Services Inc............................. 600 15,000
Progressive Corp, Ohio..................................... 200 13,475
SunAmerica Inc............................................. 1,700 75,437
USLife Corp. .............................................. 800 26,600
Washington National Corp. ................................. 900 24,750
----------
275,461
----------
Investment Banking and Brokerage: 1.68%
Bear, Stearns & Co., Inc. ................................. 1,700 47,388
Edwards, (A.G.) & Sons, Inc. .............................. 800 26,900
Paine Webber Group......................................... 500 14,062
Quick & Reilly Group Inc................................... 700 20,913
Salomon Inc................................................ 900 42,412
Schwab (Charles) Corp...................................... 400 12,800
----------
164,475
----------
Manufacturing: 1.39%
Ametek Inc................................................. 1,100 24,475
*Global Industrial Technologies Inc........................ 1,500 33,187
Olin Corp.................................................. 400 15,050
Quixote Corp............................................... 800 7,700
Trinity Industries Inc. ................................... 700 26,250
United Industrial Corp..................................... 1,600 9,400
Valmont Industries Inc..................................... 500 20,625
----------
136,687
----------
Marine Transportation: 0.44%
APL Ltd.................................................... 600 14,175
Sea Containers Ltd. Class A................................ 700 10,937
Tidewater Inc.............................................. 400 18,100
----------
43,212
----------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Medical Technology: 1.13%
*Advanced Technology Lab Inc. ............................. 1,500 $ 46,500
*Bio-Radiology Labs Inc. Class A........................... 700 21,000
Life Technologies Inc...................................... 500 12,500
U.S. Surgical Corp......................................... 500 19,688
West Co. Inc............................................... 400 11,300
----------
110,988
----------
Metal Fabrication: 2.34%
Amcast Industrial Corp..................................... 800 19,800
Commercial Metals Co....................................... 900 27,113
Intermet Corp. ............................................ 2,100 33,862
Kaydon Corp................................................ 500 23,562
Oregon Metallurgical Corp. ................................ 1,400 45,150
*Park-Ohio Industries Inc.................................. 800 10,300
SPS Technologies Inc....................................... 300 19,275
Timken Co.................................................. 1,100 50,463
----------
229,525
----------
Metals and Mining: 0.15%
Brush Wellman Inc.......................................... 900 14,738
----------
Newspapers: 0.57%
Media General Inc., Class A................................ 1,100 33,275
Pulitzer Publishing Co..................................... 500 23,187
----------
56,462
----------
Office Automation and Equipment: 0.09%
Hunt Manufacturing Co...................................... 300 5,437
Shelby Williams Industries Inc. ........................... 300 3,675
----------
9,112
----------
Oil and Gas: 4.18%
*BJ Services Co............................................ 300 15,300
British Petroleum Plc., ADR................................ 100 14,138
Elf Aquitaine, ADR ........................................ 700 31,675
*Global Marine Inc......................................... 3,100 63,937
Helmerich & Payne, Inc..................................... 700 36,487
Holly Corp................................................. 200 5,350
Kerr-McGee Corp............................................ 200 14,400
*Nabors Industries Inc..................................... 600 11,550
Occidental Petroleum Corp.................................. 400 9,350
Pennzoil Co................................................ 300 16,950
Phillips Petroleum Co...................................... 300 13,275
*Santa Fe Energy Resources Inc............................. 2,700 37,463
*Tesoro Petroleum Corp. ................................... 1,800 25,200
Texaco Inc. ............................................... 200 19,625
Union Texas Petroleum Holdings Inc. ....................... 1,200 26,850
Unocal Corp................................................ 400 16,250
USX-Marathon Group Inc..................................... 1,400 33,425
*Varco International Inc................................... 800 18,500
----------
409,725
----------
Precision Instruments: 1.43%
*Coherent Inc. ............................................ 600 25,350
Dynatech Corp. ............................................ 600 26,550
*Esterline Technologies Co................................. 900 23,513
Fluke Corp................................................. 600 26,775
Instron Corp. ............................................. 100 1,275
Measurex Corp. ............................................ 600 14,400
MTS Systems Corp. ......................................... 1,100 22,000
----------
139,863
----------
Printing and Forms: 1.27%
Bowne & Co Inc............................................. 1,800 44,325
*Gibson Greetings Inc...................................... 3,700 72,613
Graphic Industries Inc. ................................... 800 8,100
----------
125,038
----------
Publishing: 0.11%
Meredith Corp.............................................. 200 10,550
----------
</TABLE>
36
<PAGE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Railroads: 0.09%
CSX Corp.................................................... 200 $ 8,450
---------
Recreational Products: 1.16%
Brunswick Corp.............................................. 1,200 28,800
Callaway Golf Co............................................ 600 17,250
Coachmen Industries Inc..................................... 2,200 62,425
Huffy Corp.................................................. 400 5,750
---------
114,225
---------
Rental and Leasing: 0.88%
Comdisco Inc................................................ 600 19,050
GATX Corp................................................... 500 24,250
PHH Corp.................................................... 1,000 43,000
---------
86,300
---------
Restaurants: 1.24%
Applebee's International Inc................................ 400 11,000
CKE Restaurants Inc......................................... 2,100 75,600
*NPC International Inc. .................................... 1,500 12,375
Piccadilly Cafeterias Inc................................... 1,000 9,250
Ruby Tuesday Inc............................................ 700 12,950
---------
121,175
---------
Retail Trade: 3.34%
Claires Stores Inc.......................................... 1,300 16,900
*Comp USA Inc. ............................................. 1,200 24,750
Dayton Hudson Corp.......................................... 600 23,550
*Fabri-Centers of America Inc., Class A .................... 400 6,450
Food Lion Inc., Class B..................................... 1,700 17,213
Great Atlantic & Pacific Tea Co............................. 800 25,500
Haverty Furniture Co........................................ 2,100 23,888
*Kmart Corp. ............................................... 2,200 22,825
Mercantile Stores Inc. ..................................... 400 19,750
Neiman-Marcus Group Inc..................................... 200 5,100
Pier 1 Imports Inc.......................................... 500 8,812
*Safeway Inc................................................ 500 21,375
Shopko Stores Inc........................................... 2,200 33,000
*Smith's Food & Drug Centers Inc., Class B.................. 300 9,300
*Venture Stores Inc......................................... 6,100 18,300
*Vons Companies Inc......................................... 400 23,950
Wolohan Lumber Co........................................... 1,300 16,250
*Woolworth Corp............................................. 500 10,938
---------
327,851
---------
Savings and Loan Associations: 0.65%
*California Federal Bank Corp. ............................. 1,300 31,850
*Dime Bancorp Inc........................................... 1,000 14,750
TCF Financial Corp.......................................... 400 17,400
---------
64,000
---------
Steel: 1.55%
British Steel Plc, ADS...................................... 1,800 49,500
Cleveland Cliffs Inc........................................ 1,000 45,375
Oregon Steel Mills Inc...................................... 1,900 31,825
Quanex Corp................................................. 200 5,475
Texas Industries Inc. ...................................... 400 20,250
---------
152,425
---------
Telecommunications: 1.64%
BCE Inc..................................................... 300 14,325
British Telecommunications Plc, ADR......................... 200 13,725
Century Telephone Enterprise Inc. .......................... 800 24,700
Cincinnati Bell Inc. ....................................... 200 12,325
Telefonica de Espana S.A., ADS.............................. 500 34,625
Telefonos de Mexico S.A., ADS............................... 900 29,700
