AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 1999
REGISTRATION NOS. 2-93538
811-04116
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM N-1A
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
PRE-EFFECTIVE AMENDMENT NO.
POST-EFFECTIVE AMENDMENT NO. 48
AND/OR
REGISTRATION STATEMENT
UNDER THE
INVESTMENT COMPANY ACT OF 1940
AMENDMENT NO. 49
(CHECK APPROPRIATE BOX OR BOXES)
----------------
PHOENIX-ZWEIG TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
----------------
900 THIRD AVENUE, 31ST FLOOR, NEW YORK, NEW YORK 10022
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
C/O ZWEIG/GLASER SHAREHOLDER SERVICES
(800) 272-2700
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
----------------
PAMELA S. SINOFSKY
COMPLIANCE OFFICER
PHOENIX INVESTMENT PARTNERS, LTD.
56 PROSPECT STREET
HARTFORD, CONNECTICUT 06115
(NAME AND ADDRESS OF AGENT FOR SERVICE)
----------------
It is proposed that this filing will become effective (check
appropriate box)
|X| immediately upon filing pursuant to paragraph (b)
[ ] on pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(i)
[ ] on pursuant to paragraph (a)(i) [ ] 75 days after filing
pursuant to paragraph (a)(ii)
[ ] on pursuant to paragraph (a)(ii) of Rule 485.
If appropriate, check the following box:
[ ] this post-effective amendment designates a new effective date for
a previously filed post-effective amendment.
================================================================================
<PAGE>
PHOENIX-ZWEIG TRUST
Cross Reference Sheet Pursuant to Rule 495(a)
PART A
INFORMATION REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
ITEM NUMBER FORM N-1A, PART A PROSPECTUS CAPTION
- ----------------------------- ------------------
<S> <C>
1. Front and Back Cover Pages............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance..... Investment Risk and Return Summary
3. Risk/Return Summary: Fee Table........................... Fund Expenses
4. Investment Objectives, Principal Investment Strategies,
and Related Risks........................................ Investment Risk and Return Summary; Investment
Strategies; Risks Related to Investment Strategies
5. Management's Discussion of Fund Performance.............. Performance Tables
6. Management, Organization, and Capital Structure.......... Management of the Fund
7. Shareholder Information.................................. Pricing of Fund Shares; Sales Charges; Your
Account; How to Buy Shares; How to Sell Shares;
Things to Know When Selling Shares; Account
Policies; Investor Services; Tax Status of Distributions
8. Distribution Arrangements................................ Sales Charges
9. Financial Highlights Information......................... Financial Highlights
PART B
INFORMATION REQUIRED IN STATEMENT OF ADDITIONAL INFORMATION
ITEM NUMBER FORM N-1A, PART B STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ----------------------------- -------------------------------------------
10. Cover Page and Table of Contents......................... Cover Page, Table of Contents
11. Fund History............................................. The Fund
12. Description of the Fund and Its Investment Risks......... Investment Objectives and Policies; Investment Restrictions
13. Management of the Fund................................... Management of the Trust
14. Control Persons and Principal Holders of Securities...... Management of the Trust
15. Investment Advisory and Other Services................... Services of the Adviser; The Distributor;
Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices................. Portfolio Transactions and Brokerage
17. Capital Stock and Other Securities...................... Other Information
18. Purchase, Redemption, and Pricing of Shares.............. Net Asset Value; How to Buy Shares; Investor
Account Services; Redemption of Shares; Tax
Sheltered Retirement Plans
19. Taxation of the Fund..................................... Dividends, Distributions and Taxes
20. Underwriters............................................. The Distributor
21. Calculation of Performance Data.......................... Performance Information
22. Financial Statements..................................... Financial Statements
</TABLE>
PART C
INFORMATION REQUIRED TO BE INCLUDED IN PART C IS SET
FORTH UNDER THE APPROPRIATE ITEM, SO NUMBERED, IN PART C OF
THIS REGISTRATION STATEMENT.
<PAGE>
Phoenix Investment Partners
Prospectus
May 1, 1999
- -------- Zweig
Phoenix-Zweig
Government Cash Fund
Class M Shares
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This prospectus contains important
information that you should know
before investing in the PhoenixZweig
Government Cash Fund Class M Shares.
[logo] PHOENIX
INVESTMENT PARTNERS
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<S> <C>
Phoenix-Zweig Trust
Investment Risk and Return Summary............................................... 1
Phoenix-Zweig Appreciation Fund
Investment Risk and Return Summary............................................... 4
Fund Expenses.................................................................... 7
Phoenix-Zweig Foreign Equity Fund
Investment Risk and Return Summary............................................... 9
Fund Expenses.................................................................... 12
Phoenix-Zweig Government Cash Fund
Investment Risk and Return Summary............................................... 14
Fund Expenses.................................................................... 16
Phoenix-Zweig Government Fund
Investment Risk and Return Summary............................................... 18
Fund Expenses.................................................................... 20
Phoenix-Zweig Growth & Income Fund
Investment Risk and Return Summary............................................... 22
Fund Expenses.................................................................... 25
Phoenix-Zweig Managed Assets
Investment Risk and Return Summary............................................... 27
Fund Expenses.................................................................... 30
Phoenix-Zweig Strategy Fund
Investment Risk and Return Summary............................................... 32
Fund Expenses.................................................................... 34
Management of the Funds............................................................. 36
Pricing of Fund Shares.............................................................. 38
Sales Charges....................................................................... 39
Your Account........................................................................ 42
How to Buy Shares................................................................... 43
How to Sell Shares.................................................................. 43
Things You Should Know When Selling Shares.......................................... 44
Account Policies.................................................................... 45
Investor Services................................................................... 47
Tax Status of Distributions......................................................... 47
Financial Highlights................................................................ 49
Additional Information.............................................................. 68
</TABLE>
<PAGE>
PHOENIX-ZWEIG TRUST
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
THE TRUST
There are seven Phoenix-Zweig mutual funds. Together they make up the
Phoenix-Zweig Trust (the "Trust").
THE FUNDS
The seven funds that make up the Trust are: Phoenix-Zweig Appreciation Fund (the
"Appreciation Fund"), Phoenix-Zweig Foreign Equity Fund (the "Foreign Equity
Fund"), Phoenix-Zweig Government Cash Fund (the "Government Cash Fund"),
Phoenix-Zweig Government Fund (the "Government Fund"), Phoenix-Zweig Growth &
Income Fund (the "Growth & Income Fund"), Phoenix-Zweig Managed Assets ("Managed
Assets") and Phoenix-Zweig Strategy Fund (the "Strategy Fund"), each a "fund"
and together, the "funds". Each fund has its own investment policies designed to
help you achieve your goals.
INVESTMENT OBJECTIVES
Each of the funds (except the Government and Government Cash Funds) strives to
increase the value of your investment over the long term (capital appreciation)
consistent with preserving capital and reducing portfolio exposure to market
risk. The Government and Government Cash Funds focus on returning high current
income. The Government Cash Fund also strives to maintain liquidity and preserve
capital. The Growth & Income Fund, in addition to seeking capital appreciation,
strives to provide income as a secondary objective. Managed Assets strives to
increase the value of your investment from capital appreciation, dividends and
interest. Managed Assets' objective may be changed without shareholder approval.
There is no guarantee that the funds will achieve their objectives.
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund's adviser, Zweig/Glaser Advisers LLC, is responsible for
managing each fund's investment program, selecting specific securities
for the fund and maintaining the general operations of the fund.
[arrow] The subadviser, Zweig Consulting LLC, determines what percentage of the
funds' assets should be allocated to stocks, bonds and cash
equivalents. Dr. Martin E. Zweig, President of Zweig Consulting LLC,
developed the asset allocation strategy that he and his team employ.
Dr. Zweig has been a regular panelist on PBS television's Wall $treet
Week with Louis Rukeyser for 25 years and, in 1992, was inducted into
the program's Hall of Fame. He is also the author of the books Winning
on Wall Street, The ABCs of Market Forecasting and Winning with New
IRAs.
Phoenix-Zweig Trust 1
<PAGE>
[arrow] The subadviser's investment approach relies on fundamental and
technical indicators to measure the risk and reward characteristics of
the stock and bond markets. The three main groups of indicators are:
[bullet] Monetary indicators, including the trend of interest rates;
Federal Reserve policy, commodity prices, and industrial
production;
[bullet] Sentiment indicators, including mutual funds' cash-to-assets
ratio, foreign buying and selling, and volume of initial and
secondary public offerings; and
[bullet] Momentum indicators, including new highs and lows,
up-volume-to-down volume, and divergences between large- and
small-company stocks.
As the indicators point to increasing levels of market risk, the funds
may gradually reduce their market exposure. Not all of the funds'
assets may be fully invested throughout bull and bear markets, but,
instead, some profits may be left "on the table" as a strategy to limit
losses. As a result, the funds may not keep pace with all-equity
benchmarks or fully-invested stock funds during bull markets. While the
funds attempt to limit losses, it is not possible to eliminate risk
entirely.
[arrow] Except for the Government Cash Fund, in managing each fund's exposure
to changing stock and bond prices or altering each fund's asset mix,
the adviser may employ any type of future or option related to its
investments. Transaction costs normally will be lower than purchasing
or selling a related security or index, since futures or options
require lower margin deposits, currently 2% to 5% of the position size,
than securities. The fund may maintain a futures position should the
index future reflect a better price than purchasing the underlying
security.
[arrow] Each fund, with the exception of the Government Cash Fund, may sell a
security or future short when the adviser believes that the price of
the security or future may decline or the reduction of portfolio
exposure to changing securities prices will be better accomplished than
by selling the securities themselves. The adviser cannot guarantee
successfully avoiding losses from such declines. The Foreign Equity
Fund and Managed Assets may purchase or trade in currencies or currency
exchange contracts, as well as securities and futures.
[arrow] As part of their investment strategy, the funds may engage in active
and frequent trading of portfolio securities to achieve their
objectives. This may result in a higher portfolio turnover rate than
that of other mutual funds. High portfolio turnover rates may increase
costs to the funds and may negatively affect the funds. (A portfolio
turnover rate in excess of 100% may be deemed to be high.) They may
also increase capital gains distributions, which may result in greater
tax liability to you.
In addition to the above strategies, each fund has its own investment strategies
that you should note as you read through the following "Principal Investment
Strategies" sections.
2 Phoenix-Zweig Trust
<PAGE>
PRINCIPAL RISKS
If you invest in these funds, you risk that you may lose your investment.
GENERAL
The funds' focus is capital appreciation. The adviser intends to invest fund
assets so that your shares increase in value. However, the value of the funds'
investments that support your share value can decrease as well as increase.
Decreases can occur for a number of reasons, including changing economic,
industry and market conditions. If, between the time you purchase shares and the
time you sell shares, the value of the fund's investments decreases, you will
lose money. In addition, specific companies chosen for fund investment may fail
to perform as the adviser expects despite positive or negative economic,
industry, and market trends.
Investments in the funds are not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency.
Futures and options involve market risk in excess of their value. If the fund
cannot close out its futures position, it may be compelled to continue to make
daily cash payments to the broker to meet margin requirements, thus increasing
the transaction cost.
The liquidity of the futures and options market in part determines their value.
Should liquidity be adversely affected by market factors, then the price
differential of the future or option may result in a loss. The lower margin
deposits may attract more speculators and result in price distortions.
For all funds, except the Government Cash Fund, should the adviser decide to
sell a security short, it may result in increased trading, which may result in
increased transaction costs for the fund, including brokerage commissions. It
may also result in realization of net short-term capital gains taxable as
ordinary income to shareholders.
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of an entity's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000. If an entity whose securities are held by the fund does not "fix" its Year
2000 issue, it is possible that its operations and financial results would be
hurt. Also, the cost of modifying computer programs to become Year 2000
compliant may hurt the financial performance and market price of entities whose
securities are held by the fund.
In addition to these general risks of investing in the funds, there are several
specific risks that you should note as you read through each fund's "Principal
Risks" section.
Phoenix-Zweig Trust 3
<PAGE>
PHOENIX-ZWEIG APPRECIATION FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest in a diversified portfolio of small company and
larger-company stocks. The fund attempts to capitalize on smaller
companies' volatile markets whose ups and downs may contribute to
substantial gains.
[arrow] The portfolio managers select up to 700 small-company stocks primarily
from the 2,000 stocks immediately after the 1,000 largest stocks based
on market capitalization or trading volume. These 2,000 stocks have a
market capitalization ranging from $262 million to $1.5 billion or an
average trading volume of approximately $3.3 million.
Generally, anticipated price increases, trading volume and market
capitalization form the basis for security choices.
[arrow] The fund may invest up to 15% of its net assets in foreign securities
that are not publicly traded in the United States. Since foreign
countries may offer potentially more growth than the U.S. as new
markets or industries open, the fund may attempt to capitalize on such
growth.
[arrow] The fund may invest in U.S. government securities with maturities of
five years or less. In choosing among such securities, the manager
focuses on interest rate levels when attempting to anticipate the
profitability of the bonds.
[arrow] Temporary Defensive Strategy: When declines in the indices occur, or
when attempting to reduce fluctuations in net asset value, the manager
may reduce market exposure by gradually selling securities and buying
money market instruments or by selling stock index or Treasury futures.
These "cash equivalents" may include commercial paper, short-term
corporate obligations, bank deposits (including time deposits with a
maturity of less than one year) and other financial institution
obligations.
PRINCIPAL RISKS
Companies with small capitalization are often companies in industries that have
recently emerged due to cultural, economic, regulatory or technological
developments. Such developments can have a significant positive or negative
effect on small capitalization companies and their stock performance. Given the
limited operating history and rapidly changing fundamental prospects, investment
returns from smaller capitalization companies can be highly volatile. Smaller
capitalization stocks also may be subject to varying patterns of trading volume
and may, at times, be difficult to sell.
4 Phoenix-Zweig Appreciation Fund
<PAGE>
Gains generally depend on the ability of the adviser to anticipate correctly an
increase in securities prices. Securities prices may not increase as
anticipated, and the fund may experience a loss.
Foreign investments include added risks of political and economic uncertainty,
as well as less public information about investments, that may negatively impact
the fund's portfolio. Some investments may be made in currencies other than U.S.
dollars that will fluctuate in value as a result of changes in the currency
exchange rate. Foreign markets and currencies may not perform as well as U.S.
markets.
Not all U.S. Government securities are backed by the full faith and credit of
the United States. Should the issuer default in its obligations or go bankrupt,
you risk decreasing the value of your investment.
Generally, when interest rates rise, the value of bonds declines, and the value
of your investment may decrease as well.
