[Zweig Series Trust Logo]
1998 SEMI-ANNUAL REPORT
DESPITE INCREASED
VOLATILITY, THE BULLISH
CASE REMAINS STRONG.
<PAGE>
TABLE OF CONTENTS
Shareholder Letter 1
Zweig Appreciation Fund Q&A 2
Zweig Strategy Fund 4
Zweig Appreciation Fund 5
Zweig Managed Assets 6
Zweig Growth & Income Fund 7
Zweig Foreign Equity Fund 8
Zweig Government Fund 9
Zweig Government Cash Fund 9
Statement of Net Assets 10
Statement of Operations 39
Statement of Changes in Net Assets 40
Notes to Financial Statements 42
Financial Highlights 46
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 your
financial advisor or Zweig at 1-800-272-2700 to obtain a copy of the prospectus.
The performance data quoted represent past performance, which is no guarantee of
future results, and does not take into account sales charges. Investment return
and principal value will fluctuate so that your 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.
Dear Fellow Shareholder,
Despite increased volatility during the year, the bullish case remains strong.
Though we reduced our domestic equity exposure from 100% at year-end 1997, our
current allocation of 85% positions us to take advantage of favorable economic
conditions, namely continued low rates of interest and inflation.
The stock market enjoyed strong performance through its peak in April. It
confounded most strategists by rallying over 13% in the first quarter despite
widely predicted lower earnings for S&P 500 companies, stemming from uncertainty
about the effect of Asia's financial difficulties on U.S. corporations. The S&P
500 Index finished the first half of the year up 17.6%, despite a slight
slowdown in corporate earnings and another bout of Asian economic turmoil that
created volatility in April and May.
Though many investors fear the effect of Asia on U.S. corporate earnings, I
believe the concerns are overdone. Overall earnings are still strong, and Asia's
economic difficulties could actually help maintain the current health of the
U.S. monetary environment by suppressing interest rates and inflation. We saw
evidence of this during the first half of the year. Asian currency devaluations
produced a glut of cheap exports from the Pacific Rim while the dollar
strengthened, making U.S. goods more expensive for foreigners to buy. The
situation forced U.S. companies to keep their prices stable in order to compete
with Asian products both here and abroad. It also kept the Federal Reserve from
raising interest rates.
We scaled back our exposure during the period due to a downtick in our monetary
model as long-term interest rates rose slightly early in the year. Our research
is still very positive, however, because the weight of the monetary evidence
remains strong. The attractive market conditions are led by falling commodity
prices and low inflation, both of which create downward pressure on interest
rates.
Our sentiment model has remained neutral. Some of the long-term sentiment
indicators are poor. Mutual funds, for example, currently have record-low assets
in cash, which indicates a high level of investor confidence and declining
liquidity available for future purchases. But the short-term sentiment
indicators are positive. We detected a rise in pessimism (which our model
<PAGE>
interprets as positive) following the market's peak in April, and even more
nervousness after news of further economic turmoil in Asia and Russia.
The momentum model finished the period in neutral territory as the market spent
most of the second quarter in a narrow trading range. Among the indicators we
track in our momentum model is the amount of divergences in the market. For
example, large-cap stocks have done better than smaller ones. Also, the number
of new highs has contracted, while the number of new lows has expanded. In a
healthy market, the soldiers should follow the general, so to speak. A lot of
divergences can be an indication that momentum is deteriorating.
Our bullish position enabled us to participate solidly in the market's rise this
year. I trust that those of you who share my respect for risk are pleased with
the returns we have generated. I continue to place as much emphasis on limiting
losses as I do on generating returns. As long as our indicators remain positive
and we see low levels of risk in the market, we'll keep our investment exposure
at levels we believe will enable us to participate in the market's advance.
Right now, we are monitoring Japan's actions to bolster its currency (the yen),
which fell to extreme lows against the dollar during the second quarter.
Prolonged weakness in Japan may partially explain the unusual period of low
inflation in the U.S., despite levels of economic strength that have
historically fostered higher inflation. If the Japanese economy rebounds, we
will watch closely for signs of rising inflation in the U.S.
Commentaries on our mutual funds by the portfolio managers follow, starting on
page 4. My associates and I thank you for continuing to support our efforts.
Sincerely,
/s/ Martin E. Zweig [picture appears here]
- -------------------
MARTIN E. ZWEIG, Ph.D.
President
July 14, 1998
"I TRUST THAT
THOSE OF YOU
WHO SHARE MY
RESPECT FOR RISK
ARE PLEASED WITH
THE RETURNS WE
HAVE GENERATED."
1
<PAGE>
Zweig Appreciation Fund has consistently delivered superior risk-adjusted
returns to shareholders since its inception in 1991. Below, portfolio manager
David Katzen discusses some of the reasons for Appreciation's success.
How have you been able to capture over 90% of the return of the Russell 2000
Index over the past five years with about half as much risk?*
Through timely asset allocation and strong overall stock selection. Marty Zweig
and his analysts determine what percentage of the fund should be invested in
stocks. Their goal is to be in gear with the major trend of the market, and they
place a priority on limiting losses during major market declines.
While we've been in a bull market for most of the past eight years, and
there's been little opportunity to add value through risk control, small-cap
stocks have experienced greater volatility than larger stocks. Our reduced
market exposure protected capital during the market decline of 1994 and again
last year. By declining less during these market corrections, we didn't waste as
much of the subsequent advances just getting back to even.
Still, that we've basically kept up with an all-equity benchmark like the
Russell 2000 during a bull market, with an average market exposure of about 65%,
shows that we've had strong stock selection. We screen 2,000 stocks and narrow
the selection to about 500 small-cap stocks based on growth and value
characteristics. I'm very proud of the fund's returns.
Why is the concept of "risk-adjusted" return so important?
A fund's risk-adjusted return measures not so much what you got, but how much
you got relative to the risk you took. In a prolonged bull market like the one
we've had, people tend to forget that managers who hit home runs in bull markets
can easily strike out in bear markets.
There are several ways to measure risk-adjusted results. Sharpe ratio
measures how much return a fund has generated relative to how much risk it took.
Basically, the higher the Sharpe ratio, the more "bang for the buck" you got.
Standard deviation measures how volatile a fund's returns are. The lower the
standard deviation, the less volatile the investment is. Maximum NAV decline,
the most easily understood measurement of risk, measures how much an investor
could have lost on a peak-to-trough basis. It's basically a fund's worst
drawdown.
Our risk-adjusted performance, as measured by these yardsticks, has been
superior.(+) Appreciation Fund's three-year Sharpe ratio is 1.55 compared to
0.92 for the average small-cap fund. The fund's three-year standard deviation is
10.8, compared to 19.7 for the average. Five-year standard deviation is great
too--9.2 compared to an average of 16.7. Our maximum NAV decline is -7.5% since
the fund's inception, less than half of the -18.7% drop that the average
small-cap fund experienced. o
Our shareholders hire us to make money, but not at the risk of suffering big
losses. They expect us to match or outperform our benchmarks over the course of
bull and bear market cycles. I think they understand that we are likely to
underperform during bull markets and to outperform during bear markets (although
not necessarily with positive returns).
* Class A Shares only. Return does not include initial or contingent deferred
sales charges. The maximum sales charge is 5.5% for A Shares.
(+)Past performance is no guarantee of future results.
o Sources: Morningstar, Lipper and FundScope. Maximum declines do not include
any initial or contingent deferred sales charges.
STANDARD DEVIATION
Standard deviation measures how much the return of an investment varies from its
historical norm. Generally, the higher an investment's standard deviation, the
greater the risk.
SHARPE RATIO
Sharpe ratio measures the reward gained for the amount of risk taken. Let's say
we wanted to calculate the Sharpe ratio of a particular fund. First, we would
figure out how much the fund returned over an investment with no risk, using
three-month Treasury bills as a proxy. Then we would divide that figure by the
standard deviation, or volatility, of the fund's returns.
2
<PAGE>
Quotron Symbols:
ZAPAX / ZAPBX / ZAPCX
Net assets as of 6/30/98:
$ 608 Million
Portfolio Manager:
David Katzen
A risk-averse approach to
the growth potential
of small-company stocks
MAXIMUM NAV DECLINE
We measure maximum NAV decline as the largest high-to-low drop in the
week-to-week net asset value of a fund during a given period. Maximum decline is
expressed as a percentage decline.
PRICE/EARNINGS RATIO (P/E)
P/E ratio is calculated by dividing the price of a stock by its earnings per
share. Generally, investors who buy stocks with higher P/Es are paying more for
that company's earnings growth. P/E ratio is also referred to as a stock's
multiple.
Many funds produce exhilarating gains during bull markets and exasperating
losses during bear markets. These funds may ultimately produce very marketable
gains. But all too often, the people who invest in these funds fail to achieve
their objectives because they can't handle the ride down, so they end up selling
their shares at exactly the wrong time. In other words, there's a huge gap
between fund performance and people performance. Funds with superior
risk-adjusted results improve the odds of a shareholder staying in a fund long
enough to achieve attractive long-term returns.
How do you pursue superior risk-adjusted results?
First, by being willing to gradually adjust the market exposure of the fund
according to Marty Zweig's research, and second, by constructing a portfolio of
stocks with a combination of attractive growth and value characteristics. It
would be great if I could buy a stock that's attractively priced and has great
growth characteristics, but the market's too efficient to find such obvious
values. Instead, I assemble a portfolio that contains some stocks with moderate
growth characteristics and compelling valuations. Other stocks may have
compelling growth characteristics and moderately attractive valuations.
What we wind up with is a portfolio with overall characteristics that would
be hard to find in an individual stock: price-earnings ratios that are about
half as much as the benchmark and earnings growth rates that are nearly 20% to
30% higher than the benchmark. Our research has found that in the long run, a
portfolio with these overall qualities will produce superior returns with a
smoother ride.
What advantages are there in picking stocks quantitatively through computer
analysis, as you do, versus going out and visiting with companies?
Quantitative analysts look at the same fundamentals that traditional analysts
examine, such as earnings growth, profit margins and relative valuations.
Quantitative analysts use data to examine these fundamentals, while traditional
analysts "kick the tires" by visiting with company officers and studying
specific industries.
Quantitative analysis can be more objective because it takes the emotion out
of stock picking. My decisions about which stocks to buy have nothing to do with
my feelings toward a company's executives. I look for stocks with favorable
relationships between their growth and value characteristics. If a stock ranks
highly in our models, then it's a buy. If not, we stay away.
Quantitative analysis is more time-efficient too, since computer models are
able to digest vast amounts of information more rapidly than a traditional
analyst. I can research a new quantitative measure of earnings momentum, for
example, and it's almost as if I'm visiting several hundred companies at once.
And while an analyst may believe that a particular company is undervalued on an
absolute basis, he or she may have trouble determining the stocks'
attractiveness relative to other stocks. A computer can assess a stock's value
or a company's growth relative to the 2,000-stock universe that we utilize for
Zweig Appreciation Fund.
To be fair, quantitative analysis also has its drawbacks. At the end of
the day, a model is a model--it's not the real world. A model may be able to
analyze 85% of what drives a stock's price, but it doesn't capture the whole
picture. That's one of the reasons we don't take a fully automated approach.
We devote nearly as many resources to implementing our approach as we do to
developing the models.
3
<PAGE>
ZWEIG STRATEGY FUND
A risk-averse approach to the growth potential of mid-sized and large-company
stocks
For the first half of 1998, the fund's Class A Shares returned 8.3%, compared to
the Lipper Growth Fund Average of 15.1% and the 17.7% return of the S&P 500
Index. The fund's Class B and C Shares (which have no initial sales charge but
bear higher expenses) both returned 7.9%.
Our computer model screens a universe of 1,000 of the largest, most liquid
stocks for those that have favorable growth and value characteristics. While
this approach has worked well over time, the current environment has been
challenging. Our analysis shows that stocks on the smaller end of the large-cap
spectrum have more favorable valuations than do very large company stocks.
It has become increasingly difficult for investors to find value in today's
market. So instead, they are gravitating away from traditional benchmarks of
value--namely price-to-earnings (P/E) ratios--and equating size with safety. As
a result, financially strong companies with brand names are selling at
abnormally high P/E ratios, despite unremarkable growth rates. Companies with
more attractive earnings growth are trading at much lower P/E ratios. Within the
S&P 500, the average P/E ratio of the top 50 stocks is 49.6, while the bottom 50
stocks have an average P/E of 17.7.
Our discipline prevents us from ignoring traditional benchmarks of value.
Moreover, we believe that investing solely on the basis of market capitalization
is imprudent (market capitalization is calculated by multiplying the number of a
company's outstanding shares by the price per share). We prefer to adhere to our
proven process of choosing stocks with strong fundamentals and attractive
valuations. Our overweightings in retail and automobile stocks helped the fund's
performance during the first half of the year. Airline stocks also did well,
benefiting from low oil prices, increased spending by consumers and pricing
leverage. The fund's utilities and tobacco stocks dragged down returns, as did
our energy holdings, which suffered from the same low oil prices that boosted
our airline stocks.
PERFORMANCE annualized since inception (12/29/89)*
Zweig Strategy Fund Lipper Growth S&P 500
A Shares Fund Average(+) Index
- ------------------- --------------- -------
12.6% 15.7% 17.8%
AVG. MARKET EXPOSURE: 68%
PERFORMANCE after all charges and expenses
INCEPTION AVG. MARKET EXPOSURE 5 YEAR 1 YEAR
------------------------------------------------------------
A Shares 11.8% 68% 12.5% 14.0%
B Shares 13.5% 71% N/A 13.8%
C Shares 12.6% 67% 12.9% 18.4%
- --------------------------------------------------------------------------
Inception dates: A Shares-12/29/89, B Shares-4/8/96, C Shares-2/4/92
ASSET MIXES for 1998 o
[PIE CHARTS APPEAR HERE -- PLOT POINTS BELOW]
Stocks Cash Stocks Cash
------ ---- ------ ----
March 31 89% 11% June 30 85% 15%
TOP INDUSTRY GROUPS as of 6/30/98**
[BAR GRAPH APPEARS HERE -- PLOT POINTS BELOW]
Non-Bank Financial 19.5%
Consumer Cyclical 18.8%
Transportation 14.3%
Utilities 11.8%
Capital Goods 11.3%
Basic Materials 8.8%
Energy 5.5%
Technology 4.7%
Consumer Staples 3.8%
Health Care 1.2%
* These returns do not include any initial or contingent deferred sales
charges. The Lipper Growth Fund Average is based on the total return of 199
funds. The annualized return for the Class B Shares since their inception on
4/8/96 is 15.0%. The annualized return for the Class C Shares since their
inception on 2/4/92 is 12.6%. The S&P 500 Index is unmanaged and cannot be
invested in directly.
(+) The period measured is from 12/31/89 due to Lipper's weekly data.
o For purposes of determining asset mix, the fund's stock futures position is
treated as reducing or increasing stock exposure and increasing or reducing
cash.
** Percentage of the stock portion of the fund only; does not take into account
the fund's cash or futures position.
4
<PAGE>
ZWEIG APPRECIATION FUND
A risk-averse approach to the growth potential of small-company stocks
For the first half of 1998, the fund's Class A Shares returned 8.4%, outperform-
ing both the 6.5% return of the Lipper Small-Company Fund Average and the 4.9%
return of the Russell 2000 Index. The Class B and C shares (which have no
initial sales charge but bear higher annual expenses) returned 7.9% and 8.0%,
respectively.
Small-cap stocks experienced greater volatility this year as the strong U.S.
economy began to show signs of weakening. Though we continue to enjoy low
interest rates and low inflation, many companies reported lower earnings,
indicating a slowing of the economy. Small-cap stocks tend to be more sharply
affected by the business cycle because they lack the size and financial
resources that cushion large companies during economic downturns. Note the
performance difference between the Russell 2000 Index and the S&P 500 year to
date--the Russell 2000 returned 4.9%, vs. the S&P return of 17.7%.
We have no way of forecasting whether concern over the weakening business
cycle will continue to weigh heavily on small company stocks. In the meantime,
we continue to emphasize risk control in an effort to limit some of the
volatility that has besieged our peers in the small-cap arena. Our focus on
stocks with low price-to-earnings ratios, at a time when small-cap stocks are
certainly not undervalued, has helped stabilize the fund and enhance
performance.
Our holdings in consumer cyclicals, particularly retail chains, produced
strong returns. These sectors benefited from low unemployment and slight wage
inflation, which resulted in consumers spending more on discretionary items like
cars and clothes. Financial stocks also performed well, aided by consolidation,
good valuations and a continued demand for financial services.
PERFORMANCE annualized since inception (10/7/91)*
Zweig Appreciation Fund Lipper Small-Co. Russell 2000
A Shares Fund Average(+) Index
- ----------------------- --------------- ------------
14.7% 17.3% 16.9%
AVG. MARKET EXPOSURE: 68%
PERFORMANCE after all charges and expenses
INCEPTION AVG. MARKET EXPOSURE 5 YEAR 1 YEAR
------------------------------------------------------------
A Shares 13.7% 68% 13.5% 17.2%
B Shares 17.4% 71% N/A 17.0%
C Shares 13.0% 67% 14.0% 21.6%
- --------------------------------------------------------------------------
Inception dates: A Shares-10/7/91, B Shares-4/8/96, C Shares-2/4/92
ASSET MIXES for 1998 o
[PIE CHARTS APPEAR HERE -- PLOT POINTS BELOW]
Stocks Cash Stocks Cash
------ ---- ------ ----
March 31 90% 10% June 30 84% 16%
TOP INDUSTRY GROUPS as of 6/30/98**
[BAR GRAPH APPEARS HERE -- PLOT POINTS BELOW]
Consumer Cyclical 21.1%
Non-Bank Financial 19.2%
Capital Goods 19.1%
Basic Materials 9.1%
Transportation 7.4%
Consumer Staples 7.3%
Technology 4.2%
Utilities 4.1%
Energy 3.4%
Health Care 2.9%
* These returns do not include any initial or contingent deferred sales
charges. The Lipper Small-Company Fund Average is based on the total return
of 92 funds. The annualized return for the Class B Shares since their
inception on 4/8/96 is 19.0%. The annualized return for the Class C Shares
since their inception on 2/4/92 is 13.0%. The Russell 2000 Index is
unmanaged and cannot be invested in directly.
(+) The period measured is from 10/10/91 due to Lipper's weekly data.
o For purposes of determining asset mix, the fund's stock futures position is
treated as reducing or increasing stock exposure and increasing or reducing
cash.
** Percentage of the stock portion of the fund only; does not take into account
the fund's cash or futures position.
5
<PAGE>
ZWEIG MANAGED ASSETS
A risk-averse approach to domestic and foreign stocks and bonds
For the first half of 1998, the fund's Class A Shares returned 10.6%, ahead of
the 9.2% returned by the Lipper Global Flexible Fund Average. The Class B and C
Shares (which have no initial sales charge but bear higher expenses) both
returned 10.2%.
We kept our overall exposure to stocks and bonds relatively unchanged during
the period, starting and finishing the first half of the year at approximately
87%. We increased our foreign equity exposure in the first quarter as European
markets experienced strong gains. As risk levels rose in the second quarter,
however, we adopted a more conservative stance by gradually decreasing our
equity exposure overall.
The shift helped stabilize the fund's performance as a string of debacles
overseas--unrest in Indonesia, fiscal crisis in Russia and a Japanese yen that
fell to an eight-year low against the dollar--affected equities in the second
quarter. The fall of the yen in particular, which was caused by bad bank loans,
a depressed stock market and the Asian financial crisis, caused volatility in
equity markets worldwide. We were able to avoid some of the impact through
currency hedging and minimal exposure in Asia.
The flight to quality that resulted from the volatility overseas served as a
boon for bonds in both the U.S. and Europe. Our holdings in U.S. Treasuries and
German government bonds generated solid returns for the fund.
We are still quite bullish on bonds. Our current duration--sensitivity to
changes in interest rates--is 6.1 years. The main reason for our relatively high
duration is the steep price declines in commodities and continued low inflation,
both of which serve to keep interest rates low.
We remain bullish on equities as well. The underpinnings of a rally,
specifically low inflation, low interest rates and increased productivity gains,
are firmly in place throughout Europe and the U.S. In addition, we believe the
Asian financial crisis will help keep inflation and interest rates low
worldwide.
PERFORMANCE annualized since inception (2/8/93)*
Zweig Managed Assets Lipper Global Flexible
A Shares Fund Average(+)
- -------------------- -----------------------
11.2% 11.7%
AVG. MARKET EXPOSURE: 37% Stocks, 32% Bonds
PERFORMANCE after all charges and expenses
INCEPTION AVG. MARKET EXPOSURE 5 YEAR 1 YEAR
------------------------------------------------------------
A Shares 10.0% Stocks 37%, Bonds 32% 9.7% 10.5%
B Shares 14.0% Stocks 49%, Bonds 29% N/A 10.3%
C Shares 10.4% Stocks 37%, Bonds 32% 10.2% 14.7%
- --------------------------------------------------------------------------
Inception dates: A Shares-2/8/93, B Shares-4/8/96, C Shares-2/8/93
ASSET MIXES for 1998 o
[PIE CHARTS APPEAR HERE -- PLOT POINTS BELOW]
Stocks Bonds Cash Stocks Bonds Cash
------ ----- ---- ------ ----- ----
March 31 58% 34% 8% June 30 50% 37% 13%
COUNTRY ALLOCATIONS as of 6/30/98
Stocks Bonds
------ -----
United States 24.8% 18.7%
---------------------------------------------------------
Australia 1.0 1.1
---------------------------------------------------------
Denmark 1.0 0.0
---------------------------------------------------------
Finland 1.4 1.0
---------------------------------------------------------
France 4.1 2.8
---------------------------------------------------------
Germany 4.9 2.8
---------------------------------------------------------
Italy 3.0 2.0
---------------------------------------------------------
Netherlands 0.0 1.0
---------------------------------------------------------
Spain 4.3 1.5
---------------------------------------------------------
Sweden 1.2 1.9
---------------------------------------------------------
United Kingdom 3.8 3.1
---------------------------------------------------------
Other 0.7 0.9
---------------------------------------------------------
TOTAL 50.2% 36.8%
---------------------------------------------------------
* These returns do not include any initial or contingent deferred sales
charges. The Lipper Global Flexible Fund Average is based on the total
return of 16 funds. The annualized return for the Class B Shares since their
inception on 4/8/96 is 15.5%. The annualized return for the Class C Shares
since their inception on 2/8/93 is 10.4%.
(+) The period measured is from 2/11/93 due to Lipper's weekly data.
o 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.
6
<PAGE>
ZWEIG GROWTH & INCOME FUND
A risk-averse approach to growth stocks and high dividend-yield stocks
For the first half of 1998, the fund's Class A Shares returned 6.5%, compared to
the Lipper Growth & Income Fund Average of 12.1% and the 17.7% return of the S&P
500 Index. The fund's Class B and C Shares (which have no initial sales charge
but bear higher expenses) both returned 6.1%.
The fund screens a universe of 1,500 stocks with an average market
capitalization of $2.8 billion. The average market capitalization of the fund is
approximately $2 billion, which is at the low end of the range for mid-cap
funds. Market capitalization is calculated by multiplying the number of a
company's outstanding shares by the price per share.
Our size exposure hurt returns during the first half of the year, a period
characterized by the very largest stocks leading the market. It is important to
note, however, that we do not choose stocks based exclusively on size. Rather,
we look for stocks that have favorable relationships between their growth and
value characteristics. At this point, the stocks that fit our parameters are
smaller mid-cap stocks, mainly because the current valuations of many larger
stocks are high relative to their historic norms.
During the first half of 1998, the fund's growth stocks, significantly
outperformed our income stocks. The trend reversed in the second quarter as
increased volatility negatively impacted growth stocks with high
price-to-earnings ratios (P/E ratio is calculated by dividing the price of a
stock by its earnings per share. Essentially, the higher the P/E, the more an
investor is paying for earnings growth).
The fund's financial and transportation holdings performed well. Financial
stocks benefited from a wave of consolidation and low interest rates, while low
oil prices bolstered the transportation sector. On the income side, consumer
cyclicals and capital goods helped returns.
Our allocation to utilities dragged down performance slightly. We are still
overweighted in the sector, however, because of their very low valuations and
improving profit margins.