*U.S.Long Distance Corp..................................... 2,300 18,400
*Worldcom Inc............................................... 500 13,031
---------
160,831
---------
</TABLE>
<TABLE>
<CAPTION>
Number Value
of Shares (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Textiles: 0.52%
Culp Inc................................................... 900 $ 13,725
Guilford Mills Inc......................................... 600 15,975
Springs Industries Inc., Class A........................... 500 21,500
----------
51,200
----------
Tobacco: 0.42%
RJR Nabisco Holdings Corp.................................. 1,200 40,800
----------
Trucking: 0.21%
Yellow Corp................................................ 1,400 20,125
----------
Utilities: 11.02%
Allegheny Power Systems Inc................................ 500 15,188
Baltimore Gas & Electric Co................................ 700 18,725
Boston Edison Co........................................... 1,000 26,875
California Water Service Co. .............................. 200 8,400
Centerior Energy Corp...................................... 2,600 27,950
Central Hudson Gas & Electric Co........................... 1,000 31,375
Central Maine Power Co..................................... 3,700 43,012
Central Vermont Public Service Co. ........................ 900 10,800
CMS Energy Corp............................................ 400 13,450
Commonwealth Energy Systems Corp........................... 1,900 44,650
Connecticut Energy Corp.................................... 100 2,125
Eastern Enterprises Inc.................................... 400 14,150
Edison International Inc................................... 1,300 25,837
Energen Corp............................................... 500 15,125
Enova Corp. ............................................... 1,100 25,025
Entergy Corp............................................... 1,700 47,175
GPU Inc.................................................... 900 30,263
Green Mountain Power Corp. ................................ 700 16,712
Illinova Corp. ............................................ 700 19,250
Interstate Power Co. ...................................... 600 17,400
IPALCO Enterprises Inc..................................... 300 8,175
MidAmerican Energy Holdings Co. ........................... 2,000 31,750
Montana Power Co........................................... 900 19,237
National Fuel & Gas Co. ................................... 300 12,375
New York State Electric & Gas Co. ......................... 1,200 25,950
*Niagara Mohawk Power Co................................... 1,600 15,800
NorAm Energy Corp. ........................................ 2,700 41,513
Northwest Natural Gas Co. ................................. 800 19,200
NUI Corp................................................... 1,500 33,938
Oklahoma Gas & Electric Co................................. 300 12,525
Orange & Rockland Utilities Co............................. 500 17,937
Pacificorp................................................. 900 18,450
Peoples Energy Corp........................................ 200 6,775
Pinnacle West Capital Corp. ............................... 1,800 57,150
Portland General Corp...................................... 900 37,800
Providence Energy Corp..................................... 400 7,000
Public Services Enterprise Group........................... 400 10,900
Sierra Pacific Resources Inc............................... 900 25,875
SIGCORP, Inc............................................... 200 6,925
Southwestern Energy Co. ................................... 700 10,588
TNP Enterprises Inc. ...................................... 2,100 57,487
United Illuminating Co. ................................... 1,500 47,062
UtiliCorp United Inc. ..................................... 800 21,600
Washington Water Power Co.................................. 900 16,763
Westcoast Energy Inc....................................... 2,000 33,500
Western Resources Inc...................................... 300 9,263
WPL Holdings Inc........................................... 800 22,500
----------
1,081,525
----------
Wholesale Distributors: 1.42%
Bearings Inc............................................... 500 13,938
*Handleman Co.............................................. 1,900 16,150
Hughes Supply Inc. ........................................ 1,300 56,063
*Rexel Inc. ............................................... 2,600 41,275
*United Stationers Inc. ................................... 600 11,700
----------
139,126
----------
Total Common Stocks
(Cost $6,082,236).................................................... 6,125,916
----------
</TABLE>
37
<PAGE>
ZWEIG GROWTH & INCOME FUND
Statement of Net Assets as of December 31, 1996
(Concluded)
<TABLE>
<CAPTION>
Principal
Amount
or Number Value
of Contracts (Note 2)
- --------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS: 15.99%
Federal Home Loan Mortgage Corp., Discount Notes:
15.28%
6.50%, 1/2/97...................................... $1,500,000 $1,499,458
----------
United States Treasury Bills: 0.71%
4.80%, 3/6/97...................................... 40,000(a) 39,654
4.84%, 3/6/97...................................... 30,000(a) 29,741
----------
69,395
----------
Total Short-Term Obligations
(Cost $1,569,128)................................................ 1,568,853
----------
REPURCHASE AGREEMENTS: 17.23%
With Morgan Stanley & Co., Inc., (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds $1,691,622);
collateralized by: $1,689,635 Federal Home Loan
Mortgage Corporation, 8.00%-8.25%, 9/1/2007-5/1/2008
(Market value $1,745,480)........................... 1,691,000 1,691,000
----------
Total Repurchase Agreements
(Cost $1,691,000)................................................ 1,691,000
----------
Unrealized Appreciation on Futures
Contracts: 0.10%
Standard & Poor's 500
March 1997 Short futures (b)........................ (1) 9,608
----------
Total Investments
(Cost $9,342,364)................................... 95.76% 9,395,377
Other Assets........................................ 4.48 439,577
---------- ----------
Total Assets....................................... 100.24% 9,834,954
Total Liabilities (Note 6)......................... (0.24) (23,486)
---------- ----------
Net Assets (Note 7)................................. 100.00% $9,811,468
========== ==========
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
<S> <C>
Class A Shares
Net asset value ("NAV") and redemption price per share
($2,507,960/220,527 shares)............................................. $11.37
======
Maximum public offering price per share-NAV/
(1-maximum sales charge) ($11.37/.945).................................. $12.03
======
Class B Shares
Net asset value and offering price per share
($2,694,175/236,876 shares)............................................. $11.37
======
Redemption price per share.............................................. **
======
Class C Shares
Net asset value and offering price per share
($4,508,651/396,319 shares)............................................. $11.38
======
Redemption price per share.............................................. **
======
Class I Shares
Net asset value, offering and redemption price per share
($100,682/8,856 shares)................................................. $11.37
======
</TABLE>
- -------------------------------------------------------------------------------
*Non-income producing security.
**Varies by length of time shares are held. (Note 3b)
(a)Pledged as collateral for futures transactions.
(b) The market value represented by the short futures was $372,250
(representing 3.79% of the Fund's net assets) with proceeds of $381,858.
For Federal income tax purposes, the tax basis of investments owned at
December 31, 1996 was $9,342,364 and net unrealized appreciation on
investments consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation........................................ $ 175,355
Gross unrealized depreciation........................................ (122,342)
---------
Net unrealized appreciation.......................................... $ 53,013
=========
</TABLE>
38
<PAGE>
ZWEIG GOVERNMENT FUND
Statement of Net Assets as of December 31, 1996
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT &
AGENCY OBLIGATIONS: 82.76%
Over One Year: 70.49%
Federal Home Loan Mortgage Corp.,
Modified Mtge. Pass-Through
Securities: 0.77%
10.50%, 1/1/2001...................................... $ 26,050 $ 27,696
10.50%, 6/1/2011...................................... 109,543 121,045
11.50%, 10/1/2015..................................... 91,358 103,433
12.00%, 11/1/2015..................................... 108,633 123,977
-----------
376,151
-----------
Federal National Mortgage Assn.,
Modified Mtge. Pass-Through
Securities: 0.09%
12.50%, 10/1/2014..................................... 38,386 44,179
-----------
Federal National Mortgage Assn.: 4.32%
Deb., 8.25%, 12/18/2000............................... 950,000 1,014,275
Notes, 6.95%, 9/10/2002............................... 1,100,000 1,090,839
-----------
2,105,114
-----------
Government National Mortgage Assn., Modified Mtge.