In addition to price fluctuations based on changes in interest rates, mortgage
securities and collateralized mortgage obligations also are subject to
prepayment risk which can result in the proceeds being reinvested at a lower
rate of interest and loss of any premium. This typically occurs when homeowners
refinance their mortgages at lower rates.
Phoenix-Zweig Appreciation Fund 5
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Appreciation Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year.(1) The table shows how the
fund's average annual returns compare to those of a broad-based securities
market index. The fund's past performance is not necessarily an indication of
how the fund will perform in the future.
[graphic omitted]
CALENDAR YEAR ANNUAL RETURN (%)
1992 9.5
1993 14.7
1994 -1.8
1995 24.0
1996 15.4
1997 23.8
1998 -1.0
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 15.0% (quarter ending December 31,
1998) and the lowest return for a quarter was (20.6)% (quarter ending September
30, 1998). Year to date performance through March 31, 1999 was (8.70)%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns Life of the Fund(2)
One Five ---------------------------------------------
(for the periods ending 12/31/98)(1) Year Years Class A Class B Class C Class I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares (6.4)% 10.2% 11.3% -- -- --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares (6.6)% -- -- 10.2% -- --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares (2.9)% 10.7% -- -- 10.5% --
- -----------------------------------------------------------------------------------------------------------------
Class I Shares (0.7)% -- -- -- -- 13.3%
- -----------------------------------------------------------------------------------------------------------------
Russell 2000 Index(3) (2.6)% 11.9% 14.6% 11.0% 12.6% 11.8%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since October 7, 1991, Class B shares since April 8, 1996,
Class C Shares since February 4, 1992 and Class I Shares since November 1, 1996.
(3) The Russell 2000 Index is an unmanaged, commonly used measure of mid-cap to
small-cap stock performance on a weighted basis. The index's performance does
not reflect sales charges.
6 Phoenix-Zweig Appreciation Fund
<PAGE>
Fund Expenses
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None(a) 5%(b) 1.25%(c) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None None None None
Dividends
Redemption Fee None None None None
Exchange Fee None None None None
------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 1.00% 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees (d) 0.30% 1.00% 1.00% N/A
Other Expenses 0.22% 0.22% 0.22% 0.22%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.52% 2.22% 2.22% 1.22%
==== ==== ==== ====
</TABLE>
- ----------
(a) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares--Reduced Sales Charges" in the Statement of
Additional Information.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Phoenix-Zweig Appreciation Fund 7
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
Class A $696 $1,004 $1,333 $2,263
- -----------------------------------------------------------------------------------------------------------------
Class B $725 $994 $1,390 $2,295
- -----------------------------------------------------------------------------------------------------------------
Class C $350 $694 $1,190 $2,554
- -----------------------------------------------------------------------------------------------------------------
Class I $124 $387 $670 $1,477
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
Class A $696 $1,004 $1,333 $2,263
- -----------------------------------------------------------------------------------------------------------------
Class B $225 $694 $1,190 $2,295
- -----------------------------------------------------------------------------------------------------------------
Class C $225 $694 $1,190 $2,554
- -----------------------------------------------------------------------------------------------------------------
Class I $124 $387 $670 $1,477
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
8 Phoenix-Zweig Appreciation Fund
<PAGE>
PHOENIX-ZWEIG FOREIGN EQUITY FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] Under normal circumstances, the fund will invest at least 65% of its
assets in foreign equity securities.
[arrow] Currently, securities are selected from approximately 22 countries. The
subadviser may change asset and/or geographic allocations among
countries if their market capitalizations or economic growth change.
[arrow] Forward currency exchange contracts, options and futures related to
foreign currencies, and securities indexed to foreign currencies may be
included in the fund's portfolio to take advantage of currency
fluctuations. Currency exchange contracts are agreements to exchange
one currency for another at a set rate on a future date. They may be
used to lock in an exchange rate for purchases of securities
denominated in foreign currencies.
[arrow] Temporary Defensive Strategy: When declines in the indices occur, or
when attempting to reduce fluctuations in net asset value, the manager
may reduce market exposure by gradually selling securities and buying
money market instruments or by selling stock index or Treasury futures.
These "cash equivalents" may include commercial paper, short-term
corporate obligations, bank deposits (including time deposits with a
maturity of less than one year) and other financial institution
obligations.
PRINCIPAL RISKS
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio. Some investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the currency exchange
rate. Foreign markets and currencies may not perform as well as U.S. markets.
The securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility.
Foreign transactions may result in higher transaction costs due to: generally
higher commission rates; foreign taxes withheld on dividends and interest
withheld prior to receipt by the fund; investment or exchange control
regulations; and potential restrictions on the flow of international capital.
The European conversion to the common currency called the "Euro" may adversely
affect fund securities. For example, market uncertainties, increased price
transparency, and shifting pricing information in the European markets may
expose the fund's investments to increased risk and volatility.
Phoenix-Zweig Foreign Equity Fund 9
<PAGE>
Foreign securities, as well as the issuers of those securities, held by the fund
may not be registered with nor subject to the reporting requirements of the U.S.
Securities and Exchange Commission.
Securities prices may not increase as anticipated by the adviser. Moreover, the
value of your shares may decrease if conditions are worse than expected in the
overall economy, whether foreign or domestic, or specific industries or
companies in which the fund invests.
Currency exchange contracts involve the risk that currency movements will be
inaccurately predicted, in which case the fund's return would be adversely
affected. In addition, some futures and forward exchange currency contracts are
customized financial contracts between two parties which subject them to the
additional risk that the counterparty will not meet its obligations. They also
may be less liquid and more difficult to value than standardized contracts
traded on a regulated exchange.
10 Phoenix-Zweig Foreign Equity Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Foreign Equity Fund. The bar chart shows the Class A Shares
performance.(1) The table shows how the fund's average annual return compares to
that of a broad-based securities market index. The fund's past performance is
not necessarily an indication of how the fund will perform in the future.
[graphic omitted]
CALENDAR YEAR ANNUAL RETURN (%)
1998 9.1
(1) The fund's average annual return in the chart above does not reflect the
deduction of any sales charges. The return would have been less than that shown
if sales charges were deducted. During the period shown in the chart above, the
highest return for a quarter was 13.4% (quarter ending March 31, 1998) and the
lowest return for a quarter was (13.3)% (quarter ending September 30, 1998).
Year to date performance through March 31, 1999 was 4.28%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns One ------------------------------------------------------
(for the periods ending 12/31/98)(1) Year Class A Class B Class C Class I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares 3.1% 3.8% -- -- --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares 2.9% -- 3.6% -- --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares 6.9% -- -- 8.5% --
- -----------------------------------------------------------------------------------------------------------------
Class I Shares 9.3% -- -- -- 9.6%
- -----------------------------------------------------------------------------------------------------------------
Morgan Stanley World (excluding U.S.) 19.1% 14.7% 14.7% 14.7% 14.7%
Index(3)
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A, B, C and I Shares since November 21, 1997.
(3) The Morgan Stanley World Index is an unmanaged, commonly used measure of
foreign stock fund performance which includes net dividends reinvested. The
index does not reflect sales charges.
Phoenix-Zweig Foreign Equity Fund 11
<PAGE>
Fund Expenses
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None(b) 5%(c) 1.25%(d) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None None None
Redemption Fee None None None None
Exchange Fee None None None None
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 1.00% 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees (e) 0.30% 1.00% 1.00% N/A
Other Expenses 2.70% 2.70% 2.70% 2.70%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES (A) 4.00% 4.70% 4.70% 3.70%
==== ==== ==== ====
</TABLE>
- ----------
(a) The adviser had voluntarily undertaken to limit the expenses of the fund
(exclusive of taxes, interest, brokerage commissions, 12b-1 fees, and
extraordinary expenses) to 1.50% of its average net assets through April
30,1999. Total Annual Fund Operating Expenses after expense reimbursement (if
applicable) were 1.80% for Class A Shares, 2.50% for Class B Shares, 2.50% for
Class C Shares, and 1.50% for Class I Shares.
(b) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares--Reduced Sales Charges" in the Statement of
Additional Information.
(c) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(d) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(e) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
12 Phoenix-Zweig Foreign Equity Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $930 $1,701 $2,488 $4,524
- -----------------------------------------------------------------------------------------------------------------
Class B $971 $1,716 $2,568 $4,569
- -----------------------------------------------------------------------------------------------------------------
Class C $596 $1,416 $2,368 $4,771
- -----------------------------------------------------------------------------------------------------------------
Class I $372 $1,132 $1,911 $3,950
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $930 $1,701 $2,488 $4,524
- -----------------------------------------------------------------------------------------------------------------
Class B $471 $1,416 $2,368 $4,569
- -----------------------------------------------------------------------------------------------------------------
Class C $471 $1,416 $2,368 $4,771
- -----------------------------------------------------------------------------------------------------------------
Class I $372 $1,132 $1,911 $3,950
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Zweig Foreign Equity Fund 13
<PAGE>
PHOENIX-ZWEIG GOVERNMENT CASH FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The goal of the fund is to maintain a stable share price of $1.00.
[arrow] The fund invests exclusively in the following instruments:
[bullet] short-term securities issued or guaranteed as to payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities; and
[bullet] repurchase agreements collateralized by such securities.
U.S. Government securities are considered to be of the highest credit
quality, yet the primary consideration in choosing among these
securities is managing risk related to changes in interest rate levels.
[arrow] Money market instruments selected for investment have remaining
maturities of less than 397 days and have an average weighted portfolio
maturity of not greater than 90 days.
PRINCIPAL RISKS
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
Not all U.S. Government securities are backed by the full faith and credit of
the United States. Some are supported only by the credit of the agency or
instrumentality. The Statement of Additional Information lists agencies and
instrumentalities of the U.S. Government.
Delays in payment or losses may result if the other party to a repurchase
agreement defaults or becomes bankrupt.
Generally, when interest rates rise, the value of bonds declines, and the value
of your investment may decrease as well.
In addition to price fluctuations based on changes in interest rates, mortgage
securities and collateralized mortgage obligations also are subject to
prepayment risk which can result in the proceeds being invested at a lower rate
of interest and loss of any premium. This typically occurs when homeowners
refinance their mortgages at lower rates.
14 Phoenix-Zweig Government Cash Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Government Cash Fund. The bar chart shows Class A Shares
performance from year to year over the life of the fund.(1) The table shows the
fund's average annual returns for one year and over the life of the fund. The
fund's past performance is not necessarily an indication of how the fund will
perform in the future.
[graphic omitted]
CALENDAR YEAR ANNUAL RETURN (%)
1995 5.1
1996 4.8
1997 5.0
1998 4.9
(1) During the period shown in the chart above, the highest return for a quarter
was 1.3% (quarter ending June 30, 1995) and the lowest return for a quarter was
1.1% (quarter ending December 31, 1998). Year to date performance through March
31, 1999 was 1.1%.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Average Annual Total Returns
(for the periods ending 12/31/98)(1) One Year Life of the Fund(2)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Class A Shares 4.9% 4.8%
- ----------------------------------------------------------------------------------------------------------------
Class B Shares (0.8)% 1.2%
- ----------------------------------------------------------------------------------------------------------------
Class C Shares 3.7% 4.8%
- ----------------------------------------------------------------------------------------------------------------
Class I Shares 5.2% 5.2%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect a full
redemption in the fund's Class B and Class C Shares.
(2) Class A and C Shares since May 1, 1994, Class B Shares since April 8, 1996,
and Class I Shares since November 1, 1996. Class M Shares are covered in a
separate prospectus.
The fund's Class A Shares 7-day yield on December 31, 1998 was 4.41%.
Phoenix-Zweig Government Cash Fund 15
<PAGE>
Fund Expenses
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) None None None None
Maximum Deferred Sales Charge (load) (as a percentage of None 5%(b) 1.25%(c) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None None None None
Dividends
Redemption Fee None None None None
Exchange Fee None None None None
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.50% 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fees (d) 0.30% 1.00% 0.30% N/A
Other Expenses 0.50% 2.20% 0.58% 0.97%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES (A) 1.30% 3.70% 1.38% 1.47%
==== ==== ==== ====
</TABLE>
(a) The adviser has voluntarily undertaken to limit expenses (exclusive of
taxes, interest, brokerage commissions, 12b-1 fees and extraordinary expenses)
until December 31, 1999 to 0.35% of the fund's average net assets. Total Annual
Fund Operating Expenses after expense reimbursement (if applicable) are 0.65%
for Class A Shares, 1.35% for Class B Shares, 0.65% for Class C Shares, and
0.35% for Class I Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
16 Phoenix-Zweig Government Cash Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $132 $412 $713 $1,568
- -----------------------------------------------------------------------------------------------------------------
Class B $872 $1,432 $2,111 $3,162
- -----------------------------------------------------------------------------------------------------------------
Class C $266 $437 $755 $1,657
- -----------------------------------------------------------------------------------------------------------------
Class I $150 $465 $803 $1,757
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $132 $412 $713 $1,568
- -----------------------------------------------------------------------------------------------------------------
Class B $372 $1,132 $1,911 $3,162
- -----------------------------------------------------------------------------------------------------------------
Class C $141 $437 $755 $1,657
- -----------------------------------------------------------------------------------------------------------------
Class I $150 $465 $803 $1,757
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's manager. Refer to
the section "Management of the Funds" for information about expense
reimbursement.
Phoenix-Zweig Government Cash Fund 17
<PAGE>
PHOENIX-ZWEIG GOVERNMENT FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest primarily in U.S. Government and agency securities
of all maturities, repurchase agreements collateralized by U.S.
Government and agency securities, and also debt securities issued or
guaranteed by the U.S. Treasury or a U.S. Government agency or
instrumentality.
[arrow] U.S. Government securities are considered to be of the highest credit
quality, yet the primary consideration in choosing among these
securities is managing risk related to changes in interest rate levels.
A bond's duration measures its sensitivity to changes in interest
rates. Typically, the longer the duration, the greater the debt
security's price movement will be as interest rates change. The fund
alters its mix of short-, medium-, and long-term holdings to minimize
such interest rate risk.
PRINCIPAL RISKS
Not all U.S. Government securities are backed by the full faith and credit of
the United States. Should the issuer default in its obligations or go bankrupt,
you risk losing the value of your investment and receipt of current income. The
Statement of Additional Information lists agencies and instrumentalities of the
U.S. Government.
The longer the duration of a bond, the greater the bond's price movement will be
as interest rates change. Generally as interest rates rise, the value of the
bonds declines, and the value of your investment may decrease as well.
In addition to price fluctuations based on changes in interest rates, mortgage
securities and collateralized mortgage obligations also are subject to
prepayment risk which can result in the proceeds being reinvested at a lower
rate of interest and loss of any premium. This typically occurs when homeowners
refinance their mortgages at lower rates.