PERFORMANCE annualized since inception (11/26/96)*
Zweig Lipper
Growth & Income Growth & Income S&P 500
Fund A Shares Fund Average(+) Index
- ------------------- --------------- -------
18.8% 23.9% 31.0%
AVG. MARKET EXPOSURE: 77%
PERFORMANCE after all charges and expenses
INCEPTION AVG. MARKET EXPOSURE 1 YEAR
------------------------------------------------
A Shares 14.6% 77% 15.4%
B Shares 15.0% 77% 15.3%
C Shares 18.0% 77% 19.8%
- --------------------------------------------------------------
Inception date: 11/26/96
ASSET MIXES for 1998 o
[PIE CHARTS APPEAR HERE -- PLOT POINTS BELOW]
Stocks Cash Stocks Cash
------ ---- ------ ----
March 31 90% 10% June 30 83% 17%
TOP INDUSTRY GROUPS as of 6/30/98**
[BAR GRAPH APPEARS HERE -- PLOT POINTS BELOW]
Consumer Cyclical 19.7%
Non-Bank Financial 15.8%
Utilities 15.8%
Capital Goods 13.3%
Basic Materials 8.8%
Transportation 8.2%
Consumer Staples 7.2%
Technology 4.9%
Energy 3.7%
Banking 1.3%
* These returns do not include any initial or contingent deferred sales
charges. The Lipper Growth & Income Fund Average is based on the total
return of 590 funds. The annualized return for the Class B Shares and the
Class C Shares since their inception on 11/26/96 is 18.0%. The S&P 500 Index
is unmanaged and cannot be invested in directly.
(+) The period measured is from 11/27/96 due to Lipper's weekly data.
o For purposes of determining asset mix, the fund's stock futures position is
treated as reducing or increasing stock exposure and increasing or reducing
cash.
** Percentage of the stock portion of the fund only; does not take into account
the fund's cash or futures position.
7
<PAGE>
ZWEIG FOREIGN EQUITY FUND
A risk-averse approach to the international (non-U.S.) equity markets
For the first half of 1998, the fund's Class A Shares returned 13.2%, compared
to the 15.5% returned by the Lipper International Fund Average, and the 15.8%
returned by the Morgan Stanley World (excluding U.S.) Index. The fund's Class B
and C Shares (which have no initial sales charge but bear higher expenses) both
returned 12.8%.
Our average market exposure during the period was 75%. We began the year at
66%, which we gradually increased to 85%--mainly in Europe--during the first
quarter. The shift helped fund performance as European equities soared amid low
inflation and low interest rates.
We steadily cut back our exposure, primarily in Asia, as our models
indicated risk levels rising in the second quarter. Volatility surged following
currency declines in Indonesia, Japan and other Asian nations. Japan's currency,
for example, fell to an eight-year low against the dollar, which further
jeopardized the economic stability of neighboring Asian countries. The situation
prompted us to decrease our exposure in Asia to 6% from a high of nearly 14% at
the end of the first quarter. We ended the period with an overall market
exposure of 68%.
Widespread fears of an interest rate hike by Germany's central bank ignited
European volatility and slowed investment momentum in the second quarter. We
reduced our European exposure only slightly, however, because we believe growth
prospects are still strong. The monetary environment remains positive, due to
low interest rates and low inflation. In fact, most European nations rallied
once it became clear that rates would remain stable.
We are also bullish on Europe because many European stock markets are poised
to capture a wave of assets from pension plans. The pension market in Europe is
being deregulated, and equities--never as popular as bonds among European
investors--are starting to win acceptance as an attractive investment option for
pensions.
PERFORMANCE cumulative since inception (11/21/97)*
Zweig Foreign Morgan Stanley
Equity Fund Lipper International World (excluding
A Shares Fund Average U.S.) Index
- ------------- -------------------- ----------------
14.4% 14.1% 14.4%
AVG. MARKET EXPOSURE: 66%
PERFORMANCE after all charges and expenses
INCEPTION AVG. MARKET EXPOSURE
--------------------------------------
A Shares 8.1% 66%
B Shares 8.2% 66%
C Shares 12.5% 66%
----------------------------------------------------
Inception date: 11/21/97
ASSET MIXES for 1998 o
[PIE CHARTS APPEAR HERE -- PLOT POINTS BELOW]
Stocks Cash Stocks Cash
------ ---- ------ ----
March 31 85% 15% June 30 68% 32%
COUNTRY ALLOCATIONS as of 6/30/98
Stocks Stocks
------ ------
France 6.6% Austria 2.7%
- -------------------------------------------------------------
Spain 6.2 Hong Kong 2.4
- -------------------------------------------------------------
Germany 6.1 Canada 1.9
- -------------------------------------------------------------
Sweden 5.7 Mexico 1.9
- -------------------------------------------------------------
United Kingdom 5.5 Belgium 1.8
- -------------------------------------------------------------
Italy 5.3 Denmark 1.7
- -------------------------------------------------------------
Netherlands 4.6 Finland 1.4
- -------------------------------------------------------------
Japan 4.2 Singapore 1.1
- -------------------------------------------------------------
Switzerland 3.8 New Zealand 1.1
- -------------------------------------------------------------
Australia 3.6 Malaysia 0.4
- -------------------------------------------------------------
TOTAL 68.0%
------------------------
* Cumulative return since inception on 11/21/97. These returns do not include
any initial or contingent deferred sales charges. The Lipper International
Fund Average is based on the total return of 523 funds. The cumulative return
for both the Class B Shares and the Class C Shares since their inception on
11/21/97 is 13.9%. The Morgan Stanley World (excluding U.S.) Index is
unmanaged and cannot be invested in directly.
o 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.
8
<PAGE>
ZWEIG GOVERNMENT FUND
Monthly income from U.S. Government securities
For the first half of 1998, the fund's Class A Shares returned 3.3%, compared to
the 3.6% return of the Lipper U.S. Government Fund Average. The fund's Class B
and C Shares (which have no initial sales charge but bear higher expenses)
returned 3.0% and 3.1%, respectively.
Bond prices, which ended the first quarter of the year relatively unchanged,
surged in the second quarter. Consequently, yields fell sharply, ending the
period at 5.6% (bond prices move in the opposite direction of yields). Bonds
benefited from the global flight to quality--money moving from stocks to
bonds--prompted by a rekindling of Asia's financial crisis, instability in
Indonesia, and concerns about a currency devaluation in Russia. In addition, the
yen's slide worsened Japan's economic crisis and spurred more foreign buying of
U.S. bonds, primarily Treasuries.
The strength of the dollar and a slight weakening of the robust U.S. economy
were also positive developments for bonds. A strong dollar encourages foreign
investors seeking returns from a favorable exchange rate to buy U.S. bonds. A
slowing economy is generally good for bonds because it decreases the likelihood
that the Federal Reserve will raise interest rates (rising rates cause bond
prices to fall).
In response to the positive environment for bonds, we kept our
duration--sensitivity to changes in interest rates--high at 6.0 years. We remain
bullish on bonds, particularly amid falling commodities prices, a sustained
demand for bonds and continued volatility overseas.
PERFORMANCE annualized since inception (3/25/85)*
Zweig Lipper
Government Fund US Government
A Shares Fund Average (+)
- --------------- ----------------
7.2% 8.3%
PERFORMANCE after all charges and expenses
10 YEAR/INCEPTION 5 YEAR 1 YEAR
--------------------------------------------
A Shares 6.5% 4.1% 5.1%
B Shares 5.2% N/A 4.1%
C Shares 5.5% 4.7% 8.4%
-------------------------------------------------------
Inception dates: A Shares-3/25/85**, B Shares-4/8/96, C Shares-2/4/92
* These 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 20 funds. The annualized return for the Class B Shares since their
inception on 4/8/96 is 6.7%. The annualized return for the Class C Shares
since their inception on 2/4/92 is 5.5%.
(+) The period measured is from 3/31/85 due to Lipper's weekly data.
** Zweig/Glaser Advisers assumed responsibility for managing the fund on
September 1, 1989.
ZWEIG GOVERNMENT CASH FUND*
The annualized net yield of Zweig Government Cash Fund for the year-to-date
through June 30, 1998 was 4.92% for Class A and C Shares, 5.15% for Class M
Shares, and 4.22% for Class B Shares.
* On April 16, 1998, the Zweig Series Trust Board of Trustees approved a change
in the name of the Zweig Cash Fund to the Zweig Government Cash Fund,
effective May 1, 1998. The new name more accurately conveys that the fund
invests exclusively in short-term U.S. government securities and in
repurchase agreements collateralized by such securities.
9
<PAGE>
ZWEIG STRATEGY FUND
Statement of Net Assets as of June 30, 1998 (Unaudited)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
COMMON STOCKS: 81.07%
Aerospace: 0.88%
Cordant Technologies Inc. 114,100 $ 5,262,862
Northrop Grumman Corp. 42,600 4,393,125
Precision Castparts Corp. 29,500 1,574,563
--------------
11,230,550
--------------
Air Freight: 1.91%
Airborne Freight Corp. 472,500 16,507,969
* FDX Corp. 123,100 7,724,525
--------------
24,232,494
--------------
Apparel and Textiles: 0.87%
* Burlington Industries, Inc. 199,800 2,809,688
Interface Inc., Class A 121,200 2,446,725
Liz Claiborne Inc. 29,900 1,562,275
* Mohawk Industries Inc. 76,300 2,417,756
VF Corp. 34,400 1,771,600
--------------
11,008,044
--------------
Automobiles: 2.85%
Chrysler Corp. 142,100 8,010,888
Daimler-Benz AG, ADR 16,500 1,605,656
Ford Motor Co. 450,400 26,573,600
--------------
36,190,144
--------------
Automotive Parts and Equipment: 0.95%
Arvin Industries Inc. 84,400 3,064,775
Borg-Warner Automotive, Inc. 61,600 2,960,650
Dana Corp. 55,500 2,969,250
* Lear Corp. 34,300 1,760,019
Modine Manufacturing Co. 38,400 1,329,600
--------------
12,084,294
--------------
Banks: 0.01%
* Imperial Bancorp 4,295 128,850
--------------
Building Materials and Products: 1.99%
Lafarge Corp. 124,200 4,882,612
Lone Star Industries, Inc. 40,100 3,090,206
Southdown, Inc. 128,300 9,157,412
* USG Corp. 151,000 8,172,875
--------------
25,303,105
--------------
Chemicals: 1.67%
Albemarle Corp. 120,600 2,660,737
B.F. Goodrich & Co. 68,400 3,394,350
Dexter Corp. 63,500 2,020,094
* International Specialty Products Inc. 61,100 1,137,987
Lyondell Petrochemical Corp. 194,800 5,929,225
Millennium Chemicals Inc. 132,600 4,491,825
* W.R. Grace & Co. 92,600 1,579,988
--------------
21,214,206
--------------
Computers and Software: 3.66%
* Lexmark International, Inc., Class A 115,000 7,015,000
* Sterling Software Inc. 116,600 3,446,988
* Storage Technology Corp. 670,800 29,095,950
* Stratus Computer, Inc. 166,400 4,212,000
* Symantec Corp. 107,300 2,803,213
--------------
46,573,151
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Construction and Farm Equipment: 2.12%
AGCO Corp. 237,500 $ 4,883,594
Case Corp. 275,900 13,312,175
Caterpillar Inc. 57,300 3,029,737
Deere & Co. 109,300 5,779,238
--------------
27,004,744
--------------
Containers and Packaging: 0.17%
Ball Corp. 53,100 2,133,956
--------------
Electronics: 0.18%
* CHS Electronics Inc. 49,300 881,237
* Litton Industries, Inc. 23,200 1,368,800
--------------
2,250,037
--------------
Engineering: 0.10%
McDermott International, Inc. 37,900 1,305,181
--------------
Finance: 3.08%
AMBAC Financial Group Inc. 136,300 7,973,550
* Americredit Corp. 35,600 1,270,475
Countrywide Credit Industries, Inc. 30,300 1,537,725
Equitable Companies Inc. . 317,240 23,773,172
* Imperial Credit Industries Inc. 30,900 726,150
Liberty Financial Companies, Inc. 112,710 3,888,495
--------------
39,169,567
--------------
Food and Beverages: 0.93%
Adolph Coors Co., Class B 131,100 4,457,400
Earthgrains Co. 76,900 4,296,787
Interstate Bakeries Corp. 38,600 1,281,037
* Smithfield Foods Inc. 60,500 1,845,250
--------------
11,880,474
--------------
Healthcare Facilities and Products: 0.98%
Integrated Health Services, Inc. 211,400 7,927,500
Sun Healthcare Group, Inc. 299,400 4,378,725
* Trigon Healthcare Inc. 4,800 173,700
--------------
12,479,925
--------------
Homebuilding and Land Development: 1.83%
Centex Corp. 355,300 13,412,575
Fleetwood Enterprises, Inc. 65,100 2,604,000
Kaufman & Broad Home Corp. 50,300 1,597,025
Lennar Corp. 95,400 2,814,300
Pulte Corp. 93,800 2,802,275
--------------
23,230,175
--------------
Hotels: 0.40%
* Prime Hospitality Corp. 249,940 4,358,329
Royal Caribbean Cruises Ltd. 9,200 731,400
--------------
5,089,729
--------------
Household Furnishings and Products: 0.44%
* Furniture Brands International, Inc. 120,200 3,373,113
Whirlpool Corp. 32,900 2,261,875
--------------
5,634,988
--------------
Industrial Products, Services and Machinery: 0.29%
Cincinnati Milacron Inc. 63,000 1,531,687
Ingersoll-Rand Co. 48,100 2,119,406
--------------
3,651,093
--------------
10
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Insurance: 3.63%
Allmerica Financial Corp. 90,900 $ 5,908,500
Allstate Corp. 82,400 7,544,750
Capital Re Corp. 12,200 873,825
Conseco Inc. 69,600 3,253,800
Everest Reinsurance Holdings Inc. 177,100 6,807,281
Financial Security Assurance Holdings Ltd. 16,100 945,875
Fremont General Corp. 100,500 5,445,844
Lincoln National Corp. 19,800 1,809,225
Loews Corp. 30,700 2,674,738
NAC Re Corp. 7,400 394,975
Old Republic International Corp. 332,250 9,739,078
Presidential Life Corp. 11,100 237,263
Travelers Property Casualty Corp., Class A 13,400 574,525
--------------
46,209,679
--------------
Investment Banking and Brokerage: 7.19%
A.G. Edwards, Inc. 217,850 9,299,472
Bear, Stearns & Co. Inc. 406,398 23,113,886
Donaldson, Lufkin & Jenrette, Inc. 100,800 5,121,900
Lehman Brothers Holdings Inc. 338,400 26,247,150
Morgan Stanley, Dean Witter,
Discover & Co. 109,100 9,969,013
PaineWebber Group Inc. 412,200 17,724,600
--------------
91,476,021
--------------
Manufacturing: 2.92%
Aeroquip-Vickers Inc. 143,300 8,365,137
Canadian Pacific Ltd. 93,700 2,658,738
Hanson Plc., ADR 31,500 954,844
Johnson Controls Inc. 22,700 1,298,156
Parker-Hannifin Corp. 273,840 10,440,150
Premark International Inc. 139,800 4,508,550
Trinity Industries, Inc. 213,600 8,864,400
--------------
37,089,975
--------------
Metal Fabrication: 1.15%
* Hexcel Corp. 11,100 251,137
Kaydon Corp. 18,600 656,813
Kennametal Inc. 17,200 718,100
* Mueller Industries, Inc. 91,850 3,409,931
Timken Co. 311,200 9,588,850
--------------
14,624,831
--------------
Metals and Mining: 0.39%
* Alumax Inc. 79,236 3,674,569
ASARCO Inc. 32,600 725,350
De Beers Consolidated Mines Ltd., ADR 28,200 493,500
--------------
4,893,419
--------------
Oil and Gas: 6.31%
Ashland Inc. 246,200 12,710,075
* BJ Services Co. 27,900 810,844
Coastal Corp. 308,400 21,530,175
Equitable Resources Inc. . 8,200 250,100
* EVI Weatherford Inc. 104,020 3,861,742
* Input/Output Inc. 39,000 694,688
Marketspan Corp. 67,972 2,034,912
Pennzoil Co. 18,200 921,375
* Rowan Companies, Inc. 230,500 4,480,344
* SEACOR Smit Inc. 99,500 6,100,594
* Sun Company, Inc. 394,000 15,292,125
Tidewater Inc. 243,600 8,038,800
* Veritas DGC Inc. 63,100 3,151,056
Vintage Petroleum Inc. 19,600 369,950
--------------
80,246,780
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Printing and Forms: 0.19%
* World Color Press Inc. 69,100 $ 2,418,500
--------------
Real Estate Investment Trusts: 0.45%
* Avalon Bay Communities, Inc. 62,800 2,386,400
Crescent Real Estate Equities Inc. 43,100 1,449,238
FelCor Suite Hotels, Inc. 23,400 734,175
Liberty Property Trust 47,000 1,201,437
--------------
5,771,250
--------------
Recreational Products: 0.07%
Brunswick Corp. 33,500 829,125
--------------
Restaurants: 0.62%
Bob Evans Farms, Inc. 50,200 1,063,612
* Brinker International Inc. 108,400 2,086,700
Darden Restaurants, Inc. 296,700 4,710,113
--------------
7,860,425
--------------
Retail Trade: 7.86%
Dayton Hudson Corp. 508,000 24,638,000
Dillard Department Stores, Inc., Class A 56,200 2,328,788
* Federated Department Stores, Inc. 500,600 26,938,538
Fingerhut Companies, Inc. 253,200 8,355,600
* Footstar Inc. 27,600 1,324,800
* K Mart Corp. 585,500 11,270,875
* Michaels Stores Inc. 10,300 363,398
Neiman Marcus Group 76,900 3,340,344
* Officemax Inc. 210,400 3,471,600
Ross Stores, Inc. 296,600 12,753,800
* Venator Group, Inc. 73,800 1,411,425
* Zale Corp. 117,300 3,731,606
--------------
99,928,774
--------------
Savings and Loan Associations: 1.44%
Golden West Financial Corp. 42,000 4,465,125
H.F. Ahmanson & Co. 125,200 8,889,200
TR Financial Corp. 56,700 2,374,313
Webster Financial Corp. 78,400 2,606,800
--------------
18,335,438
--------------
Steel: 3.08%
AK Steel Holding Corp. 120,900 2,161,087
* Bethlehem Steel Corp. 923,700 11,488,519
Inland Steel Industries, Inc. 246,400 6,945,400
Pohang Iron & Steel Co., ADR 206,400 2,476,800
Texas Industries, Inc. 34,200 1,812,600
USX-U.S. Steel Group 432,600 14,275,800
--------------
39,160,206
--------------
Supermarket Chains: 0.47%
Supervalu Inc. 133,400 5,919,625
--------------
Telecommunications: 0.17%
Century Telephone Enterprises, Inc. 8,900 408,288
Perusahaan PT IndoSat, ADR 21,800 242,525
Philippine Long Distance
Telephone Co., ADR 36,400 823,550
Portugal Telecommunications S.A., ADR 3,800 201,162
Telefonica De Argentina, ADR 15,600 506,025
--------------
2,181,550
--------------
11
<PAGE>
ZWEIG STRATEGY FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Tobacco: 0.74%
RJR Nabisco Holdings Corp. 390,200 $ 9,267,250
Universal Corp. 5,100 190,612
--------------
9,457,862
--------------
Transportation: 9.69%
* America West Holdings Corp., Class B 138,000 3,941,625
AMR Corp. 321,400 26,756,550
Burlington Northern Santa Fe Corp. 44,200 4,339,887
Canadian National Railway Co. 150,200 7,979,375
Comair Holdings, Inc. 70,000 2,161,250
* Continental Airlines, Inc., Class B 135,800 8,266,825
Delta Air Lines, Inc. 75,300 9,732,525
J.B. Hunt Transport Services, Inc. 74,500 2,654,063
KLM Royal Dutch Airlines N.V., ADR 139,820 5,723,881
Ryder System, Inc. 90,800 2,865,875
Southwest Airlines Co. 481,300 14,258,512
* UAL Corp. 24,900 1,942,200
* US Airways Group Inc. 332,300 26,334,775
USFreightways Corp. 124,800 4,098,900
Werner Enterprises Inc. 117,000 2,230,313
--------------
123,286,556
--------------
Trucks: 1.50%
Cummins Engine Co. 8,100 415,125
* Navistar Internationl Corp. . 383,400 11,070,675
PACCAR Inc. 144,000 7,524,000
--------------
19,009,800
--------------
Utilities: 7.69%
Allegheny Energy Inc. 5,000 150,625
BEC Energy Holding Co. 172,300 7,150,450
Central & South West Corp. 217,500 5,845,312
Consolidated Edison Co.
of New York, Inc. 78,100 3,597,481
DQE Inc. 34,200 1,231,200
DTE Energy Co. 200,200 8,083,075
Edison International 350,300 10,355,744
Endesa SA, ADR 22,000 475,750
Energy East Corp. 4,100 170,662
FirstEnergy Corp. 120,200 3,696,150
FPL Group Inc. 116,600 7,345,800
Gener SA, ADR 30,000 547,500
GPU, Inc. 301,100 11,385,344
Houston Industries Inc. 111,800 3,451,825
MidAmerican Energy Holdings Co. 111,600 2,413,350
Minnesota Power & Light Co. 23,200 922,200
Montana Power Co. 80,400 2,793,900
New England Electric System 149,200 6,452,900
Pinnacle West Capital Corp. 228,400 10,278,000
Public Service Enterprise Group Inc. 92,200 3,175,137
* Sempra Energy Corp. 110,600 3,069,150
UtiliCorp United Inc. 137,000 5,163,187
--------------
97,754,742
--------------
Waste Management: 0.02%
Laidlaw Environmental Services, Inc. 84,000 304,500
--------------
Wholesale Distributors: 0.18%
* United Stationers Inc. 34,900 2,259,775
--------------
Principal Amount
or Number Value
of Contracts (Note 2)
- -------------------------------------------------------------------------
Total Common Stocks
(Cost $825,094,906) $1,030,813,540
--------------
SHORT-TERM OBLIGATIONS: 2.59%
Federal Home Loan Mortgage Corp.,
Discount Notes: 1.57%
5.40%, 7/9/98 $ 5,000,000 4,993,483
5.46%, 7/24/98 15,000,000 14,945,399
--------------
19,938,882
--------------
Federal National Mortgage Assn.,
Discount Notes: 0.78%
5.47%, 7/17/98 10,000,000 9,974,170
--------------
United States Treasury Bills: 0.24%
4.85%, 7/23/98 2,000,000(a) 1,994,022
4.93%, 9/17/98 1,000,000(a) 989,383
--------------
2,983,405
--------------
Total Short-Term Obligations
(Cost $32,900,754) 32,896,457
--------------
REPURCHASE AGREEMENTS: 16.46%
With Morgan Stanley & Co., Inc.,
(dated 6/30/98), 6.25%, due 7/1/98
(Repurchase proceeds $129,328,449) ;
collateralized by: $129,951,933
Federal National Mortgage Association Bonds,
6.167% - 7.82%, 1/1/2002 - 7/1/2036
(Market value $132,355,607) 129,306,000 129,306,000
With Prudential Securities Inc.,
(dated 6/30/98), 6.05%, due 7/1/98
(Repurchase proceeds $80,013,444);
collateralized by: $80,746,084 of various
United States Government and Agency
Obligations, 4.925% - 9.00%,
9/3/98 - 7/1/2028
(Market value $81,600,485) 80,000,000 80,000,000
--------------
Total Repurchase Agreements
(Cost $209,306,000) 209,306,000
--------------
Total Investments in Securities
(Cost $1,067,301,660) 1,273,015,997
--------------
Net Unrealized Appreciation on
Futures Contracts: 0.09%
Standard & Poor's 500
Sept. 1998 Long futures (b) 159 1,185,351
--------------
TOTAL INVESTMENTS (COST $1,067,301,660) 100.21% 1,274,201,348
Other Assets 0.10 1,256,559
------ --------------
Total Assets 100.31% 1,275,457,907
Total Liabilities (Note 5) (0.31) (3,885,069)
------ --------------
Net Assets (Note 6) 100.00% $1,271,572,838
====== ==============
12
<PAGE>
- -------------------------------------------------------------------------------
Class A Shares
Net asset value (NAV) and redemption price per share
($562,709,962/33,054,736 shares) $17.02
======
Maximum public offering price per share -
NAV/(1 - maximum sales charge) ($17.02/.945) $18.01
======
Class B Shares
Net asset value and offering price per share
($95,913,148/5,604,061 shares) $17.11
======
Redemption price per share **
======
Class C Shares
Net asset value and offering price per share
($611,858,854/35,865,582 shares) $17.06
======
Redemption price per share **
======
Class I Shares
Net asset value, offering and redemption price per share
($1,090,874/63,680 shares) $17.13
======
- -------------------------------------------------------------------------------
* Non-income producing security.
(a) Pledged as collateral for futures transactions.
(b) The market value of the Long futures was $45,434,250 (repesenting 3.57%
of the Fund's net assets) with a cost of $44,248,899.