Pass-Through
Securities: 0.28%
12.50%, 11/20/2013.................................... 47,492 54,542
12.00%, 9/15/2015..................................... 52,965 60,910
8.00%, 8/15/2022...................................... 21,726 22,188
-----------
137,640
-----------
Private Export Funding Corp.: 2.16%
7.90%, 3/31/2000...................................... 1,000,000 1,049,886
-----------
United States Treasury Bonds: 27.22%
10.75%, 2/15/2003..................................... 1,000,000 1,224,376
10.75%, 5/15/2003..................................... 2,000,000 2,461,252
12.00%, 8/15/2013..................................... 1,025,000 1,466,711
7.25%, 8/15/2022...................................... 2,000,000 2,116,252
7.625%, 11/15/2022.................................... 1,145,000 1,263,795
7.625%, 2/15/2025..................................... 3,700,000 4,109,316
6.875%, 8/15/2025..................................... 600,000 611,625
-----------
13,253,327
-----------
United States Treasury Notes: 35.65%
6.25%, 8/31/2000...................................... 15,000,000 15,060,945
6.375%, 8/15/2002..................................... 1,200,000 1,208,251
7.25%, 5/15/2004...................................... 1,036,000 1,090,714
-----------
17,359,910
-----------
Total Over One Year
(Cost $34,141,542)................................................. 34,326,207
-----------
Less Than One Year: 12.27%
Federal National Mortgage Association., Discount Notes:
12.27%
5.37%, 1/28/97........................................ 3,000,000 2,987,470
5.32%, 2/4/97......................................... 3,000,000 2,984,483
-----------
Total Less Than One Year
(Cost $5,972,844).................................................. 5,971,953
-----------
Total United States Government & Agency Obligations
(Cost $40,114,386)................................................. 40,298,160
-----------
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
- ------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS: 16.25%
With Morgan Stanley & Co., Inc., (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds $3,912,439);
collateralized by: $3,908,442 Federal Home Loan
Mortgage Corporation, 8.00%, 5/1/2026 (Market value
$4,026,104)............................................ $3,911,000 $ 3,911,000
With Prudential Securities Inc., (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds $4,001,472);
collateralized by: $3,893,592 Federal Home Loan
Mortgage Corporation, 7.652%, 3/1/2024 (Market value
$4,080,001)............................................ 4,000,000 4,000,000
-----------
Total Repurchase Agreements
(Cost $7,911,000)................................................. 7,911,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(Cost $48,025,386)........................................ 99.01% 48,209,160
Other Assets............................................... 1.51 736,100
------ -----------
Total Assets.............................................. 100.52% 48,945,260
Total Liabilities (Note 6)................................ (0.52) (253,215)
------ -----------
Net Assets (Note 7)........................................ 100.00% $48,692,045
====== ===========
</TABLE>
<TABLE>
<S> <C>
Weighted Average Duration............................................. 4.1 years
=========
</TABLE>
<TABLE>
<S> <C>
Class A Shares
Net asset value ("NAV") and redemption price per share
($33,848,405/3,448,857 shares)........................................... $9.81
=====
</TABLE>
<TABLE>
<S> <C>
Maximum public offering price per share- NAV/(1-maximum sales charge )
($9.81/.9525)........................................................... $10.30
======
</TABLE>
<TABLE>
<S> <C>
Class B Shares
Net asset value and offering price per share
($513,263/52,046 shares).................................................. $9.86
=====
Redemption price per share................................................ *
=====
Class C Shares
Net asset value and offering price per share
($14,330,377/1,460,269 shares)............................................ $9.81
=====
Redemption price per share................................................ *
=====
</TABLE>
- --------------------------------------------------------------------------------
*Varies by length of time shares are held.(Note 3b)
For Federal income tax purposes, the tax basis of investments owned at
December 31, 1996 was $48,042,823 and net unrealized appreciation on
investments consisted of :
<TABLE>
<S> <C>
Gross unrealized appreciation........................................ $ 470,904
Gross unrealized depreciation........................................ (304,567)
---------
Net unrealized appreciation.......................................... $ 166,337
=========
</TABLE>
39
<PAGE>
ZWEIG CASH FUND
Statement of Net Assets as of December 31, 1996
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
- -----------------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCY
OBLIGATIONS: 85.61%
Federal Farm Credit Bank, Discount Notes: 21.81%
5.22%, 1/10/97....................................... $3,000,000 $ 2,996,085
5.21%, 2/21/97....................................... 1,000,000 992,619
5.22%, 3/6/97........................................ 3,000,000 2,972,160
5.21%, 3/7/97........................................ 3,000,000 2,971,779
5.29%, 3/27/97....................................... 2,000,000 1,975,019
-----------
11,907,662
-----------
Federal Home Loan Bank: 9.15%
4.40%, 1/21/97....................................... 5,000,000 4,997,039
-----------
Federal Home Loan Bank,
Discount Note: 5.47%
5.38%, 2/6/97........................................ 3,000,000 2,983,860
-----------
Federal Home Loan Mortgage Corp.,
Discount Notes: 14.58%
5.25%, 1/14/97....................................... 2,000,000 1,996,208
5.48%, 1/17/97....................................... 2,000,000 1,995,129
5.21%, 2/19/97....................................... 3,000,000 2,978,726
5.35%, 3/21/97....................................... 1,000,000 988,260
-----------
7,958,323
-----------
Federal National Mortgage Assn.,
Discount Notes: 34.60%
5.26%, 1/7/97........................................ 3,000,000 2,997,370
5.23%, 1/17/97....................................... 3,000,000 2,993,027
5.51%, 1/24/97....................................... 3,000,000 2,989,439
5.21%, 1/27/97....................................... 3,000,000 2,988,712
5.22%, 3/10/97....................................... 2,000,000 1,980,280
5.24%, 3/12/97....................................... 2,000,000 1,979,622
5.25%, 3/21/97....................................... 3,000,000 2,965,437
-----------
18,893,887
-----------
Total United States Government Agency Obligations
(Cost $46,740,771)............................................... 46,740,771
-----------
</TABLE>
See notes to financial statements.
<TABLE>
<CAPTION>
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS: 14.74%
With Morgan Stanley & Co., Inc. (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds $4,001,472);
collateralized by: $3,861,395 Federal National Mortgage
Association, 9.00%, 12/1/2017 (Market value
$4,141,347)............................................ $4,000,000 $ 4,000,000
With Prudential Securities, Inc. (dated 12/31/96),
6.625%, due 1/2/97 (Repurchase proceeds $4,051,491);
collateralized by: $3,942,262 Federal Home Loan
Mortgage Corporation, 7.652%, 3/1/2024 (Market value
$4,131,000)............................................ 4,050,000 4,050,000
-----------
Total Repurchase Agreements
(Cost $8,050,000)................................................. 8,050,000
-----------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(Cost $54,790,771)......................................... 100.35% 54,790,771
Other Assets............................................... 0.20 111,663
------ -----------
Total Assets.............................................. 100.55% 54,902,434
Total Liabilities (Note 6)................................ (0.55) (302,203)
------ -----------
Net Assets (Note 7)........................................ 100.00% $54,600,231
====== ===========
</TABLE>
<TABLE>
<S> <C>
Net asset value, offering and redemption
price per share (3,360,127 Class A Shares,
32,951 Class B Shares, 4,535,326 Class C Shares,
1,400,782 Class I Shares and 45,271,045
Class M Shares).......................................................... $1.00
=====
Weighted average days to maturity........................................ 35
=====
</TABLE>
40
<PAGE>
ZWEIG SERIES TRUST
Statement of Operations for the Year Ended December 31, 1996
(in thousands)
<TABLE>
<CAPTION>
Zweig Zweig Zweig Zweig Growth Zweig Zweig
Strategy Appreciation Managed & Income Government Cash
Fund Fund Assets Fund*** Fund Fund
-------- ------------ ------- ------------ ---------- ------
<S> <C> <C> <C> <C> <C> <C>
Investment Income:
Income:
Dividends*............ $ 27,406 $ 8,936 $ 7,767 $ 7 $ -- $ --
Interest.............. 4,429 4,068 18,333** 13 3,445 3,499
- ------------------------------------------------------------------------------------------
Total Income........ 31,835 13,004 26,100 20 3,445 3,499
- ------------------------------------------------------------------------------------------
Expenses: (Note 2)
Advisory fees (Note
3)................... 9,070 4,876 6,109 5 322 325
Distribution fees,
Class A (Note 3)..... 1,757 820 388 1 111 11
Distribution fees,
Class B (Note 3)..... 178 33 29 2 2 1
Distribution fees,
Class C (Note 3)..... 6,057 2,106 4,782 3 125 12
Distribution fees,
Class M (Note 3)..... -- -- -- -- -- 29
Transfer agent fees... 1,389 679 693 -- 83 21
Amortization of organ-
ization expenses..... -- 114 156 1 -- --
Custodian fees........ 154 117 435 4 19 21
Insurance............. 69 28 34 -- 3 3
Portfolio accounting
fees................. 233 169 196 1 39 8
Professional fees..... 240 121 147 -- 14 15
Registration fees..... 105 59 66 9 53 52
Reports to sharehold-
ers.................. 504 217 236 -- 21 17
Trustees' fees........ 28 14 16 1 5 5
Miscellaneous......... 132 55 69 -- 7 7
- ------------------------------------------------------------------------------------------
Total expenses...... 19,916 9,408 13,356 27 804 527
Less: Expenses reim-
bursed by investment
adviser (Note 3) -- -- -- (15) (117) (247)
- ------------------------------------------------------------------------------------------
Net expenses........ 19,916 9,408 13,356 12 687 280
- ------------------------------------------------------------------------------------------
Net investment income... 11,919 3,596 12,744 8 2,758 3,219
- ------------------------------------------------------------------------------------------
Net Realized and
Unrealized Gains
(Losses) on Investments
and Foreign Currency:
Net realized gains
(losses):
Security transactions. 131,156 71,368 23,513 1 (1,290) --
Futures transactions.. (50,297) (12,270) 203 (6) -- --
Currency transactions. -- -- 7,471 -- -- --
- ------------------------------------------------------------------------------------------
Net realized gains
(losses)............. 80,859 59,098 31,187 (5) (1,290) --
- ------------------------------------------------------------------------------------------
Increase (decrease) in
unrealized appreciation
of investments and for-
eign currency.......... 48,334 5,819 6,798 53 (2,075) --
- ------------------------------------------------------------------------------------------
Net realized and
unrealized gains (loss-
es) on investments and
foreign currency....... 129,193 64,917 37,985 48 (3,365) 0
- ------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations........ $141,112 $68,513 $50,729 $56 $ (607) $3,219
- ------------------------------------------------------------------------------------------
* Net of taxes with-
held on foreign div-
idends.............. $ 484 $ 188 $ 570 -- -- --
-------------------------------------------------
-------------------------------------------------
</TABLE>
** Net of taxes withheld on foreign interest of $56.
*** Commenced operations on November 26, 1996.
See notes to financial statements.