18 Phoenix-Zweig Government Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Government Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year over a ten-year period.(1) The
table shows how the fund's average annual returns compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[graphic omitted]
CALENDAR YEAR ANNUAL RETURN (%)
1989 12.5
1990 6.1
1991 14.4
1992 4.5
1993 10.4
1994 -2.8
1995 13.3
1996 0.4
1997 8.4
1998 8.9
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the ten-year period shown in the
chart above, the highest return for a quarter was 13.1% (quarter ending December
31, 1998) and the lowest return for a quarter was (19.9)% (quarter ending
September 30, 1998). Year to date performance through March 31, 1999 was
(1.83)%.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns One Five Ten -----------------------------------------
(for the periods ending 12/31/98)(1) Year Years Years Class A Class B Class C Class I
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Class A Shares(4) 3.7% 4.4% 6.9% 7.1% -- -- --
- ---------------------------------------------------------------------------------------------------------------
Class B Shares 2.8% -- -- -- 6.1% -- --
- ---------------------------------------------------------------------------------------------------------------
Class C Shares 7.1% 4.9% -- -- -- 5.8% --
- ---------------------------------------------------------------------------------------------------------------
Class I Shares 9.3% -- -- -- -- -- 9.9%
- ---------------------------------------------------------------------------------------------------------------
Lehman Brothers 13.5% 9.3% 11.5% 9.7% 9.5% 8.1% 9.7%
Government Bond Index(3)
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since March 25, 1985, Class B Shares since April 8, 1996,
Class C Shares since February 4, 1992, and Class I Shares since July 14, 1997.
(3) The Lehman Brothers 1-3 Year Government Bond Index is an unmanaged, commonly
used measure of total return performance of short maturity government
securities. The index does not reflect sales charges nor allow for direct
investment.
(4) Zweig/Glaser assumed responsibility for managing the fund on September 1,
1989.
Phoenix-Zweig Government Fund 19
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 4.75% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None(a) 5%(b) 1.25%(c) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None None None
Redemption Fee None None None None
Exchange Fee None None None None
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.60% 0.60% 0.60% 0.60%
Distribution and Service (12b-1) Fees (d) 0.30% 1.00% 0.75% N/A
Other Expenses 0.42% 0.42% 0.42% 0.42%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.32% 2.02% 1.77% 1.02%
==== ==== ==== ====
</TABLE>
- ----------
(a) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares--Reduced Sales Charges" in the Statement of
Additional Information.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
20 Phoenix-Zweig Government Fund
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $603 $873 $1,164 $1,990
- -----------------------------------------------------------------------------------------------------------------
Class B $705 $934 $1,288 $2,084
- -----------------------------------------------------------------------------------------------------------------
Class C $305 $557 $959 $2,084
- -----------------------------------------------------------------------------------------------------------------
Class I $104 $325 $563 $1,248
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $603 $873 $1,164 $1,990
- -----------------------------------------------------------------------------------------------------------------
Class B $205 $634 $1,088 $2,084
- -----------------------------------------------------------------------------------------------------------------
Class C $180 $557 $959 $2,084
- -----------------------------------------------------------------------------------------------------------------
Class I $104 $325 $563 $1,248
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Zweig Government Fund 21
<PAGE>
PHOENIX-ZWEIG GROWTH & INCOME FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest in up to 300 stocks divided approximately equally
between those chosen for their:
[bullet] growth characteristics, which include positive earnings
momentum and above-average earnings; and
[bullet] income characteristics, which include above-average dividend
yields and favorable dividend growth.
[arrow] The fund may invest up to 15% of its net assets in foreign securities
that are not publicly traded in the United States. Since foreign
countries may offer potentially more growth than the U.S. as new
markets or industries open, the fund may attempt to cash in on such
growth.
[arrow] The fund may invest in U.S. government securities with maturities of
five years or less. In choosing among such securities, the manager
focuses on interest rate levels when attempting to anticipate the
profitability of the bonds.
[arrow] Temporary Defensive Strategy: When declines in the indices occur, or
when attempting to reduce fluctuations in net asset value, the manager
may reduce market exposure by gradually selling securities and buying
money market instruments or by selling stock index or Treasury futures.
These "cash equivalents" may include commercial paper, short-term
corporate obligations, bank deposits (including time deposits with a
maturity of less than one year) and other financial institution
obligations.
PRINCIPAL RISKS
Small and mid-sized capitalization companies typically are subject to a greater
degree of change in earnings and business prospects than are larger, more
established companies. As a result, their volatile markets may contribute to
greater investment risk. They may be more vulnerable to downturns in industry,
economy, or related markets.
Gains generally depend on the ability of the adviser to anticipate correctly an
increase in securities prices. Securities prices may not increase as
anticipated, and the fund may experience a loss.
Foreign investments include added risks of political and economic uncertainty,
as well as less public information about investments, that may negatively impact
the fund's portfolio. Some investments may be made in currencies other than U.S.
dollars that will fluctuate in value as a
22 Phoenix-Zweig Growth & Income Fund
<PAGE>
result of changes in the currency exchange rate. Foreign markets and currencies
may not perform as well as U.S. markets.
Not all U.S. Government securities are backed by the full faith and credit of
the United States. Should the issuer default in its obligations or go bankrupt,
you risk decreasing the value of your investment.
Generally, when interest rates rise, the value of bonds declines, and the value
of your investment may decrease as well.
In addition to price fluctuations based on changes in interest rates, mortgage
securities and collateralized mortgage obligations also are subject to
prepayment risk which can result in the proceeds being reinvested at a lower
rate of interest and loss of any premium. This typically occurs when homeowners
refinance their mortgages at lower rates.
Phoenix-Zweig Growth & Income Fund 23
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Growth & Income Fund. The bar chart shows changes in the
fund's Class A Shares performance from year to year over the life of the
fund.(1) The table shows how the fund's average annual returns compare to those
of a broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[graphic omitted]
CALENDAR YEAR ANNUAL RETURN (%)
1997 23.1
1998 -1.6
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 13.5% (quarter ending December 31,
1998) and the lowest return for a quarter was (18.5)% (quarter ending September
30, 1998). Year to date performance through March 31, 1999 was (5.90)%.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns One --------------------------------------------------------
(for the periods ending 12/31/98)(1) Year Class A Class B Class C Class I
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Class A Shares (7.0)% 6.9% -- -- --
- -------------------------------------------------------------------------------------------------------------------
Class B Shares (7.2)% -- 6.9% -- --
- -------------------------------------------------------------------------------------------------------------------
Class C Shares (3.6)% -- -- 9.0% --
- -------------------------------------------------------------------------------------------------------------------
Class I Shares (1.3)% -- -- -- 10.1%
- -------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 28.6% 28.4% 28.4% 28.4% 28.4%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A, B, C and I Shares since November 26, 1996.
(3) The S&P 500 Index is an unmanaged but commonly used measure of stock total
return performance. The index does not reflect sales charges.
24 Phoenix-Zweig Growth & Income Fund
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None(a) 5%(b) 1.25%(c) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None None None
Redemption Fee None None None None
Exchange Fee None None None None
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (d) 0.30% 1.00% 1.00% N/A
Other Expenses 0.51% 0.51% 0.51% 0.51%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.56% 2.26% 2.26% 1.26%
==== ==== ==== ====
</TABLE>
- ----------
(a) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares--Reduced Sales Charges" in the Statement of
Additional Information.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
Phoenix-Zweig Growth & Income 25
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $700 $1,016 $1,353 $2,304
- ------------------------------------------------------------------------------------------------------------------
Class B $729 $1,007 $1,410 $2,337
- ------------------------------------------------------------------------------------------------------------------
Class C $354 $706 $1,210 $2,595
- ------------------------------------------------------------------------------------------------------------------
Class I $128 $400 $692 $1,523
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $700 $1,016 $1,353 $2,304
- ------------------------------------------------------------------------------------------------------------------
Class B $229 $706 $1,210 $2,337
- ------------------------------------------------------------------------------------------------------------------
Class C $229 $706 $1,210 $2,595
- ------------------------------------------------------------------------------------------------------------------
Class I $128 $400 $692 $1,523
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
26 Phoenix-Zweig Growth & Income Fund
<PAGE>
PHOENIX-ZWEIG MANAGED ASSETS
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund allocates its assets among domestic and foreign
[bullet] stocks,
[bullet] bonds,
[bullet] short-term debt instruments,
[bullet] currencies and
[bullet] currency-related instruments.
[arrow] The fund may invest up to 50% of its assets in foreign securities that
are not publicly traded in the United States, but not more than 15% of
its assets in any one foreign country. Since foreign countries may
offer potentially more growth than the U.S. as new markets or
industries open, the fund may attempt to cash in on such growth.
[arrow] The fund may invest up to 60% of its assets in foreign and domestic
bonds of all maturities. The adviser considers the bond's ratings,
interest rate levels and the market's perception of the issuer when
attempting to anticipate the profitability of the bonds. A bond's
duration measures its sensitivity to changes in interest rates. The
manager can attempt to minimize the risks associated with bond maturity
duration by altering the mix of short-, medium- and long-term bonds.
[arrow] The fund may invest in investment vehicles or groups of foreign stocks
that, in the aggregate, are expected to perform similarly to a
particular major foreign stock market index and in investment companies
that invest in the securities of a particular country.
[arrow] Up to 200 stocks will be selected from among approximately 750 domestic
stocks that the portfolio manager considers to be comparable in market
capitalization and liquidity to the stocks in the Standard & Poor's 500
Index.
[arrow] Forward currency exchange contracts, options and futures related to
foreign currencies, and securities indexed to foreign currencies may be
included in the fund's portfolio to take advantage of currency
fluctuations. Currency exchange contracts are agreements to exchange
one currency for another at a set rate on a future date. They may be
used to lock in an exchange rate for purchases of securities
denominated in foreign currencies.
[arrow] Temporary Defensive Strategy: When declines in the indices occur, or
when attempting to reduce fluctuations in net asset value, the manager
may reduce market exposure by gradually selling securities and buying
money market instruments or by selling stock
Phoenix-Zweig Managed Assets 27
<PAGE>
index or Treasury futures. These "cash equivalents" may include commercial
paper, short-term corporate obligations, bank deposits (including time deposits
with a maturity of less than one year) and other financial institution
obligations.
PRINCIPAL RISKS
Political and economic uncertainty in foreign countries, as well as less public
information about foreign investments, may negatively impact the fund's
portfolio. Some investments may be made in currencies other than U.S. dollars
that will fluctuate in value as a result of changes in the currency exchange
rate. Foreign markets and currencies may not perform as well as U.S. markets.
The securities often trade with less frequency and volume than domestic
securities and therefore may exhibit greater price volatility.
Foreign transactions may result in higher transaction costs due to: generally
higher commission rates; foreign taxes withheld on dividends and interest
withheld prior to receipt by the fund; investment or exchange control
regulations; and potential restrictions on the flow of international capital.
The European conversion to the common currency called the "Euro" may adversely
affect fund securities. For example, market uncertainties, increased price
transparency, and shifting pricing information in the European markets may
expose the fund's investments to increased risk and volatility.
Foreign securities, as well as the issuers of those securities, held by the fund
may not be registered with nor subject to the reporting requirements of the U.S.
Securities and Exchange Commission.
Gains generally depend on the ability of the adviser to anticipate correctly an
increase in securities prices. Securities prices may not increase as
anticipated, and the fund may experience a loss.
Investing in other investment companies brings in other investment managers and
service providers adding another layer of expenses and reducing the portfolio
manager's direct control. Other investment professionals will apply their own
financial strategies that may result in a loss.
The longer the duration, the greater the bond's price movement will be as
interest rates change. Should interest rates rise, the value of the bonds will
decline, and the value of your investment may decrease as well.
In addition to price fluctuations based on changes in interest rates and the
market's perception of the issuer, mortgage securities and collateralized
mortgage obligations also are subject to prepayment risk which can result in the
proceeds being reinvested at a lower rate of interest and loss of any premium.
This typically occurs when homeowners refinance their mortgages at lower rates.
28 Phoenix-Zweig Managed Assets
<PAGE>
Currency exchange contracts involve the risk that currency movements will be
inaccurately predicted, in which case the fund's return would be adversely
affected. In addition, some futures and forward exchange currency contracts are
customized financial contracts between two parties which subject them to the
additional risk that the counterparty will not meet its obligations. They also
may be less liquid and more difficult to value than standardized contracts
traded on a regulated exchange.
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in Phoenix-Zweig Managed Assets. The bar chart shows changes in the fund's Class
A Shares performance from year to year over the life of the fund.(1) The table
shows how the fund's average annual returns compare to those of a broad-based
securities market index. The fund's past performance is not necessarily an
indication of how the fund will perform in the future.
[graphic omitted]
CASLENDAR YEAR ANNUAL RETURN (%)
1994 -2.9
1995 16.3
1996 9.8
1997 15.5
1998 14.9
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 9.6% (quarter ending March 31, 1998)
and the lowest return for a quarter was 4.2% (quarter ending September 30,
1998). Year to date performance through March 31, 1999 was 1.20%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns One Five ---------------------------------------------
(for the periods ending 12/31/98)(1) Year Years Class A Class B Class C Class I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares 8.6% 9.2% 9.8% -- -- --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares 8.4% -- -- 12.6% -- --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares 12.6% 9.7% -- -- 10.1% --
- -----------------------------------------------------------------------------------------------------------------
Class I Shares 15.2% -- -- -- -- 16.3%
- -----------------------------------------------------------------------------------------------------------------
50/50 Blend Index(3) 16.0% 10.7% 11.8% 13.0% 11.8% 13.9%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A and Class C Shares since February 8, 1993, Class B Shares since
April 8, 1996, and Class I Shares from November 1, 1996.
(3) The 50/50 Blend of the Morgan Stanley Country Index-World and the Salomon
Currency Hedged World Government Bond Index is an unmanaged but commonly used
measure of stock and bond total return performance. The index does not reflect
sales charges.