For Federal income tax purposes, the tax basis of investments owned at
June 30, 1998 was $1,067,866,478 and net unrealized appreciation on
investments consisted of:
Gross unrealized appreciation $240,035,566
Gross unrealized depreciation (33,700,696)
------------
Net unrealized appreciation $206,334,870
============
See notes to financial statements.
13
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of June 30, 1998 (Unaudited)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
COMMON STOCKS: 84.09%
Aerospace: 1.55%
AAR Corp. 30,000 $ 886,875
* Alliant Techsystems Inc. 4,900 309,925
* Aviall Inc. 33,800 462,637
Cordant Technologies Inc. 33,600 1,549,800
Curtiss-Wright Corp. 20,400 799,425
* Moog Inc., Class A 21,600 824,850
Precision Castparts Corp. 15,600 832,650
* Sequa Corp. 35,590 2,375,633
* Triumph Group Inc. 32,600 1,369,200
--------------
9,410,995
--------------
Air Freight: 0.75%
Airborne Freight Corp. 115,900 4,049,256
CNF Transportation Inc. 12,400 527,000
--------------
4,576,256
--------------
Apparel and Textiles: 1.56%
Burlington Industries, Inc. 59,400 835,312
Guilford Mills Inc. 31,600 632,000
Interface Inc., Class A 204,900 4,136,419
Kellwood Co. 5,500 196,625
* Mohawk Industries Inc. 51,000 1,616,063
Oshkosh B'gosh Inc. 19,200 854,400
Pillowtex Corp. 21,500 862,687
Shaw Industries Inc. 20,000 352,500
--------------
9,486,006
--------------
Automobiles: 0.06%
Honda Motor Co., Ltd., ADR 5,200 371,475
--------------
Automotive Parts and Equipment: 1.91%
Arvin Industries, Inc. 32,200 1,169,263
Borg-Warner Automotive, Inc. 23,300 1,119,856
Exide Corp. 12,400 208,475
Intermet Corp. 138,900 2,517,563
Mark IV Industries, Inc. 7,500 162,187
Modine Manufacturing Co. 30,000 1,038,750
* SPX Corp. 23,300 1,499,937
Standard Products Co. 74,100 2,084,063
Superior Industries International, Inc. 13,900 391,806
Wynn's International, Inc. 74,250 1,429,313
--------------
11,621,213
--------------
Banks: 1.82%
CVB Financial Corp. 22,078 535,392
First Union Corp. 7,196 419,167
Flagstar Bancorp 44,100 1,074,938
GBC Bancorp 14,400 381,600
* Imperial Bancorp 54,097 1,622,910
NBT Bancorp Inc. 18,700 474,512
North Fork Bancorporation, Inc. 17,679 432,031
Republic Bancorp 73,600 1,389,200
Riggs National Corp. 77,600 2,267,375
Sterling Bancorp 33,730 876,980
Trust Company of New Jersey 28,100 758,700
USBancorp, Inc. 10,700 827,244
--------------
11,060,049
--------------
Biotechnology: 0.03%
* Gensia Sicor Inc. 39,000 156,000
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Broadcasting: 0.02%
Grupo Radio Centro ADS 10,000 $ 111,250
--------------
Building Materials and Products: 4.12%
Centex Construction Products Inc. 99,044 3,813,194
Florida Rock Industries, Inc. 70,600 2,060,638
Lafarge Corp. 23,400 919,913
Lone Star Industries, Inc. 70,800 5,456,025
* Medusa Corp. 20,400 1,280,100
* Mestek, Inc. 44,200 944,775
* NCI Building Systems, Inc. 35,500 2,050,125
* Premdor, Inc. 12,600 125,212
* Simpson Manufacturing Inc. 11,500 444,187
Southdown, Inc. 78,700 5,617,212
TJ International Inc. 78,000 2,349,750
--------------
25,061,131
--------------
Casino Operators: 0.09%
* Rio Hotel & Casino, Inc. 30,000 566,250
--------------
Chemicals: 1.50%
Albemarle Corp. 25,400 560,388
* Bacou USA, Inc. 91,800 1,910,588
Cambrex Corp. 21,600 567,000
Dexter Corp. 10,500 334,031
* International Specialty Products Inc. 57,000 1,061,625
LeaRonal Inc. 12,900 307,988
* Methanex Corp. 35,200 303,600
Mine Safety Appliances Co. 15,900 1,192,500
Spartech Corp. 22,500 482,344
Stepan Co. 8,200 244,462
Terra Industries Inc. 30,900 278,100
Velcro Industries N.V. 200 27,850
* W. R. Grace & Co. 109,900 1,875,169
--------------
9,145,645
--------------
Commercial Services: 0.16%
* ADVO Inc. 2,000 56,375
Ogden Corp. 2,700 74,756
* Primark Corp. 14,078 440,817
* Veterinary Centers of America, Inc. 22,800 428,925
--------------
1,000,873
--------------
Communication Equipment: 0.06%
* Anixter International 18,700 356,469
--------------
Computers and Software: 2.01%
* Avid Technology, Inc. 18,700 626,450
* Boole & Babbage, Inc. 39,200 935,900
Comdisco, Inc. 98,550 1,872,450
* Hummingbird Communications Ltd. 9,800 262,150
* Mapics Inc. 66,300 1,305,281
* MTI Technology Corp. 51,600 472,463
* New Dimensions Software Ltd. 7,500 251,719
* PLATINUM Software Corp. 85,200 2,076,750
* QLogic Corp. 13,600 485,350
* Sterling Software, Inc. 63,800 1,886,088
* Stratus Computer, Inc. 26,500 670,781
* Symantec Corp. 52,800 1,379,400
--------------
12,224,782
--------------
14
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Construction and Farm Equipment: 0.56%
AGCO Corp. 72,200 $ 1,484,612
Manitowoc Company, Inc. 47,150 1,900,734
--------------
3,385,346
--------------
Consumer Products and Services: 0.48%
* Fossil, Inc. 58,450 1,453,944
Russ Berrie & Co., Inc. 59,100 1,477,500
--------------
2,931,444
--------------
Containers and Packaging: 0.15%
Ball Corp. 18,400 739,450
Vitro Sociedad Anonima, ADR . 29,400 187,425
--------------
926,875
--------------
Electrical Products: 1.89%
* AFC Cable Systems, Inc. 47,700 1,693,350
C&D Technologies, Inc. 19,300 1,119,400
* Genlyte Group Inc. 100,900 2,673,850
Kuhlman Corp. 39,700 1,570,631
* Magnetek Inc. 8,600 135,450
* Powell Industries Inc. 3,300 41,250
Superior Telecom Inc. 31,200 1,298,700
Technitrol Inc. 48,300 1,928,981
Tecumseh Products Co., Class A 20,100 1,061,531
--------------
11,523,143
--------------
Electronics: 1.42%
* Bel Fuse Inc. 28,700 638,575
Canadian Marconi Co. 96,500 1,248,469
* CHS Electronics Inc. 15,400 275,275
Elron Electronic Industries Ltd. 79,800 1,391,513
* Esterline Technologies Corp. 89,000 1,857,875
* InaCom Inc. 16,700 530,225
MTS Systems Corp. 86,800 1,394,225
* Orbotech Ltd. 35,100 1,276,763
* Siliconix Inc. 900 22,050
--------------
8,634,970
--------------
Engineering: 0.30%
* Dycom Industries, Inc. 8,500 286,875
* Jacobs Engineering Group Inc. 11,500 369,438
* Morrison Knudsen Corp. 68,300 960,469
Stone & Webster Inc. 5,400 213,975
--------------
1,830,757
--------------
Entertainment: 0.33%
* Anchor Gaming Co. 14,100 1,094,513
* Radica Games Ltd. 52,700 889,313
--------------
1,983,826
--------------
Finance: 3.62%
* Americredit Corp. 33,900 1,209,806
Cash America International Inc. 22,000 335,500
* Contifinancial Corp. 9,900 228,937
Doral Financial Corp. 200,800 3,514,000
* Electro Rent Corp. 204,650 4,591,834
* First Republic Bank . 10,200 368,475
Fund American Enterprise Holdings, Inc. 5,500 814,000
* IMC Mortgage Corp. 21,200 223,925
Liberty Financial Companies, Inc. 77,300 2,666,850
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
McGrath Rentcorp. 46,100 $ 973,863
Price Enterprises Inc. 132,000 2,425,500
Resource Bancshares Mortgage Group 163,000 3,035,875
XTRA Corp. 26,400 1,597,200
--------------
21,985,765
--------------
Food and Beverages: 1.89%
Adolph Coors Co., Class B 61,200 2,080,800
Canandaigua Brands, Class A 43,200 2,124,900
Earthgrains Co. 33,300 1,860,637
Michael Foods Inc. 77,500 2,276,562
Pepsi-Gemex S.A. de C.V., ADR 21,300 256,931
Pilgrim's Pride Corp. 119,900 2,398,000
Seaboard Corp. 300 87,300
* Seneca Foods Corp., Class B 2,200 32,450
* Smithfield Foods Inc. 12,000 366,000
--------------
11,483,580
--------------
Forest and Paper Products: 0.39%
Chesapeake Corp. 4,500 175,219
MacMillan Bloedel Ltd. 66,700 708,687
Wausau-Mosinee Paper Corp. 64,008 1,464,183
--------------
2,348,089
--------------
Healthcare Facilities and Products: 2.45%
* Beverly Enterprises, Inc. 53,600 740,350
* Cooper Companies Inc. 89,300 3,253,869
* Extendicare Inc., Class A 29,500 250,750
Integrated Health Services, Inc. 113,117 4,241,888
* NovaCare Inc. 13,700 160,975
* Sun Healthcare Group, Inc. 104,100 1,522,463
* Trigon Healthcare Inc. 6,300 227,981
United Wisconsin Services, Inc. 33,800 959,075
* Universal Health Services, Inc., Class B 11,700 682,987
* VISX Inc. 47,100 2,802,450
West Companies Inc. 1,500 42,469
--------------
14,885,257
--------------
Homebuilding and Land Development: 3.29%
* American Homestar Corp. 40,800 976,650
Centex Corp. 126,300 4,767,825
* Champion Enterprises Inc. 22,100 649,187
* Crossmann Communities Inc. 9,100 276,412
D.R. Horton Inc. 173,050 3,612,419
Del Webb Corp. 14,400 373,500
Fleetwood Enterprises, Inc. 37,100 1,484,000
Kaufman & Broad Home Corp. 46,900 1,489,075
Lennar Corp. 30,603 902,789
M.D.C Holdings Inc. 13,700 270,575
Pulte Corp. 42,200 1,260,725
Ryland Group Inc. 6,000 157,500
Standard Pacific Corp. 71,100 1,466,437
* Toll Brothers Inc. 43,100 1,236,431
* U.S. Home Corp. 26,229 1,081,946
--------------
20,005,471
--------------
Hotels: 0.46%
Bristol Hotel Co. 40,600 994,700
* CapStar Hotel Co. 13,400 375,200
* Servico Inc. 68,600 1,029,000
* Sun International Hotels Ltd. 8,200 373,100
--------------
2,772,000
--------------
15
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Household Furnishings and Products: 1.69%
Bush Industries Inc., Class A 2,900 $ 63,075
Ethan Allen Interiors Inc. 60,000 2,996,250
* Furniture Brands International, Inc. 96,200 2,699,612
La-Z-Boy Inc. 4,600 259,900
L. S. Starrett Co. 24,800 979,600
Oneida Ltd. 85,850 2,629,156
* O'Sullivan Industries Holdings, Inc. 12,300 172,200
* Windmere-Durable Holdings, Inc. 13,300 476,306
--------------
10,276,099
--------------
Industrial Products, Services and Machinery: 1.88%
Applied Power Inc., Class A 26,700 917,812
Chart Industries Inc. 5,400 128,925
Cincinnati Milacron Inc. 35,000 850,938
DT Industries, Inc. 7,400 179,450
Gleason Corp. 134,600 3,785,625
* Indigo N.V. 40,200 238,688
Lincoln Electric Co. 10,800 238,950
* Motivepower Industries Inc. 106,700 2,614,150
NACCO Industries, Inc., Class A 8,900 1,150,325
* Specialty Equipment Companies Inc. 37,300 843,913
Woodward Governor Co. 16,500 509,438
--------------
11,458,214
--------------
Insurance: 6.05%
Alfa Corp. 27,900 578,925
* Alleghany Corp. 700 163,275
American Annuity Group, Inc. 89,600 2,156,000
AmerUS Life Holdings Inc., Class A 8,200 265,475
Capital Re Corp. 13,500 966,938
Chartwell Re Corp. 22,800 671,175
* Chicago Title Corp. 3,300 152,419
Citizens Corp. 14,500 454,031
CMAC Investment Corp. 1,400 86,100
* Delphi Financial Group, Inc., Class A 37,527 2,113,239
Enhance Financial Services Group Inc. 34,400 1,161,000
Everest Reinsurance Holdings Inc. 34,600 1,329,937
FBL Financial Group Inc.,Class A 53,300 1,365,813
Fidelity National Financial, Inc. 30,700 1,222,244
Financial Security Assurance Holdings Ltd. 19,400 1,139,750
First American Financial Corp. 13,550 1,219,500
Foremost Corp. of America 62,400 1,505,400
Fremont General Corp. 45,200 2,449,275
* Highlands Insurance Group Inc. 12,900 238,650
Hooper Holmes Inc. 11,600 243,600
LandAmerica Financial Group Inc. 8,300 475,175
Lasalle Re Holdings Ltd. 8,900 337,088
Life Re Corp. 16,100 1,320,200
* Markel Corp. 400 71,200
Medical Assurance Inc. 13,133 364,441
NAC Re Corp. 9,500 507,062
* National Western Life Insurance Co.,
Class A 6,400 774,400
Nationwide Financial Services, Inc.,
Class A 19,000 969,000
NYMAGIC, Inc. 25,926 709,724
Old Republic International Corp. 39,725 1,164,439
Orion Capital Corp. 25,600 1,430,400
Presidential Life Corp. 116,900 2,498,737
Reinsurance Group of America Inc. 1,200 70,950
Reliance Group Holdings, Inc. 93,000 1,627,500
Renaissance Re Holdings Ltd. 22,700 1,051,294
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
RLI Corp. 30,000 $ 1,220,625
State Auto Financial Corp. 5,500 175,313
Tokio Marine & Fire Insurance Ltd., ADR 2,100 106,838
Transatlantic Holdings Inc. 2,650 204,878
* Triad Guaranty Inc. 50,200 1,706,800
Vesta Insurance Group 26,000 554,125
--------------
36,822,935
--------------
Investment Banking and Brokerage: 1.48%
EVEREN Capital Corp. 6,200 173,600
Jefferies Group, Inc. 99,800 4,091,800
McDonald & Co. Investments, Inc. 70,100 2,300,156
Morgan Keegan Inc. 28,300 732,262
Raymond James Financial Corp. 46,617 1,395,596
Southwest Securities Group Inc. 13,970 314,364
--------------
9,007,778
--------------
Manufacturing: 4.34%
A.O.Smith Corp. 26,900 1,390,394
* ACX Technologies, Inc. 2,600 56,550
Aeroquip-Vickers Inc. 39,500 2,305,812
AptarGroup Inc. 4,200 261,188
* Astec Industries 12,900 445,050
Barnes Group . 130,600 3,534,362
Carlisle Companies Inc. 6,300 271,294
CTS Corp. 86,400 2,548,800
Graco Inc. 8,300 289,462
Koor Industries Ltd., ADR 2,300 53,762
Myers Industries . 25,300 607,200
* NOVA Corp. 1,400 16,188
Pentair, Inc. 9,100 386,750
Premark International Inc. 44,600 1,438,350
Robbins & Myers Inc. 87,500 2,542,969
* SPS Technologies Inc. 59,200 3,463,200
Thomas Industries Inc. 61,790 1,509,993
Tredegar Industries Inc. 55,600 4,719,050
U.S. Industries, Inc. 2,520 62,370
United Dominion Industries Ltd. 10,400 347,100
Valhi Inc. 16,600 173,263
--------------
26,423,107
--------------
Metal Fabrication: 3.68%
Ampco-Pittsburgh Corp. 60,900 936,337
* Avondale Industries, Inc. 138,900 3,832,772
* Encore Wire Corp. 111,900 1,804,388
* Hexcel Corp. 12,600 285,075
Kaydon Corp. 18,200 642,687
Kennametal, Inc. 8,200 342,350
* Maverick Tube Corp. 9,300 108,112
* Mueller Industries, Inc. 127,600 4,737,150
Reliance Steel & Aluminum Co. 72,600 2,804,175
* RMI Titanium Co. 157,500 3,583,125
Timken Co. 12,700 391,319
* Tower Automotive Inc. 30,100 1,290,537
Varlen Corp. 46,900 1,618,050
--------------
22,376,077
--------------
Metals and Mining: 0.19%
* Alumax Inc. 17,613 816,803
Anglogold Ltd. ADR 10,120 205,320
Arch Coal Inc. 3,200 79,600
Tremont Corp. 500 28,094
--------------
1,129,817
--------------
16
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Office Automation and Equipment: 0.07%
* Knoll Inc. 13,800 $ 407,100
--------------
Oil and Gas: 3.78%
* Atwood Oceanics Inc. 7,000 278,687
BP Prudhoe Bay Royalty Trust Co. 43,100 460,631
Cabot Oil & Gas Corp., Class A 14,100 282,000
* Cliffs Drilling Co. 76,000 2,493,750
Columbia Energy Group 20,400 1,134,750
Devon Energy Corp. 27,200 950,300
Energen Corp. 77,200 1,553,650
FINA, Inc., Class A 8,500 552,500
Helmerich & Payne, Inc. 22,800 507,300
Imperial Oil Ltd. 4,500 78,469
* Louis Dreyfus Natural Gas Corp. 9,900 187,481
Lufkin Industries, Inc. 26,800 884,400
MDU Resources Group Inc. 24,300 867,206
National Fuel Gas Co. 6,700 291,869
NICOR Inc. 9,600 385,200
ONEOK Inc. 1,400 55,825
Piedmont Natural Gas Co. 2,100 70,612
* Pool Energy Services Co. 51,600 761,100
RPC Inc. 243,320 3,041,500
San Juan Basin Royalty Trust Co. 9,300 70,331
* SEACOR Smit Inc. 25,000 1,532,812
Southwest Gas Corp. 34,200 835,762
* Tuboscope Vetco International Corp. 39,000 770,250
* Veritas DGC Inc. 94,355 4,711,853
Vintage Petroleum Inc. 10,100 190,638
Washington Gas Light Co. 2,200 58,850
--------------
23,007,726
--------------
Polution Control Equipment: 0.05%
Met-Pro Corp. 21,420 319,961
--------------
Printing and Forms: 1.25%
Banta Corp. 55,600 1,716,650
Bowne & Co., Inc. 38,100 1,714,500
* Mail-Well, Inc. 30,200 654,963
Merrill Corp. 77,000 1,698,812
Quebecor Inc., Class A 46,800 938,925
* World Color Press Inc. 24,500 857,500
--------------
7,581,350
--------------
Publishing: 0.02%
Value Line Inc. 2,600 99,450
--------------
Real Estate Investment Trusts: 2.60%
American General Hospitality Corp. 16,800 357,000
Apartment Investment & Management Co.,
Class A 28,400 1,121,800
* Avalon Bay Communities, Inc. 6,900 262,200
Bradley Real Estate Inc. 52,800 1,115,400
CBL & Associates Properties, Inc. 14,600 354,050
Cousins Properties Inc. 34,100 1,018,737
Criimi Mae Inc. 50,700 703,462
Equity Inns Inc. 42,200 556,513
Essex Property Trust Inc. 13,800 427,800
FelCor Suite Hotels, Inc. 40,400 1,267,550
General Growth Properties Inc. 13,700 512,038
Highwoods Properties Inc. 4,000 129,250
IMPAC Mortgage Holdings Inc. 27,300 424,856
Indymac Mortgage Holdings Inc. 14,200 323,050
Kimco Realty Corp. 25,800 1,057,800
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Kimco Realty Corp., 7.5% Cum. Conv. Pfd. 9,288 $ 251,937
Koger Equity Inc. 13,400 270,513
Liberty Property Trust 36,300 927,919
Macerich Co. 11,500 337,094
Manufactured Home Communities Inc. 63,500 1,531,938
Parkway Properties Inc. 5,600 165,200
Prentiss Properties Trust . 11,000 267,437
RFS Hotel Investors Inc. 45,500 864,500
Sunstone Hotel Investors Inc. 23,300 310,181
Thornburg Mortgage Asset Corp. 12,900 157,219
Urban Shopping Centers Inc. 100 3,150
Urstadt Biddle Properties 695 12,336
U.S. Restaurant Properties, Inc. 39,200 1,060,850
--------------
15,791,780
--------------
Recreational Products: 0.15%
Coachmen Industries, Inc. 10,700 279,538
Score Board Inc. 786 25
Thor Industries Inc. 24,050 665,885
--------------
945,448
--------------
Restaurants: 1.16%
Bob Evans Farms, Inc. 9,600 203,400
* Brinker International Inc. 37,700 725,725
Foodmaker, Inc. 132,200 2,230,875
* Showbiz Pizza Time, Inc. 97,100 3,914,344
--------------
7,074,344
--------------
Retail Trade: 6.52%
* American Eagle Outfitters Inc. 29,400 1,133,737
* Ames Department Stores Inc. 165,300 4,349,456
* Buckle Inc. 58,500 1,725,750
Burlington Coat Factory Warehouse Corp. 36,800 828,000
Cato Corp., Class A 112,200 1,952,981
* Central Garden & Pet Co. 13,300 413,962
* Dress Barn, Inc. 103,900 2,584,512
* Eagle Hardware & Garden Inc. 41,700 964,312
* Fabri-Centers of America, Inc., Class A 41,000 1,122,375
Fingerhut Companies, Inc. 80,200 2,646,600
* Finish Line Inc., Class A 63,000 1,771,875
* Footstar Inc. 8,800 422,400
* Garden Ridge Corp. 12,000 232,500
* Genesco Inc. 84,900 1,384,931
* Goody's Family Clothing Inc. 76,600 4,203,425
Hughes Supply, Inc. 55,650 2,038,181
* Insight Enterprises, Inc. 67,200 2,688,000
* Maxim Group Inc. 8,000 159,000
* Michaels Stores Inc. 34,100 1,203,091
* Musicland Stores Corp. 69,700 975,800
Neiman Marcus Group 19,800 860,063
* Renters Choice Inc. 35,400 1,004,475
* Trans World Entertainment Corp. 89,800 3,872,625
* Zale Corp. 35,500 1,129,344
--------------
39,667,395
--------------
Savings and Loan Associations: 2.35%
* Anchor Bancorp Wisconsin, Inc. 3,200 125,000
Coast Federal Litigation Trust,
CPR Certificates 14,900 225,362
Downey Financial Corp. 80,780 2,640,496
* Firstfed Financial Corp. 43,600 2,267,200
MAF Bancorp Inc. 31,550 1,147,631
* PFF Bancorp Inc. 12,400 230,950
17
<PAGE>
ZWEIG APPRECIATION FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Savings and Loan
Associations (continued)
TR Financial Corp. 136,100 $ 5,699,187
Webster Financial Corp. 59,000 1,961,750
--------------
14,297,576
--------------
Shoes: 0.12%
Stride Rite Corp. 18,600 280,162
* Timberland Co., Class A 5,600 402,850
Weyco Group Inc. 2,400 62,700
--------------
745,712
--------------
Steel: 1.97%
AK Steel Holding Corp. 116,200 2,077,075
* ARMCO Inc. 242,400 1,545,300
* Bethlehem Steel Corp. 243,800 3,032,262
Carpenter Technology Corp. 3,400 170,850
Cleveland-Cliffs Inc. 2,400 128,700
Inland Steel Industries, Inc. 28,200 794,888
IPSCO Inc. 9,900 266,062
Lone Star Technologies, Inc. 72,300 1,102,575
LTV Corp. 25,400 242,887
National Steel Corp., Class B 2,900 34,437
* NS Group, Inc. 24,700 250,087
Roanoke Electric Steel Corp. 61,300 1,149,375
Texas Industries, Inc. 22,900 1,213,700
--------------
12,008,198
--------------
Supermarket Chains: 0.20%
Great Atlantic & Pacific Tea Company, Inc. 36,000 1,190,250
--------------
Telecommunications: 0.05%
Atlantic Tele-Network, Inc. 16,720 207,955
Tele Danmark A.S., ADR 1,700 80,112
--------------
288,067
--------------
Tobacco: 0.42%
Universal Corp. 68,400 2,556,450
--------------
Transportation: 5.69%
* Alaska Air Group, Inc. 95,700 5,221,631
Alexander & Baldwin Inc. 65,600 1,910,600
* America West Holding Corp., Class B 66,300 1,893,694
Comair Holdings Inc. 74,100 2,287,838
Florida East Coast Industries, Inc. 13,200 386,100
GATX Corp. 8,400 368,550
* Greyhound Lines Inc. 264,000 1,600,500
J. B. Hunt Transport Services, Inc. 76,400 2,721,750
KLM Royal Dutch Airlines N.V., ADR 8,762 358,694
* Marine Transport Corp. 960 3,900
* Mesaba Holdings Inc. 63,750 1,466,250
* Midwest Express Holdings Inc. 10,950 396,253
* M S Carriers Inc. 102,200 2,772,175
Oglebay Norton Co. 3,700 146,150
* Omi Corp. (New) 7,900 63,200
Roadway Express, Inc. 44,800 845,600
Rollins Truck Leasing Corp. 121,000 1,497,375
* Sea Containers Ltd., Class A . 10,100 386,325
Skywest Inc. 137,400 3,847,200
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Stolt-Nielsen, SA 44,300 $ 758,638
USFreightways Corp. 110,400 3,625,950
Werner Enterprises Inc. 109,225 2,082,102
--------------
34,640,475
--------------
Trucks: 1.54%
* Gardner Denver Machinery Inc. 184,900 5,107,863
* Navistar International Corp. 73,500 2,122,313
* Terex Corp. 74,300 2,117,550
--------------
9,347,726
--------------
Utilities: 2.59%
BEC Energy Co. 85,300 3,539,950
Commonwealth Energy System . 3,900 147,225
* El Paso Electric Co. 114,600 1,052,888
Empresa Nacional de Electricidad (Chile),
ADR 19,900 283,575
Hawaiian Electric Industries Inc. 3,200 127,000
IPALCO Enterprises, Inc. 27,100 1,204,256
MidAmerican Energy Holdings Co. 89,800 1,941,925
Minnesota Power Inc. 27,700 1,101,075