41
<PAGE>
ZWEIG SERIES TRUST
Statement of Changes in Net Assets for the Years Ended December 31, 1996 and
1995
(in thousands)
<TABLE>
<CAPTION>
Zweig
Growth &
Zweig Zweig Zweig Income Zweig Zweig
Strategy Fund Appreciation Fund Managed Assets Fund Government Fund Cash Fund
---------------------- ------------------ ------------------ -------- ---------------- ------------------
1996 1995 1996 1995 1996 1995 1996 (1) 1996 1995 1996 1995
---------- ---------- -------- -------- -------- -------- -------- ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Increase
(Decrease) in
Net Assets:
Operations:
Net investment
income......... $ 11,919 $ 14,369 $ 3,596 $ 3,389 $ 12,744 $ 21,943 $ 8 $ 2,758 $ 3,329 $ 3,219 $ 3,705
Net realized
gains (losses)
on investments. 80,859 88,379 59,098 17,192 31,187 49,667 (5) (1,290) 1,665 -- (106)
Unrealized
appreciation
(depreciation)
of investments
and foreign
currency....... 48,334 81,614 5,819 68,145 6,798 30,325 53 (2,075) 3,304 -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets
resulting from
operations..... 141,112 184,362 68,513 88,726 50,729 101,935 56 (607) 8,298 3,219 3,599
- ----------------------------------------------------------------------------------------------------------------------------------
Additions to
capital paid-in
(Note 3a)....... -- -- -- -- -- -- -- -- -- -- 106
- ----------------------------------------------------------------------------------------------------------------------------------
Dividends to
shareholders
from net
investment
income:
Class A......... (7,570) (13,218) (2,921) (5,429) (4,262) (8,831) (3) (1,935) (2,404) (169) (199)
Class B......... (126) -- (16) -- (74) -- (2) (9) -- (1) --
Class C......... (4,367) (6,393) (775) (1,215) (12,584) (26,808) (3) (784) (1,014) (188) (250)
Class I......... (3) -- (5) -- (9) -- -- -- -- (8) --
Class M......... -- -- -- -- -- -- -- -- -- (2,853) (3,256)
Distributions to
shareholders
from net
realized gains
on investments:
Class A......... (42,767) (20,001) (34,739) (8,373) (4,252) (4,348) -- -- -- -- --
Class B......... (2,917) -- (984) -- (218) -- -- -- -- -- --
Class C......... (45,605) (18,613) (27,713) (6,032) (15,742) (16,160) -- -- -- -- --
Class I......... (65) -- (271) -- (105) -- -- -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------------------
Total dividends
and
distributions
to
shareholders... (103,420) (58,225) (67,424) (21,049) (37,246) (56,147) (8) (2,728) (3,418) (3,219) (3,705)
- ----------------------------------------------------------------------------------------------------------------------------------
Capital share
transactions
(Note 8):
Net proceeds
from sale of
shares......... 286,753 329,295 71,443 62,439 60,565 88,397 10,511 3,408 8,989 314,285 284,593
Net proceeds
from merger
(Note 4)....... -- -- -- 57,544 -- -- -- -- -- -- --
Net asset value
of shares
issued to
shareholders in
reinvestment of
dividends and
distributions.. 94,207 45,624 60,141 17,132 31,988 40,755 6 1,609 1,943 1,962 2,031
- ----------------------------------------------------------------------------------------------------------------------------------
380,960 374,919 131,584 137,115 92,553 129,152 10,517 5,017 10,932 316,247 286,624
Cost of shares
redeemed....... (261,535) (144,286) (95,266) (89,795) (224,314) (231,550) (754) (14,976) (24,048) (318,281) (317,482)
- ----------------------------------------------------------------------------------------------------------------------------------
Increase
(decrease) in
net assets
derived from
capital share
transactions... 119,425 230,633 36,318 47,320 (131,761) (102,398) 9,763 (9,959) (13,116) (2,034) (30,858)
- ----------------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease) in
net assets..... 157,117 356,770 37,407 114,997 (118,278) (56,610) 9,811 (13,294) (8,236) (2,034) (30,858)
NET ASSETS:
Beginning of
year........... 1,088,586 731,816 467,794 352,797 668,542 725,152 0 61,986 70,222 56,634 87,492
- ----------------------------------------------------------------------------------------------------------------------------------
End of year..... $1,245,703 $1,088,586 $505,201 $467,794 $550,264 $668,542 $9,811 $48,692 $61,986 $ 54,600 $ 56,634
- ----------------------------------------------------------------------------------------------------------------------------------
Undistributed
(overdistributed)
net investment
income.......... $ (172) $ (25) $ (335) $ (214) $ (2,677) $ 1,508 $ -- $ 30 $ -- $ -- $ --
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commenced operations on November 26, 1996.
See notes to financial statements.
42
<PAGE>
NOTES TO FINANCIAL STATEMENTS
Note 1--Organization
Zweig Series Trust (the "Trust"), reorganized as a Delaware business trust
from a Massachusetts business trust effective April 30, 1996, is registered
under the Investment Company Act of 1940 (the "Act") as a diversified, open-
end management investment company. The Trust presently consists of six
separate investment portfolios ("Series"): Zweig Strategy Fund, Zweig
Appreciation Fund, Zweig Managed Assets, Zweig Growth & Income Fund, Zweig
Government Fund (formerly Government Securities Series) and Zweig Cash Fund.
Each Series has distinct investment objectives and policies. A shareholder's
interest is limited to the Series in which he or she owns shares. Each Series
offers Class A, Class B, Class C and Class I Shares and Zweig Cash Fund also
offers Class M Shares. Class I Shares in Zweig Government Fund are currently
inactive. All classes of shares have identical rights to earnings, assets and
voting privileges, except that each class has its own distribution and/or
service plan, and has exclusive voting rights with respect to matters
affecting only that class. The offering of Class B Shares and Class I Shares
commenced on April 8, 1996 and November 1, 1996, respectively. The offering of
Zweig Growth & Income Fund commenced on November 26, 1996.
Note 2--Significant Accounting Policies
(a) General: Securities transactions are recorded on trade date. Realized
gains and losses on sales of investments are determined on the identified cost
basis for both financial reporting and income tax purposes. Distributions to
shareholders and dividend income are recorded on the ex-dividend date.
Interest income is recorded on the accrual basis. Direct expenses are charged
to each class or Series and general expenses are allocated in proportion to
net assets. Organization expenses are amortized on a straight-line basis over
the first 60 months of operations of a Series. The preparation of financial
statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could
differ from those estimates.
(b) Portfolio Valuation: Stocks, futures and options are valued at the
closing prices reported on recognized securities exchanges or if no sale was
reported, and for unlisted securities, at the mean between the last-reported
bid and asked prices. Bonds and other fixed-income securities are valued at
prices obtained from an established bond-pricing service. Forward foreign
currency contracts are valued using forward currency exchange rates supplied
by a quotation service. Securities for which market quotations are not readily
available (of which there were none at December 31, 1996) are valued at fair
value as determined by the Board of Trustees. Short-term obligations having a
remaining maturity of 60 days or less are valued at amortized cost (which
approximates market value). Zweig Cash Fund values all short-term investments
using the amortized cost method pursuant to Rule 2a-7 under the Act.
(c) Futures Contracts and Option Accounting Principles: Initial margin
deposits on futures contracts are recorded as assets. The value of such
contracts are "marked to market" daily and changes are recognized as
unrealized gains or losses. Variation margin payments are recognized as assets
or liabilities, depending upon whether unrealized gains or losses are
incurred. When a futures contract is closed, the Series realizes a gain or
loss equal to the difference between the proceeds from (or cost of) the
closing transaction and its basis in the contract. When a Series writes an
option, an amount equal to the premium received is recorded as an asset and a
corresponding liability. The liability is subsequently "marked to market"
daily. When an option written is exercised, the proceeds of sale of the
underlying security are increased by the premium originally received and the
Series realizes a gain or loss. When an option written expires or the Series
enters into a closing purchase transaction, the liability is extinguished and
the Series realizes a gain or loss.