Phoenix-Zweig Managed Assets 29
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
<S> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None(a) 5%(b) 1.25%(c) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None None None
Redemption Fee None None None None
Exchange Fee None None None None
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 1.00% 1.00% 1.00% 1.00%
Distribution and Service (12b-1) Fees (d) 0.30% 1.00% 1.00% N/A
Other Expenses 0.21% 0.21% 0.21% 0.21%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.51% 2.21% 2.21% 1.21%
==== ==== ==== ====
</TABLE>
- ----------
(a) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares--Reduced Sales Charges" in the Statement of
Additional Information.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
30 Phoenix-Zweig Managed Assets
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $695 $1,001 $1,328 $2,252
- ------------------------------------------------------------------------------------------------------------------
Class B $724 $991 $1,385 $2,285
- ------------------------------------------------------------------------------------------------------------------
Class C $349 $691 $1,185 $2,544
- ------------------------------------------------------------------------------------------------------------------
Class I $123 $384 $665 $1,466
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $695 $1,001 $1,328 $2,252
- ------------------------------------------------------------------------------------------------------------------
Class B $224 $691 $1,185 $2,285
- ------------------------------------------------------------------------------------------------------------------
Class C $224 $691 $1,185 $2,544
- ------------------------------------------------------------------------------------------------------------------
Class I $123 $384 $665 $1,466
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Zweig Managed Assets 31
<PAGE>
PHOENIX-ZWEIG STRATEGY FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES
[arrow] The fund will invest in primarily mid-sized and large company stocks.
Up to 300 highly ranked stocks will be selected from the 1,000 most
liquid stocks that:
[bullet] the portfolio manager considers to be comparable to the stocks
included in the Standard & Poor's 500 Index;
[bullet] have a minimum market capitalization of at least $400 million;
and
[bullet] have an average daily trading volume of 50,000 shares or $425
million of total assets.
[arrow] The fund may invest up to 15% of its net assets in foreign securities
that are not publicly traded in the United States. Since foreign
countries may offer potentially more growth than the U.S. as new
markets or industries open, the fund can attempt to capitalize on such
growth.
[arrow] Temporary Defensive Strategy: When declines in the indices occur, or
when attempting to reduce fluctuations in net asset value, the manager
may reduce market exposure by gradually selling securities and buying
money market instruments or by selling stock index or Treasury futures.
These "cash" or "cash equivalents" may include commercial paper,
short-term corporate obligations, bank deposits (including time
deposits with a maturity of less than one year) and other financial
institution obligations.
PRINCIPAL RISKS
Mid-sized capitalization companies typically are subject to a greater degree of
change in earnings and business prospects than are larger, more established
companies. As a result, their volatile markets may contribute to greater
investment risk. They may be more vulnerable to downturns in industry, economy,
or related markets.
Gains generally depend on the ability of the adviser to anticipate correctly an
increase in securities prices. Securities prices may not increase as
anticipated, and the fund may experience a loss.
Foreign investments include added risks of political and economic uncertainty,
as well as less public information about investments, that may negatively impact
the fund's portfolio. Some investments may be made in currencies other than U.S.
dollars that will fluctuate in value as a result of changes in the currency
exchange rate. Foreign markets and currencies may not perform as well as U.S.
markets.
32 Phoenix-Zweig Strategy Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Strategy Fund. The bar chart shows changes in the fund's
Class A Shares performance from year to year over the life of the fund.(1) The
table shows how the fund's average annual returns compare to those of a
broad-based securities market index. The fund's past performance is not
necessarily an indication of how the fund will perform in the future.
[graphic omitted]
CALENDAR YEAR ANNUAL RETURN (%)
1990 -2.2
1991 23.4
1992 7.6
1993 15.0
1994 1.1
1995 25.1
1996 13.0
1997 18.1
1998 -1.9
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 13.1% (quarter ending December 31,
1998) and the lowest return for a quarter was (19.9)% (quarter ending September
30, 1998). Year to date performance through March 31, 1999 was (2.23)%.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Life of the Fund(2)
Average Annual Total Returns One Five ---------------------------------------------
(for the periods ending 12/31/98)(1) Year Years Class A Class B Class C Class I
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Class A Shares (7.3)% 9.4% 9.9% -- -- --
- -----------------------------------------------------------------------------------------------------------------
Class B Shares (7.5)% -- -- 6.8% -- --
- -----------------------------------------------------------------------------------------------------------------
Class C Shares (3.9)% 9.8% -- -- 10.0% --
- -----------------------------------------------------------------------------------------------------------------
Class I Shares (1.7)% -- -- -- -- 10.1%
- -----------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 28.6% 24.1% 17.9% 30.1% 19.9% 31.6%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares and a
full redemption in the fund's Class B and Class C Shares.
(2) Class A Shares since December 29, 1989, Class B Shares since April 8, 1996,
Class C Shares since February 4, 1992, and Class I Shares since November 1,
1996.
(3) The S&P 500 Index is an unmanaged but commonly used measure of stock total
return performance. The index does not reflect sales charges.
Phoenix-Zweig Strategy Fund 33
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
<S> <C> <C> <C> <C>
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
Maximum Sales Charge (load) Imposed on Purchases (as a
percentage of offering price) 5.50% None None None
Maximum Deferred Sales Charge (load) (as a percentage of None(a) 5%(b) 1.25%(c) None
the lesser of the value redeemed or the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested None
Dividends None None None
Redemption Fee None None None None
Exchange Fee None None None None
---------------------------------------------------------
CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES
------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.75% 0.75% 0.75% 0.75%
Distribution and Service (12b-1) Fees (d) 0.30% 1.00% 1.00% N/A
Other Expenses 0.19% 0.19% 0.19% 0.19%
---- ---- ---- ----
TOTAL ANNUAL FUND OPERATING EXPENSES 1.24% 1.94% 1.94% 0.94%
==== ==== ==== ====
</TABLE>
- ----------
(a) A 1% CDSC is imposed on redemptions within 12 months of purchases of $1
million or more originally purchased without an initial sales charge as
described under "Class A Shares--Reduced Sales Charges" in the Statement of
Additional Information.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
34 Phoenix-Zweig Strategy Fund
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $669 $922 $1,194 $1,967
- ------------------------------------------------------------------------------------------------------------------
Class B $697 $909 $1,247 $1,198
- ------------------------------------------------------------------------------------------------------------------
Class C $322 $609 $1,047 $2,264
- ------------------------------------------------------------------------------------------------------------------
Class I $96 $300 $520 $1,155
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A $669 $922 $1,194 $1,967
- ------------------------------------------------------------------------------------------------------------------
Class B $197 $609 $1,047 $1,198
- ------------------------------------------------------------------------------------------------------------------
Class C $197 $609 $1,047 $2,264
- ------------------------------------------------------------------------------------------------------------------
Class I $96 $300 $520 $1,155
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Zweig Strategy Fund 35
<PAGE>
MANAGEMENT OF THE FUNDS
- --------------------------------------------------------------------------------
THE ADVISERS
Zweig/Glaser Advisers LLC ("Zweig/Glaser") is the investment adviser to each of
the funds and is located at 900 Third Avenue, New York, NY 10022. As of December
31, 1998, Zweig/Glaser was managing twelve funds with net assets of
approximately $2.6 billion and acting as administrator to two closed-end funds
with more than $1.4 billion in assets. Zweig/Glaser has been managing funds
since September 1989.
Zweig/Glaser is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd.
("PXP"), a Delaware corporation, located at 56 Prospect St., Hartford, CT 06115.
PXP is a publicly-traded independent registered investment advisory firm, and
has served investors for over 70 years. As of December 31, 1998, PXP had over
$53.5 billion in assets under management.
Subject to the direction of the Trust's Board of Trustees, Zweig/Glaser is
responsible for managing the funds' investment program, selecting specific
securities for the funds, and maintaining the general operations of the funds.
Zweig/Glaser manages the funds' assets to conform with the investment policies
as described in this prospectus.
The funds pay Zweig/Glaser a monthly investment management fee that is accrued
daily against the value of the fund's net assets at the following annual rates.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Appreciation Fund,
Managed Assets, Growth & Income
and and Government
Foreign Equity Fund Strategy Funds Government Fund Cash Fund
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Management Fee 1.00% 0.75% 0.60% 0.50%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Zweig Consulting LLC ("Zweig Consulting"), a New York limited liability company,
acts as the investment subadviser for the funds and is located at 900 Third
Avenue, New York, NY 10022. Dr. Martin E. Zweig serves as President of the Trust
and of Zweig Consulting. Dr. Zweig and his associates determine the asset
allocation strategy for all of the Phoenix-Zweig mutual funds, except the
Government Cash Fund. Dr. Zweig does not select the individual securities to
implement the strategy. The portfolio managers select the specific securities
for each fund.
Zweig/Glaser pays Zweig Consulting a subadvisory fee of approximately $2,500,000
per year, allocated monthly.
The adviser has voluntarily agreed to assume operating expenses of the
Government Cash Fund (excluding interest, taxes, brokerage commissions, 12b-1
fees, and extraordinary expenses) until December 31, 1999 to the extent that
such expenses exceed 0.35% of the average annual net assets of that fund.
36 Phoenix-Zweig Trust
<PAGE>
During the funds' last fiscal year, the funds paid total management fees of
$20,835,087.
The total advisory fees as a percentage of the aggregate net assets of certain
of the funds are greater than that for most mutual funds; however, the Trustees
have determined that they are comparable to fees charged by other mutual funds
whose investment objectives are similar to those of the funds.
PORTFOLIO MANAGEMENT
Investment and trading decisions for the funds are made by a team of managers
and analysts. The team leaders, which include David Katzen, Carlton Neel and
Beth Abraham, are primarily responsible for the day-to-day investment decisions
related to the funds.
David Katzen has been the portfolio manager for the Strategy Fund, Appreciation
Fund and Growth & Income Fund since their inceptions. Mr. Katzen is a Senior
Vice President of the Trust. Mr. Katzen received his B.A. in Mathematics from
City University of New York and an M.A. in Mathematics from Dartmouth College,
where he was admitted to the Ph.D. program.
Carlton Neel has been the portfolio manager for Managed Assets and Government
Fund since July 5, 1995 and for the Foreign Equity Fund since its inception. Mr.
Neel is a First Vice President of the Trust. Mr. Neel received a dual B.A. in
Economics and Political Science from Brown University. Prior to joining the
Zweig Companies, he was a Vice President with J.P. Morgan & Co., Inc.
Beth Abraham has been the portfolio manager for the Government Cash Fund and an
Assistant Vice President of the Trust since 1995. Ms. Abraham's experience
includes consulting to the mutual fund industry and acting as a Senior
Compliance Examiner in the New York Regional Office of the Securities and
Exchange Commission.
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000.
The major systems that would impact the funds with respect to the year 2000 are
those of the transfer agent and custodian. The fund has been advised in writing
by both the transfer agent and the custodian that they are working to fix, and
expect to have fixed in time, all of the issues relating to the year 2000. While
management of the fund will continue to monitor the progress of the transfer
agent and the custodian in solving the year 2000 problem, no assurance can be
given that their systems will be fixed on time, or what the magnitude of the
problems would be if such systems are not fixed.
Phoenix-Zweig Trust 37
<PAGE>
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
Each fund calculates a share price for each class of its shares. The share price
is based on the net assets of the fund and the number of outstanding shares. In
general, each fund calculates net asset value by:
[bullet] adding the values of all securities and other assets of the
fund,
[bullet] subtracting liabilities, and
[bullet] dividing the result by the total number of outstanding shares
of the fund.
The Government Cash Fund attempts to stabilize the net asset value of its shares
at $1.00 and uses the amortized cost method (which approximates market value) to
value its securities.
Asset Value: The funds' investments are valued at market value. If market
quotations are not available, the fund determines a "fair value" for an
investment according to rules and procedures approved by the Trustees. Foreign
forward currency contracts are valued using forward currency exchange rates
supplied by a quotation service. Short-term investments having a remaining
maturity of sixty days or less are valued at amortized cost, which the Trustees
have determined approximates market value.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities that are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class's net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class's net asset value per
share.
The net asset value per share of each class of each fund is determined on days
when the New York Stock Exchange (the "NYSE") is open for trading as of the
close of trading (normally 4:00 PM eastern time) and as of 2:00 PM eastern time
for the Government Cash Fund. Trading of securities held by the funds in foreign
markets may negatively or positively impact the value of such securities on days
when the fund neither trades securities nor calculates its net asset values
(i.e., weekends and certain holidays).
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the funds' authorized agents prior to the close of
regular trading on the NYSE (normally 4:00 PM eastern time), or 2:00 PM eastern
time for the Government Cash Fund, will be executed based on that day's net
asset value. Shares credited to your account
38 Phoenix-Zweig Trust
<PAGE>
from the reinvestment of fund distributions will be in full and fractional
shares that are purchased at the closing net asset value on the next business
day on which the fund's net asset value is calculated following the dividend
record date.
SALES CHARGES
- --------------------------------------------------------------------------------
WHAT ARE THE CLASSES AND HOW DO THEY DIFFER?
The Trust presently offers four classes of shares of each fund, and an
additional class, Class M Shares, of the Government Cash Fund that is described
in a separate prospectus. Each class of shares has different sales and
distribution charges (see "Fund Expenses" previously in this prospectus). The
Trust has adopted distribution and service plans allowed under Rule 12b-1 of the
Investment Company Act of 1940 that authorize the fund to pay distribution and
service fees for the sale of its shares and for services provided to
shareholders.
WHAT ARRANGEMENT IS BEST FOR YOU?
The different classes permit you to choose the method of purchasing shares that
is most beneficial to you. In choosing a class, consider the amount of your
investment, the length of time you expect to hold the shares, whether you decide
to receive distributions in cash or to reinvest them in additional shares, and
any other personal circumstances. Depending upon these considerations, the
accumulated distribution and service fees and contingent deferred sales charges
of one class may be more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought at the same
time. Because distribution and service fees are paid out of the fund's assets on
an ongoing basis, these fees, over time, will increase the cost of your
investment and may cost you more than paying other types of sales charges.
CLASS A SHARES. If you purchase Class A Shares, you will pay a maximum sales
charge at the time of purchase equal to 5.50% of the offering price (5.82% of
the amount invested) for the Appreciation Fund, Foreign Equity Fund, Growth &
Income Fund, Managed Assets, and Strategy Fund, and 4.75% of the offering price
(4.99% of the amount invested) for the Government Fund. The Government Cash Fund
has no sales charge for Class A Shares. The sales charge may be reduced or
waived under certain conditions. Generally, Class A Shares are not subject to
any charges by the fund when redeemed; however, a 1% CDSC is imposed on
redemptions within the first 12 months on purchases of $1 million or more if
originally purchased without an initial sales charge (except for the Government
Cash Fund). Class A Shares have lower distribution and service fees (0.30%) and
pay higher dividends than Class B or Class C Shares.
CLASS B SHARES. If you purchase Class B Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class B Shares within the first 6
years after they are purchased, you
Phoenix-Zweig Trust 39
<PAGE>
will pay a sales charge of up to 5% of your shares' value. See "Deferred Sales
Charge Alternative--Class B and C Shares" below. This charge declines to 0% over
a period of 6 years and may be waived under certain conditions. Class B shares
have higher distribution and service fees (1.00%) and pay lower dividends than
Class A Shares. Class B Shares automatically convert to Class A Shares seven
years after purchase. Purchase of Class B Shares may be inappropriate for any
investor who may qualify for reduced sales charges of Class A Shares and anyone
who is over 85 years of age. The distributor may decline purchases in such
situations.