Montana Power Co. 25,800 896,550
Orange & Rockland Utilities, Inc. 7,200 386,550
Powergen Plc, ADR 600 33,825
Public Service Co. of New Mexico 23,100 524,081
Rochester Gas & Electric Co. 55,400 1,769,338
Sierra Pacific Resources 21,900 795,244
SIGCORP Inc. 300 9,619
TNP Enterprises Inc. 7,500 231,563
UtiliCorp United Inc. 46,000 1,733,625
--------------
15,778,289
--------------
Waste Management: 0.10%
Laidlaw Environmental Services, Inc. 146,300 530,338
* Thermo Ecotek Corp. 4,200 65,625
--------------
595,963
--------------
Wholesale Distributors: 1.28%
* Handleman Co. 22,000 253,000
* PEC Israel Economic Corp. 44,100 1,052,888
* United Stationers Inc. 87,900 5,691,525
* VWR Scientific Products Corp. 32,800 807,700
--------------
7,805,113
--------------
Total Common Stocks
(Cost $410,001,893) 511,487,317
--------------
SHORT-TERM OBLIGATIONS: 0.98%
Federal Home Loan Mortgage Corp.,
Discount Notes: 0.49%
5.44%, 7/31/98 $3,000,000 2,985,947
--------------
United States Treasury Bills: 0.49%
4.85%, 7/23/98 2,000,000 1,994,022
4.87%, 7/23/98 1,000,000 997,011
--------------
2,991,033
--------------
Total Short-Term Obligations
(Cost $5,977,496) 5,976,980
--------------
18
<PAGE>
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS: 14.97%
With Morgan Stanley & Co., Inc.,
(DATED 6/30/98), 6.25%, DUE 7/1/98
(Repurchase proceeds $61,067,600) ;
collateralized by: $61,707,458
Federal National Mortgage Association Bonds,
6.115%--7.782%, 1/1/2027--6/1/2029
(Market value $62,573,530) $61,057,000 $ 61,057,000
With Prudential Securities Inc.,
(dated 6/30/98), 6.05%, due 7/1/98
(Repurchase proceeds $30,005,042);
collateralized by: $30,743,292 of various United
States Government and Agency Obligations,
4.925%--5.799%, 9/3/98--6/1/2028
(Market value $30,600,645) 30,000,000 30,000,000
--------------
Total Repurchase Agreements
(Cost $91,057,000) 91,057,000
--------------
Total Investments (Cost $507,036,389) 100.04% 608,521,297
Other Assets 0.19 1,141,666
------ --------------
Total Assets 100.23% 609,662,963
Total Liabilities (Note 5) (0.23) (1,383,844)
------ --------------
NET ASSETS (NOTE 6) 100.00% $ 608,279,119
====== ==============
Class A Shares
Net asset value ("NAV") and redemption price per share
($307,446,951/15,531,036 shares) $19.80
======
Maximum public offering price per share -
NAV/(1- maximum sales charge) ($19.80/.945) $20.95
======
Class B Shares
Net asset value and offering price per share
($32,919,205/1,682,034 SHARES) $19.57
======
Redemption price per share **
======
Class C Shares
Net asset value and offering price per share
($265,947,788/13,610,004 shares) $19.54
======
Redemption price per share **
======
Class I Shares
Net asset value, offering and redemption price per share
($1,965,175/98,110 shares) $20.03
======
- -------------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held. (Note 3b)
For Federal income tax purposes, the tax basis of investments owned at June
30, 1998 was $507,161,154 and net unrealized appreciation on investments
consisted of:
Gross unrealized appreciation $112,481,115
Gross unrealized depreciation (11,120,972)
------------
Net unrealized appreciation. $101,360,143
============
See notes to financial statements
19
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of June 30, 1998 (Unaudited)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
COMMON STOCKS: 50.27%
UNITED STATES: 24.82%
Airfreight: 0.08%
CNF Transportation Inc. 11,000 $ 467,500
--------------
Airlines: 0.25%
* AMR Corp. 8,000 666,000
Delta Air Lines Inc. 6,000 775,500
--------------
1,441,500
--------------
Apparel and Textiles: 0.08%
Spring Industries Inc., Class A 10,000 461,250
--------------
Automobiles: 0.93%
Chrysler Corp. 48,000 2,706,000
General Motors Corp. 40,000 2,672,500
--------------
5,378,500
--------------
Automotive Parts and Equipment: 0.27%
Snap-On Inc. 43,000 1,558,750
--------------
Banks: 2.09%
Bankers Trust New York Corp. 42,000 4,874,625
Fleet Financial Group Inc. 34,000 2,839,000
PNC Bank Corp. 82,000 4,412,625
--------------
12,126,250
--------------
Biotechnology: 0.39%
Amgen Inc. 25,000 1,634,375
* Biogen Inc. 13,000 637,000
--------------
2,271,375
--------------
Broadcasting: 0.43%
CBS Corp. 12,326 391,350
Viacom Inc., Class B 36,000 2,097,000
--------------
2,488,350
--------------
Building Materials and Products: 0.65%
Armstrong World Industries, Inc. 11,000 741,125
Lafarge Corp. 50,000 1,965,625
* USG Corp. 19,000 1,028,375
--------------
3,735,125
--------------
Chemicals: 0.78%
Dow Chemical Corp. 11,000 1,063,562
Ethyl Corp. 140,000 857,500
International Flavors & Fragrances Corp. 22,000 955,625
Olin Corp. 40,000 1,667,500
--------------
4,544,187
--------------
Computers and Software: 1.41%
Adobe Systems Inc. 49,000 2,079,437
Compaq Computer Corp. 84,000 2,383,500
Electronic Data Systems Corp. 17,000 680,000
International Business Machines Corp. 14,000 1,607,375
* Oracle Corp. 58,000 1,424,625
--------------
8,174,937
--------------
Conglomerates: 0.56%
ITT Industries Inc. 29,000 1,083,875
National Service Industries, Inc. 42,000 2,136,750
--------------
3,220,625
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Consumer Products and Services: 0.59%
Colgate-Palmolive Co. 20,000 $ 1,760,000
Kimberly-Clark Corp. 13,000 596,375
Ralston-Purina Group Inc. 9,000 1,051,313
--------------
3,407,688
--------------
Electrical Equipment: 0.11%
Cooper Industries Inc. 12,000 659,250
--------------
Electronics: 0.99%
* Computer Sciences Corp. 18,000 1,152,000
Harris Corp. 36,000 1,608,750
Intel Corp. 10,000 741,250
* Litton Industries Inc. 13,000 767,000
* STMicroelectronics N.V. 21,000 1,467,375
--------------
5,736,375
--------------
Engineering: 0.11%
Harnischfeger Industries Inc. 23,000 651,188
--------------
Entertainment: 0.58%
Gaylord Entertainment Inc., Class A 40,333 1,300,739
* King World Productions Inc. 80,000 2,040,000
--------------
3,340,739
--------------
Finance: 1.45%
Beneficial Corp. 9,000 1,378,687
Federal National Mortgage Association 66,000 4,009,500
Greentree Financial Corp. 11,500 492,344
SunAmerica Inc. 10,000 574,375
TransAmerica Corp. 17,000 1,957,125
--------------
8,412,031
--------------
Food and Beverages: 0.66%
Adolph Coors Co., Class B 15,000 510,000
Conagra Inc. 70,000 2,218,125
IBP Inc. 60,000 1,087,500
--------------
3,815,625
--------------
Hospitals and Healthcare: 0.23%
Manor Care Inc. 34,000 1,306,875
--------------
Hotels: 0.07%
Marriott International Inc. 12,000 388,500
--------------
Household Products: 0.36%
Maytag Corp. 38,000 1,876,250
Tupperware Corp. 8,000 225,000
--------------
2,101,250
--------------
Industrial Products, Services and Machinery: 0.18%
NACCO Industries Inc., Class A 8,000 1,034,000
--------------
Insurance: 1.34%
AFLAC Inc. 52,000 1,576,250
CIGNA Corp. 41,100 2,835,900
* CNA Financial Corp. 30,000 1,396,875
EXEL Limited 25,000 1,945,313
--------------
7,754,338
--------------
Investment Banking and Brokerage: 0.31%
PaineWebber Group Inc. 42,000 1,806,000
--------------
20
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Metals and Mining: 0.29%
Aluminum Co. of America 6,000 $ 395,625
ASARCO Inc. 19,000 422,750
Freeport McMoran Copper & Gold Co.,
Class B 23,000 349,312
Newmont Mining Corp. 22,000 519,750
--------------
1,687,437
--------------
Natural Gas: 0.17%
Consolidated Natural Gas Co. 17,000 1,000,875
--------------
Office Automation and Equipment: 0.16%
Xerox Corp. 9,000 914,625
--------------
Oil and Gas: 1.84%
Amerada Hess Corp. 28,000 1,520,750
Ashland Inc. 66,000 3,407,250
Dresser Industries Inc. 23,000 1,013,438
Phillips Petroleum Co. 52,000 2,505,750
Sun Company, Inc. 32,000 1,242,000
Texaco Inc. 10,000 596,875
Unocal Corp. 10,000 357,500
--------------
10,643,563
--------------
Pharmaceuticals: 1.66%
Allergan Inc. 66,000 3,060,750
Merck & Co. 15,000 2,006,250
Pfizer Inc. 23,000 2,499,813
Schering-Plough Inc. 22,600 2,070,725
--------------
9,637,538
--------------
Photographic Products: 0.09%
Eastman Kodak Co. 7,000 511,438
--------------
Printing and Publishing: 0.21%
Knight-Ridder Inc. 6,000 330,375
McGraw-Hill Cos. 11,000 897,187
--------------
1,227,562
--------------
Recreational Products: 0.19%
Mattel Inc. 26,000 1,100,125
--------------
Restaurants: 0.29%
* Brinker International Inc. 23,000 442,750
Darden Restaurants, Inc. 44,000 698,500
* Host Marriot Corp. 30,000 534,375
--------------
1,675,625
--------------
Retail Trade: 1.28%
* Federated Deptartment Stores Inc. 34,000 1,829,625
* K-Mart Corp. 40,000 770,000
Sears Roebuck & Co. 37,000 2,259,313
Supervalu Inc. 27,000 1,198,125
TJX Companies Inc. 26,000 627,250
* Toys "R" Us Inc. 32,000 754,000
--------------
7,438,313
--------------
Shoes: 0.07%
* Reebok International Ltd. 14,000 387,625
--------------
Steel: 0.12%
USX-U.S. Steel Group Inc. 22,000 726,000
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Telecommunications: 1.99%
* Airtouch Communications Corp. 17,000 $ 993,437
AT&T Corp. 70,000 3,998,750
Bell Atlantic Corp. 30,720 1,401,600
Lucent Technologies Inc. 26,000 2,162,875
MCI Communications Corp. 7,000 406,875
* United States Cellular Corp. 38,100 1,171,575
U S West Communications Group Inc. 30,000 1,410,000
--------------
11,545,112
--------------
Tobacco: 0.67%
Philip Morris Companies Inc. 34,000 1,338,750
RJR Nabisco Holdings Corp. 63,000 1,496,250
UST Inc. 38,000 1,026,000
--------------
3,861,000
--------------
Utilities: 0.79%
FirstEnergy Corp. 102,000 3,136,500
Texas Utilities Co. 2,874 119,630
UtiliCorp United Inc. 35,000 1,319,063
--------------
4,575,193
--------------
Waste Management: 0.10%
Browning-Ferris Industries Inc. 17,000 590,750
--------------
Total United States
(Cost $116,033,186) 143,804,989
--------------
FOREIGN STOCKS: 25.45%
Australia: 1.06%
Business Services: 0.19%
Brambles Industries Ltd. 55,000 1,079,360
--------------
Conglomerates: 0.19%
Broken Hill Proprietary Ltd. 131,700 1,113,268
--------------
Metals and Mining: 0.13%
WMC Ltd. 258,500 777,997
--------------
Newspapers: 0.49%
News Corp. Ltd. 345,300 2,818,339
--------------
Recreational Products: 0.06%
* TAB Ltd. 240,000 353,728
--------------
Total Australia 6,142,692
--------------
Denmark: 1.02%
Airlines: 0.02%
SAS Danmark AS 6,600 132,441
--------------
Banks: 0.18%
Den Danske Bank 4,600 551,839
Unidanmark AS, Class A 5,200 467,297
--------------
1,019,136
--------------
Business Services: 0.03%
ISS International Service Systems, Class B 2,700 157,045
--------------
21
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Food and Beverages: 0.16%
Carlsberg, Class A 5,000 $ 363,531
Danisco 8,100 544,162
--------------
907,693
--------------
Homebuilders: 0.03%
Superfos AS 7,600 204,450
--------------
Hospitals and Healthcare: 0.17%
Novo-Nordisk AS, Class B 7,200 992,526
--------------
Household Products: 0.03%
Bang & Olufsen Holdings 2,200 158,354
--------------
Telecommunications: 0.21%
GN Store Nord 10,100 308,419
Tele Danmark AS, Class B 9,400 902,137
--------------
1,210,556
--------------
Transportation: 0.19%
D/S 1912, Class B 95 815,036
D/S Svendborg, Class B 24 293,151
--------------
1,108,187
--------------
Total Denmark 5,890,388
--------------
Finland: 1.36%
Banks: 0.11%
* Merita Ltd., Class A 98,200 647,925
--------------
Conglomerates: 0.06%
Metra OY, Class B 10,200 334,640
--------------
Electronics: 0.85%
Nokia AB, Class A 67,000 4,927,458
--------------
Food and Beverages: 0.04%
Cultor OY 1 14,100 228,725
--------------
Forest and Paper Products: 0.18%
* UPM-Kymmen OY 39,100 1,076,114
--------------
Insurance: 0.08%
Sampo Insurance Co., Class A 9,300 440,718
--------------
Metals and Mining: 0.04%
Outokumpu OY, Class A 18,800 239,861
--------------
Total Finland 7,895,441
--------------
France: 4.14%
Banks: 0.42%
Banque Nationale De Paris 15,300 1,250,116
Societe Generale Paris 5,550 1,153,878
--------------
2,403,994
--------------
Business Services: 0.37%
Vivendi 10,100 2,156,649
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Chemicals: 0.17%
Air Liquide Co. 5,906 $ 976,844
--------------
Consumer Products and Services: 0.71%
Loreal Co. 6,650 3,698,966
* Promodes 800 443,268
--------------
4,142,234
--------------
Electronics: 0.35%
Alcatel Alsthom 7,500 1,527,043
* Schneider SA 6,250 498,367
--------------
2,025,410
--------------
Food and Beverages: 0.12%
LVMH Moet Hennessy 3,550 710,470
--------------
Insurance: 0.48%
AXA UAP 24,650 2,772,411
--------------
Oil and Gas: 0.27%
Societe Nationale Elf Aquitaine 11,300 1,588,654
--------------
Real Estate: 0.09%
Simco 6,600 541,449
--------------
Retail Trade: 0.49%
Carrefour 2,650 1,676,522
Cie De St. Gobain 6,150 1,140,283
--------------
2,816,805
--------------
Telecommunications: 0.52%
* France Telecom SA 43,400 2,993,351
--------------
Utilities: 0.15%
Total SA, Class B 6,650 864,522
--------------
Total France 23,992,793
--------------
Germany: 4.86%
Automobiles: 0.74%
Daimler-Benz AG . 22,000 2,163,435
Volkswagen AG 2,200 2,124,432
--------------
4,287,867
--------------
Banks: 0.98%
* Bayerische Hypotheken-Und 26,800 1,698,571
Deutsche Bank AG 26,200 2,215,025
Dresdner Bank AG 32,400 1,750,138
--------------
5,663,734
--------------
Chemicals: 0.81%
Bayer AG 48,650 2,517,402
Hoechst AG 43,900 2,207,161
--------------
4,724,563
--------------
Conglomerates: 0.15%
Viag AG 1,300 894,515
--------------
22
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Consumer Products and Services: 0.06%
Karstadt AG 750 $ 364,612
--------------
Electronics: 0.34%
Siemens AG 32,100 1,958,900
--------------
Insurance: 0.63%
Allianz AG Holding 11,000 3,626,039
--------------
Machinery and Equipment: 0.80%
Mannesmann AG 45,500 4,615,540
--------------
Telecommunications: 0.07%
Deutsche Telekom AG 15,000 404,709
--------------
Utilities: 0.28%
RWE AG 27,700 1,638,981
--------------
Total Germany 28,179,460
--------------
Italy: 3.00%
Apparel and Textiles: 0.06%
Benetton Group SPA 171,600 356,223
--------------
Automobiles: 0.28%
Fiat SPA 273,900 1,198,808
Fiat SPA Priv. 161,700 402,533
--------------
1,601,341
--------------
Banks: 0.55%
Credito Italiano SPA 345,000 1,805,983
Istituto Banc San Paolo SPA 55,500 800,864
Mediobanca SPA 45,500 577,213
--------------
3,184,060
--------------
Broadcasting: 0.10%
Mediaset SPA 93,500 596,753
--------------
Building Materials and Products: 0.04%
Sirti SPA 39,500 214,883
--------------
Conglomerates: 0.04%
Snia BPD 170,000 208,489
--------------
Energy: 0.61%
Eni SPA 534,000 3,499,817
--------------
Industrial Products, Services and Machinery: 0.11%
Pirelli SPA 205,000 640,066
--------------
Insurance: 0.43%
Assicurazioni Generali SPA 68,000 2,211,133
Ras Riun Adriat Di Sicurt SPA 23,000 299,541
--------------
2,510,674
--------------
Telecommunications: 0.72%
Telecom Italia Mobile SPA 397,500 2,430,776
Telecom Italia SPA 238,888 1,758,516
--------------
4,189,292
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Utilities: 0.06%
Edison SPA 45,000 $ 361,129
--------------
Total Italy 17,362,727
--------------
Mexico: 0.73%
Broadcasting: 0.07%
* Grupo Televisa SA 21,000 395,415
--------------
Building Materials and Products: 0.06%
Cemex SA, Class A 93,000 346,706
--------------
Conglomerates: 0.08%
Alfa SA, Class A 53,000 217,049
Grupo Carso SA 61,000 250,829
--------------
467,878
--------------
Food and Beverages: 0.13%
Grupo Industrial Bimbo SA 128,000 253,550
Grupo Modelo SA 58,000 480,859
--------------
734,409
--------------
Forest and Paper Products: 0.03%
* Grupo Industrial Emprex SA, Class B 33,000 171,500
--------------
Hospitals and Healthcare: 0.05%
Kimberly Clark De Mexico SA 93,000 322,903
--------------
Metals and Mining: 0.03%
Grupo Mexico SA 61,000 166,993
--------------
Retail Trade: 0.08%
* Cifra SA, Class V 329,352 482,336
--------------
Telecommunications: 0.20%
Telefonos De Mexico SA 67,000 156,577
Telefonos De Mexico SA, Class L 413,000 985,850
--------------
1,142,427
--------------
Total Mexico 4,230,567
--------------
Spain: 4.29%
Banks: 1.75%
* Argentaria SA 74,400 1,671,801
Banco Bilbao Vizcaya SA 71,100 3,655,085
Banco Central Hispano SA 37,600 1,183,827
Banco De Santander SA 102,600 2,630,512
* Banco Espanol Credito SA 85,100 1,022,823
--------------
10,164,048
--------------
Business Services: 0.08%
Autopistas Cesa Co. 28,400 440,590
Autopistas Cesa Co. New Rights 28,400 21,519
--------------
462,109
--------------
Energy: 0.30%
Repsol Petroleo SA 31,300 1,727,644
--------------
Engineering: 0.08%
Dragados & Construcciones SA 15,100 484,297
--------------
23
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Finance: 0.06%
Corporacion Financiera SA 2,900 $ 319,191
--------------
Homebuilders: 0.09%
Fomento De Construcion SA 10,400 537,357
--------------
Insurance: 0.05%
Mapfre SA 8,400 295,199
--------------
Retail Trade: 0.07%
* Centros Com. Pryca SA 23,100 428,532
--------------
Steel: 0.05%
Acerinox SA 2,000 266,771
--------------
Telecommunications: 0.73%
Telefonica De Espana SA 90,800 4,205,186
--------------
Tobacco: 0.07%
Tabacalera SA, Class A 20,500 420,472
--------------
Utilities: 0.96%
Endesa SA 108,000 2,366,843
General De Aguas D'Barcelona SA 6,800 379,777
Iberdrola I SA 130,300 2,119,322
Sevillana De Electricidad SA 28,300 312,411
Union Electrica Fenosa SA 30,000 387,027
--------------
5,565,380
--------------
Total Spain 24,876,186
--------------
Sweden: 1.22%
Automobiles: 0.13%
Volvo AB, Class A 8,900 258,912
Volvo AB, Class B 15,800 470,539
--------------
729,451
--------------
Banks: 0.09%
Svenska Handelsbanken AB, Class A 10,900 505,712
--------------
Building Materials and Products: 0.05%
Skanska AB, Class B 6,300 282,812
--------------
Consumer Products and Services: 0.10%
Hennes & Mauritz AB, Class B 9,400 599,957
--------------
Electronics: 0.52%
ABB AB, Class B 16,100 224,091
Electrolux AB, Class B 19,500 334,989
Ericsson LM AB, Class B 83,800 2,448,357
--------------
3,007,437
--------------
Hospitals and Healthcare: 0.27%
Astra AB, Class A 60,200 1,230,435
Astra AB, Class B 17,700 352,895
--------------
1,583,330
--------------
Insurance: 0.06%
Skandia Forsakrings AB 26,500 378,813
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Total Sweden $ 7,087,512
--------------
United Kingdom: 3.77%
Banks: 0.59%
Abbey National Plc. 33,500 596,997
HSBC Holdings 26,200 636,529
HSBC Holdings, Class A 17,500 444,143
Lloyds TSB Group Plc. 50,100 699,711
National Westminster Bank Plc. 46,800 837,918
Royal Bank of Scotland 12,772 221,427
--------------
3,436,725
--------------
Broadcasting: 0.10%
Reed International Corp. 61,400 554,782
--------------
Building Materials and Products: 0.11%
RMC Group Inc. 8,500 147,647
Tarmac Plc. 71,600 128,732
Williams Holdings Co. 37,514 242,561
Wolseley Plc 15,400 91,287
--------------
610,227
--------------
Business Services: 0.04%
Railtrack Group Plc 8,800 215,705
--------------
Chemicals: 0.10%
BOC Group 16,077 219,439
Imperial Chemical Industries Inc. 23,700 382,016
--------------
601,455
--------------
Conglomerates: 0.11%
Hanson Co. 10,121 61,430
Siebe Plc. 11,300 226,075
TI Group 45,500 349,620
--------------
637,125
--------------
Consumer Products and Services: 0.53%
BAA Plc. 13,400 145,001
Caradon Plc. 11,340 35,195
De La Rue Plc. 4,600 22,989
Glaxo Holdings Plc. 71,500 2,152,278
Smithkline Beecham, Class A 42,422 516,383
Tomkins Corp. 31,400 171,330
--------------
3,043,176
--------------
Food and Beverages: 0.61%
Allied Domecq Plc. 24,500 228,934
Associated British Foods Plc. 16,200 152,863
BASS Plc. 19,114 357,211
Bat Industries Inc. 66,700 666,110
Cadbury Schweppes Inc. 86,200 1,334,784
Unilever Plc. 62,800 674,317
United Biscuits Corp. 33,200 133,232
--------------
3,547,451
--------------
Industrial Products, Services and Machinery: 0.01%
Lucasvarity Plc. 20,100 79,823
--------------
Insurance: 0.27%
Prudential Corp. 88,100 1,161,338
Royal & Sun Alliance Insurance Co. 37,900 386,715
--------------
1,548,053
--------------
24
<PAGE>
Number of
Shares or Value
Principal Amount (Note 2)
- -------------------------------------------------------------------------
Oil and Gas: 0.30%
British Petroleum Plc. 61,600 $ 896,813
Shell Transport 120,000 842,983
--------------
1,739,796
--------------
Real Estate: 0.08%
Land Securities Plc. 31,100 481,316
--------------
Retail Trade: 0.42%
Boots Co. 26,764 445,248
Great Universal Stores Inc. 15,800 208,408
Kingfisher Plc. 15,700 254,375
Marks & Spencer Corp. 111,100 1,014,045
Sears Plc. 52,700 46,826
Tesco Corp. 47,600 464,245
--------------
2,433,147
--------------
Telecommunications: 0.34%
British Telecommunications Corp. 131,500 1,618,242
Cable & Wireless Plc. 30,200 367,611
--------------
1,985,853
--------------
Tobacco: 0.01%
Imperial Tobacco Group Plc. 8,097 59,515
--------------
Tourism: 0.07%
Ladbroke Group 18,800 103,756
Rank Group Plc. 10,000 54,439
Scottish & Newscastle Plc. 18,200 256,161
--------------
414,356
--------------
Utilities: 0.08%
BG Plc. 28,900 167,092
National Power Corp. 13,500 127,048
Scottish Power Plc. 19,200 169,478