(d) Foreign Currency Translation: Assets and liabilities denominated in a
foreign currency are translated into U.S. dollars using exchange rates on the
valuation date. Purchases and sales of securities, expense payments and income
receipts are translated into U.S. dollars using the exchange rate on the
transaction date. The Trust does not segregate that portion of the results of
operations resulting from changes in foreign exchange rates from the portion
resulting from changes in market prices of securities held; both are included
in net realized and unrealized gains or losses.
(e) Off-Balance-Sheet Risk, Repurchase Agreements and Derivatives: Foreign
securities and forward foreign currency contracts may involve risks relating
to the level of governmental supervision and regulation of foreign markets,
and the possibility of political or economic instability. With respect to
forward foreign currency contracts and repurchase agreements, losses may arise
if the counterparty does not perform under the contract or agreement. The
Trust's investment manager monitors the requirement that the market value of
the securities used to collateralize a repurchase agreement exceed the dollar
amount of the counterparty's obligation to repurchase. A Series' use of
futures contracts, forward foreign currency contracts and options involves, to
varying degrees, elements of market risk in excess of the amount recognized in
the statement of net assets. These derivative financial instruments
("derivatives") are used to adjust the risk and return characteristics of a
Series' portfolio. Derivatives are not used for the purpose of leverage. The
objective in buying or selling a derivative instrument is to increase or
decrease a Series' exposure to changing security prices, interest rates or
currency exchange rates. If the Manager misjudges market conditions or employs
a strategy that does not correlate well with the Series' other investments,
use of these derivatives could result in a loss, regardless of the Manager's
original intent to reduce risk.
(f) Federal Income Taxes: It is the policy of each Series to continue to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies and to
43
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
distribute all of its net taxable income, including any net realized gain on
investments, to its shareholders; therefore, no provision for federal income
tax is required.
(g) Dividends and Distributions to Shareholders: Dividends and distributions
are declared separately for each class of shares of a Series. Dividends from
net investment income are declared and paid monthly by Zweig Government Fund,
semi-annually by Zweig Strategy Fund, Zweig Managed Assets and Zweig Growth &
Income Fund, and at least annually by Zweig Appreciation Fund. Any net
realized capital gain distributions are declared and paid annually, except
that amounts attributable to net short-term capital gains may be included with
dividends from net investment income. Zweig Cash Fund declares daily dividends
of all net investment income, plus or minus realized gains or losses, and pays
dividends monthly. The character of distributions made during the year from
net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to differences in the
recognition of income and expense items for financial statement and federal
income tax purposes.
At October 31, 1996 (each Series' tax fiscal year-end), Zweig Government Fund
had capital loss carryforwards, including acquired loss carryforwards, of
$13,506,640, $2,631,923, $249,274, $7,227,155 and $1,010,121 expiring October
31, 1997, 1998, 1999, 2001 and 2004 respectively, available to offset any net
capital gains subsequently realized, subject to certain limitations. Capital
loss carryforwards of Zweig Government Fund in the amount of $30,556,466 which
expired in 1996 have been charged to capital paid-in.
Note 3--Investment Advisory Fees and Other Transactions with Affiliates
(a) Investment Manager: The Trust's investments are managed by Zweig/Glaser
Advisers (the "Manager"). The Manager's investment advisory fee is based on
the average daily net assets of each Series at the following annual rates:
Zweig Strategy Fund--0.75%; Zweig Appreciation Fund--1.00%; Zweig Managed
Assets--1.00%; Zweig Growth & Income Fund--0.75%; Zweig Government Fund--
0.60%; and Zweig Cash Fund--0.50%. The fees are accrued daily and paid
monthly. Investment advisory fees for the year ended December 31, 1996
aggregated $20,708,384.
The Manager has voluntarily undertaken to limit the expenses of Zweig Cash
Fund (exclusive of taxes, interest, brokerage commissions, the distribution
fees described below and extraordinary expenses) until April 30, 1997 to 0.35%
of its average daily net assets. During the year ended December 31, 1996, the
Manager's reimbursements to Zweig Cash Fund aggregated $247,232. The Manager
reserves the right to discontinue this expense limitation at any time after
April 30, 1997. In November 1995, the Manager contributed $106,250 to Zweig
Cash Fund to offset losses incurred by the Fund on sales of certain variable
rate reset notes.
From May 1, 1996 until December 31, 1996, the Manager voluntarily limited the
expenses of Zweig Government Fund (exclusive of taxes, interest, brokerage
commissions, the distribution fees described below and extraordinary expenses)
to 0.75% of its average daily net assets. The Manager's reimbursements to
Zweig Government Fund during the period aggregated $117,002.
Effective November 26, 1996 (commencement of operations), the Manager has
voluntarily undertaken to limit the expenses of Zweig Growth & Income Fund
(exclusive of taxes, interest, brokerage commissions, the distribution fees
described below and extraordinary expenses) until April 30, 1997 to 1.00% of
its average daily net assets. During the period November 26, 1996 to December
31, 1996, the Manager's reimbursements to Zweig Growth & Income Fund
aggregated $14,949. The Manager reserves the right to discontinue this expense
limitation at any time after April 30, 1997.
(b) Principal Distributor: Zweig Securities Corp. (the "Distributor") serves
as principal distributor of shares of the Trust. The Trust's Class A Shares
(excluding Zweig Cash Fund shares) are sold with an initial sales charge,
Class B Shares and Class C Shares are sold without an initial sales charge,
but are subject to a contingent deferred sales charge, and Class I Shares and
Class M Shares are sold without a sales charge. During the year ended December
31, 1996, the Distributor's share of the initial and contingent deferred sales
charges was $555,090 and $492,911, respectively.
Pursuant to a Rule 12b-1 plan of distribution, the Trust pays the Distributor
a combined service and distribution fee equal to an annual rate of 0.30% of
average daily net assets for each Series of Class A Shares, 1.00% for each
Series of Class B Shares, and 1.00% for Class C Shares of Zweig Strategy Fund,
Zweig Appreciation Fund, Zweig Managed Assets and Zweig Growth & Income Fund,
0.75% for Class C Shares of Zweig Government Fund and 0.30% for Class C Shares
of Zweig Cash Fund, respectively. A separate Rule 12b-1 distribution sharing
plan for Class M Shares of Zweig Cash Fund provides that service organizations
for investors in Class M Shares are paid equally by the Class M Shares and the
Manager. Class I Shares, which are available for purchase by tax-exempt
retirement plans of the Distributor and its affiliates and certain
institutional investors, do not have a Rule 12b-1 Plan.
During the year ended December 31, 1996, the Trust paid Zweig Securities
Corp. brokerage commissions of $633,637 in connection with portfolio
transactions effected by it.
One Trustee and all of the officers of the Trust are also officers of the
Manager and/or the Distributor.
44
<PAGE>
Note 4--Merger
On April 4, 1995, Zweig Appreciation Fund ("Appreciation") acquired all of
the net assets of Zweig Series Trust Priority Selection List Series
("Priority") pursuant to a plan of reorganization approved by the shareholders
of Priority on March 28, 1995. The acquisition was accomplished by a tax-free
exchange of the Appreciation shares for all the net assets of Priority and has
been accounted for as a pooling of interest without restatement for financial
reporting purposes. The selected financial information and shares outstanding
for the funds immediately before and after the acquisition were as follows:
<TABLE>
<CAPTION>
Net Asset
Value Shares Exchange Shares
Net Assets Per Share Outstanding* Ratio Outstanding**
------------ --------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Priority Class A........ $ 41,711,769 $12.47 3,344,959 X .90442368 = 3,025,260
Appreciation Class A.... 207,349,503 13.79 15,038,440 15,038,440
------------ ---------- ----------
Combined................ $249,061,272 $13.79 18,383,399 18,063,700
============ ========== ==========
Priority Class C........ $ 15,831,830 $12.44 1,272,171 X .90935221 = 1,156,852
Appreciation Class C.... 139,760,128 13.69 10,212,445 10,212,445
------------ ---------- ----------
Combined................ $155,591,958 $13.69 11,484,616 11,369,297
============ ========== ==========
</TABLE>
The net assets of Priority included unrealized appreciation on investments of
$1,745,945 and accumulated net realized losses of $1,314,728.
- ------
* Before acquisition.