CLASS C SHARES. If you purchase Class C Shares, you will not pay a sales charge
at the time of purchase. If you sell your Class C Shares within the first year
after they are purchased, you will pay a sales charge of 1.25%. See "Deferred
Sales Charge Alternative--Class B and C Shares" below. Class C Shares have the
same distribution and service fees of 1.00%, except for the Government and
Government Cash Funds which are 0.75% and 0.30%, respectively, and pay
comparable dividends as Class B Shares. Class C Shares do not convert to any
other class of shares of the fund.
CLASS I SHARES. Class I Shares are offered primarily to persons subject to the
Investment Adviser's Code of Ethics relating to personal securities transactions
and to tax-exempt retirement plans specifically affiliated with the Investment
Adviser, as well as certain institutional investors. If you are eligible to
purchase and do purchase Class I Shares, you will pay no sales charge at any
time. There are no distribution and services fees applicable to Class I Shares.
Class I Shares are not available in all states. Please refer to "Alternative
Purchase Arrangements" in the Statement of Additional Information to see if you
qualify.
INITIAL SALES CHARGE ALTERNATIVE--CLASS A SHARES
The public offering price of Class A Shares is the net asset value plus a sales
charge that varies depending on the size of your purchase (see "Class A
Shares--Reduced Sales Charges: Combination Purchase Privilege" in the Statement
of Additional Information). Shares purchased based on the automatic reinvestment
of income dividends or capital gains distributions are not subject to any sales
charges. The sales charge is divided between your investment dealer and the
fund's distributor (Phoenix Equity Planning Corporation or "PEPCO").
40 Phoenix-Zweig Trust
<PAGE>
SALES CHARGE YOU MAY PAY TO PURCHASE CLASS A SHARES
<TABLE>
<CAPTION>
SALES CHARGE AS
AMOUNT OF A PERCENTAGE OF
TRANSACTION ------------------------------------------------
AT OFFERING PRICE NET
(ALL FUNDS, EXCEPT GOVERNMENT AND OFFERING AMOUNT
GOVERNMENT CASH FUNDS) PRICE INVESTED
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Under $50,000 5.50% 5.82%
$50,000 but under $100,000 4.75 4.99
$100,000 but under $250,000 3.75 3.90
$250,000 but under $500,000 2.75 2.83
$500,000 but under $1,000,000 1.75 1.78
$1,000,000 or more None None
GOVERNMENT FUND
- ---------------------------------------------------------------------------------------------------------
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.00 4.17
$100,000 but under $250,000 3.00 3.09
$250,000 but under $500,000 2.25 2.30
$500,000 but under $1,000,000 1.75 1.78
$1,000,000 or more None None
</TABLE>
There is no initial sales charge on purchases of the Government Cash Fund's
Class A Shares.
DEFERRED SALES CHARGE ALTERNATIVE--CLASS B AND C SHARES
Class B and C Shares are purchased without an initial sales charge; however,
shares sold within a specified time period are subject to a declining contingent
deferred sales charge ("CDSC") at the rates listed below. The sales charge will
be multiplied by the then current market value or the initial cost of the shares
being redeemed, whichever is less. No sales charge will be imposed on increases
in net asset value or on shares purchased through the reinvestment of income
dividends or capital gains distributions. To minimize the sales charge, shares
not subject to any charge will be redeemed first, followed by shares held the
longest time. To calculate the amount of shares owned and time period held, all
Class B Shares purchased in any month are considered purchased on the last day
of the preceding month, and all Class C Shares are considered purchased on the
trade date.
DEFERRED SALES CHARGE YOU MAY PAY TO SELL CLASS B SHARES
<TABLE>
<CAPTION>
YEAR 1 2 3 4 5 6 7
<S> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------------
CDSC 5% 4% 3% 3% 2% 1% 0%
</TABLE>
<TABLE>
<CAPTION>
YEAR 1 2+
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CDSC 1.25% 0%
</TABLE>
Phoenix-Zweig Trust 41
<PAGE>
YOUR ACCOUNT
- --------------------------------------------------------------------------------
Opening an Account
Your financial advisor can assist you with your initial purchase as well as all
phases of your investment program. If you are opening an account by yourself,
please follow the instructions outlined below.
STEP 1.
Your first choice will be the initial amount you intend to invest.
Minimum INITIAL investments:
[arrow] $25 for individual retirement accounts (IRAs), or accounts that use the
systematic exchange privilege, or accounts that use the Investo-Matic
program (see below for more information on the Investo-Matic program).
[arrow] There is no initial dollar requirement for defined contribution plans,
profit-sharing plans, or employee benefit plans. There is also no
minimum for reinvesting dividends and capital gains into another
account.
[arrow] $500 for all other accounts.
Minimum ADDITIONAL investments:
[arrow] $25 for any account.
[arrow] There is no minimum for defined contribution plans, profit-sharing
plans, or employee benefit plans. There is also no minimum for
reinvesting dividends and capital gains into an existing account.
STEP 2.
Your second choice will be what class of shares to buy. The fund offers Class A,
Class B and Class C Shares for individual investors, as well as Class I Shares
to qualified investors. Each has different sales and distribution charges.
Because all future investments in your account will be made in the share class
you choose when you open your account, you should make your decision carefully.
Your financial advisor can help you pick the share class that makes the most
sense for your situation.
STEP 3.
Your next choice will be how you want to receive any dividends and capital gain
distributions. Your options are:
[bullet] Receive both dividends and capital gain distributions in
additional shares;
[bullet] Receive dividends in additional shares and capital gain
distributions in cash;
42 Phoenix-Zweig Trust
<PAGE>
[bullet] Receive dividends in cash and capital gain distributions in
additional shares; or
[bullet] Receive both dividends and capital gain distributions in cash.
No interest will be paid on uncashed distribution checks.
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TO OPEN AN ACCOUNT
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- -----------------------------------------------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301.
- -----------------------------------------------------------------------------------------------------------------
Through express delivery Complete a New Account Application and send it with a check payable to the
fund. Send them to: Boston Financial Data Services, Attn: Phoenix Funds,
66 Brooks Drive, Braintree, MA 02184.
- -----------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574 (press 1, then 0).
- -----------------------------------------------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- -----------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the fund buy back shares at the net asset value next
determined after receipt of a redemption order by the fund's Transfer Agent or
an authorized agent. In the case of a Class B or Class C Share redemption, you
will be subject to the applicable deferred sales charge, if any, for such
shares. Subject to certain restrictions, shares may be redeemed by telephone or
in writing. In addition, shares may be sold through securities dealers, brokers
or agents who may charge customary commissions or fees for their services. The
fund does not charge any redemption fees. Payment for shares redeemed is made
within seven days; however, redemption proceeds will not be disbursed until each
check used for purchases of shares has been cleared for payment by your bank,
which may take up to 15 days after receipt of the check.
Phoenix-Zweig Trust 43
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
TO SELL SHARES
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- -----------------------------------------------------------------------------------------------------------------
Through the mail Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- -----------------------------------------------------------------------------------------------------------------
Through express delivery Send a letter of instruction and any share certificates (if you hold
certificate shares) to: Boston Financial Data Services, Attn: Phoenix
Funds, 66 Brooks Drive, Braintree, MA 02184. Be sure to include the
registered owner's name, fund and account number.
- -----------------------------------------------------------------------------------------------------------------
By telephone For sales up to $50,000 requests can be made by calling (800)243-1574.
- -----------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800)243-1574 (press 1, then 0).
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the fund. The fund reserves the right to pay large redemptions
"in-kind" (in securities owned by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received. To avoid delay
in redemption or transfer, shareholders having questions about specific
requirements should contact the fund's Transfer Agent at (800)243-1574.
REDEMPTIONS BY MAIL
[arrow] If you are selling shares held individually, jointly, or as custodian
under the Uniform Gifts to Minors Act or Uniform Transfers to Minors
Act.
Send a clear letter of instruction if all of these apply:
[bullet] The proceeds do not exceed $50,000.
[bullet] The proceeds are payable to the registered owner at the
address on record.
44 Phoenix-Zweig Trust
<PAGE>
Send a clear letter of instruction with a signature guarantee when any
of these apply:
[bullet] You are selling more than $50,000 worth of shares.
[bullet] The name or address on the account has changed within the last
60 days.
[bullet] You want the proceeds to go to a different name or address
than on the account.
[arrow] If you are selling shares held in a corporate or fiduciary account,
please contact the fund's Transfer Agent at (800)243-1574.
The signature on your request must be guaranteed by an eligible guarantor
institution as defined by the fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
ACCOUNT REINSTATEMENT PRIVILEGE
For 180 days after you have made a partial or complete redemption of your Class
A, Class B, or Class C Shares, you can purchase Class A Shares of any fund at
net asset value, with no sales charge, by reinvesting all or part of your
proceeds, but not more. Send your written request to State Street Bank, P.O. Box
8301, Boston, MA 02266-8301. You can call us at (800)243-1574 for more
information.
Please remember, a redemption and reinvestment are considered to be a sale and
purchase for tax-reporting purposes. Class B shareholders who have had the
contingent deferred sales
Phoenix-Zweig Trust 45
<PAGE>
charge waived because they are in the Systematic Withdrawal Program are not
eligible for this reinstatement privilege.
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $200, you may receive a notice requesting you to bring the balance up
to $200 within 60 days. If you do not, the shares in the account will be sold at
net asset value, and a check will be mailed to the address of record.
EXCHANGE PRIVILEGES
You should read the prospectus carefully before deciding to make an exchange.
You can obtain a prospectus from your financial advisor or by calling us at
(800)243-1574 or accessing our Web site at www.phoenixinvestments.com.
[bullet] You may exchange shares for another fund in the same class of
shares; e.g., Class A for Class A.
[bullet] Exchanges may be made by phone ((800)243-1574) or by mail
(State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
[bullet] The amount of the exchange must be equal to or greater than
the minimum initial investment required.
[bullet] The exchange of shares is treated as a sale and a purchase for
federal income tax purposes.
[bullet] Because excessive trading can hurt fund performance and harm
other shareholders, the fund reserves the right to temporarily
or permanently end exchange privileges or reject an order from
anyone who appears to be attempting to time the market,
including investors who request more than one exchange in any
30-day period. The fund's distributor has entered into
agreements with certain timing firms permitting them to
exchange by telephone. These privileges are limited, and the
funds' distributor has the right to reject or suspend them.
[bullet] Class A Shares of the Government Cash Fund purchased without a
sales charge are exchangeable at net asset value plus the
applicable sales charge. Exchange privileges do not apply to
Class M Shares of the Government Cash Fund.
No exchanges may currently be made between any of the funds of Phoenix-Zweig
Trust and other Phoenix Funds.
RETIREMENT PLANS
Shares of the fund may be used as investments under the following qualified
prototype retirement plans: traditional IRA, rollover IRA, SIMPLE IRA, Roth IRA,
401(k) plans,
46 Phoenix-Zweig Trust
<PAGE>
profit-sharing, money purchase plans, and 403(b) plans. For more information,
call (800)243-4361.
INVESTOR SERVICES
- --------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your mutual fund account. Just complete the Automatic
Investment Plan section on the application and include a voided check.
SYSTEMATIC EXCHANGE allows you to automatically move money from one
Phoenix-Zweig Fund to another on a monthly, quarterly, semiannual or annual
basis. Shares of one Phoenix-Zweig Fund will be exchanged for shares of the same
class of another fund at the interval you select. To sign up, just complete the
Systematic Exchange Section on the application. No exchange privilege is
currently available between any of the funds of Phoenix-Zweig Trust and other
Phoenix Funds.
TELEPHONE EXCHANGE lets you exchange shares of one Phoenix-Zweig Fund for the
same class of shares in another Phoenix-Zweig Fund, using our customer service
telephone service. See the Telephone Exchange Section on the application.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $5,000 and elect
to have all dividends reinvested.
TAX STATUS OF DISTRIBUTIONS
- --------------------------------------------------------------------------------
The fund plans to make distributions from net investment income at intervals
stated on the table below and to distribute net realized capital gains, if any,
at least annually.
Phoenix-Zweig Trust 47
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
FUND DIVIDEND PAID
- ------------------------------------------------------------------------------------------------------------------
<S> <C>
Appreciation Fund Annually
- ------------------------------------------------------------------------------------------------------------------
Foreign Equity Fund Annually
- ------------------------------------------------------------------------------------------------------------------
Government Cash Fund Monthly (declared Daily)
- ------------------------------------------------------------------------------------------------------------------
Government Fund Monthly
- ------------------------------------------------------------------------------------------------------------------
Growth & Income Fund Semiannually
- ------------------------------------------------------------------------------------------------------------------
Managed Assets Semiannually
- ------------------------------------------------------------------------------------------------------------------
Strategy Fund Semiannually
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
Distributions of short-term capital gains and net investment income are taxable
to shareholders as ordinary income. Long-term capital gains, if any, distributed
to shareholders and which are designated by the fund as capital gains
distributions, are taxable to shareholders as long-term capital gain
distributions regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and capital gain
distributions are paid in additional shares. All distributions, cash or
additional shares, are subject to federal income tax and may be subject to
state, local and other taxes.
48 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the funds' financial
performance since inception. Certain information reflects financial results for
a single fund share. The total returns in the table represent the rate that an
investor would have earned or lost on an investment in the fund (assuming
reinvestment of all dividends and distributions). This information has been
audited by PricewaterhouseCoopers LLP, independent accountants. Their report,
together with the funds' financial statements, are included in the funds' most
recent Annual Report, which is available upon request.