--------------
463,618
--------------
Total United Kingdom 21,852,123
--------------
Total Foreign Stocks (Cost $96,117,732) 147,509,889
--------------
Total Common Stocks (Cost $212,150,918) 291,314,878
--------------
BONDS: 37.48%
UNITED STATES GOVERNMENT OBLIGATIONS: 19.32%
United States Treasury Bonds: 2.38%
10.75%, 5/15/2003 $ 7,000,000 8,531,257
7.25%, 8/15/2022 1,700,000 2,035,220
7.50%, 11/15/2024 2,600,000 3,225,627
--------------
13,792,104
--------------
United States Treasury Notes: 16.94%
6.25%, 8/31/2000 10,400,000 10,556,011
7.50%, 2/15/2005 7,100,000 7,863,257
6.50%, 5/15/2005 5,400,000 5,702,065
6.875%, 5/15/2006 19,900,000 21,560,416
6.50%, 10/15/2006 22,800,000 24,225,023
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
6.625%, 5/15/2007 $ 22,900,000 $ 24,617,523
6.375%, 8/15/2027 3,300,000 3,625,878
--------------
98,150,173
--------------
Total United States Government Obligations
(Cost $109,417,719) 111,942,277
--------------
FOREIGN GOVERNMENT
OBLIGATIONS: 18.16%
Australian Commonwealth
Government Bonds: 1.11%
7.50%, 9/15/2009 A$ 9,000,000 6,438,183
--------------
Deutschland Rebublic
Government Bonds: 2.79%
6.00%, 7/4/2007 DM 26,850,000 16,188,839
--------------
Finnish Government
Bonds: 0.95%
7.25%, 4/18/2006 Fim 26,000,000 5,477,790
--------------
France O.A.T. Bonds: 2.82%
5.50%, 10/25/2007 ff 94,300,000 16,348,869
--------------
Italian Government
Bonds: 2.04%
6.75%, 7/1/2007 LIRA 18,700,000,000 11,829,850
--------------
Netherlands Government
Bonds: 0.98%
5.25%, 7/15/2008 NLG 11,200,000 5,682,037
--------------
New Zealand Government
Bonds: 0.94%
7.00%, 7/15/2009 NZ$ 10,000,000 5,459,858
--------------
Spanish Government
Bonds: 1.48%
6.00%, 1/31/2008 Pta 1,220,000,000 8,569,645
--------------
Swedish Government
Bonds: 1.92%
8.00%, 8/15/2007 SKr 72,700,000 11,134,042
--------------
United Kingdom
Treasury Bonds: 3.13%
8.50%, 7/16/2007 (pound) 6,400,000 12,547,973
7.25%, 12/7/2007 (pound) 3,043,000 5,591,696
--------------
18,139,669
--------------
Total Foreign Government Obligations
(Cost $102,471,195 ) 105,268,782
--------------
Total Bonds (Cost $211,888,914) 217,211,059
--------------
UNITED STATES SHORT-TERM
OBLIGATIONS: 0.40%
United States Treasury Bills: 0.40%
4.85%, 7/23/98 $1,000,000 997,011
4.89%, 7/23/98 1,300,000 1,296,115
--------------
Total United States Short-Term Obligations
(Cost $2,293,151) 2,293,126
--------------
25
<PAGE>
ZWEIG MANAGED ASSETS
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------
UNITED STATES REPURCHASE
AGREEMENTS: 8.94%
With Morgan Stanley & Co., Inc. (dated 6/30/98), 6.25%,
due 7/1/98 (Repurchase proceeds $36,802,388);
collateralized by: $36,960,422 Federal
National Mortgage Association Bonds,
7.064% - 7.732%, 11/1/2024 - 7/1/2036
(Market value $37,896,198) $36,796,000 $ 36,796,000
With Prudential Securities Inc., (dated 6/30/98), 6.05%,
due 7/1/98 (Repurchase proceeds $15,002,521);
collateralized by: $15,062,000 United States
Treasury Notes, 5.375%, 2/15/2001
(Market value $15,300,967) 15,000,000 15,000,000
--------------
Total United States Repurchase Agreements
(Cost $51,796,000) 51,796,000
--------------
Total Investments in Securities
(Cost $478,128,983) 562,615,063
--------------
Net Unrealized Depreciation on Foreign Forward
Currency Contracts (Note 4): (0.48)% (2,758,749)
Total Investments (Cost $478,128,983) 96.61% 559,856,314
Other Assets 3.69 21,365,476
------ --------------
Total Assets 100.30% 581,221,790
Total Liabilities (Note 5) (0.30) (1,735,130)
------ --------------
Net Assets (Note 6) 100.00% $ 579,486,660
====== ==============
Class A Shares
Net asset value ("NAV") and redemption price per share
($119,259,427/8,572,892 shares) $13.91
======
Maximum public offering price per share -
NAV/(1- Maximum sales charge) ($13.91/.945) $14.72
======
Class B Shares
Net asset value and offering price per share
($27,577,310/1,971,744 shares) $13.99
======
Redemption price per share **
======
Class C Shares
Net asset value and offering price per share
($430,769,172/31,195,051 shares) $13.81
======
Redemption price per share **
======
Class I Shares
Net asset value, offering and redemption price per share
($1,880,751/132,451 shares) $14.20
======
- -------------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held (Note 3b).
For Federal income tax purposes, the tax basis of investments owned at June
30, 1998 was $478,516,781 and net unrealized appreciation on investments
consisted of:
Gross unrealized appreciation $90,456,874
Gross unrealized depreciation (9,117,341)
-----------
Net unrealized appreciation $81,339,533
===========
%Net
Industry Breakdown - Common Stock Value Assets
- ------------------------------------------------------------------------
Airfreight $ 467,500 0.08%
Airlines 1,573,941 0.27%
Apparel and Textiles 817,473 0.14%
Automobiles 11,997,159 2.07%
Automotive Parts and Equipment 1,558,750 0.27%
Banks 39,151,584 6.75%
Biotechnology 2,271,375 0.39%
Broadcasting 4,035,300 0.70%
Building Materials and Products 5,189,753 0.90%
Business Services 4,070,868 0.70%
Chemicals 10,847,049 1.87%
Computers and Software 8,174,937 1.41%
Conglomerates 6,876,540 1.19%
Consumer Products and Services 11,557,667 1.99%
Electrical Equipment 659,250 0.11%
Electronics 17,655,580 3.05%
Energy 5,227,461 0.90%
Engineering 1,135,485 0.20%
Entertainment 3,340,739 0.58%
Finance 8,731,222 1.51%
Food and Beverages 9,944,373 1.72%
Forest and Paper Products 1,247,614 0.21%
Homebuilders 741,807 0.13%
Hospitals and Healthcare 4,205,634 0.73%
Hotels 388,500 0.07%
Household Products 2,259,604 0.39%
Industrial Products, Services and
Machinery 1,753,889 0.30%
Insurance 19,326,245 3.33%
Investment Banking and Brokerage 1,806,000 0.31%
Machinery and Equipment 4,615,540 0.80%
Metals and Mining 2,872,288 0.50%
Natural Gas 1,000,875 0.17%
Newspapers 2,818,339 0.49%
Office Automation and Equipment 914,625 0.16%
Oil and Gas 13,972,013 2.41%
Pharmaceuticals 9,637,538 1.66%
Photographic Products 511,438 0.09%
Printing and Publishing 1,227,562 0.21%
Real Estate 1,022,765 0.18%
Recreational Products 1,453,853 0.25%
Restaurants 1,675,625 0.29%
Retail Trade 13,599,133 2.35%
Shoes 387,625 0.07%
Steel 992,771 0.17%
Telecommunications 27,676,486 4.77%
Tobacco 4,340,987 0.75%
Tourism 414,356 0.07%
Transportation 1,108,187 0.19%
Utilities 13,468,823 2.32%
Waste Management 590,750 0.10%
------------ -----
$291,314,878 50.27%
============ =====
See notes to financial statements.
26
<PAGE>
ZWEIG GROWTH & INCOME FUND
Statement of Net Assets as of June 30, 1998 (Unaudited)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
COMMON STOCKS: 83.42%
Aerospace: 1.56%
AAR Corp. 6,300 $ 186,244
Cordant Technologies Inc. 7,700 355,163
Northrop Grumman Corp. 800 82,500
Sundstrand Corp. 1,600 91,600
--------------
715,507
--------------
Air Freight: 0.78%
Airborne Freight Corp. 7,800 272,512
Expeditors International of Washington, Inc. 2,000 88,000
--------------
360,512
--------------
Apparel and Textiles: 2.99%
Guilford Mills, Inc. 9,400 188,000
Interface Inc., Class A 15,800 318,962
* Jones Apparel Group Inc. 4,400 160,875
Kellwood Co. 6,100 218,075
* Mohawk Industries Inc. 5,900 186,956
* Nautica Enterprises Inc. 3,400 91,162
Springs Industries, Inc., Class A 4,400 202,950
* Tommy Hilfiger Corp. 100 6,250
--------------
1,373,230
--------------
Automobiles: 1.61%
Chrysler Corp. 1,700 95,837
Ford Motor Co. 10,900 643,100
--------------
738,937
--------------
Automotive Parts and Equipment: 2.44%
Arvin Industries, Inc. 11,800 428,487
Borg-Warner Automotive, Inc. 3,800 182,637
Dana Corp. 1,700 90,950
Excel Industries, Inc. 900 12,881
* Gentex Corp. 11,400 206,625
Intermet Corp. 3,500 63,438
Mark IV Industries, Inc. 3,800 82,175
Mascotech, Inc. 1,100 26,400
Standard Products Co. 1,100 30,938
--------------
1,124,531
--------------
Banks: 1.08%
First Union Corp. 3,276 190,827
* Imperial Bancorp 1,950 58,500
National Commerce Bancorporation 2,200 92,125
North Fork Bancorporation, Inc. 6,350 155,178
--------------
496,630
--------------
Building Materials and Products: 2.09%
Lafarge Corp. 9,800 385,262
Southdown, Inc. 6,800 485,350
* USG Corp. 1,700 92,012
--------------
962,624
--------------
Casino Operators: 0.10%
* Rio Hotel & Casino Inc. 2,500 47,188
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Chemicals: 1.25%
B.F. Goodrich & Co. 1,800 $ 89,325
Lyondell Petrochemical Corp. 2,100 63,919
Millennium Chemicals Inc. 6,200 210,025
Quaker Chemical Corp. 1,300 24,619
Wellman Inc. 8,300 188,306
--------------
576,194
--------------
Commercial Services: 1.34%
* AccuStaff Inc. 3,700 115,625
* CIBER, Inc. 3,300 125,400
* Computer Horizons Corp. 2,000 74,125
Laidlaw Inc. 9,000 109,688
Ogden Corp. 3,400 94,137
* Systems & Computer Technology Corp. . 3,600 97,200
--------------
616,175
--------------
Computers and Software: 2.05%
* Avid Technology, Inc. 2,900 97,150
* Check Point Software Technology Corp. 3,400 111,350
* Cognos Inc. 2,400 63,938
* Lexmark International, Inc., Class A 3,200 195,200
* PLATINUM Software Corp. 1,400 39,987
* Sterling Software Inc. 4,500 133,031
* Symantec Corp. 4,900 128,013
* Unisys Corp. 6,200 175,150
--------------
943,819
--------------
Construction and Farm Equipment: 0.28%
Manitowoc Company, Inc. 3,200 129,000
--------------
Containers and Packaging: 0.50%
Ball Corp. 5,700 229,069
--------------
Electrical Products: 0.47%
Tecumseh Products Co., Class A 4,100 216,531
--------------
Electronics: 1.05%
General Motors Corp., Class H 3,300 155,513
* Ingram Micro Inc., Class A 2,500 110,625
* Level One Communications Inc. 4,700 110,450
* Waters Corp. 1,800 106,088
--------------
482,676
--------------
Engineering: 0.33%
Fluor Corp. 1,800 91,800
* Jacobs Engineering Group Inc. 1,900 61,038
--------------
152,838
--------------
Entertainment: 0.44%
* Anchor Gaming Co. 2,600 201,825
--------------
Finance: 2.77%
* Americredit Corp. 4,800 171,300
Equitable Companies Inc. 6,100 457,119
Sunamerica Inc. 8,750 502,578
XTRA Corp. 2,400 145,200
--------------
1,276,197
--------------
27
<PAGE>
ZWEIG GROWTH & INCOME FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Food and Beverages: 1.29%
Adolph Coors Co., Class B 7,900 $ 268,600
Interstate Bakeries Corp. 6,800 225,675
Michael Foods Inc. 3,400 99,875
--------------
594,150
--------------
Forest and Paper Products: 0.55%
Bowater Inc. 2,200 103,950
Chesapeake Corp. 800 31,150
Mead Corp. 3,000 95,250
P.H. Glatfelter Co. 1,300 20,556
--------------
250,906
--------------
Healthcare Facilities and
Products: 0.36%
* NovaCare Inc. 4,000 47,000
* Total Renal Care Holdings, Inc., Class A 2,900 100,050
West Companies Inc. 700 19,819
--------------
166,869
--------------
Homebuilding and Land
Development: 2.07%
Centex Corp. 5,500 207,625
* Champion Enterprises Inc. 2,300 67,563
Del Webb Corp. 2,000 51,875
* Fairfield Communities Inc. 7,700 147,744
Fleetwood Enterprises, Inc. 6,200 248,000
Kaufman & Broad Home Corp. 5,600 177,800
Ryland Group Inc. 1,900 49,875
--------------
950,482
--------------
Hotels: 0.50%
* Host Marriott Corp. 6,300 112,219
* Prime Hospitality Corp. 4,500 78,469
* Sun International Hotels Ltd. 900 40,950
--------------
231,638
--------------
Household Furnishings and
Products: 1.74%
Ethan Allen Interiors Inc. 8,100 404,494
* Furniture Brands International, Inc. 6,500 182,406
Maytag Corp. 2,400 118,500
Whirlpool Corp. 1,400 96,250
--------------
801,650
--------------
Industrial Products, Services and
Machinery: 0.91%
Applied Power Inc., Class A 4,100 140,938
Cincinnati Milacron Inc. 7,600 184,775
Ingersoll-Rand Co. 2,150 94,734
--------------
420,447
--------------
Insurance: 3.81%
Allstate Corp. 1,500 137,344
Conseco Inc. 4,200 196,350
Everest Reinsurance Holdings Inc. 2,200 84,563
Financial Security Assurance Holdings Ltd. 3,500 205,625
Foremost Corp. of America 1,000 24,125
IPC Holdings Ltd. 4,100 124,281
Loews Corp. 900 78,413
Mercury General Corp. 2,300 148,206
Old Republic International Corp. 6,550 191,997
* PartnerRe Ltd. 1,800 91,800
Reliance Group Holdings, Inc. 10,800 189,000
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Selective Insurance Group, Inc. 5,300 $ 118,753
TIG Holdings Inc. 2,900 66,700
Travelers Property Casualty Corp., Class A 2,200 94,325
--------------
1,751,482
--------------
Investment Banking and
Brokerage: 4.60%
A.G. Edwards, Inc. 10,300 439,681
Bear, Stearns & Co. Inc. 10,285 584,959
Donaldson, Lufkin & Jenrette, Inc. 2,700 137,194
Lehman Brothers Holdings Inc. 5,300 411,081
Morgan Stanley, Dean Witter,
Discover & Co. 4,625 422,609
PaineWebber Group Inc. 2,800 120,400
--------------
2,115,924
--------------
Manufacturing: 2.81%
A.O. Smith Corp. 4,100 211,919
Aeroquip-Vickers Inc. 4,800 280,200
Carlisle Companies Inc. 1,600 68,900
Graco Inc. 6,400 223,200
Hanson Plc., ADR 5,200 157,625
Pentair Inc. 900 38,250
Premark International Inc. 3,200 103,200
Trinity Industries, Inc. 4,400 182,600
United Dominion Industries Ltd. 800 26,700
--------------
1,292,594
--------------
Metal Fabrication: 2.12%
* Hexcel Corp. 3,800 85,975
Kaydon Corp. 8,000 282,500
Kennametal Inc. 1,900 79,325
Timken Co. 9,200 283,475
* Tower Automotive Inc. 1,900 81,463
Varlen Corp. 4,650 160,425
--------------
973,163
--------------
Metals and Mining: 0.45%
Alcan Aluminium Ltd. 4,200 116,025
Reynolds Metals Co. 1,600 89,500
--------------
205,525
--------------
Office Automation and
Equipment: 0.50%
Herman Miller, Inc. 9,400 228,538
--------------
Oil and Gas: 3.41%
Ashland Inc. 3,800 196,175
CTG Resources Inc. 400 9,400
Eastern Enterprises 700 30,013
Equitable Resources Inc. 4,000 122,000
* Global Industries Ltd. 6,800 114,750
* Input/Output Inc. 3,600 64,125
* Parker Drilling Co. 13,700 96,756
Pride International Inc. 3,400 57,587
* SEACOR Smit Inc. 2,000 122,625
* Stolt Comex Seaway Corp., SA 750 13,125
* Stolt Comex Seaway Corp., SA, ADR 1,500 29,063
TrizecHahn Corp. 2,600 55,737
* Tuboscope Vetco International Corp. 3,000 59,250
* Varco International, Inc. 17,400 344,738
* Veritas DGC Inc. 5,100 254,681
--------------
1,570,025
--------------
28
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Personal Care Products: 0.27%
* NBTY, Inc. 6,800 $ 124,950
--------------
Printing and Forms: 1.26%
Banta Corp. 3,300 101,887
Bowne & Co., Inc. 8,300 373,500
* Mail-Well, Inc. 4,800 104,100
--------------
579,487
--------------
Real Estate Investment Trusts: 0.77%
Carramerica Realty Corp. 3,000 85,125
FelCor Suite Hotels, Inc. 3,300 103,537
Liberty Property Trust 2,900 74,131
Prentiss Properties Limited Inc. 3,800 92,387
--------------
355,180
--------------
Recreational Products: 0.25%
Brunswick Corp. 3,200 79,200
Coachmen Industries, Inc. 1,300 33,963
--------------
113,163
--------------
Restaurants: 1.53%
Bob Evans Farms, Inc. 6,800 144,075
CKE Restaurants, Inc. 13,515 557,494
--------------
701,569
--------------
Retail Trade: 3.70%
* Central Garden & Pet Co. 2,300 71,588
* Dress Barn, Inc. 13,000 323,375
Hughes Supply, Inc. 1,250 45,781
* K Mart Corp. 6,300 121,275
Neiman Marcus Group 600 26,063
Pier 1 Imports, Inc. 13,550 323,506
Ross Stores, Inc. 9,200 395,600
TJX Companies Inc. 16,400 395,650
--------------
1,702,838
--------------
Savings and Loan
Associations: 1.24%
Dime Bancorp Inc. 4,100 122,744
Golden West Financial Corp. 900 95,681
H.F. Ahmanson & Co. 3,200 227,200
Webster Financial Corp. 3,800 126,350
--------------
571,975
--------------
Steel: 2.65%
AK Steel Holding Corp. 4,300 76,863
Birmingham Steel Corp. 2,000 24,750
British Steel Plc, ADR 6,900 156,975
Carpenter Technology Corp. 3,000 150,750
Cleveland-Cliffs Inc. 2,900 155,512
Inland Steel Industries, Inc. 3,700 104,294
LTV Corp. 4,600 43,987
Quanex Corp. 3,000 90,937
Texas Industries, Inc. 3,300 174,900
USX-U.S. Steel Group 7,300 240,900
--------------
1,219,868
--------------
Supermarket Chains: 0.67%
Great Atlantic & Pacific Tea Company, Inc. 2,700 89,269
Supervalu Inc. 4,900 217,437
--------------
306,706
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Telecommunications: 1.13%
* 360 Communications Co. 5,300 $ 169,600
* Brightpoint Inc. 11,500 166,750
Tele Danmark A.S., ADR 2,400 113,100
Telefonica De Argentina, ADR 2,200 71,362
--------------
520,812
--------------
Tobacco: 1.18%
RJR Nabisco Holdings Corp. 8,800 209,000
Universal Corp. 8,900 332,638
--------------
541,638
--------------
Transportation: 6.07%
* Alaska Air Group Inc. 6,800 371,025
Alexander & Baldwin, Inc. 2,100 61,162
* America West Holdings Corp., Class B 7,100 202,794
* AMR Corp. 3,600 299,700
Burlington Northern Santa Fe Corp. 1,000 98,187
Canadian National Railway Co. 1,700 90,312
Comair Holdings, Inc. 5,500 169,813
* Continental Airlines, Inc., Class B 2,300 140,012
GATX Corp. 5,400 236,925
J.B. Hunt Transport Services, Inc. 4,200 149,625
* M S Carriers Inc. 5,500 149,187
Ryder System, Inc. 2,800 88,375
Southwest Airlines Co. 7,550 223,669
* Swift Transportation Co., Inc. 5,500 108,969
USFreightways Corp. 9,700 318,584
Werner Enterprises Inc. 4,600 87,687
--------------
2,796,026
--------------
Trucks: 1.08%
Cummins Engine Co. 1,700 87,125
* Navistar International Corp. 3,800 109,725
PACCAR Inc. 5,700 297,825
--------------
494,675
--------------
Utilities: 12.82%
Allegheny Energy Inc. 2,600 78,325
Baltimore Gas & Electric Co. 6,900 214,331
BEC Energy Holding Co. 7,600 315,400
Central & South West Corp. 5,300 142,438
CMS Energy Corp. 3,300 145,200
Commonwealth Energy System 1,200 45,300
Consolidated Edison Co. of New York, Inc. 4,100 188,856
Dominion Resources, Inc. 2,300 93,725
DQE Inc. 2,400 86,400
DTE Energy Co. 3,600 145,350
Eastern Utilities Associates 7,300 191,625
Edison International 10,900 322,231
Energy East Corp. 10,900 453,713
Entergy Corp. 6,500 186,875
FirstEnergy Corp. 4,900 150,675
Florida Progress Corp. 2,600 106,925
FPL Group Inc. 1,700 107,100
GPU Inc. 6,800 257,125
Houston Industries Inc. 5,848 180,557
Montana Power Co. 1,700 59,075
New England Electric System 4,200 181,650
PECO Energy Co. 7,900 230,581
PG&E Corp. 6,475 204,367
Pinnacle West Capital Corp. 9,000 405,000
PP&L Resources, Inc. 2,900 65,794
Public Service Co. of New Mexico 12,600 285,863
Public Service Enterprises Group Inc. 9,700 334,044
29
<PAGE>
ZWEIG GROWTH & INCOME FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number of
Shares or Value
Principal Amount (Note 2)
- -------------------------------------------------------------------------
Utilities (continued)
* Sempra Energy Corp. 5,600 $ 155,400
Sierra Pacific Resources 2,000 72,625
Texas Utilities Co. 2,400 99,900
TNP Enterprises, Inc. 2,200 67,925
Unicom Corp. 2,600 91,163
UtiliCorp United Inc. 4,400 165,825
Westcoast Energy Inc. 3,000 66,938
--------------
5,898,301
--------------
Waste Management: 0.55%
* Allied Waste Industries, Inc. 6,400 153,600
* USA Waste Services, Inc. 2,000 98,750
--------------
252,350
--------------
Total Common Stocks
(Cost $34,202,739) 38,376,414
--------------
SHORT-TERM OBLIGATIONS: 6.82%
Federal Home Loan Mortgage Corp.,
Discount Notes: 6.50%
5.46%, 7/24/98 $3,000,000 2,989,080
--------------
United States Treasury Bills: 0.32%
4.85%, 7/23/98 100,000 99,701
4.87%, 7/23/98 50,000 49,850
--------------
149,551
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $3,139,090) 3,138,631
--------------
REPURCHASE AGREEMENT: 9.24%
With Morgan Stanley & Co., Inc.,
(dated 6/30/98), 6.25%, due 7/1/98
(Repurchase proceeds $4,250,738);
collateralized by: $4,316,000
Federal National Mortgage Association Bonds,
6.184%, 7/1/2028
(Market value $4,387,929) 4,250,000 4,250,000
--------------
Total Repurchase Agreement
(Cost $4,250,000) 4,250,000
--------------
Value
(Note 2)
- -------------------------------------------------------------------------
TOTAL INVESTMENTS (COST $41,591,829) 99.48% $ 45,765,045
Other Assets 0.79 365,069
------ --------------
Total Assets 100.27% 46,130,114
Total Liabilities (Note 5) (0.27) (124,180)
------ --------------
Net Assets (Note 6) 100.00% $ 46,005,934
====== ==============
Class A Shares
Net asset value (NAV) and redemption price per share
($8,847,982/607,515 shares) $14.56
======
Maximum public offering price per share -
NAV/(1 - maximum sales charge) ($14.56/.945) $15.41
======
Class B Shares
Net asset value and offering price per share
($17,905,107/1,230,043 shares) $14.56
======
Redemption price per share **
======
Class C Shares
Net asset value and offering price per share
($17,454,762/1,200,511 shares) $14.54
======
Redemption price per share **
======
Class I Shares
Net asset value, offering and redemption price per share
($1,798,083/123,080 shares) $14.61
======
- -------------------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held. (Note 3b)
For Federal income tax purposes, the tax basis of investments owned at June 30,
1998 was $41,592,751 and net unrealized appreciation on investments consisted
of:
Gross unrealized appreciation $5,039,626
Gross unrealized depreciation (867,332)
----------
Net unrealized appreciation $4,172,294
==========
See notes to financial statements.