** After acquisition.
Note 5--Purchases and Sales of Securities and Forward Currency Contracts
During the year ended December 31, 1996, purchase and sale transactions of
the Trust, excluding repurchase transactions, short-term obligations held to
maturity, and futures contracts, were:
<TABLE>
<CAPTION>
Zweig Zweig Zweig Zweig Growth Zweig
Strategy Appreciation Managed & Income Government
Fund Fund Assets Fund Fund
-------------- ------------ -------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Securities purchases.... $2,065,737,847 $362,060,906 $ 917,014,287 $6,149,510 $67,492,484
Securities sales........ 2,015,122,084 414,405,807 1,172,353,205 68,343 75,515,343
</TABLE>
Forward currency contracts outstanding at December 31, 1996, for Zweig
Managed Assets were:
<TABLE>
<CAPTION>
Unrealized
Settlement Appreciation
Contracts to Deliver In Exchange For Date Value (Depreciation)
-------------------- --------------- ---------- ------------- --------------
<S> <C> <C> <C> <C> <C>
Sales
Australian Dollar..... A$ 25,200,000 $ 19,973,016 01/21/97 $ (20,017,911) $ (44,895)
Danish Krone.......... DKr 44,300,000 7,470,111 01/21/97 (7,526,052) (55,941)
Finnish Markka........ Fim 92,300,000 19,938,220 01/21/97 (20,081,904) (143,684)
French Franc.......... ff 148,300,000 28,338,031 01/21/97 (28,596,841) (258,810)
German Deutsche Mark.. DM 35,000,000 22,583,559 01/21/97 (22,754,456) (170,897)
Italian Lira.......... Lira 22,500,000,000 14,677,104 01/21/97 (14,797,080) (119,976)
Japanese Yen.......... (Yen) 1,250,000,000 10,991,427 01/21/97 (10,815,104) 176,323
Spanish Peseta........ Pta 4,100,000,000 31,352,277 01/21/97 (31,565,318) (213,041)
Swedish Krona......... Skr 150,000,000 21,968,687 01/21/97 (22,045,298) (76,611)
U.K. Pound Sterling... (Pounds) 6,750,000 11,213,100 01/21/97 (11,551,705) (338,605)
-------------- ------------- -----------
$ 188,505,532 $(189,751,669) $(1,246,137)
============== ============= ===========
Purchases
Finnish Markka........ $ 8,189,655 Fim 38,000,000 01/21/97 $ 8,267,739 $ 78,084
French Franc.......... 20,571,429 ff 108,000,000 01/21/97 20,825,751 254,322
------------------- ------------- -----------
$ 28,761,084 $ 29,093,490 $ 332,406
=================== ============= ===========
</TABLE>
45
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Continued)
Note 6--Liabilities--December 31, 1996 (in thousands)
<TABLE>
<CAPTION>
Zweig Zweig Zweig Growth Zweig Zweig
Appreciation Managed & Income Government Cash
Fund Assets Fund Fund Fund
------------ ------- ------------ ---------- -----
<S> <C> <C> <C> <C> <C>
Advisory fee................ $ 27 $ 30 $-- $ 2 $ 1
Distribution and service
fees....................... 259 398 5 18 7
Capital shares redeemed..... 740 1,049 -- 195 4
Dividends................... -- -- -- -- 270
Securities purchased........ -- 9 -- -- --
Accrued expenses............ 278 346 18 38 20
------------------------------------------
Total Liabilities......... $1,304 $1,832 $ 23 $253 $302
------------------------------------------
------------------------------------------
</TABLE>
Note 7--Net Assets--December 31, 1996 (in thousands)
<TABLE>
<CAPTION>
Zweig Zweig Zweig Growth Zweig Zweig
Appreciation Managed & Income Government Cash
Fund Assets Fund Fund Fund
------------ -------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Net Assets consist of:
Capital paid-in....... $406,483 $508,795 $9,763 $ 69,930 $54,600
Undistributed net in-
vestment income
(loss)............... (335) (2,677) -- 30 --
Accumulated net real-
ized gain (loss)..... 3,979 11,278 (5) (21,452) --
Net unrealized appre-
ciation of invest-
ments................ 95,074 32,868 53 184 --
------------------------------------------
$505,201 $550,264 $9,811 $ 48,692 $54,600
------------------------------------------
------------------------------------------
</TABLE>
46
<PAGE>
Note 8--Capital Shares
The Trust has unlimited authorized shares of beneficial interest ($0.10 par
value), divided into Series and issued in classes (see note 1). Capital share
transactions for the years ended December 31, 1996 and 1995 are set forth
below.
<TABLE>
<CAPTION>
Class A Class B Class C Class I
----------------------- --------- ------------------------ ---------
1996 1995 1996(2) 1996 1995 1996(3)
---------- ----------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Zweig Strategy Fund
Sold................... 5,310,565 7,877,181 2,674,142 11,001,933 15,068,149 55,405
Issued in reinvestment
of dividends and
distributions......... 3,017,222 1,847,851 187,019 3,044,500 1,322,287 4,509
Redeemed............... (8,068,624) (5,617,447) (52,868) (9,152,149) (4,816,427) --
- -------------------------------------------------------------------------------------------------
Net increase......... 259,163 4,107,585 2,808,293 4,894,284 11,574,009 59,914
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Zweig Appreciation Fund
Sold................... 1,366,791 1,345,078 478,983 2,349,161 2,780,621 119,892
Issued in reinvestment
of dividends and
distributions......... 2,080,245 755,791 60,465 1,645,320 352,626 17,411
Issued in merger of
Priority Selection
List Series (Note 4).. -- 3,025,260 -- -- 1,156,852 --
Redeemed............... (3,223,564) (3,757,691) (11,560) (2,475,552) (2,393,312) --
- -------------------------------------------------------------------------------------------------
Net increase......... 223,472 1,368,438 527,888 1,518,929 1,896,787 137,303
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Zweig Managed Assets
Sold................... 935,264 1,612,962 488,970 3,156,176 5,502,115 213,961
Issued in reinvestment
of dividends and
distributions......... 582,313 874,559 19,353 1,875,546 2,398,874 8,711
Redeemed............... (3,815,288) (4,317,073) (16,845) (13,854,155) (14,332,281) --
- -------------------------------------------------------------------------------------------------
Net increase
(decrease).......... (2,297,711) (1,829,552) 491,478 (8,822,433) (6,431,292) 222,672
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Zweig Growth & Income
Fund(4)
Sold................... 222,285 -- 239,579 458,447 -- 8,843
Issued in reinvestment
of dividends and
distributions......... 265 -- 112 177 -- 13
Redeemed............... (2,023) -- (2,815) (62,305) -- --
- -------------------------------------------------------------------------------------------------
Net increase......... 220,527 -- 236,876 396,319 -- 8,856
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Zweig Government Fund
Sold................... 72,327 224,049 60,506 211,764 676,987 --
Issued in reinvestment
of dividends.......... 113,204 136,077 559 49,766 60,147 --
Redeemed............... (799,865) (1,242,528) (9,019) (706,323) (1,181,786) --
- -------------------------------------------------------------------------------------------------
Net increase
(decrease).......... (614,334) (882,402) 52,046 (444,793) (444,652) --
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
Zweig Cash Fund(1)
Sold................... 3,251,313 13,510,433 267,603 6,804,176 10,482,656 1,497,941
Issued in reinvestment
of dividends.......... 139,547 157,598 1,135 156,899 211,361 2,841
Redeemed............... (3,691,361) (14,310,228) (235,787) (6,884,138) (11,275,296) (100,000)
- -------------------------------------------------------------------------------------------------
Net increase
(decrease).......... (300,501) (642,197) 32,951 76,937 (581,279) 1,400,782
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
(1) For the years ended December 31, 1996 and 1995, respectively, shares of
Zweig Cash Fund Class M sold were 302,464,048 and 260,599,750; shares
issued in reinvestment of dividends were 1,661,513 and 1,661,722; and
shares redeemed were 307,369,088 and 291,896,255 for a net decrease of
(3,243,527) and (29,634,783) shares, respectively.
(2) Class B Shares commenced operations on April 8, 1996.
(3) Class I Shares commenced operations on November 1, 1996.
(4) Zweig Growth & Income Fund commenced operations on November 26, 1996.