PHOENIX-ZWEIG APPRECIATION FUND
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.27 $15.90 $15.91 $13.54 $14.33
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS(2)
Net investment income 0.07 0.10 0.17 0.16 0.16
Net realized and unrealized gain (loss) (0.32) 3.67 2.25 3.05 (0.43)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.25) 3.77 2.42 3.21 (0.27)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) (0.09) (0.17) (0.33) (0.06)
Dividends from net realized gains (1.74) (1.31) (2.26) (0.51) (0.46)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.81) (1.40) (2.43) (0.84) (0.52)
------ ------ ------ ------ ------
Change in net asset value (2.06) 2.37 (0.01) 2.37 (0.79)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $16.21 $18.27 $15.90 $15.91 $13.54
====== ====== ====== ====== ======
Total return(1) (0.97)% 23.83% 15.39% 24.00% (1.83)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $240,900 $293,809 $275,935 $272,590 $213,400
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.52% 1.52% 1.62% 1.63% 1.70%
Net investment income 0.34% 0.61% 1.03% 1.10% 1.09%
Portfolio turnover rate 117% 77% 88% 68% 97%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
Phoenix-Zweig Trust 49
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG APPRECIATION FUND
<TABLE>
<CAPTION>
CLASS B CLASS I
-------------------------------- ---------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 4/8/96 TO DECEMBER 31, 11/1/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
------ ------ -------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.13 $15.82 $16.34 $18.46 $16.04 $17.28
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS(4)
Net investment income (loss) (0.06) (0.02) 0.03 0.09 0.15 0.04
Net realized and unrealized gain (loss) (0.31) 3.64 1.74 (0.29) 3.71 1.02
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.37) 3.62 1.77 (0.20) 3.86 1.06
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.03) (0.09) (0.13) (0.04)
Dividends from net realized gains (1.74) (1.31) (2.26) (1.74) (1.31) (2.26)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.74) (1.31) (2.29) (1.83) (1.44) (2.30)
------ ------ ------ ------ ------ ------
Change in net asset value (2.11) 2.31 (0.52) (2.03) 2.42 (1.24)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $16.02 $18.13 $15.82 $16.43 $18.46 $16.04
====== ====== ====== ====== ====== ======
Total return(1) (1.66)% 22.97% 11.01%(3) (0.67)% 24.17% 6.30%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $30,370 $22,122 $8,350 $2,760 $2,735 $2,202
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.22% 2.22% 2.32%(2) 1.22% 1.22% 1.32%(2)
Net investment income (loss) (0.36)% (0.09)% 0.33%(2) 0.64% 0.91% 1.33%(2)
Portfolio turnover rate 117% 77% 88% 117% 77% 88%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
50 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG APPRECIATION FUND
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $18.10 $15.79 $15.83 $13.36 $14.19
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS(2)
Net investment income (loss) (0.07) (0.02) 0.06 0.06 0.06
Net realized and unrealized gain (loss) (0.30) 3.64 2.22 3.03 (0.43)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.37) 3.62 2.28 3.09 (0.37)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income -- -- (0.06) (0.11) --
Dividends from net realized gains (1.74) (1.31) (2.26) (0.51) (0.46)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (1.74) (1.31) (2.32) (0.62) (0.46)
------ ------ ------ ------ ------
Change in net asset value (2.11) 2.31 (0.04) 2.47 (0.83)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $15.99 $18.10 $15.79 $15.83 $13.36
====== ====== ====== ====== ======
Total return(1) (1.67)% 23.01% 14.54% 23.20% (2.55)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $201,789 $248,584 $218,714 $195,204 $139,397
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.22% 2.22% 2.32% 2.33% 2.40%
Net investment income (loss) (0.36)% (0.09)% 0.33% 0.40% 0.39%
Portfolio turnover rate 117% 77% 88% 68% 97%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
Phoenix-Zweig Trust 51
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG FOREIGN EQUITY FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- ---------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 11/24/97 TO DECEMBER 31, 11/24/97 TO
1998 12/31/97 1998 12/31/97
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.45 $11.34 $11.45 $11.34
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.08 0.01 0.04 0.01
Net realized and unrealized gain 0.96 0.11 0.92 0.11
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.04 0.12 0.96 0.12
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.10) (0.01) (0.06) (0.01)
------ ------ ------ ------
Change in net asset value 0.94 0.11 0.90 0.11
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.39 $11.45 $12.35 $11.45
====== ====== ====== ======
Total return(1) 9.08% 1.09%(3) 8.36% 1.03%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $2,122 $414 $1,873 $713
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(4) 1.80% 1.80%(2) 2.50% 2.50%(2)
Net investment income 1.14% 1.20%(2) 0.44% 0.50%(2)
Portfolio turnover rate 40% 64%(2) 40% 64%(2)
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Includes reimbursement of operating expenses by investment adviser of $0.20
and $0.03 per share (2.20% and 3.35% ratio of expenses to average net assets)
for the periods ending December 31, 1998 and 1997, respectively, for each class
of shares.
52 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG FOREIGN EQUITY FUND
<TABLE>
<CAPTION>
CLASS C CLASS I
--------------------------- ---------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 11/24/97 TO DECEMBER 31, 11/24/97 TO
1998 12/31/97 1998 12/31/97
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.45 $11.34 $11.46 $11.34
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.01 0.16 0.02
Net realized and unrealized gain 0.90 0.11 0.91 0.12
------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.95 0.12 1.07 0.14
------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.07) (0.01) (0.18) (0.02)
------ ------ ------ ------
Change in net asset value 0.88 0.11 0.89 0.12
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $12.33 $11.45 $12.35 $11.46
====== ====== ====== ======
Total return(1) 8.27% 1.03%(3) 9.32% 1.22%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $3,384 $1,177 $1,107 $1,012
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(4) 2.50% 2.50%(2) 1.50% 1.50%(2)
Net investment income 0.44% .50%(2) 1.44% 1.50%(2)
Portfolio turnover rate 40% 64%(2) 40% 64%(2)
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Includes reimbursement of operating expenses by investment adviser of $0.20
and $0.03 per share (2.20% and 3.35% ratio of expenses to average net assets)
for the periods ending December 31, 1998 and 1997, respectively, for each class
of shares.
Phoenix-Zweig Trust 53
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GOVERNMENT CASH FUND
<TABLE>
<CAPTION>
CLASS A
-----------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED DECEMBER 31, 5/1/94 TO
1998 1997 1996 1995 12/31/94
----- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.03)
----- ----- ----- ----- -----
Change in net asset value 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return 4.91% 4.97% 4.83% 5.08% 2.55%(1)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $8,290 $2,472 $3,360 $3,661 $4,303
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(2) 0.65% 0.65% 0.65% 0.87% 0.62%(1)
Net investment income 4.75% 4.85% 4.73% 4.97% 2.52%(1)
</TABLE>
- ----------
(1) Not annualized.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.007, $0.11, $0.007, and $0.005 (0.65%, 1.09%, 0.66% and 0.47% ratio of
expenses to average net assets) per share for the periods ending December 31,
1998, 1997, 1996, and 1995, respectively.
54 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GOVERNMENT CASH FUND
<TABLE>
<CAPTION>
CLASS B CLASS I
-------------------------------- ---------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 4/8/96 TO DECEMBER 31, 11/1/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
----- ----- --------- ----- ----- ----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04 0.04 0.03 0.05 0.05 0.01
----- ----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.04) (0.03) (0.05) (0.05) (0.01)
----- ----- ----- ----- ----- -----
Change in net asset value 0.00 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== ===== =====
Total return(1) 4.18% 4.24% 3.03%(3) 5.23% 5.28% 0.80%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,738 $336 $33 $2,884 $100 $1,401
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(4) 1.35% 1.35% 1.35%(2) 0.35% 0.35% 0.35%(2)
Net investment income 3.97% 4.24% 4.03%(2) 5.15% 5.15% 5.03%(2)
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Includes reimbursement of operating expenses by investment adviser of
$0.024, $0.58, and $0.007 (2.35%, 6.14% and 0.60% ratio of expenses to average
net assets) for Class B Shares, and $0.011, $0.005, and $0.004 (1.12%, 0.47% and
0.38% ratio of expenses to average net assets) for Class I Shares for the
periods ending December 31, 1998, 1997, and 1996, respectively.
Phoenix-Zweig Trust 55
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GOVERNMENT CASH FUND
<TABLE>
<CAPTION>
CLASS C
-----------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED DECEMBER 31, 5/1/94 TO
1998 1997 1996 1995 12/31/94
----- ----- ----- ----- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03
----- ----- ----- ----- -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.03)
----- ----- ----- ----- -----
Change in net asset value 0.00 0.00 0.00 0.00 0.00
----- ----- ----- ----- -----
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total return(1) 4.91% 4.97% 4.83% 5.08% 2.55%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $6,624 $2,661 $4,535 $4,458 $5,040
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 0.65% 0.65% 0.65% 0.87% 0.62%(2)
Net investment income 4.73% 4.85% 4.73% 4.97% 2.52%(2)
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Not annualized.
(3) Includes reimbursement of operating expenses by investment adviser of
$0.007, $0.01, $0.006, and $0.003 (0.73%, 1.00%, 0.60% and 0.28% ratio of
expenses to average net assets) per share for the periods ending December 31,
1998, 1997, 1996, and 1995, respectively.
56 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GOVERNMENT FUND
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.09 $9.81 $10.39 $9.63 $10.43
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.53 0.52 0.53 0.52(1) 0.50
Net realized and unrealized gain (loss) 0.35 0.28 (0.58) 0.77 (0.79)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.88 0.80 (0.05) 1.29 (0.29)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.53) (0.52) (0.53) (0.53) (0.51)
------ ------ ------ ------ ------
Change in net asset value 0.35 0.28 (0.58) 0.76 (0.80)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.44 $10.09 $9.81 $10.39 $9.63
====== ====== ====== ====== ======
Total return(2) 8.91% 8.42% (0.42)% 13.84% (2.83)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $29,767 $28,062 $33,848 $42,207 $47,622
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.32% 1.36% 1.14%(3) 1.26% 1.28%
Net investment income 5.09% 5.26% 5.25% 5.22% 5.07%
Portfolio turnover rate 48% 128% 170% 195% 191%
</TABLE>
- ----------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Includes reimbursement of operating expenses by investment adviser of $0.002
(0.22% ratio of expenses to average net assets).
Phoenix-Zweig Trust 57
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GOVERNMENT FUND
<TABLE>
<CAPTION>
CLASS B CLASS I
----------------------------------- -------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 4/8/96 TO DECEMBER 31, 7/14/97 TO
1998 1997 12/31/96 1998 12/31/97
------ ----- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.15 $9.86 $9.76 $10.11 $9.88
------ ----- ----- ------ -----
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.44 0.46 0.29 0.55 0.26
Net realized and unrealized gain 0.37 0.26 0.11 0.37 0.23
------ ----- ----- ------ -----
TOTAL FROM INVESTMENT OPERATIONS 0.81 0.72 0.40 0.92 0.49
------ ----- ----- ------ -----
LESS DISTRIBUTIONS
Dividends from net investment income (0.44) (0.43) (0.30) (0.55) (0.26)
Change in net asset value 0.37 0.29 0.10 0.37 0.23
------ ----- ----- ------ -----
NET ASSET VALUE, END OF PERIOD $10.52 $10.15 $9.86 $10.48 $10.11
====== ====== ===== ====== ======
Total return(1) 8.20% 7.55% 4.16%(4) 9.33% 5.01%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $2,199 $1,215 $513 $3,088 $1,050
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.02% 2.06% 1.84%(2)(3) 1.02% 1.06%(3)
Net investment income 4.39% 4.56% 4.55%(3) 5.39% 5.56%(3)
Portfolio turnover rate 48% 128% 170% 48% 128%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of $0.003
per share (0.26% ratio of expenses to average net assets) for Class B Shares.
(3) Annualized.
(4) Not annualized.
58 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GOVERNMENT FUND
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $10.08 $9.81 $10.38 $9.62 $10.40
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.47 0.48 0.49 0.48(1) 0.46
Net realized and unrealized gain (loss) 0.36 0.27 (0.58) 0.76 (0.79)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 0.83 0.75 (0.09) 1.24 (0.33)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.49) (0.48) (0.48) (0.48) (0.45)
Dividends from net realized gains -- -- -- -- --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.49) (0.48) (0.48) (0.48) (0.45)
------ ------ ------ ------ ------
Change in net asset value 0.34 0.27 (0.57) 0.76 (0.78)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $10.42 $10.08 $9.81 $10.38 $9.62
====== ====== ====== ====== ======
Total return(2) 8.46% 7.86% (0.82)% 13.27% (3.18)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $11,859 $10,199 $14,330 $19,778 $22,599
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.77% 1.81% 1.59%(3) 1.71% 1.73%
Net investment income (loss) 4.64% 4.81% 4.80% 4.77% 4.62%
Portfolio turnover rate 48% 128% 170% 195% 191%
</TABLE>
- ----------
(1) Computed using average shares outstanding.
(2) Maximum sales charges are not reflected in the total return calculation.
(3) Includes reimbursement of operating expenses by investment adviser of $0.002
per share (0.22% ratio of expenses to average net assets).
Phoenix-Zweig Trust 59
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GROWTH & INCOME FUND
<TABLE>
<CAPTION>
CLASS A CLASS B
-------------------------------- ---------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 11/26/96 TO DECEMBER 31, 11/26/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
----- ----- ----------- ----- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.73 $11.37 $11.34 $13.73 $11.37 $11.34
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.11 0.24 0.01 0.02 0.16 0.01
Net realized and unrealized gain (loss) (0.33) 2.36 0.03 (0.34) 2.36 0.03
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.22) 2.60 0.04 (0.32) 2.52 0.04
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.11) (0.24) (0.01) (0.02) (0.16) (0.01)
------ ------ ------ ------ ------ ------
Change in net asset value (0.33) 2.36 0.03 (0.34) 2.36 0.03
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.40 $13.73 $11.37 $13.39 $13.73 $11.37
====== ====== ====== ====== ====== ======
Total return(1) (1.61)% 23.12% 0.39%(4) (2.33)% 22.29% 0.33%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $8,172 $6,836 $2,508 $16,416 $11,920 $2,693
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.56%(2) 1.30%(2) 1.30%(2)(3) 2.26%(2) 2.00%(2) 2.00%(2)(3)
Net investment income 0.82% 2.26% 1.47%(3) 0.12% 1.56% 0.77%(3)
Portfolio turnover rate 152% 120% 2% 152% 120% 2%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.005, $0.08 and $0.021 (0.05%, 0.70% and 2.07% ratio of expenses to average
net assets) per share for the periods ending December 31, 1998, 1997, and 1996,
respectively.
(3) Annualized.
(4) Not annualized.