30
<PAGE>
ZWEIG FOREIGN EQUITY FUND
Statement of Net Assets as of June 30, 1998 (Unaudited)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
COMMON STOCKS: 67.88%
Australia: 3.57%
Banks: 0.81%
National Australia Bank Ltd. 4,600 $ 60,676
--------------
Conglomerates: 0.71%
Broken Hill Proprietary Ltd. 6,300 53,254
--------------
Food and Beverages: 0.55%
* Coca-Cola Amatil Ltd. 1,600 10,701
Fosters Brewing Group 13,200 31,063
--------------
41,764
--------------
Newspapers: 0.92%
News Corp. Ltd. 3,700 30,199
News Corp. Ltd., Pfd. 5,500 38,965
--------------
69,164
--------------
Recreational Products: 0.10%
* TAB Ltd. 5,000 7,369
--------------
Telecommunications: 0.48%
Telestra Corp., Ltd. 14,000 35,893
--------------
Total Australia 268,120
--------------
Austria: 2.68%
Banks: 1.52%
Bank Austria AG 1,400 113,872
--------------
Conglomerates: 0.60%
Mayr-Melnhof AG 685 44,771
--------------
Homebuilders: 0.45%
Universale-Bau AG 1,095 34,060
--------------
Machinery and Equipment: 0.11%
Steyr-Daimler-Puch AG 310 8,495
--------------
Total Austria 201,198
--------------
Belgium: 1.76%
Chemicals: 0.55%
Solvay SA, Class A 517 40,988
--------------
Metals and Mining: 0.35%
* Union Miniere SA 431 26,641
--------------
Retail Trade: 0.52%
Delhaize le Lion SA 560 39,129
--------------
Utilities: 0.34%
Electrabel SA 90 25,517
--------------
Total Belgium 132,275
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Canada: 1.94%
Aerospace: 0.07%
Bombardier Inc., Class B 200 $ 5,440
--------------
Banks: 0.68%
Canadian Imperial Bank of Commerce 600 19,298
Royal Bank of Canada 300 18,054
Toronto-Dominion Bank 300 13,566
--------------
50,918
--------------
Broadcasting: 0.19%
Thomson Corp. 500 14,518
--------------
Energy: 0.08%
* Talisman Energy Inc. 200 5,725
--------------
Metals and Mining: 0.26%
Alcan Aluminum Ltd. 500 13,770
Barrick Gold Corp. 300 5,712
--------------
19,482
--------------
Telecommunications: 0.66%
BCE Inc. 500 21,199
Northern Telecom Ltd. 500 28,356
--------------
49,555
--------------
Total Canada 145,638
--------------
Denmark: 1.71%
Banks: 0.32%
Den Danske Bank 200 23,993
--------------
Food and Beverages: 0.82%
Aarhus Oliefabrik, Class A 500 25,447
Carlsberg, Class A 500 36,353
--------------
61,800
--------------
Transportation: 0.57%
D/S 1912, Class B 5 42,897
--------------
Total Denmark 128,690
--------------
Finland: 1.43%
Banks: 0.31%
* Merita Ltd., Class A 3,550 23,423
--------------
Electronics: 0.62%
Nokia AB, Class A 630 46,333
--------------
Forest and Paper Products: 0.28%
* UPM-Kymmen OY 775 21,330
--------------
Metals and Mining: 0.22%
Outokumpu OY, Class A 1,300 16,586
--------------
Total Finland 107,672
--------------
31
<PAGE>
ZWEIG FOREIGN EQUITY FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
France: 6.62%
Banks: 0.70%
Cie Fin Paribas 297 $ 31,783
Societe Generale Paris 100 20,791
--------------
52,574
--------------
Business Services: 0.62%
Vivendi 217 46,336
--------------
Consumer Products and Services: 0.98%
Loreal Co. 132 73,423
--------------
Electronics: 0.66%
Alcatel Alsthom 125 25,451
* Schneider SA 301 24,001
--------------
49,452
--------------
Food and Beverages: 0.38%
LVMH Moet Hennessy 141 28,219
--------------
Insurance: 0.70%
AXA UAP 467 52,524
--------------
Oil and Gas: 0.28%
Societe Nationale Elf Aquitaine 150 21,088
--------------
Real Estate: 0.18%
Simco 166 13,618
--------------
Retail Trade: 0.42%
Carrefour 50 31,632
--------------
Telecommunications: 1.13%
* France Telecom SA 1,233 85,042
--------------
Utilities: 0.57%
Total SA, Class B 332 43,161
--------------
Total France 497,069
--------------
Germany: 6.07%
Automobiles: 1.05%
Daimler-Benz AG 800 78,449
--------------
Banks: 0.79%
Deutsche Bank AG 700 59,277
--------------
Chemicals: 0.89%
BASF AG 750 35,526
Bayer AG 600 30,947
--------------
66,473
--------------
Electronics: 0.65%
Siemens AG 800 48,665
--------------
Insurance: 1.03%
Aachener & Muenchener Bet Namen AG 100 11,684
Allianz AG Holding 200 65,928
--------------
77,612
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Oil and Gas: 0.45%
Veba AG 500 $ 34,072
--------------
Pharmaceuticals: 0.47%
Schering AG 300 35,352
--------------
Retail Trade: 0.08%
Metro Stamm AG 100 6,071
--------------
Telecommunications: 0.66%
Deutsche Telekom AG 1,850 49,914
--------------
Total Germany 455,885
--------------
Hong Kong: 2.43%
Airlines: 0.38%
Cathay Pacific Airways Ltd. 41,000 28,837
--------------
Banks: 0.20%
Hang Seng Bank 2,600 14,697
--------------
Conglomerates: 0.65%
Hutchison Whampoa Ltd. 5,000 26,392
Swire Pacific Ltd., Class A 6,000 22,649
--------------
49,041
--------------
Real Estate: 0.64%
Hang Lung Development Co. 11,000 10,931
New World Development Co. 5,000 9,679
Sun Hung Kai Properties 5,000 21,230
Wharf Holdings 6,000 5,924
--------------
47,764
--------------
Telecommunications: 0.14%
Hong Kong Telecommunications 5,600 10,516
--------------
Tourism: 0.05%
Shangri-La Asia Ltd. 6,300 4,065
--------------
Utilities: 0.37%
CLP Holdings Ltd. 6,000 27,334
--------------
Total Hong Kong 182,254
--------------
Italy: 5.27%
Automobiles: 0.53%
Fiat SPA 9,000 39,391
--------------
Banks: 0.81%
Credito Italiano SPA 7,500 39,260
Istituto Banc San Paolo SPA 1,500 21,645
--------------
60,905
--------------
Energy: 0.87%
Eni SPA 10,000 65,540
--------------
32
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Insurance: 1.44%
Assicurazioni Generali SPA 2,250 $ 73,163
Istituto Naz Assicuraz SPA 3,000 8,523
Ras Riun Adriat Di Sicurt SPA 2,000 26,047
--------------
107,733
--------------
Telecommunications: 1.30%
Telecom Italia Mobile SPA 10,000 61,152
Telecom Italia SPA 5,000 36,806
--------------
97,958
--------------
Utilities: 0.32%
Edison SPA 3,000 24,075
--------------
Total Italy 395,602
--------------
Japan: 4.16%
Automobiles: 0.35%
Toyota Motor Corp. 1,000 25,867
--------------
Banks: 0.68%
Sumitomo Bank 2,000 19,455
The Bank of Tokyo-Mitsubishi 3,000 31,754
--------------
51,209
--------------
Chemicals: 0.04%
Dainippon Ink & Chemicals Ltd. 1,000 3,062
--------------
Electronics: 1.12%
Hitachi Ltd. 1,000 6,521
* Matsushita Electric Industrial Corp. Ltd. 1,000 16,068
Nintendo Corp. Ltd. 300 27,777
Sharp Corp. 1,000 8,099
Sony Corp. 300 25,831
--------------
84,296
--------------
Hospitals and Healthcare: 0.30%
Sankyo Co. Ltd. 1,000 22,769
--------------
Photographic Products: 0.61%
Fuji Photo Film Ltd. 1,000 34,802
Fujitsu Ltd. 1,000 10,520
--------------
45,322
--------------
Telecommunications: 0.57%
DDI Corp. 10 34,802
Nippon Telegraph & Telephone Corp. 1 8,286
--------------
43,088
--------------
Utilities: 0.21%
Tokyo Electric Power Co. 800 15,679
--------------
Wholesale Distributors: 0.28%
Nissho Iwai Corp. 12,000 20,665
--------------
Total Japan 311,957
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Malaysia: 0.42%
Banks: 0.11%
Malayan Banking Bhd. 8,000 $ 8,063
--------------
Conglomerates: 0.09%
Sime Darby Bhd. 10,000 6,896
--------------
Telecommunications: 0.05%
Telekom Malaysia Bhd. 2,000 3,375
--------------
Transportation: 0.17%
Malaysia International Shipping Bhd. 9,000 13,128
--------------
Total Malaysia 31,462
--------------
Mexico: 1.84%
Broadcasting: 0.50%
* Grupo Televisa SA 2,000 37,658
--------------
Food and Beverages: 0.44%
Grupo Modelo SA 4,000 33,163
--------------
Retail Trade: 0.26%
* Cifra SA, Class V 13,397 19,620
--------------
Telecommunications: 0.64%
Telefonos De Mexico SA, Class L 20,000 47,741
--------------
Total Mexico 138,182
--------------
Netherlands: 4.63%
Airlines: 0.11%
KLM Royal Dutch Airlines NV 200 8,121
--------------
Banks: 0.40%
ABN Amro Holding NV 1,289 30,163
--------------
Broadcasting: 0.41%
Wolters Kluwer-Cva NV 225 30,882
--------------
Electronics: 0.56%
Philips Electronics NV 500 42,031
--------------
Energy: 1.02%
Royal Dutch Petroleum NV 1,384 76,745
--------------
Finance: 0.74%
ING Groep NV 852 55,789
--------------
Food and Beverages: 1.04%
Heineken NV 468 18,382
Unilever NV 752 59,666
--------------
78,048
--------------
Forest and Paper Products: 0.21%
Koninklijke KNP BT NV 400 15,397
--------------
33
<PAGE>
ZWEIG FOREIGN EQUITY FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Transportation: 0.14%
* TNT Post Group NV 400 $ 10,225
--------------
Total Netherlands 347,401
--------------
New Zealand: 1.12%
Finance: 0.21%
Brierley Investments Ltd. 31,500 15,698
--------------
Forest and Paper Products: 0.21%
Carter Holt Harvey 18,600 16,221
--------------
Telecommunications: 0.60%
Telecom Corp. of New Zealand 10,900 44,926
--------------
Tobacco: 0.06%
Lion Nathan Ltd. 1,900 4,221
--------------
Utilities: 0.04%
Fletcher Challenge Energy 1,200 2,866
--------------
Total New Zealand 83,932
--------------
Singapore: 1.11%
Airlines: 0.25%
Singapore Airlines 4,000 18,704
--------------
Banks: 0.18%
Overseas Chinese Banking Corp. 4,000 13,613
--------------
Broadcasting: 0.12%
Singapore Press Holdings 1,276 8,534
--------------
Conglomerates: 0.03%
Singapore Technologies Inc. 3,000 2,220
--------------
Electronics: 0.16%
* Creative Technology 1,000 12,134
--------------
Real Estate: 0.14%
City Developments 2,000 5,587
DBS Land 6,000 4,972
--------------
10,559
--------------
Telecommunications: 0.13%
Singapore Telecom Inc. 7,000 9,944
--------------
Tourism: 0.10%
Shangri-La Hotel Ltd. 6,000 7,422
--------------
Total Singapore 83,130
--------------
Spain: 6.20%
Banks: 2.63%
* Argentaria SA 1,600 35,953
Banco Bilbao Vizcaya SA 2,125 109,241
Banco De Santander SA 2,050 52,559
--------------
197,753
--------------
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Business Services: 0.11%
Autopistas Cesa Co. SA 500 $ 7,757
Autopistas Cesa Co. SA New Rights 500 379
--------------
8,136
--------------
Energy: 0.51%
Repsol Petroleo SA 700 38,637
--------------
Telecommunications: 1.70%
Telefonica De Espana SA 2,750 127,360
--------------
Tobacco: 0.14%
Tabacalera SA, Class A 500 10,256
--------------
Utilities: 1.11%
Endesa SA 2,525 55,336
Iberdrola I SA 1,700 27,650
--------------
82,986
--------------
Total Spain 465,128
--------------
Sweden: 5.69%
Banks: 0.33%
Sparbanken Sverige AB 500 15,047
Svenska Handelsbanken AB, Class A 200 9,279
--------------
24,326
--------------
Business Services: 0.03%
Esselte AB, Class A 100 2,219
--------------
Chemicals: 0.06%
AGA AB, Class A 300 4,702
--------------
Consumer Products and Services: 0.34%
Hennes & Mauritz AB, Class B 400 25,530
--------------
Electronics: 3.08%
Ericsson LM AB, Class B 7,900 230,812
--------------
Forest and Paper Products: 0.17%
Svenska Cellulosa AB, Class B 500 12,947
--------------
Hospitals and Healthcare: 1.39%
Astra AB, Class A 5,100 104,239
--------------
Machinery and Equipment: 0.29%
Atlas Copco AB, Class A 200 5,455
Sandvik AB, Class A 600 16,590
--------------
22,045
--------------
Total Sweden 426,820
--------------
Switzerland: 3.79%
Banks: 0.54%
Credit Suisse Group 100 22,251
UBS Namen AG 50 18,592
--------------
40,843
--------------
34
<PAGE>
Number Value
of Shares (Note 2)
- -------------------------------------------------------------------------
Business Services: 0.12%
Adecco SA 20 $ 9,019
--------------
Food and Beverages: 0.86%
Nestle SA 30 64,201
--------------
Hospitals and Healthcare: 1.54%
Novartis Inhaber AG 10 16,653
Novartis Namen AG 30 49,921
Roche Holding AG 5 49,100
--------------
115,674
--------------
Insurance: 0.34%
Schweiz Ruckversiche 10 25,290
--------------
Machinery and Equipment: 0.39%
ABB AG Baden 20 29,536
--------------
Total Switzerland 284,563
--------------
United Kingdom: 5.44%
Banks: 1.20%
Barclays Plc. 500 14,442
HSBC Holdings 700 17,007
Lloyds TSB Group Plc. 4,200 58,658
--------------
90,107
--------------
Building Materials and Products: 0.20%
Tarmac Plc. 2,400 4,315
Wolseley Plc. 1,800 10,670
--------------
14,985
--------------
Business Services: 0.07%
Railtrack Group Plc. 200 4,902
--------------
Consumer Products and Services: 1.09%
Glaxo Holdings Plc. 1,700 51,173
Smithkline Beecham, Class A 2,500 30,431
--------------
81,604
--------------
Engineering: 0.05%
Taylor Woodrow Plc. 1,100 3,689
--------------
Food and Beverages: 0.36%
Unilever Plc. 2,500 26,844
--------------
Oil and Gas: 0.85%
British Petroleum Plc. 4,400 64,058
--------------
Real Estate: 0.29%
Land Securities Plc. 1,400 21,667
--------------
Number of
Shares or Value
Principal Amount (Note 2)
- -------------------------------------------------------------------------
Retail Trade: 0.47%
Marks & Spencer Corp. 3,900 $ 35,597
--------------
Telecommunications: 0.80%
British Telecommunications Corp. 4,900 60,300
--------------
Utilities: 0.06%
Scottish Power Plc. 500 4,413
--------------
Total United Kingdom 408,166
--------------
Total Common Stocks
(Cost $4,643,860) 5,095,144
--------------
UNITED STATES SHORT-TERM
OBLIGATIONS: 11.94%
Federal Home Loan Mortgage Corp.,
Discount Notes: 9.28%
5.44%, 7/30/98 $ 700,000 696,827
--------------
United States Treasury Bills: 2.66%
4.81%, 7/23/98 50,000 49,851
--------------
4.87%, 7/23/98 100,000 99,701
--------------
4.90%, 7/23/98 50,000 49,850
--------------
199,402
--------------
Total United States Short-Term Obligations:
(Cost $896,338) 896,229
--------------
UNITED STATES REPURCHASE AGREEMENT: 18.16%
With Morgan Stanley & Co., Inc.
(dated 6/30/98), 6.25%, due 7/1/98 (Repurchase
proceeds $1,363,237); collateralized by: $1,359,841
Federal National Mortgage Association Bonds,
6.50% - 7.64%, 7/1/2013 - 3/1/2025
(Market value $1,394,087) 1,363,000 1,363,000
--------------
Total Repurchase Agreement
(Cost $1,363,000) 1,363,000
--------------
Total Investments in Securities
(Cost $6,903,198) 7,354,373
--------------
Net Unrealized Appreciation on Foreign Forward
Currency Contracts (Note 4): 0.29% 21,725
--------------
Total Investments (Cost $6,903,198) 98.27% 7,376,098
Other Assets 2.12 158,893
------ --------------
Total Assets 100.39% 7,534,991
Total Liabilities (Note 5) (0.39) (29,471)
------ --------------
Net Assets (Note 6) 100.00% $ 7,505,520
====== ==============
35
<PAGE>
ZWEIG FOREIGN EQUITY FUND
Statement of Net Assets as of June 30, 1998 (Unaudited) (continued)
Class A Shares
Net asset value (NAV) and redemption price per share
($1,115,960/86,127 shares) $12.96
======
Maximum public offering price per share -
NAV/(1- Maximum sales charge) ($12.96/.945) $13.71
======
Class B Shares
Net asset value and offering price per share
($1,635,376/126,645 shares) $12.91
======
Redemption price per share **
======
Class C Shares
Net asset value and offering price per share
($3,607,964/279,518 shares) $12.91
======
Redemption price per share.. **
======
Class I Shares
Net asset value, offering and redemption price per share
($1,146,220/88,332 shares) $12.98
======
- -------------------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held (Note 3b).
For Federal income tax purposes, the tax basis of investments owned at June
30, 1998 was $6,903,198 and net unrealized appreciation on investments
consisted of:
Gross unrealized appreciation $764,120
Gross unrealized depreciation (291,220)
--------
Net unrealized appreciation $472,900
========
% Net
Industry Breakdown--Foreign Stocks Value Assets
- -------------------------------------------------------------------------
Aerospace $ 5,440 0.07%
Airlines 55,662 0.74%
Automobiles 143,707 1.91%
Banks 916,412 12.21%
Broadcasting 91,592 1.22%
Building Materials and Products 14,985 0.20%
Business Services 70,612 0.94%
Chemicals 115,225 1.53%
Conglomerates 156,182 2.08%
Consumer Products and Services 180,557 2.41%
Electronics 513,723 6.85%
Energy 186,647 2.49%
Engineering 3,689 0.05%
Finance 71,487 0.95%
Food and Beverages 334,039 4.45%
Forest and Paper Products 65,895 0.88%
Homebuilders 34,060 0.45%
Hospitals and Healthcare 242,682 3.23%
Insurance 263,159 3.51%
Machinery and Equipment 60,076 0.80%
Metals and Mining 62,709 0.84%
Newspapers 69,164 0.92%
Oil and Gas 119,218 1.59%
Pharmaceuticals 35,352 0.47%
Photographic Products 45,322 0.60%
Real Estate 93,608 1.25%
Recreational Products 7,369 0.10%
Retail Trade 132,049 1.76%
Telecommunications 665,612 8.87%
Tobacco 14,477 0.19%
Tourism 11,487 0.15%
Transportation 66,250 0.88%
Utilities 226,031 3.01%
Wholesale Distributors 20,665 0.28%
---------- ------
$5,095,144 67.88%
========== ======
See notes to financial statements.