47
<PAGE>
FINANCIAL HIGHLIGHTS
Selected Data for each share of capital stock outstanding throughout the years
indicated
<TABLE>
<CAPTION>
Net
Net Realized Distributions
Asset and Dividends from Net Total Net Asset
Value Net Unrealized Total from from Net Realized Dividends Value
Year Beginning Investment Gains Investment Investment Capital and End Total
Ended of Year Income (Losses) Operations Income Gains Distributions of Year Return***
----- --------- ---------- ---------- ---------- ---------- ------------- ------------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Zweig Strategy Fund Class A
1996 $14.51 $ 0.20 $ 1.68 $ 1.88 $(0.20) $(1.18) $(1.38) $15.01 13.00%
1995 12.36 0.27 2.80 3.07 (0.37) (0.55) (0.92) 14.51 25.12
1994 12.52 0.24 (0.10) 0.14 (0.20) (0.10) (0.30) 12.36 1.14
1993 13.60 0.13 1.72 1.85 (0.12) (2.81) (2.93) 12.52 14.97
1992 13.03 0.17 0.80 0.97 (0.21) (0.19) (0.40) 13.60 7.61
Zweig Strategy Fund Class B(4)
1996 15.12 0.06 1.13 1.19 (0.06) (1.18) (1.24) 15.07 7.88**
Zweig Strategy Fund Class C(1)
1996 14.56 0.11 1.66 1.77 (0.11) (1.18) (1.29) 15.04 12.19
1995 12.35 0.16 2.82 2.98 (0.22) (0.55) (0.77) 14.56 24.26
1994 12.51 0.15 (0.10) 0.05 (0.11) (0.10) (0.21) 12.35 0.41
1993 13.61 0.05 1.71 1.76 (0.05) (2.81) (2.86) 12.51 14.18
1992 12.89 0.08 0.69 0.77 (0.05) -- (0.05) 13.61 6.00
Zweig Strategy Fund Class I(5)
1996 15.42 0.04 0.83 0.87 (0.04) (1.18) (1.22) 15.07 5.68**
Zweig Appreciation Fund Class A
1996 15.91 0.17 2.25 2.42 (0.17) (2.26) (2.43) 15.90 15.39
1995 13.54 0.16 3.05 3.21 (0.33) (0.51) (0.84) 15.91 24.00
1994 14.33 0.16 (0.43) (0.27) (0.06) (0.46) (0.52) 13.54 (1.83)
1993 13.10 0.07 1.83 1.90 (0.06) (0.61) (0.67) 14.33 14.65
1992 12.03 0.06 1.07 1.13 (0.03) (0.03) (0.06) 13.10 9.52
Zweig Appreciation Fund Class B(4)
1996 16.34 0.03 1.74 1.77 (0.03) (2.26) (2.29) 15.82 11.01**
Zweig Appreciation Fund Class C(1)
1996 15.83 0.06 2.22 2.28 (0.06) (2.26) (2.32) 15.79 14.54
1995 13.36 0.06 3.03 3.09 (0.11) (0.51) (0.62) 15.83 23.20
1994 14.19 0.06 (0.43) (0.37) -- (0.46) (0.46) 13.36 (2.55)
1993 13.01 (0.01) 1.80 1.79 -- (0.61) (0.61) 14.19 13.84
1992 12.33 (0.02) 0.70 0.68 -- -- -- 13.01 5.52
Zweig Appreciation Fund Class I(5)
1996 17.28 0.04 1.02 1.06 (0.04) (2.26) (2.30) 16.04 6.30**
Zweig Managed Assets Class A(2)
1996 12.48 0.35 0.86 1.21 (0.45) (0.49) (0.94) 12.75 9.80
1995 11.76 0.47 1.40 1.87 (0.75) (0.40) (1.15) 12.48 16.26
1994 12.38 0.33 (0.69) (0.36) (0.26) -- (0.26) 11.76 (2.93)
1993 11.34 0.22 1.13 1.35 (0.14) (0.17) (0.31) 12.38 11.98
Zweig Managed Assets Class B(4)
1996 12.43 0.13 1.00 1.13 (0.17) (0.49) (0.66) 12.90 9.11**
Zweig Managed Assets Class C(2)
1996 12.49 0.27 0.85 1.12 (0.36) (0.49) (0.85) 12.76 9.03
1995 11.73 0.38 1.40 1.78 (0.62) (0.40) (1.02) 12.49 15.44
1994 12.36 0.23 (0.68) (0.45) (0.18) -- (0.18) 11.73 (3.66)
1993 11.34 0.15 1.13 1.28 (0.09) (0.17) (0.26) 12.36 11.34
Zweig Managed Assets Class I(5)
1996 13.02 0.05 0.45 0.50 (0.04) (0.49) (0.53) 12.99 3.83**
Zweig Growth & Income Fund Class A(6)
1996(11) 11.34 0.01 0.03 0.04 (0.01) -- (0.01) 11.37 0.39**
Zweig Growth & Income Fund Class B(6)
1996(11) 11.34 0.01 0.03 0.04 (0.01) -- (0.01) 11.37 0.33**
Zweig Growth & Income Fund Class C(6)
1996(11) 11.34 0.01 0.04 0.05 (0.01) -- (0.01) 11.38 0.42**
Zweig Growth & Income Fund Class I(6)
1996(11) 11.34 0.02 0.03 0.05 (0.02) -- (0.02) 11.37 0.41**
<CAPTION>
Ratios to
Average
Net Assets Average
------------------- Commission
Net Portfolio Per Share on Net Assets
Year Investment Turnover Portfolio End of Year
Ended Expenses Income Rate Transactions ( in thousands )
----- -------- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Zweig Strategy Fund Class A
1996 1.28% 1.27% 181% $0.03 $581,149
1995 1.27 1.92 95 0.03 558,286
1994 1.40 1.90 70 N/A 424,805
1993 1.43 1.00 359 N/A 405,884
1992 1.63 1.32 249 N/A 358,318
Zweig Strategy Fund Class B(4)
1996 1.98* 0.57* 181 0.03 42,317
Zweig Strategy Fund Class C(1)
1996 1.98 0.57 181 0.03 621,334
1995 1.97 1.22 95 0.03 530,300
1994 2.10 1.20 70 N/A 307,011
1993 2.13 0.30 359 N/A 188,631
1992 2.43* 0.40* 249 N/A 64,697
Zweig Strategy Fund Class I(5)
1996 0.98* 1.57* 181 0.03 903
Zweig Appreciation Fund Class A
1996 1.62 1.03 88 0.03 275,935
1995 1.63 1.10 68 0.03 272,590
1994 1.70 1.09 97 N/A 213,400
1993 1.73 0.52 69 N/A 230,230
1992 1.96 0.49 61 N/A 200,656
Zweig Appreciation Fund Class B(4)
1996 2.32* 0.33* 88 0.03 8,350
Zweig Appreciation Fund Class C(1)
1996 2.32 0.33 88 0.03 218,714
1995 2.33 0.40 68 0.03 195,204
1994 2.40 0.39 97 N/A 139,397
1993 2.43 (0.18) 69 N/A 105,957
1992 2.80* (0.32)* 61 N/A 42,089
Zweig Appreciation Fund Class I(5)
1996 1.32* 1.33* 88 0.03 2,202
Zweig Managed Assets Class A(2)
1996 1.64 2.64 187 0.02 114,837
1995 1.59 3.69 239 0.03 141,110
1994 1.68 2.70 299 N/A 154,441
1993 1.67* 1.93* 196 N/A 121,620
Zweig Managed Assets Class B(4)
1996 2.34* 1.94* 187 0.02 6,339
Zweig Managed Assets Class C(2)
1996 2.34 1.94 187 0.02 426,194
1995 2.29 2.99 239 0.03 527,432
1994 2.38 2.00 299 N/A 570,710
1993 2.37* 1.23* 196 N/A 429,088
Zweig Managed Assets Class I(5)
1996 1.34* 2.94* 187 0.02 2,893
Zweig Growth & Income Fund Class A(6)
1996(11) 1.30* 1.47* 2 0.03 2,508
Zweig Growth & Income Fund Class B(6)
1996(11) 2.00* 0.77* 2 0.03 2,693
Zweig Growth & Income Fund Class C(6)
1996(11) 2.00* 0.77* 2 0.03 4,509
Zweig Growth & Income Fund Class I(6)
1996(11) 1.00* 1.77* 2 0.03 101
</TABLE>
48
<PAGE>
<TABLE>
<CAPTION>
Net
Net Realized Distributions Net
Asset and Dividends from Net Total Asset
Value Net Unrealized Total from from Net Realized Dividends Value
Year Beginning Investment Gains Investment Investment Capital and End Total
Ended of Year Income (Losses) Operations Income Gains Distributions of Year Return***
----- --------- ---------- ---------- ---------- ---------- ------------- ------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Zweig Government Fund Class A
1996(10) $10.39 $0.53 $(0.58) $(0.05) $(0.53) $-- $(0.53) $ 9.81 (0.42)%
1995+ 9.63 0.52 0.77 1.29 (0.53) -- (0.53) 10.39 13.84
1994 10.43 0.50 (0.79) (0.29) (0.51) -- (0.51) 9.63 (2.83)
1993 10.01 0.55 0.46 1.01 (0.59) -- (0.59) 10.43 10.35
1992 10.21 0.65 (0.22) 0.43 (0.63) -- (0.63) 10.01 4.51
Zweig Government Fund Class B(4)
1996(10) 9.76 0.29 0.11 0.40 (0.30) -- (0.30) 9.86 4.16**
Zweig Government Fund Class C(1)
1996(10) 10.38 0.49 (0.58) (0.09) (0.48) -- (0.48) 9.81 (0.82)
1995+ 9.62 0.48 0.76 1.24 (0.48) -- (0.48) 10.38 13.27
1994 10.40 0.46 (0.79) (0.33) (0.45) -- (0.45) 9.62 (3.18)
1993 10.02 0.52 0.41 0.93 (0.55) -- (0.55) 10.40 9.48
1992 9.86 0.52 0.09 0.61 (0.45) -- (0.45) 10.02 6.31
Zweig Cash Fund Class A(3)
1996(8) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 4.83
1995(7) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 5.08
1994 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 2.55**
Zweig Cash Fund Class B(4)