60 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG GROWTH & INCOME FUND
<TABLE>
<CAPTION>
CLASS C CLASS I
-------------------------------- ---------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 11/26/96 TO DECEMBER 31, 11/26/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
----- ----- ----------- ----- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $13.71 $11.38 $11.34 $13.77 $11.37 $11.34
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.02 0.17 0.01 0.15 0.24 0.02
Net realized and unrealized gain (loss) (0.34) 2.33 0.04 (0.33) 2.40 0.03
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.32) 2.50 0.05 (0.18) 2.64 0.05
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.02) (0.17) (0.01) (0.15) (0.24) (0.02)
------ ------ ------ ------ ------ ------
Change in net asset value (0.34) 2.33 0.04 (0.33) 2.40 0.03
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $13.37 $13.71 $11.38 $13.44 $13.77 $11.37
====== ====== ====== ====== ====== ======
Total return(1) (2.34)% 22.15% 0.42%(4) (1.31)% 23.42% 0.41%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $14,364 $13,525 $4,509 $1,664 $1,686 $101
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.26%(2) 2.00%(2) 2.00%(2)(3) 1.26%(2) 1.00%(2) 1.00%(2)(3)
Net investment income 0.12% 1.56% 0.77%(3) 1.12% 2.56% 1.77%(3)
Portfolio turnover rate 152% 120% 2% 152% 120% 2%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.005, $0.08 and $0.021 per share (0.05%, 0.70% and 2.07% ratio of expenses to
net assets) for the periods ending December 31, 1998, 1997 and 1996,
respectively.
(3) Annualized.
(4) Not annualized.
Phoenix-Zweig Trust 61
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG MANAGED ASSETS
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.72 $12.75 $12.48 $11.76 $12.38
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.38 0.13 0.35 0.47 0.33
Net realized and unrealized gain (loss) 1.50 1.83 0.86 1.40 (0.69)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.88 1.96 1.21 1.87 (0.36)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.38) -- (0.45) (0.75) (0.26)
Dividends from net realized gains (0.04) (1.99) (0.49) (0.40) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.42) (1.99) (0.94) (1.15) (0.26)
------ ------ ------ ------ ------
Change in net asset value 1.46 (0.03) 0.27 0.72 (0.62)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.18 $12.72 $12.75 $12.48 $11.76
====== ====== ====== ====== ======
Total return(1) 14.87% 15.47% 9.80% 16.26% (2.93)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $122,085 $110,908 $114,837 $141,110 $154,441
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.51% 1.59% 1.64% 1.59% 1.68%
Net investment income 2.77% 2.40% 2.64% 3.69% 2.70%
Portfolio turnover rate 62% 168% 187% 239% 299%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
62 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG MANAGED ASSETS
<TABLE>
<CAPTION>
CLASS B CLASS I
-------------------------------- ---------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 4/8/96 TO DECEMBER 31, 11/1/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
----- ----- ----------- ----- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.79 $12.90 $12.43 $13.05 $12.99 $13.02
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.26 0.04 0.13 0.56 0.09 0.05
Net realized and unrealized gain (loss) 1.53 1.84 1.00 1.41 1.96 0.45
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.79 1.88 1.13 1.97 2.05 0.50
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.26) -- (0.17) (0.67) -- (0.04)
Dividends from net realized gains (0.04) (1.99) (0.49) (0.04) (1.99) (0.49)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.30) (1.99) (0.66) (0.71) (1.99) (0.53)
------ ------ ------ ------ ------ ------
Change in net asset value 1.49 (0.11) 0.47 1.26 0.06 (0.03)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.28 $12.79 $12.90 $14.31 $13.05 $12.99
====== ====== ====== ====== ====== ======
Total return(1) 14.06% 14.67% 9.11%(3) 15.16% 15.88% 3.83%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $33,172 $18,117 $6,339 $1,848 $2,645 $2,893
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.21% 2.29% 2.34%(2) 1.21% 1.29% 1.34%(2)
Net investment income 2.07% 1.70% 1.94%(2) 3.07% 2.70% 2.94%(2)
Portfolio turnover rate 62% 168% 187% 62% 168% 187%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
Phoenix-Zweig Trust 63
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG MANAGED ASSETS
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $12.63 $12.76 $12.49 $11.73 $12.36
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.29 0.04 0.27 0.38 0.23
Net realized and unrealized gain (loss) 1.48 1.82 0.85 1.40 (0.68)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS 1.77 1.86 1.12 1.78 (0.45)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.29) -- (0.36) (0.62) (0.18)
Dividends from net realized gains (0.04) (1.99) (0.49) (0.40) --
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.33) (1.99) (0.85) (1.02) (0.18)
------ ------ ------ ------ ------
Change in net asset value 1.44 (0.13) 0.27 0.76 (0.63)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.07 $12.63 $12.76 $12.49 $11.73
====== ====== ====== ====== ======
Total return 14.03% 14.67% 9.03% 15.44% (3.66)%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $429,655 $407,625 $426,194 $527,432 $570,710
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.21% 2.29% 2.34% 2.29% 2.38%
Net investment income 2.07% 1.70% 1.94% 2.99% 2.00%
Portfolio turnover rate 62% 168% 187% 239% 299%
</TABLE>
- ----------
64 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG STRATEGY FUND
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.77 $15.01 $14.51 $12.36 $12.52
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.17 0.20 0.20 0.27 0.24
Net realized and unrealized gain (loss) (0.48) 2.49 1.68 2.80 (0.10)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.31) 2.69 1.88 3.07 0.14
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.18) (0.19) (0.20) (0.37) (0.20)
Dividends from net realized gains (0.48) (1.74) (1.18) (0.55) (0.10)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.66) (1.93) (1.38) (0.92) (0.30)
------ ------ ------ ------ ------
Change in net asset value (0.97) 0.76 0.50 2.15 (0.16)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.80 $15.77 $15.01 $14.51 $12.36
====== ====== ====== ====== ======
Total return(1) (1.88)% 18.07% 13.00% 25.12% 1.14%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $409,065 $565,721 $581,149 $558,286 $424,805
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.24% 1.24% 1.28% 1.27% 1.40%
Net investment income 0.97% 1.20% 1.27% 1.92% 1.90%
Portfolio turnover rate 116% 126% 181% 95% 70%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
Phoenix-Zweig Trust 65
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG STRATEGY FUND
<TABLE>
<CAPTION>
CLASS B CLASS I
-------------------------------- ---------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 4/8/96 TO DECEMBER 31, 11/1/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
----- ----- ----------- ----- ----- -----------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.86 $15.07 $15.12 $15.87 $15.07 $15.42
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.07 0.06 0.17 0.23 0.04
Net realized and unrealized gain (loss) (0.48) 2.53 1.13 (0.45) 2.54 0.83
------ ------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.43) 2.60 1.19 (0.28) 2.77 0.87
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.07) (0.06) (0.17) (0.23) (0.04)
Dividends from net realized gains (0.48) (1.74) (1.18) (0.48) (1.74) (1.18)
------ ------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.53) (1.81) (1.24) (0.65) (1.97) (1.22)
------ ------ ------ ------ ------ ------
Change in net asset value (0.96) 0.79 (0.05) (0.93) 0.80 (0.35)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.90 $15.86 $15.07 $14.94 $15.87 $15.07
====== ====== ====== ====== ====== ======
Total return(1) (2.61)% 17.33% 7.88%(3) (1.66)% 18.52% 5.68%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $82,531 $76,820 $42,317 $1,407 $1,070 $903
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.94% 1.94% 1.98%(2) 0.94% 0.94% 0.98%(2)
Net investment income 0.27% 0.50% 0.57%(2) 1.27% 1.50% 1.57%(2)
Portfolio turnover rate 116% 126% 181% 116% 126% 181%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
66 Phoenix-Zweig Trust
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
PHOENIX-ZWEIG STRATEGY FUND
<TABLE>
<CAPTION>
CLASS C
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $15.81 $15.04 $14.56 $12.35 $12.51
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.07 0.11 0.16 0.15
Net realized and unrealized gain (loss) (0.48) 2.52 1.66 2.82 (0.10)
------ ------ ------ ------ ------
TOTAL FROM INVESTMENT OPERATIONS (0.43) 2.59 1.77 2.98 0.05
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.08) (0.11) (0.22) (0.11)
Dividends from net realized gains (0.48) (1.74) (1.18) (0.55) (0.10)
------ ------ ------ ------ ------
TOTAL DISTRIBUTIONS (0.52) (1.82) (1.29) (0.77) (0.21)
------ ------ ------ ------ ------
Change in net asset value (0.95) 0.77 0.48 2.21 (0.16)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $14.86 $15.81 $15.04 $14.56 $12.35
====== ====== ====== ====== ======
Total return(1) (2.64)% 17.30% 12.19% 24.26% 0.41%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $423,791 $591,512 $621,334 $530,300 $307,011
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.94% 1.94% 1.98% 1.97% 2.10%
Net investment income 0.27% 0.50% 0.57% 1.22% 1.20%
Portfolio turnover rate 116% 126% 181% 95% 70%
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
Phoenix-Zweig Trust 67
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The Trust has filed a Statement of Additional Information, dated May 1, 1999,
with the Securities and Exchange Commission. The Statement contains more
detailed information about the funds. It is incorporated into this prospectus by
reference and is legally part of the prospectus. You may obtain a free copy of
the Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200, or
[arrow] by calling (800) 243-1574.
You may also obtain information about the Trust from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC, or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
SHAREHOLDER REPORTS
The Trust semiannually mails to its shareholders detailed reports containing
information about the funds' investments. The Trust's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the funds' performance from January 1 through December
31. You may request a free copy of the Trust's Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200, or
[arrow] by calling (800) 243-1574.
CUSTOMER SERVICE AND MARKETING: (800) 243-1574
TELEPHONE ORDERS: (800) 243-1574
SEC File Nos. 2-93538 & 811-04116 Printed on recycled paper using soybean ink
68 Phoenix-Zweig Trust
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
INVESTMENT PARTNERS
Phoenix Investment Partners PXP 1197 (5/99)
is pleased to welcome you
as a Phoenix-Zweig
Shareholder.
<PAGE>
Phoenix Investment Partners
Prospectus
May 1, 1999
- -------- Zweig
Phoenix-Zweig
Government Cash Fund
Class M Shares
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This prospectus contains important
information that you should know
before investing in the Phoenix Strategic
Allocation Fund, Inc.
[logo] PHOENIX
INVESTMENT PARTNERS
<PAGE>
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Risk and Return Summary............................................... 1
Fund Expenses.................................................................... 4
Management of the Fund........................................................... 6
Pricing of Fund Shares........................................................... 7
How to Buy Shares................................................................ 8
How to Sell Shares............................................................... 9
Things You Should Know When Selling Shares....................................... 10
Account Policies................................................................. 11
Investor Services................................................................ 12
Distributions and Taxes.......................................................... 12
Financial Highlights............................................................. 13
Additional Information........................................................... 17
</TABLE>
[arrow] PHOENIX
ZWEIG
GOVERNMENT
CASH FUND
CLASS M
SHARES
<PAGE>
PHOENIX-ZWEIG GOVERNMENT CASH FUND
INVESTMENT RISK AND RETURN SUMMARY
- --------------------------------------------------------------------------------
INVESTMENT OBJECTIVE
Phoenix-Zweig Government Cash Fund (the "fund"), one of seven different funds,
or series, of Phoenix-Zweig Trust (the "Trust") strives to provide high current
income consistent with maintaining liquidity and preserving capital. There is no
guarantee that the fund will achieve its objective.
THIS PROSPECTUS DESCRIBES CLASS M SHARES OF PHOENIX-ZWEIG GOVERNMENT CASH FUND.
Refer to the Phoenix-Zweig Trust Prospectus for information on Class A, Class B,
Class C or Class I Shares.
PRINCIPAL INVESTMENT STRATEGIES
[ARROW] The goal of the fund is to maintain a stable share price of $1.00.
[ARROW] The fund invests exclusively in the following instruments:
[BULLET] short-term securities issued or guaranteed as to payment of
principal and interest by the U.S. Government, its agencies or
instrumentalities; and
[ARROW] repurchase agreements collateralized by such securities.
U.S. Government securities are considered to be of the highest credit
quality, yet the primary consideration in choosing among these
securities is managing risk related to changes in interest rate levels.
[ARROW] Money market instruments selected for investment have remaining
maturities of less than 397 days and have an average weighted portfolio
maturity of not greater than 90 days.
Phoenix-Zweig Government Cash Fund 1
<PAGE>
PRINCIPAL RISKS
An investment in the fund is not insured or guaranteed by the Federal Deposit
Insurance Corporation or any other government agency. Although the fund seeks to
preserve the value of your investment at $1.00 per share, it is possible to lose
money by investing in the fund.
Not all U.S. Government securities are backed by the full faith and credit of
the United States. Some are supported only by the credit of the agency or
instrumentality. The Statement of Additional Information lists agencies and
instrumentalities of the U.S. Government.
Delays in payment or losses may result if the other party to a repurchase
agreement defaults or becomes bankrupt.
Generally, when interest rates rise, the value of bonds decline, and the value
of your investment may decrease as well.
In addition to price fluctuations based on changes in interest rates, mortgage
securities and collateralized mortgage obligations also are subject to
prepayment risk which can result in the proceeds being invested at a lower rate
of interest and loss of any premium. This typically occurs when homeowners
refinance their mortgages at lower rates.
2 Phoenix-Zweig Government Cash Fund
<PAGE>
PERFORMANCE TABLES
The bar chart and table below provide some indication of the risks of investing
in the Phoenix-Zweig Government Cash Fund. The bar chart shows changes in the
fund's Class M Shares performance from year to year over a 10-year period.1 The
table shows the fund's average annual returns for one year and over the life of
the fund. The fund's past performance is not necessarily an indication of how
the fund will perform in the future.
[graphic missing]
CALENDAR YEAR ANNUAL RETURN (%)
1989 8.2
1990 7.5
1991 5.6
1992 3.4
1993 2.9
1994 3.7
1995 5.3
1996 5.1
1997 5.2
1998 5.2
(1) During the 10-year period shown in the chart above, the highest return for a
quarter was 2.2% (quarter ending June 30, 1989) and the lowest return for a
quarter was 0.7% (quarter ending March 31, 1993). Year-to-date performance
(through March 31, 1999) was 1.12%.
<TABLE>
- ------------------------------------------------------------------------------------------------------------
<CAPTION>
Average Annual Total Returns One Year Five Years Ten Years Life of the
(for the periods ending 12/31/98)(1) Fund(2)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class M Shares(3) 5.2% 4.9% 5.2% 6.3%
- ------------------------------------------------------------------------------------------------------------
Class A Shares 4.9% -- -- 4.8%
- ------------------------------------------------------------------------------------------------------------
Class B Shares (0.8)% -- -- 1.2%
- ------------------------------------------------------------------------------------------------------------
Class C Shares 3.7% -- -- 4.8%
- ------------------------------------------------------------------------------------------------------------
Class I Shares 5.2% -- -- 5.2%
- ------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect a full
redemption in the fund's Class B Shares.
(2) Class M Shares since March 1, 1982, Class A and Class C Shares since May 1,
1994, Class B Shares since April 8, 1996, and Class I Shares since November 1,
1996.
(3) Zweig/Glaser assumed responsibility for managing the fund on September 1,
1989.