36
<PAGE>
ZWEIG GOVERNMENT FUND
Statement of Net Assets as of June 30, 19998 (Unaudited)
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------
UNITED STATES GOVERNMENT
& AGENCY OBLIGATIONS: 97.60%
Federal Home Loan Mortgage Corp.,
Modified Mtge. Pass-Through
Securities: 0.74%
10.50%, 1/1/2001 $ 12,119 $ 12,889
10.50%, 6/1/2001 81,715 89,376
11.50%, 10/1/2015 59,740 66,909
12.00%, 11/1/2015 104,441 118,018
--------------
\ 287,192
--------------
Federal National Mortgage Assn.,
Modified Mtge. Pass-Through
Securities: 0.10%
12.50%, 10/1/2014 34,150 38,910
--------------
Federal National
Mortgage Assn.: 2.58%
Deb., 8.25%, 12/18/2000 950,000 1,006,501
--------------
Government National Mortgage Assn.,
Modified Mtge. Pass-Through
Securities: 0.25%
12.50%, 11/20/2013 20,474 23,277
12.00%, 9/15/2015 51,772 58,939
8.00%, 8/15/2022 14,666 15,211
--------------
97,427
--------------
Private Export Funding Corp.: 2.66%
7.90%, 3/31/2000 1,000,000 1,036,848
--------------
United States Treasury
Bonds: 21.33%
10.75%, 2/15/2003 1,000,000 1,208,751
10.75%, 5/15/2003 2,000,000 2,437,502
12.00%, 8/15/2013 1,025,000 1,522,446
7.25%, 8/15/2022 1,900,000 2,274,657
7.50%, 11/15/2024 700,000 868,438
--------------
8,311,794
--------------
United States Treasury
Notes: 69.94%
6.25%, 8/31/2000 3,300,000 3,349,503
6.375%, 8/15/2002 1,200,000 1,236,751
7.25%, 5/15/2004 1,036,000 1,124,384
6.875%, 5/15/2006 7,900,000 8,559,160
6.50%, 10/15/2006 3,600,000 3,825,004
6.625%, 5/15/2007 7,400,000 7,955,008
6.375%, 8/15/2027 1,100,000 1,208,626
--------------
27,258,436
--------------
Total United States Government &
Agency Obligations (Cost $37,235,450) 38,037,108
--------------
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENT: 1.22%
With Morgan Stanley & Co., Inc.,
(dated 6/30/98), 6.25%, due
7/1/98 (Repurchase proceeds
$474,082); collateralized by:
$482,825 Federal National Mortgage
Association Bonds, 6.167%, 4/1/2018
(Market value $487,744) $474,000 $ 474,000
--------------
Total Repurchase Agreement
(Cost $474,000) 474,000
--------------
Total Investments (Cost $37,709,450) 98.82% 38,511,108
Other Assets 1.76 686,646
------ --------------
Total Assets 100.58% 39,197,754
Total Liabilities (Note 5) (0.58) (225,921)
------ --------------
Net Assets (Note 6) 100.00% $ 38,971,833
====== ==============
Weighted Average Duration 6.0 years
=========
Class A Shares
Net asset value ("NAV") and redemption
price per share ($26,994,902/2,654,263 shares) $10.17
======
Maximum public offering price per share -
NAV/(1 - maximum sales charge) ($10.17/.9525) $10.68
======
Class B Shares
Net asset value and offering price per share
($1,250,058/122,228 shares) $10.23
======
Redemption price per share *
======
Class C Shares
Net asset value and offering price per share
($9,639,748/949,684 shares) $10.15
======
Redemption price per share *
======
Class I Shares
Net asset value, offering and redemption price per share
($1,087,125/106,655 shares) $10.19
======
- -------------------------------------------------------------------------------
* Varies by length of time shares are held. (Note 3b)
For Federal income tax purposes, the tax basis of investments owned at June 30,
1998 was $37,709,450 and net unrealized appreciation on investments consisted
of:
Gross unrealized appreciation $ 1,078,447
Gross unrealized depreciation (276,789)
-----------
Net unrealized appreciation $ 801,658
===========
37
<PAGE>
ZWEIG GOVERNMENT CASH FUND
Statement of Net Assets as of June 30, 1998 (Unaudited)
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------
UNITED STATES GOVERNMENT
AGENCY OBLIGATIONS: 72.42%
Federal Farm Credit Bank,
Discount Notes: 6.61%
5.46%, 7/1/98 $5,000,000 $ 5,000,000
--------------
Federal Home Loan Mortgage Corp.,
Discount Notes: 32.88%
5.47%, 7/24/98 5,000,000 4,982,526
5.47%, 7/27/98 5,000,000 4,980,247
5.45%, 7/29/98 5,000,000 4,978,806
5.42%, 8/26/98 5,000,000 4,957,845
5.42%, 9/8/98 5,000,000 4,948,058
--------------
24,847,482
--------------
Federal National Mortgage Assn.,
Discount Notes: 32.93%
5.41%, 7/15/98 5,000,000 4,989,481
5.42%, 7/15/98 5,000,000 4,989,461
5.47%, 7/17/98 5,000,000 4,987,844
5.44%, 8/20/98 5,000,000 4,962,222
5.41%, 8/27/98 5,000,000 4,957,171
--------------
24,886,179
--------------
Total United States Government
Agency Obligations (Cost $54,733,661) 54,733,661
--------------
Principal Value
Amount (Note 2)
- -------------------------------------------------------------------------
REPURCHASE AGREEMENTS: 28.86%
With Morgan Stanley & Co., Inc.
(dated 6/30/98), 6.25%, due 7/1/98
(Repurchase proceeds $18,811,265);
collateralized by: $18,876,289; Federal
National Mortgage Association Bonds,
6.926% - 7.82%, 6/1/2024 - 8/1/2027
(Market value $19,387,171) $18,808,000 $ 18,808,000
--------------
With Prudential Securities, Inc.
(dated 6/30/98), 6.05%, due 7/1/98
(Repurchase proceeds $3,000,504);
collateralized by: $3,088,000 United
States Treasury Bills, 4.925%, 9/3/98
(Market value $3,060,542) 3,000,000 3,000,000
--------------
Total Repurchase Agreements (Cost $21,808,000) 21,808,000
--------------
Total Investments (Cost $76,541,661) 101.28% 76,541,661
Other Assets 0.78 589,944
------ --------------
Total Assets 102.06% 77,131,605
Total Liabilities (Note 5) (2.06) (1,554,882)
------ --------------
Net Assets (Note 6) 100.00% $75,576,723
====== ==============
Net asset value, offering and redemption price per share
(2,996,652 Class A Shares, 421,540 Class B Shares,
3,101,820 Class C Shares, 6,679 Class I Shares and
69,050,032 Class M Shares) $1.00
=====
Weighted average days to maturity 24
=====
See notes to financial statements.
38
<PAGE>
ZWEIG SERIES TRUST
Statement of Operations for the Six Months Ended June 30, 1998 (Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Zweig Zweig Zweig Zweig Growth Zweig Zweig Zweig
Strategy Appreciation Managed & Income Foreign Equity Government Government
Fund Fund Assets Fund Fund Fund Cash Fund
-------- ------------ ------- ------------ -------------- ---------- ----------
<S><C>
Investment Income:
Income:
Dividends * $ 7,928 $ 3,383 $ 3,564 $ 327 $ 69 $ -- $ --
Interest 3,971 1,560 7,719 121 33 1,299 2,107
- --------------------------------------------------------------------------------------------------------------------------------
Total Income 11,899 4,943 11,283 448 102 1,299 2,107
- --------------------------------------------------------------------------------------------------------------------------------
Expenses: (Note 2)
Advisory fees (Note 3) 4,740 2,963 2,821 152 27 119 189
Distribution fees, Class A (Note 3) 854 455 174 12 1 41 5
Distribution fees, Class B (Note 3) 436 138 115 76 6 6 2
Distribution fees, Class C (Note 3) 3,031 1,296 2,114 77 12 37 4
Distribution fees, Class M (Note 3) -- -- -- -- -- -- 25
Transfer agent fees 655 306 285 3 12 43 33
Custodian fees 81 42 131 17 11 7 9
Portfolio accounting fees 119 88 98 18 6 16 4
Professional fees 56 34 41 7 9 3 3
Reports to shareholders 142 60 57 3 1 5 5
Registration fees 29 23 19 17 39 17 20
Insurance 18 8 8 1 -- 1 1
Trustees' fees 14 7 7 2 2 2 3
Amortization of organization
expenses -- -- 13 3 3 -- --
Miscellaneous 15 7 8 -- -- 1 1
- --------------------------------------------------------------------------------------------------------------------------------
Total expenses 10,190 5,427 5,891 388 129 298 304
Less: Expenses reimbursed by
investment adviser (Note 3) -- -- -- (14) (70) -- (136)
- --------------------------------------------------------------------------------------------------------------------------------
Net expenses 10,190 5,427 5,891 374 59 298 168
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) 1,709 (484) 5,392 74 43 1,001 1,939
- --------------------------------------------------------------------------------------------------------------------------------
Net Realized and Unrealized Gains
(Losses) on Investments and
Foreign Currency:
Net realized gains (losses):
Security transactions 93,780 99,267 14,740 1,952 13 648 --
Futures and options transactions (4,638) (4,876) (1,255) (177) 5 -- --
Currency transactions -- -- 2,626 -- 16 -- --
- --------------------------------------------------------------------------------------------------------------------------------
Net realized gains 89,142 94,391 16,111 1,775 34 648 --
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in unrealized
appreciation of investments and
foreign currency 7,744 (47,743) 33,653 339 429 (369) --
- --------------------------------------------------------------------------------------------------------------------------------
Net realized and unrealized gains
on investments and foreign currency 96,886 46,648 49,764 2,114 463 279 --
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations $98,595 $46,164 $55,156 $2,188 $506 $1,280 $1,939
================================================================================================================================
* Net of taxes withheld on foreign
dividends $ 116 $ 56 $ 208 $ 3 $ 9 $ -- $ --
================================================================================================================================
</TABLE>
See notes to financial statements.
39
<PAGE>
ZWEIG SERIES TRUST
Statement of Changes in Net Assets for the Six Months Ended June 30, 1998 and
for the Year Ended December 31, 1997
(Unaudited) (In Thousands)
<TABLE>
<CAPTION>
Zweig Zweig
Strategy Fund Appreciation Fund
----------------------------- ---------------------------
1998 1997 1998 1997
----------------------------- ---------------------------
<S><C>
Increase (Decrease) in Net Assets:
Operations:
Net investment income (loss) $ 1,709 $ 10,080 $ (484) $ 1,487
Net realized gains (losses) on investments 89,142 131,682 94,391 53,881
Unrealized appreciation (depreciation) of investments
and foreign currency 7,744 56,468 (47,743) 54,154
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting
from operations 98,595 198,230 46,164 109,522
- --------------------------------------------------------------------------------------------------------------------------------
Dividends to shareholders from
net investment income:
Class A (1,977) (6,761) -- (1,474)
Class B -- (297) -- --
Class C -- (2,955) -- --
Class I (5) (14) -- (19)
Class M -- -- -- --
Distributions to shareholders from net
realized gains on investments:
Class A -- (56,611) -- (19,748)
Class B -- (7,516) -- (1,403)
Class C -- (59,242) -- (16,881)
Class I -- (105) -- (180)
- --------------------------------------------------------------------------------------------------------------------------------
Total dividends and distributions to shareholders (1,982) (133,501) -- (39,705)
- --------------------------------------------------------------------------------------------------------------------------------
Capital share transactions (Note 7):
Net proceeds from sale of shares 64,552 146,735 57,134 62,499
Net asset value of shares issued to shareholders in
reinvestment of dividends and distributions 1,612 103,555 -- 32,564
- --------------------------------------------------------------------------------------------------------------------------------
66,164 250,290 57,134 95,063
Cost of shares redeemed (126,327) (325,599) (62,269) (102,831)
- --------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets derived from
capital share transaction (60,163) (75,309) (5,135) (7,768)
- --------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets 36,450 (10,580) 41,029 62,049
NET ASSETS:
Beginning of period 1,235,123 1,245,703 567,250 505,201
- --------------------------------------------------------------------------------------------------------------------------------
End of period $1,271,573 $1,235,123 $608,279 $567,250
================================================================================================================================
Undistributed net investment income (loss) $ (392) $ (119) $ (825) $ (341)
================================================================================================================================
</TABLE>
(1) Commenced operations on November 24, 1997
See notes to financial statements.
40
<PAGE>
<TABLE>
<CAPTION>
Zweig Zweig Growth & Zweig Zweig Zweig
Managed Assets Income Fund Foreign Equity Fund Government Fund Government Cash Fund
-------------------- --------------------- ------------------- ------------------- --------------------
1998 1997 1998 1997 1998 1997(1) 1998 1997 1998 1997
-------------------- --------------------- ------------------- ------------------- --------------------
<S><C>
$ 5,392 $ 10,101 $ 74 $ 374 $ 43 $ 3 $ 1,001 $ 2,182 $ 1,939 $ 3,067
16,111 50,282 1,775 537 34 (11) 648 77 -- --
33,653 15,151 339 3,781 429 44 (369) 987 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
55,156 75,534 2,188 4,692 506 36 1,280 3,246 1,939 3,067
- ---------------------------------------------------------------------------------------------------------------------------------
(1,360) -- (34) (107) -- (1) (686) (1,566) (87) (140)
(215) -- (12) (98) -- -- (27) (35) (8) (16)
(3,406) -- (12) (145) -- (1) (234) (556) (69) (165)
(33) -- (9) (27) -- (2) (28) (26) (11) (55)
-- -- -- -- -- -- -- -- (1,764) (2,691)
-- (15,307) -- -- -- -- -- -- -- --
-- (2,356) -- -- -- -- -- -- -- --
-- (56,348) -- -- -- -- -- -- -- --
-- (349) -- -- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------------------
(5,014) (74,360) (67) (377) -- (4) (975) (2,183) (1,939) (3,067)
- ---------------------------------------------------------------------------------------------------------------------------------
36,557 56,900 12,787 22,306 3,788 3,336 2,418 3,744 265,434 360,029
3,906 56,413 58 310 -- 3 570 1,275 876 1,727
- ---------------------------------------------------------------------------------------------------------------------------------
40,463 113,313 12,845 22,616 3,788 3,339 2,988 5,019 266,310 361,756
(50,414) (125,455) (2,927) (2,775) (104) (55) (4,847) (14,248) (252,901) (354,188)
- ---------------------------------------------------------------------------------------------------------------------------------
(9,951) (12,142) 9,918 19,841 3,684 3,284 (1,859) (9,229) 13,409 7,568
- ---------------------------------------------------------------------------------------------------------------------------------
40,191 (10,968) 12,039 24,156 4,190 3,316 (1,554) (8,166) 13,409 7,568
539,296 550,264 33,967 9,811 3,316 0 40,526 48,692 62,168 54,600
- ---------------------------------------------------------------------------------------------------------------------------------
$579,487 $539,296 $46,006 $33,967 $7,506 $3,316 $38,972 $40,526 $75,577 $62,168
=================================================================================================================================
$ 284 $ (94) $ 4 $ (3) $ 42 $ (1) $ 55 $ 29 $ -- $ --
=================================================================================================================================
</TABLE>
41
<PAGE>
NOTES TO FINANCIAL STATEMENTS
June 30, 1998 (unaudited)
Note 1--Organization
Zweig Series Trust (the "Trust"), organized as a Delaware business trust, is
registered under the Investment Company Act of 1940 (the "Act") as a
diversified, open-end management investment company. The Trust presently
consists of seven separate investment portfolios ("Series"): Zweig Strategy
Fund, Zweig Appreciation Fund, Zweig Managed Assets, Zweig Growth & Income Fund,
Zweig Foreign Equity Fund, Zweig Government Fund and Zweig Government Cash Fund
(formerly named Zweig Cash Fund). Each Series offers Class A, Class B, Class C
and Class I Shares and Zweig Government Cash Fund also offers Class M Shares.
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 June 30, 1998) are valued at fair value as determined under
procedures approved 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 Government 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 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.
42
<PAGE>
(g) Dividends and Distributions to Shareholders: Dividends and distributions are
declared separately for each class of shares of a Series. 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, 1997 (each Series' tax fiscal year-end), Zweig Government Fund
had capital loss carryforwards, including acquired loss carryforwards, of
$2,631,923, $249,274, $7,227,155 and $1,010,121 expiring October 31, 1998, 1999,
2002 and 2004 respectively; available to offset any net capital gains
subsequently realized, subject to certain limitations.
Note 3--Investment Advisory Fees and Other Transactions with Affiliates
(a) Investment Manager: The Trust's investments are managed by Zweig/Glaser
Advisers (the "Manager"). The Manager's investment advisory fee is based on the
average daily net assets of each Series at the following annual rates: Zweig
Strategy Fund and Zweig Growth & Income Fund - 0.75%; Zweig Appreciation Fund,
Zweig Managed Assets and Zweig Foreign Equity Fund - 1.00%; Zweig Government
Fund - 0.60%; and Zweig Government Cash Fund - 0.50%. The fees are accrued daily
and paid monthly. Investment advisory fees for the six months ended June 30,
1998 aggregated $11,011,128 before expense reimbursements.
The Manager has voluntarily undertaken to limit the expenses of Zweig Government
Cash Fund (exclusive of taxes, interest, brokerage commissions, the distribution
fees described below and extraordinary expenses) until April 30, 1999 to 0.35%
of its average daily net assets. During the six months ended June 30, 1998, the
Manager's reimbursements to Zweig Government Cash Fund aggregated $136,181. The
Manager reserves the right to discontinue this expense limitation at any time
after April 30, 1999.
The Manager has voluntarily undertaken to limit the expenses of Zweig Foreign
Equity Fund (exclusive of taxes, interest, brokerage commissions, the
distribution fees described below and extraordinary expenses) until April 30,
1999 to 1.50% of its average daily net assets. During the six months ended June
30, 1998, the Manager's reimbursements to Zweig Foreign Equity Fund aggregated
$69,961. The Manager reserves the right to discontinue this expense limitation
at any time after April 30, 1999.
The Manager had 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,
1998 to 1.00% of its average daily net assets. During the six months ended June
30, 1998, the Manager's reimbursements to Zweig Growth & Income Fund aggregated
$13,761.
(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 Government 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 six months
ended June 30, 1998, the Distributor's share of the initial and contingent
deferred sales charges was $165,464 and $262,653, 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, Zweig Growth & Income Fund and
Zweig Foreign Equity Fund, 0.75% for Class C Shares of Zweig Government Fund and
0.30% for Class C Shares of Zweig Government Cash Fund, respectively. A separate
Rule 12b-1 distribution sharing plan for Class M Shares of Zweig Government Cash
Fund provides that service organizationsmay be paid up to 0.30% of average daily
net assets 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 six months ended June 30, 1998, the Trust paid Zweig Securities Corp.
brokerage commissions of $412,105 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.
43
<PAGE>
Note 4--Purchases and Sales of Securities and Forward Currency Contracts
During the six months ended June 30, 1998, 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 Zweig
Strategy Appreciation Managed & Income Foreign Equity Government
Fund Fund Assets Fund Fund Fund
------------ ------------ ------------ ----------- -------------- -----------
<S><C>
Securities purchases $425,094,573 $293,303,127 $159,143,449 $28,771,946 $2,997,012 $12,426,594
Securities sales 634,796,208 377,275,304 178,874,636 24,436,173 543,669 11,216,638
</TABLE>
Forward currency contracts outstanding at June 30, 1998, for Zweig Managed
Assets were:
<TABLE>
<CAPTION>
Net Unrealized
Settlement Appreciation
Contracts to Deliver In Exchange For Date Value (Depreciation)
---------------------- --------------- ---------- ------------- ---------------
<S><C>
Sales
Australian Dollar A$ 30,700,000 $ 18,051,600 9/16/98 $ (19,030,997) $ (979,397)
Danish Krone DKr 41,200,000 6,067,747 9/16/98 (6,011,495) 56,252
Finnish Markka Fim 71,000,000 13,003,663 9/16/98 (12,996,862) 6,801
French Franc ff 244,000,000 40,333,553 9/16/98 (40,546,811) (213,258)
German Deutsche Mark DM 78,100,000 43,297,594 9/16/98 (43,472,726) (175,132)
Italian Lira Lira 53,700,000,000 30,115,504 9/16/98 (30,251,519) (136,015)
Netherlands Guilder NLG 11,800,000 5,833,498 9/16/98 (5,828,621) 4,877
New Zealand Dollar NZ$ 10,800,000 5,313,600 9/16/98 (5,577,662) (264,062)
Spanish Peseta Pta 5,150,000,000 33,725,156 9/16/98 (33,734,642) (9,486)
Swedish Krona SKr 141,000,000 17,472,119 9/16/98 (17,736,971) (264,852)
U.K. Pound Sterling (pound) 24,500,000 39,788,000 9/16/98 (40,697,975) (909,975)
------------ ------------- -----------
$253,002,034 $(255,886,281) $(2,884,247)
============ ============= ===========
Purchases
Australian Dollar $ 6,383,475 A$ 10,500,000 9/16/98 $ 6,508,973 $ 125,498
===================== ============= ===========
Net Unrealized Appreciation on Foreign Forward Currency Contracts $(2,758,749)
===========
</TABLE>
Forward currency contracts outstanding at June 30, 1998, for Zweig Foreign
Equity Fund were:
<TABLE>
<CAPTION>
Net Unrealized
Settlement Appreciation
Contracts to Deliver In Exchange For Date Value (Depreciation)
---------------------- --------------- ---------- ------------- ---------------
<S><C>
Sales
Australian Dollar A$ 410,000 $ 255,721 7/29/98 $ (254,028) $ 1,693
Austrian Schilling AS 2,700,000 213,144 7/29/98 (212,996) 148
Belgium Franc BEF 4,900,000 133,880 7/29/98 (131,913) 1,967
Canadian Dollar Can$ 220,000 151,881 7/29/98 (149,707) 2,174
Danish Krone DKr 906,000 133,167 7/29/98 (131,909) 1,258
Finnish Markka Fim 70,000 104,165 7/29/98 (104,070) 95
French Franc ff 2,950,000 488,811 7/29/98 (488,825) (14)
German Deutsche Mark DM 820,000 455,733 7/29/98 (455,130) 603
Italian Lira Lira 750,000,000 427,350 7/29/98 (422,119) 5,231
Japanese Yen (Y) 43,500,000 316,364 7/29/98 (314,837) 1,527
Netherlands Guilder NLG 720,000 354,981 7/29/98 (354,596) 385
New Zealand Dollar NZ$ 195,000 103,350 7/29/98 (101,025) 2,325
Spanish Peseta Pta 71,500,000 467,427 7/29/98 (467,539) (112)
Swedish Krona SKr 3,360,000 431,405 7/29/98 (421,848) 9,557
Swiss Franc Sf 430,000 289,562 7/29/98 (284,347) 5,215
U.K. Pound Sterling (pound) 250,000 406,075 7/29/98 (416,402) (10,327)
------------ ------------- -----------
$ 4,733,016 $ (4,711,291) $ 21,725
============ ============= ===========
</TABLE>
Note 5--Liabilities--June 30, 1998 (in thousands)
<TABLE>
<CAPTION>
Zweig Zweig Zweig Zweig Growth Zweig Zweig Zweig
Strategy Appreciation Managed & Income Foreign Equity Government Government
Fund Fund Assets Fund Fund Fund Cash Fund
-------- ------------ ------- ------------ -------------- ---------- ----------
<S><C>
Advisory fee $ 52 $ 33 $ 32 $ 1 $-- $ 1 $ 1
Distribution and service fees 716 316 404 30 4 14 6
Capital shares redeemed 2,534 668 642 92 -- 164 1,214
Dividends -- -- -- -- -- -- 302
Securities purchased -- -- 273 -- -- -- --
Variation margin payable -- 103 -- -- -- -- --
Accrued expenses 583 264 384 1 25 47 32
--------------------------------------------------------------------------------------------
Total Liabilities $3,885 $1,384 $1,735 $124 $29 $226 $1,555
============================================================================================
</TABLE>
44
<PAGE>
Note 6--Net Assets--June 30, 1998 (in thousands)
<TABLE>
<CAPTION>
Zweig Zweig Zweig Zweig Growth Zweig Zweig Zweig
Strategy Appreciation Managed & Income Foreign Equity Government Government
Fund Fund Assets Fund Fund Fund Cash Fund
--------- ------------ -------- ------------ -------------- ---------- ----------
<S><C>
Net Assets consist of:
Capital paid-in $ 937,775 $393,580 $486,702 $39,522 $6,968 $45,394 $75,577
Undistributed net
investment income (loss) (392) (825) 284 4 42 55 --
Accumulated net realized gain (loss) 127,290 114,039 10,829 2,307 23 (7,279) --
Net unrealized appreciation
of investments 206,900 101,485 81,672 4,173 473 802 --
-----------------------------------------------------------------------------------------
$1,271,573 $608,279 $579,487 $46,006 $7,506 $38,972 $75,577
=========================================================================================
</TABLE>
Note 7--Capital Shares
The Trust has unlimited authorized shares of beneficial interest ($0.10 par
value), divided into Series and issued in classes (see note 1). Capital share
transactions for the six months ended June 30, 1998 and for the year ended
December 31, 1997 are set forth below.