1996(8) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 3.03**
Zweig Cash Fund Class C(3)
1996(8) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 4.83
1995(7) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 5.08
1994 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 2.55**
Zweig Cash Fund Class I(5)
1996(8) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 1.00 0.80**
Zweig Cash Fund Class M(9)
1996 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 5.09
1995 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 5.32
1994 1.00 0.04 -- 0.04 (0.04) -- (0.04) 1.00 3.67
1993 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 2.86
1992 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 3.40
<CAPTION>
Ratios to
Average
Net Assets Average
------------------- Commission
Net Portfolio Per Share on Net Assets
Year Investment Turnover Portfolio End of Year
Ended Expenses Income Rate Transactions ( in thousands )
----- -------- ---------- --------- ------------ ----------------
<S> <C> <C> <C> <C> <C>
Zweig Government Fund Class A
1996(10) 1.14% 5.25% 170% N/A $ 33,848
1995+ 1.26 5.22 195 N/A 42,207
1994 1.28 5.07 191 N/A 47,622
1993 1.30 5.46 256 N/A 60,207
1992 1.30 6.58 200 N/A 70,062
Zweig Government Fund Class B(4)
1996(10) 1.84* 4.55* 170 N/A 513
Zweig Government Fund Class C(1)
1996(10) 1.59 4.80 170 N/A 14,330
1995+ 1.71 4.77 195 N/A 19,778
1994 1.73 4.62 191 N/A 22,599
1993 1.75 5.01 256 N/A 21,301
1992 1.81* 5.93* 200 N/A 9,210
Zweig Cash Fund Class A(3)
1996(8) 0.65 4.73 N/A N/A 3,360
1995(7) 0.87 4.97 N/A N/A 3,661
1994 0.62** 2.52** N/A N/A 4,303
Zweig Cash Fund Class B(4)
1996(8) 1.35* 4.03* N/A N/A 33
Zweig Cash Fund Class C(3)
1996(8) 0.65 4.73 N/A N/A 4,535
1995(7) 0.87 4.97 N/A N/A 4,458
1994 0.61** 2.52** N/A N/A 5,040
Zweig Cash Fund Class I(5)
1996(8) 0.35* 5.03* N/A N/A 1,401
Zweig Cash Fund Class M(9)
1996 0.40 4.98 N/A N/A 45,271
1995 0.64 5.20 N/A N/A 48,515
1994 0.70 3.58 N/A N/A 78,149
1993 0.70 2.83 N/A N/A 92,471
1992 0.70 3.35 N/A N/A 145,169
</TABLE>
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(1) Commenced operations on February 4, 1992.
(2) Commenced operations on February 8, 1993.
(3) Commenced operations on May 1, 1994.
(4) Commenced operations on April 8, 1996.
(5) Commenced operations on November 1, 1996.
(6) Commenced operations on November 26, 1996.
(7) During 1995, the Manager voluntarily reimbursed Zweig Cash Fund Class A
and Class C $.005 and $.003 per share (0.47% and 0.28% ratio of expenses
to average net assets), respectively.
(8) During 1996, the Manager voluntarily reimbursed Zweig Cash Fund Class A,
Class B, Class C and Class I $.007, $.007, $.006 and $.004 per share
(0.66%, 0.69%, 0.60% and 0.38% ratio of expenses to average net assets),
respectively.
(9) During 1996, 1995, 1994, 1993 and 1992, the Manager voluntarily
reimbursed Zweig Cash Fund Class M $.003, $.001, $.002, $.001 and $.002
per share (0.32%, 0.10%, 0.15%, 0.08% and 0.15% ratio of expenses to
average net assets), respectively.
(10) During 1996, the Manager voluntarily reimbursed Zweig Government Fund
Class A, Class B and Class C $.002, $.003 and $.002 per share (0.22%,
0.26% and 0.22% ratio of expenses to average net assets), respectively.
(11) During 1996, the Manager voluntarily reimbursed Zweig Growth & Income
Fund Class A, Class B, Class C and Class I $.021, $.021, $.020 and $.021
per share (2.13%, 2.05%, 2.02% and 2.08% ratio of expenses to average net
assets), respectively.
* Annualized
** Not Annualized
*** Total Return does not consider the effect of any initial or contingent
deferred sales charge.
+ Based on the average of the number of shares outstanding during the year.
49
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Shareholders and Board of Trustees of Zweig Series Trust:
We have audited the accompanying statements of net assets of Zweig Series
Trust (comprising the Zweig Strategy Fund, Zweig Appreciation Fund, Zweig
Managed Assets, Zweig Growth & Income Fund, Zweig Government Fund (formerly
Government Securities Series) and Zweig Cash Fund) and the statement of assets
and liabilities of Zweig Strategy Fund as of December 31, 1996, the related
statements of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended and financial
highlights for each of the five years in the period then ended with respect to
Zweig Strategy Fund, Zweig Appreciation Fund, Zweig Government Fund and Zweig
Cash Fund, the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period
then ended and financial highlights for each of the four years in the period
then ended with respect to Zweig Managed Assets, and the related statements of
operations and changes in net assets and financial highlights for the period
November 26, 1996 (commencement of operations) to December 31, 1996 with
respect to Zweig Growth & Income Fund. These financial statements and
financial highlights are the responsibility of the management of the Trust.
Our responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1996 by correspondence with the custodian and
brokers. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of each
of the respective funds comprising Zweig Series Trust as of December 31, 1996
and the results of their operations, the changes in their net assets and
financial highlights for each of the periods referred to above, in conformity
with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
New York, New York
January 23, 1997
50
<PAGE>
zweig series trust
TRUSTEES
Claire B. Benenson
Richard E. Deems
S. Leland Dill
Eugene J. Glaser
Donald B. Romans
OFFICERS
Eugene J. Glaser
Chairman, Chief Executive Officer
and Trustee
Martin E. Zweig
President
David Katzen
Senior Vice President
Barry M. Mandinach
First Vice President
Carlton B. Neel
First Vice President
Alfred J. Ratcliffe
First Vice President & Treasurer
Charles I. Leone
First Vice President
& Assistant Secretary
Annemarie Gilly
Vice President
Jeffrey Lazar
Vice President
Marc Baltuch
Secretary
Thomas Disbrow
Assistant Vice President
& Assistant Treasurer
Beth Abraham
Assistant Vice President
Rhonda Berzner
Assistant Vice President
INVESTMENT MANAGER
Zweig/Glaser Advisers
5 Hanover Square-17th Floor
New York, New York 10004
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp.
5 Hanover Square-17th Floor
New York, New York 10004
CUSTODIAN
The Bank of New York
48 Wall Street
New York, New York 10015
TRANSFER AGENT
State Street Bank & Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
SERVICING AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
1301 Avenue of the Americas
New York, New York 10019
<PAGE>
Zweig [LOGO] BULK RATE
Mutual Funds U.S. POSTAGE
5 Hanover Square-17th Floor PAID
New York, New York 10004 METRO SELIGER
INDUSTRIES
(C) Zweig Securities Corp. Member NASD.
T964
[LOGO] This annual report is printed on recycled paper.