<TABLE>
<CAPTION>
Class A Class B Class C
---------------------- --------------------- -----------------------
1998 1997 1998 1997 1998 1997
---------- --------- --------- --------- ---------- ----------
<S><C>
Zweig Strategy Fund
Sold 1,066,032 2,807,598 1,016,573 2,096,572 1,786,063 4,383,171
Issued in reinvestment of
dividends and distributions 95,317 3,252,707 -- 381,258 -- 2,907,657
Redeemed (3,971,930) (8,921,797) (257,267) (441,368) (3,344,901) (11,191,028)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) (2,810,581) (2,861,492) 759,306 2,036,462 (1,558,838) (3,900,200)
=============================================================================================================
Zweig Appreciation Fund
Sold 1,638,027 1,060,202 513,161 734,181 779,455 1,773,391
Issued in reinvestment of
dividends and distributions -- 1,003,794 -- 67,139 -- 719,068
Redeemed (2,187,514) (3,337,609) (51,432) (108,903) (904,917) (2,605,708)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) (549,487) (1,273,613) 461,729 692,417 (125,462) (113,249)
=============================================================================================================
Zweig Managed Assets
Sold 655,810 742,760 618,512 877,242 1,411,986 2,570,807
Issued in reinvestment of
dividends and distributions 83,466 1,025,936 11,411 133,637 185,441 3,309,309
Redeemed (885,745) (2,057,937) (74,918) (85,618) (2,683,370) (7,007,366)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) (146,469) (289,241) 555,005 925,261 (1,085,943) (1,127,250)
=============================================================================================================
Zweig Growth & Income Fund
Sold 174,017 342,607 383,666 665,724 328,467 692,913
Issued in reinvestment of dividends 2,087 7,885 597 5,498 675 9,040
Redeemed (66,359) (73,249) (22,353) (39,965) (114,843) (112,060)
- -------------------------------------------------------------------------------------------------------------
Net increase 109,745 277,243 361,910 631,257 214,299 589,893
=============================================================================================================
Zweig Foreign Equity Fund (3)
Sold 52,002 40,901 66,232 62,246 181,117 102,702
Issued in reinvestment of dividends -- 40 -- 35 -- 39
Redeemed (2,011) (4,805) (1,868) -- (4,340) --
- -------------------------------------------------------------------------------------------------------------
Net increase 49,991 36,136 64,364 62,281 176,777 102,741
=============================================================================================================
Zweig Government Fund (2)
Sold 69,605 75,151 21,493 105,575 147,582 96,406
Issued in reinvestment of dividends 39,023 91,379 1,431 2,045 13,306 33,910
Redeemed (235,504) (834,248) (20,348) (40,014) (222,827) (578,962)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) (126,876) (667,718) 2,576 67,606 (61,939) (448,646)
=============================================================================================================
Zweig Government Cash Fund (1)
Sold 23,615,296 2,563,843 278,817 1,317,811 2,202,749 3,683,651
Issued in reinvestment of dividends 50,871 115,524 6,876 13,873 62,172 151,967
Redeemed (23,141,747) (3,567,262) (200,405) (1,028,383) (1,823,735) (5,710,310)
- -------------------------------------------------------------------------------------------------------------
Net increase (decrease) 524,420 (887,895) 85,288 303,301 441,186 (1,874,692)
=============================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Class I
-------------------
1998 1997
------- -------
<S><C>
Zweig Strategy Fund
Sold -- 10
Issued in reinvestment of
dividends and distributions 299 7,517
Redeemed (4,060) --
- -------------------------------------------------------------
Net increase (decrease) (3,761) 7,527
=============================================================
Zweig Appreciation Fund
Sold 1,935 10
Issued in reinvestment of
dividends and distributions -- 10,810
Redeemed (51,978) --
- -------------------------------------------------------------
Net increase (decrease) (50,043) 10,820
=============================================================
Zweig Managed Assets
Sold 1,104 20,576
Issued in reinvestment of
dividends and distributions 2,297 26,984
Redeemed (73,705) (67,477)
- -------------------------------------------------------------
Net increase (decrease) (70,304) (19,917)
=============================================================
Zweig Growth & Income Fund
Sold -- 111,492
Issued in reinvestment of dividends 635 2,097
Redeemed -- --
- -------------------------------------------------------------
Net increase 635 113,589
=============================================================
Zweig Foreign Equity Fund (3)
Sold -- 88,192
Issued in reinvestment of dividends -- 140
Redeemed -- --
- -------------------------------------------------------------
Net increase -- 88,332
=============================================================
Zweig Government Fund (2)
Sold -- 101,214
Issued in reinvestment of dividends 2,786 2,655
Redeemed -- --
- -------------------------------------------------------------
Net increase (decrease) 2,786 103,869
=============================================================
Zweig Government Cash Fund (1)
Sold 1,432,583 1,359,182
Issued in reinvestment of dividends 11,534 59,598
Redeemed (1,537,000) (2,720,000)
- -------------------------------------------------------------
Net increase (decrease) (92,883) (1,301,220)
=============================================================
</TABLE>
(1) For the six months ended June 30, 1998 and for the year ended December 31,
1997, respectively, shares of Zweig Government Cash Fund Class M sold were
237,904,767 and 351,104,043; shares issued in reinvestment of dividends
were 744,973 and 1,386,181; and shares redeemed were 226,199,000 and
341,161,977 for a net increase of 12,450,740 and 11,328,247 shares,
respectively.
(2) Class I Shares of Zweig Government Fund commenced operations on July 14,
1997.
(3) Zweig Foreign Equity Fund commenced operations on November 24, 1997.
Note 8--Borrowings
The Trust has entered into a Liquidity Line of Credit with The Bank of New
York for $100,000,000. The Trust has not used the Line of Credit since it was
established on July 21, 1997. If a Series uses the Line of Credit, it will be
collateralized by that Series' portfolio.
45
<PAGE>
FINANCIAL HIGHLIGHTS
Selected data for each share of capital stock outstanding throughout the six
months ended June 30, 1998 and the years ended December 31, 1997, 1996, 1995,
1994 and 1993 (Unaudited)
<TABLE>
<CAPTION>
Net
Net Realized Distributions
Asset and Dividends from Net Total Net Asset
Value Net Unrealized Total from from Net Realized Dividends Value
Period Beginning Investment Gains Investment Investment Capital and End Total
Ended of Period Income (Loss) (Losses) Operations Income Gains Distributions of Period Return***
- ------ --------- ------------- ----------- ---------- ---------- ------------- ------------- --------- ---------
<S><C>
Zweig Strategy Fund Class A
1998 $15.77 $0.06 $1.25 $1.31 $(0.06) $ -- $(0.06) $17.02 8.31%
1997 15.01 0.20 2.49 2.69 (0.19) (1.74) (1.93) 15.77 18.07
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
Zweig Strategy Fund Class B (3)
1998 15.86 -- 1.25 1.25 -- -- -- 17.11 7.88
1997 15.07 0.07 2.53 2.60 (0.07) (1.74) (1.81) 15.86 17.33
1996 15.12 0.06 1.13 1.19 (0.06) (1.18) (1.24) 15.07 7.88**
Zweig Strategy Fund Class C
1998 15.81 -- 1.25 1.25 -- -- -- 17.06 7.91
1997 15.04 0.07 2.52 2.59 (0.08) (1.74) (1.82) 15.81 17.30
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
Zweig Strategy Fund Class I (4)
1998 15.87 0.09 1.25 1.34 (0.08) -- (0.08) 17.13 8.45
1997 15.07 0.23 2.54 2.77 (0.23) (1.74) (1.97) 15.87 18.52
1996 15.42 0.04 0.83 0.87 (0.04) (1.18) (1.22) 15.07 5.68**
Zweig Appreciation Fund Class A
1998 18.27 0.02 1.51 1.53 -- -- -- 19.80 8.37
1997 15.90 0.10 3.67 3.77 (0.09) (1.31) (1.40) 18.27 23.83
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
Zweig Appreciation Fund Class B (3)
1998 18.13 (0.05) 1.49 1.44 -- -- -- 19.57 7.94
1997 15.82 (0.02) 3.64 3.62 -- (1.31) (1.31) 18.13 22.97
1996 16.34 0.03 1.74 1.77 (0.03) (2.26) (2.29) 15.82 11.01**
Zweig Appreciation Fund Class C
1998 18.10 (0.05) 1.49 1.44 -- -- -- 19.54 7.96
1997 15.79 (0.02) 3.64 3.62 -- (1.31) (1.31) 18.10 23.01
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
Zweig Appreciation Fund Class I (4)
1998 18.46 0.08 1.49 1.57 -- -- -- 20.03 8.51
1997 16.04 0.15 3.71 3.86 (0.13) (1.31) (1.44) 18.46 24.17
1996 17.28 0.04 1.02 1.06 (0.04) (2.26) (2.30) 16.04 6.30**
Zweig Managed Assets Class A (1)
1998 12.72 0.17 1.18 1.35 (0.16) -- (0.16) 13.91 10.62
1997 12.75 0.13 1.83 1.96 -- (1.99) (1.99) 12.72 15.47
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 (3)
1998 12.79 0.11 1.20 1.31 (0.11) -- (0.11) 13.99 10.24
1997 12.90 0.04 1.84 1.88 -- (1.99) (1.99) 12.79 14.67
1996 12.43 0.13 1.00 1.13 (0.17) (0.49) (0.66) 12.90 9.11**
Zweig Managed Assets Class C (1)
1998 12.63 0.12 1.17 1.29 (0.11) -- (0.11) 13.81 10.22
1997 12.76 0.04 1.82 1.86 -- (1.99) (1.99) 12.63 14.67
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
</TABLE>
<TABLE>
<CAPTION>
Ratios to Average
Net Assets
--------------------
Net Portfolio Net Assets
Investment Turnover End of Period
Expenses Income Rate (in thousands)
-------- ---------- --------- --------------
<S><C>
Zweig Strategy Fund Class A
1998 $ 1.23%* 0.65%* 76%* $562,710
1997 1.24 1.20 126 565,721
1996 1.28 1.27 181 581,149
1995 1.27 1.92 95 558,286
1994 1.40 1.90 70 424,805
1993 1.43 1.00 359 405,884
Zweig Strategy Fund Class B (3)
1998 1.93* (0.05)* 76* 95,913
1997 1.94 0.50 126 76,820
1996 1.98* 0.57* 181 42,317
Zweig Strategy Fund Class C
1998 1.93* (0.05)* 76* 611,859
1997 1.94 0.50 126 591,512
1996 1.98 0.57 181 621,334
1995 1.97 1.22 95 530,300
1994 2.10 1.20 70 307,011
1993 2.13 0.30 359 188,631
Zweig Strategy Fund Class I (4)
1998 0.93* 0.95* 76* 1,091
1997 0.94 1.50 126 1,070
1996 0.98* 1.57* 181 903
Zweig Appreciation Fund Class A
1998 1.49* 0.17* 109* 307,447
1997 1.52 0.61 77 293,809
1996 1.62 1.03 88 275,935
1995 1.63 1.10 68 272,590
1994 1.70 1.09 97 213,400
1993 1.73 0.52 69 230,230
Zweig Appreciation Fund Class B (3)
1998 2.19* (0.53)* 109* 32,919
1997 2.22 (0.09) 77 22,122
1996 2.32* 0.33* 88 8,350
Zweig Appreciation Fund Class C
1998 2.19* (0.53)* 109* 265,948
1997 2.22 (0.09) 77 248,584
1996 2.32 0.33 88 218,714
1995 2.33 0.40 68 195,204
1994 2.40 0.39 97 139,397
1993 2.43 (0.18) 69 105,957
Zweig Appreciation Fund Class I (4)
1998 1.19* 0.47* 109* 1,965
1997 1.22 0.91 77 2,735
1996 1.32* 1.33* 88 2,202
Zweig Managed Assets Class A (1)
1998 1.54* 2.46* 63* 119,259
1997 1.59 2.40 168 110,908
1996 1.64 2.64 187 114,837
1995 1.59 3.69 239 141,110
1994 1.68 2.70 299 154,441
1993 1.67* 1.93* 196 121,620
Zweig Managed Assets Class B (3)
1998 2.24* 1.76* 63* 27,577
1997 2.29 1.70 168 18,117
1996 2.34* 1.94* 187 6,339
Zweig Managed Assets Class C (1)
1998 2.24* 1.76* 63* 430,769
1997 2.29 1.70 168 407,625
1996 2.34 1.94 187 426,194
1995 2.29 2.99 239 527,432
1994 2.38 2.00 299 570,710
1993 2.37* 1.23* 196 429,088
</TABLE>
46
<PAGE>
<TABLE>
<CAPTION>
Net
Net Realized Distributions
Asset and Dividends from Net Total Net Asset
Value Net Unrealized Total from from Net Realized Dividends Value
Period Beginning Investment Gains Investment Investment Capital and End Total
Ended of Period Income (Loss) (Losses) Operations Income Gains Distributions of Period Return***
- ------ --------- ------------- ----------- ---------- ---------- ------------- ------------- --------- ---------
<S><C>
Zweig Managed Assets Class I (4)
1998 $13.05 $0.31 $1.09 $1.40 $(0.25) $ -- $(0.25) $14.20 10.73%
1997 12.99 0.09 1.96 2.05 -- (1.99) (1.99) 13.05 15.88
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 (5)
1998(16) 13.73 0.06 0.83 0.89 (0.06) -- (0.06) 14.56 6.45
1997(15) 11.37 0.24 2.36 2.60 (0.24) -- (0.24) 13.73 23.12
1996(14) 11.34 0.01 0.03 0.04 (0.01) -- (0.01) 11.37 0.39**
Zweig Growth & Income Fund Class B (5)
1998(16) 13.73 0.01 0.83 0.84 (0.01) -- (0.01) 14.56 6.12
1997(15) 11.37 0.16 2.36 2.52 (0.16) -- (0.16) 13.73 22.29
1996(14) 11.34 0.01 0.03 0.04 (0.01) -- (0.01) 11.37 0.33**
Zweig Growth & Income Fund Class C (5)
1998(16) 13.71 0.01 0.83 0.84 (0.01) -- (0.01) 14.54 6.13
1997(15) 11.38 0.17 2.33 2.50 (0.17) -- (0.17) 13.71 22.15
1996(14) 11.34 0.01 0.04 0.05 (0.01) -- (0.01) 11.38 0.42**
Zweig Growth & Income Fund Class I (5)
1998(16) 13.77 0.08 0.84 0.92 (0.08) -- (0.08) 14.61 6.65
1997(15) 11.37 0.24 2.40 2.64 (0.24) -- (0.24) 13.77 23.42
1996(14) 11.34 0.02 0.03 0.05 (0.02) -- (0.02) 11.37 0.41**
Zweig Foreign Equity Fund Class A (7)
1998(18) 11.45 0.09 1.42 1.51 -- -- -- 12.96 13.19
1997(17) 11.34 0.01 0.11 0.12 (0.01) -- (0.01) 11.45 1.09**
Zweig Foreign Equity Fund Class B (7)
1998(18) 11.45 0.06 1.40 1.46 -- -- -- 12.91 12.75
1997(17) 11.34 0.01 0.11 0.12 (0.01) -- (0.01) 11.45 1.03**
Zweig Foreign Equity Fund Class C (7)
1998(18) 11.45 0.06 1.40 1.46 -- -- -- 12.91 12.75
1997(17) 11.34 0.01 0.11 0.12 (0.01) -- (0.01) 11.45 1.03**
Zweig Foreign Equity Fund Class I (7)
1998(18) 11.46 0.12 1.40 1.52 -- -- -- 12.98 13.26
1997(17) 11.34 0.02 0.12 0.14 (0.02) -- (0.02) 11.46 1.22**
Zweig Government Fund Class A
1998 10.09 0.26 0.07 0.33 (0.25) -- (0.25) 10.17 3.34
1997 9.81 0.52 0.28 0.80 (0.52) -- (0.52) 10.09 8.42
1996(13) 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
Zweig Government Fund Class B (3)
1998 10.15 0.23 0.08 0.31 (0.23) -- (0.23) 10.23 3.04
1997 9.86 0.46 0.26 0.72 (0.43) -- (0.43) 10.15 7.55
1996(13) 9.76 0.29 0.11 0.40 (0.30) -- (0.30) 9.86 4.16**
Zweig Government Fund Class C
1998 10.08 0.24 0.07 0.31 (0.24) -- (0.24) 10.15 3.12
1997 9.81 0.48 0.27 0.75 (0.48) -- (0.48) 10.08 7.86
1996(13) 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
Zweig Government Fund Class I (6)
1998 10.11 0.28 0.07 0.35 (0.27) -- (0.27) 10.19 3.50
1997 9.88 0.26 0.23 0.49 (0.26) -- (0.26) 10.11 5.01**
Zweig Government Cash Fund Class A (2)
1998(11) 1.00 0.02 -- 0.02 (0.02) -- (0.02) 1.00 2.47
1997(10) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 4.97
1996(9) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 4.83
1995(8) 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 Government Cash Fund Class B (3)
1998(11) 1.00 0.02 -- 0.02 (0.02) -- (0.02) 1.00 2.11
1997(10) 1.00 0.04 -- 0.04 (0.04) -- (0.04) 1.00 4.24
1996(9) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 3.03**
</TABLE>
<TABLE>
<CAPTION>
Ratios to Average
Net Assets
--------------------
Net Portfolio Net Assets
Investment Turnover End of Period
Expenses Income Rate (in thousands)
-------- ---------- --------- --------------
<S><C>
Zweig Managed Assets Class I (4)
1998 1.24%* 2.76%* 63%* $ 1,881
1997 1.29 2.70 168 2,645
1996 1.34* 2.94* 187 2,893
Zweig Growth & Income Fund Class A (5)
1998(16) 1.32* 0.87* 135* 8,848
1997(15) 1.30 2.26 120 6,836
1996(14) 1.30* 1.47* 2 2,508
Zweig Growth & Income Fund Class B (5)
1998(16) 2.02* 0.17* 135* 17,905
1997(15) 2.00 1.56 120 11,920
1996(14) 2.00* 0.77* 2 2,693
Zweig Growth & Income Fund Class C (5)
1998(16) 2.02* 0.17* 135* 17,455
1997(15) 2.00 1.56 120 13,525
1996(14) 2.00* 0.77* 2 4,509
Zweig Growth & Income Fund Class I (5)
1998(16) 1.02* 1.17* 135* 1,798
1997(15) 1.00 2.56 120 1,686
1996(14) 1.00* 1.77* 2 101
Zweig Foreign Equity Fund Class A (7)
1998(18) 1.80* 2.06* 27* 1,116
1997(17) 1.80* 1.20* 64* 414
Zweig Foreign Equity Fund Class B (7)
1998(18) 2.50* 1.36* 27* 1,635
1997(17) 2.50* 0.50* 64* 713
Zweig Foreign Equity Fund Class C (7)
1998(18) 2.50* 1.36* 27* 3,608
1997(17) 2.50* 0.50* 64* 1,177
Zweig Foreign Equity Fund Class I (7)
1998(18) 1.50* 2.36* 27* 1,146
1997(17) 1.50* 1.50* 64* 1,012
Zweig Government Fund Class A
1998 1.38* 5.18* 62* 26,995
1997 1.36 5.26 128 28,062
1996(13) 1.14 5.25 170 33,848
1995(+) 1.26 5.22 195 42,207
1994 1.28 5.07 191 47,622
1993 1.30 5.46 256 60,207
Zweig Government Fund Class B (3)
1998 2.08* 4.48* 62* 1,250
1997 2.06 4.56 128 1,215
1996(13) 1.84* 4.55* 170 513
Zweig Government Fund Class C
1998 1.83* 4.73* 62* 9,640
1997 1.81 4.81 128 10,199
1996(13) 1.59 4.80 170 14,330
1995(+) 1.71 4.77 195 19,778
1994 1.73 4.62 191 22,599
1993 1.75 5.01 256 21,301
Zweig Government Fund Class I (6)
1998 1.08* 5.48* 62* 1,087
1997 1.06* 5.56* 128 1,050
Zweig Government Cash Fund Class A (2)
1998(11) 0.65* 4.92* N/A 2,997
1997(10) 0.65 4.85 N/A 2,472
1996(9) 0.65 4.73 N/A 3,360
1995(8) 0.87 4.97 N/A 3,661
1994 0.62** 2.52** N/A 4,303
Zweig Government Cash Fund Class B (3)
1998(11) 1.35* 4.22* N/A 422
1997(10) 1.35 4.15 N/A 336
1996(9) 1.35* 4.03* N/A 33
</TABLE>
47
<PAGE>
<TABLE>
<CAPTION>
Net
Net Realized Distributions
Asset and Dividends from Net Total Net Asset
Value Net Unrealized Total from from Net Realized Dividends Value
Period Beginning Investment Gains Investment Investment Capital and End Total
Ended of Period Income (Loss) (Losses) Operations Income Gains Distributions of Period Return***
- ------ --------- ------------- ----------- ---------- ---------- ------------- ------------- --------- ---------
<S><C>
Zweig Government Cash Fund Class C (2)
1998(11) $1.00 $0.02 -- $0.02 $(0.02) -- $(0.02) $1.00 2.47%
1997(10) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 4.97
1996(9) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 4.83
1995(8) 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 Government Cash Fund Class I (4)
1998(11) 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 2.62
1997(10) 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 5.28
1996(9) 1.00 0.01 -- 0.01 (0.01) -- (0.01) 1.00 0.80**
Zweig Government Cash Fund Class M (12)
1998 1.00 0.03 -- 0.03 (0.03) -- (0.03) 1.00 2.58
1997 1.00 0.05 -- 0.05 (0.05) -- (0.05) 1.00 5.22
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
</TABLE>
<TABLE>
<CAPTION>
Ratios to Average
Net Assets
--------------------
Net Portfolio Net Assets
Investment Turnover End of Period
Expenses Income Rate (in thousands)
-------- ---------- --------- --------------
<S><C>
Zweig Government Cash Fund Class C (2)
1998(11) 0.65%* 4.92%* N/A $ 3,102
1997(10) 0.65 4.85 N/A 2,661
1996(9) 0.65 4.73 N/A 4,535
1995(8) 0.87 4.97 N/A 4,458
1994 0.62** 2.52** N/A 5,040
Zweig Government Cash Fund Class I (4)
1998(11) 0.35* 5.22* N/A 7
1997(10) 0.35 5.15 N/A 100
1996(9) 0.35* 5.03* N/A 1,401
Zweig Government Cash Fund Class M (12)
1998 0.42* 5.15* N/A 69,050
1997 0.41 5.09 N/A 56,599
1996 0.40 4.98 N/A 45,271
1995 0.64 5.20 N/A 48,515
1994 0.70 3.58 N/A 78,149
1993 0.70 2.83 N/A 92,471
</TABLE>
- ---------
(1) Commenced operations on February 8, 1993.
(2) Commenced operations on May 1, 1994.
(3) Commenced operations on April 8, 1996.
(4) Commenced operations on November 1, 1996.
(5) Commenced operations on November 26, 1996.
(6) Commenced operations on July 14, 1997.
(7) Commenced operations on November 24, 1997.
(8) 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.
(9) 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%, 0.60%, 0.60% and 0.38% ratio of expenses to average net assets),
respectively.
(10) During 1997, the Manager voluntarily reimbursed Zweig Cash Fund Class A,
Class B, Class C and Class I $.011, $.058, $.01 and $.005 per share (1.09%,
6.14%, 1.00% and 0.47% ratio of expenses to average net assets),
respectively.
(11) During 1998, the Manager voluntarily reimbursed Zweig Cash Fund Class A,
Class B, Class C and Class I $.005, $.031, $.006 and $.004 per share
(0.91%, 6.21%, 1.13% and 0.73% ratio of expenses to average net assets),
respectively.
(12) During 1998, 1997, 1996, 1995, 1994 and 1993, the Manager voluntarily
reimbursed Zweig Cash Fund Class M $.001, $.002, $.003, $.001, $.002 and
$.001 per share (0.27%, 0.32%, 0.32%, 0.10%, 0.15% and 0.08% ratio of
expenses to average net assets), respectively.
(13) 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.
(14) During 1996, the Manager voluntarily reimbursed Zweig Growth & Income Fund
Class A, Class B, Class C and Class I $.021, $.021, $.021 and $.021 per
share (2.07%, 2.07%, 2.07% and 2.07% ratio of expenses to average net
assets), respectively.
(15) During 1997, the Manager voluntarily reimbursed Zweig Growth & Income Fund
Class A, Class B, Class C and Class I $.058, $.058, $.058 and $.058 per
share (1.00%, 1.00%, 1.00% and 1.00% ratio of expenses to average net
assets), respectively.
(16) During 1998, the Manager voluntarily reimbursed Zweig Growth & Income Fund
Class A, Class B, Class C and Class I $.005, $.005, $.005 and $.005 per
share (0.07%, 0.07%, 0.07% and 0.07% ratio of expenses to average net
assets), respectively.
(17) During 1997, the Manager voluntarily reimbursed Zweig Foreign Equity Fund
Class A, Class B, Class C and Class I $.03, $.03, $.03 and $.03 per share
(3.35%, 3.35%, 3.35% and 3.35% ratio of expenses to average net assets),
respectively.
(18) During 1998, the Manager voluntarily reimbursed Zweig Foreign Equity Fund
Class A, Class B, Class C and Class I $.15, $.15, $.15 and $.15 per share
(2.53%, 2.53%, 2.53% and 2.53% 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.
48
<PAGE>
ZWEIG SERIES TRUST
Trustees
James Balog
Claire B. Benenson
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
First 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
900 Third Avenue--31st Floor
New York, NY 10022-4728
Principal Distributor
Zweig Securities Corp.
900 Third Avenue--31st Floor
New York, NY 10022-4728
Custodian
The Bank of New York
One Wall Street
New York, New York 10286
Transfer Agent
State Street Bank & Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
Servicing Agent
Boston Financial Data Services, Inc.
2 Heritage Drive
Quincy, Massachusetts 02171
Counsel
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