The fund's 7-day yield on December 31, 1998 was 4.65%.
Phoenix-Zweig Government Cash Fund 3
<PAGE>
FUND EXPENSES
- --------------------------------------------------------------------------------
This table illustrates all fees and expenses that you may pay if you buy and
hold shares of the fund.
<TABLE>
<CAPTION>
CLASS M CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------
SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR
INVESTMENT)
<S> <C> <C> <C> <C> <C>
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) None None None None None
Maximum Deferred Sales Charge (load) (as a None None 5%(b) 1.25%(c) None
percentage of the lesser of the value redeemed or
the amount invested)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None None None None
Redemption Fee None None None None None
Exchange Fee None None None None None
---------------------------------------------------------------
CLASS M CLASS A CLASS B CLASS C CLASS I
SHARES SHARES SHARES SHARES SHARES
------ ------ ------ ------ ------
ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE
DEDUCTED FROM FUND ASSETS)
Management Fees 0.50% 0.50% 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fees (d) 0.06% 0.30% 1.00% 0.30% None
Other Expenses 0.13% 0.50% 2.20% 0.58% 0.97%
----- ----- ----- ----- -----
TOTAL ANNUAL FUND OPERATING EXPENSES (A) 0.69% 1.30% 3.70% 1.38% 1.47%
===== ===== ===== ===== =====
</TABLE>
- -----------
(a) The adviser has agreed to reimburse through December 31, 1999 the
Phoenix-Zweig Government Cash Fund's expenses, excluding taxes, interest,
brokerage commissions, Rule 12b-1 fees and extraordinary expenses, to the extent
that such expenses exceed 0.35% for each Class of Shares. The Management Fees
with reimbursement were 0.22% for Class M Shares, and 0.00% for Class A, B, C,
and I Shares. Other Expenses with reimbursement were 0.13% for Class M Shares
and 0.35% for Class A, B, C, and I Shares. The Total Annual Fund Operating
Expenses after expense reimbursement were 0.41% for Class M Shares, 0.65% for
Class A and C Shares, 1.35% for Class B Shares, and 0.35% for Class I Shares.
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 3% during the
third and fourth years and to 0% after the sixth year.
(c) The deferred sales charge is imposed on Class C Shares redeemed during the
first year only.
(d) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
4 Phoenix-Zweig Government Cash Fund
<PAGE>
EXAMPLE
This example is intended to help you compare the cost of investing in the fund
with the cost of investing in other mutual funds.
The example assumes that you invest $10,000 in the fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
example also assumes that your investment has a 5% return each year and that the
fund's operating expenses remain the same. In the case of Class B Shares, it is
assumed that your shares are converted to Class A after seven years. Although
your actual costs may be higher or lower, based on these assumptions your costs
would be:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class M $69 $221 $384 $859
- -----------------------------------------------------------------------------------------------------------------
Class A $132 $412 $713 $1,568
- -----------------------------------------------------------------------------------------------------------------
Class B $872 $1,432 $2,111 $3,950
- -----------------------------------------------------------------------------------------------------------------
Class C $266 $437 $755 $1,657
- -----------------------------------------------------------------------------------------------------------------
Class I $150 $465 $803 $1,757
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your shares:
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class M $69 $221 $384 $859
- -----------------------------------------------------------------------------------------------------------------
Class A $132 $412 $713 $1,568
- -----------------------------------------------------------------------------------------------------------------
Class B $372 $1,132 $1,911 $3,950
- -----------------------------------------------------------------------------------------------------------------
Class C $141 $437 $755 $1,657
- -----------------------------------------------------------------------------------------------------------------
Class I $150 $465 $803 $1,757
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the tables above
since the expense levels used to calculate the figures shown do not include the
reimbursement of expenses over certain levels by the fund's investment adviser.
Refer to the section "Management of the Fund" for information about expense
reimbursement.
Phoenix-Zweig Government Cash Fund 5
<PAGE>
MANAGEMENT OF THE FUND
- --------------------------------------------------------------------------------
THE ADVISERS
Zweig/Glaser Advisers LLC ("Zweig/Glaser") is the investment adviser for the
fund and is located at 900 Third Avenue, New York, NY 10022. As of December 31,
1998, Zweig/Glaser was managing twelve funds with net assets of approximately
$2.6 billion and acting as administrator to two closed-end funds with more than
$1.4 billion in assets. Zweig/Glaser has been managing funds since September
1989.
Zweig/Glaser is a wholly-owned subsidiary of Phoenix Investment Partners, Ltd.
("PXP"), a Delaware corporation, located at 56 Prospect Street, Hartford, CT
06115. PXP is a publicly-traded independent registered investment advisory firm,
and has served investors for over 70 years. As of December 31, 1998, PXP had
over $53.5 billion in assets under management.
Subject to the direction of the Trust's Board of Trustees, Zweig/Glaser is
responsible for managing the fund's investment program, selecting specific
securities for the fund, and maintaining the general operations of the fund.
Zweig/Glaser manages the fund's assets to conform with the investment policies
as described in this prospectus.
The fund pays Zweig/Glaser a monthly investment management fee that is accrued
daily against the value of the fund's net assets at the annual rate of 0.50%.
Zweig Consulting LLC ("Zweig Consulting"), a New York limited liability company,
acts as the investment subadviser for all the funds of the Phoenix-Zweig Trust
and is located at 900 Third Avenue, New York, NY 10022. Dr. Martin E. Zweig
serves as President of Zweig Consulting and as President of the fund.
Zweig/Glaser pays Zweig Consulting a subadvisory fee of approximately $2,500,000
per annum allocated monthly for acting as subadviser to all of the funds of the
Phoenix-Zweig Trust.
During the fund's last fiscal year, the fund paid total management fees of
$433,374.
The adviser has voluntarily agreed to assume operating expenses of the
Government Cash Fund (excluding interest, taxes, brokerage commissions, 12b-1
fees, and extraordinary expenses) until December 31, 1999 to the extent that
such expenses exceed 0.35% of the average annual net assets of that fund.
PORTFOLIO MANAGEMENT
Beth Abraham has been the portfolio manager for the fund and an Assistant Vice
President of the Trust since 1995. Ms. Abraham's experience includes consulting
to the mutual fund industry and acting as a Senior Compliance Examiner in the
New York Regional Office of the Securities and Exchange Commission.
6 Phoenix-Zweig Government Cash Fund
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE ON FUND OPERATIONS
The Year 2000 issue is the result of computer programs being written using two
rather than four digits to define the applicable year. There is the possibility
that some or all of a company's computer programs that have date-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000.
The major systems that would impact the funds with respect to the year 2000 are
those of the transfer agent and custodian. The fund has been advised in writing
by both the transfer agent and the custodian that they are working to fix, and
expect to have fixed in time, all of the issues relating to the year 2000. While
management of the fund will continue to monitor the progress of the transfer
agent and the custodian in solving the year 2000 problem, no assurance can be
given that their systems will be fixed on time, or what the magnitude of the
problems would be if such systems are not fixed.
PRICING OF FUND SHARES
- --------------------------------------------------------------------------------
HOW IS THE SHARE PRICE DETERMINED?
The fund attempts to maintain a stable share price of $1.00. In determining the
Fund's net asset value, the fund utilizes the amortized cost method of valuing
its investments whereby investments are valued initially at cost and thereafter
assume a constant amortization to maturity of any discount or premium. In
general, the net asset value is calculated by:
[bullet] adding the values of all investments and other assets of the
fund,
[bullet] subtracting liabilities, and
[bullet] dividing the result by the total number of outstanding shares
of the fund.
Liabilities: Class specific expenses, distribution fees, service fees and other
liabilities that are deducted from the assets of each class. Expenses and
liabilities that are not class specific (such as management fees) are allocated
to each class in proportion to each class's net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any other expenses are
deducted from the proportionate interest of such class in the assets of the
fund. The resulting amount for each class is then divided by the number of
shares outstanding of that class to produce each class's net asset value per
share.
The net asset value per share of each class of the fund is determined as of
2:00 PM eastern time and as of the close of regular trading on the New York
Stock Exchange ("NYSE") (normally 4:00 PM eastern time) on each day the NYSE is
open for trading.
Phoenix-Zweig Government Cash Fund 7
<PAGE>
AT WHAT PRICE ARE SHARES PURCHASED?
All investments received by the fund's authorized agents prior to 2:00 PM
eastern time will be executed based on the net asset value as of 2:00 PM eastern
time. Those received after 2:00 PM eastern time, but prior to 4:00 PM eastern
time, will be executed based on the net asset value as of 4:00 PM eastern time.
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
The fund presently offers five classes of shares. Each class of shares has
different sales and distribution charges (see "Fund Expenses" previously in this
prospectus). The fund has adopted distribution and service plans allowed under
Rule 12b-1 of the Investment Company Act of 1940 that authorize the fund to pay
distribution and service fees for the sale of its shares and for services
provided to shareholders. Because distribution and service fees are paid out of
the fund's assets on an ongoing basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges.
THIS PROSPECTUS DESCRIBES ONLY CLASS M SHARES OF PHOENIX-ZWEIG GOVERNMENT CASH
FUND. Other classes of shares are described in a separate prospectus.
Class M Shares of the fund are sold at net asset value without a sales charge.
Minimum INITIAL investments:
[bullet] $10,000.
[bullet] $1,000 for service organizations whose clients have made
aggregate minimum purchases of $1,000,000.
Minimum ADDITIONAL investments:
[bullet] There is no minimum for additional investments.
Purchase orders received by the transfer agent by 2:00 PM eastern time become
effective and earn dividends that day, provided that payment is received in
Federal funds by 4:00 PM eastern time. Purchase orders received by the transfer
agent after 2:00 PM eastern time will begin to accrue dividends on the next
business day.
THESE MINIMUMS DO NOT APPLY TO CLASS A, CLASS B, CLASS C, OR CLASS I SHARES.
8 Phoenix-Zweig Government Cash Fund
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
TO OPEN AN ACCOUNT
(CLASS M SHARES ONLY)
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- -----------------------------------------------------------------------------------------------------------------
Through Sweep Programs Customers of participating securities dealers and banks through which
purchases and sales are made with the dealers and banks as agents. Call us
at (800)243-1574.
- -----------------------------------------------------------------------------------------------------------------
Through the mail Complete a New Account Application and send it with a check payable to the
fund. Mail them to: State Street Bank, ATTN: Phoenix-Zweig Government Cash
Fund, P.O. Box 8301, Boston, MA 02266-8301.
- -----------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800)243-1574.
- -----------------------------------------------------------------------------------------------------------------
By Investo-Matic Complete the appropriate section on the application and send it with your
initial investment payable to the fund. Mail them to: State Street Bank,
ATTN: Phoenix-Zweig Government Cash Fund, P.O. Box 8301, Boston, MA
02266-8301.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
HOW TO SELL SHARES
- --------------------------------------------------------------------------------
You have the right to have the fund buy back shares at the net asset value next
determined after receipt of a redemption order by the fund's Transfer Agent or
an authorized agent. Subject to certain restrictions, shares may be redeemed by
telephone or in writing. In addition, shares may be sold through securities
dealers, brokers or agents who may charge customary commissions or fees for
their services. The fund does not charge any redemption fees on Class M Shares.
Payment for shares redeemed is made within seven days; however, redemption
proceeds will not be disbursed until each check used for purchases of shares has
been cleared for payment by your bank, which may take up to 15 days after
receipt of the check.
Phoenix-Zweig Government Cash Fund 9
<PAGE>
<TABLE>
- -----------------------------------------------------------------------------------------------------------------
<CAPTION>
TO SELL SHARES
(CLASS M SHARES ONLY)
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- -----------------------------------------------------------------------------------------------------------------
Through Sweep Programs Call us at (800)243-1574.
- -----------------------------------------------------------------------------------------------------------------
Through the mail Send a letter of instruction, with signature guarantees, and any share
certificates (if you hold certificate shares) to: State Street Bank, ATTN:
Phoenix-Zweig Government Cash Fund, P.O. Box 8301, Boston, MA 02266-8301.
Be sure to include the registered owner's name, fund and account number,
number of shares or dollar value you wish to sell.
- -----------------------------------------------------------------------------------------------------------------
By check Call us at (800)243-1574.
- -----------------------------------------------------------------------------------------------------------------
By telephone For sales up to $50,000 requests can be made by calling (800)243-1574.
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
THINGS YOU SHOULD KNOW WHEN SELLING SHARES
- --------------------------------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax purposes) if you
redeem shares of the fund. The fund reserves the right to pay large redemptions
"in-kind" (in securities owned by the fund rather than in cash). Large
redemptions are those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations, fiduciaries, or
retirement plans, or if redemption is requested by anyone but the shareholder(s)
of record. Transfers between broker-dealer "street" accounts are governed by the
accepting broker-dealer. Questions regarding this type of transfer should be
directed to your financial advisor. Redemption requests will not be honored
until all required documents in proper form have been received. To avoid delay
in redemption or transfer, shareholders having questions about specific
requirements should contact the fund's Transfer Agent at (800)243-1574.
REDEMPTIONS BY MAIL
Send a clear letter of instructions with a signature guarantee and any
applicable certificates.
If you are selling shares held in a corporate or fiduciary account, please
contact the fund's Transfer Agent at (800)243-1574.
The signature on your request must be guaranteed by an eligible guarantor
institution as defined by the fund's Transfer Agent in accordance with its
signature guarantee procedures. Currently, such procedures generally permit
guarantees by banks, broker dealers, credit unions, national securities
exchanges, registered securities associations, clearing agencies and savings
associations.
10 Phoenix-Zweig Government Cash Fund
<PAGE>
REDEMPTIONS BY CHECK
You may establish a Check Service with State Street Bank and Trust Company.
Checks must be in amounts of $500 or more. To obtain redemption checks, complete
an application form which can be obtained by calling us at (800)243-1574. When a
check is presented for payment, State Street will redeem full and fractional
shares in your account to cover the amount of the check. State Street will not
honor a check for less than $500 or for an amount exceeding the value of your
account at the time the check is presented. We reserve the right to impose a
service charge for check redemptions, stop payment orders and returned checks.
SELLING SHARES BY TELEPHONE
The Transfer Agent will use reasonable procedures to confirm that telephone
instructions are genuine. Address and bank account information are verified,
redemption instructions are taped, and all redemptions are confirmed in writing.
The maximum amount that may be redeemed by telephone is $50,000. The Transfer
Agent will redeem shares and mail proceeds to shareholders on the same day for
telephone redemptions received prior to 2:00 PM eastern time. Those received
after 2:00 PM eastern time will be processed the next business day.
The individual investor bears the risk from instructions given by an
unauthorized third-party that the Transfer Agent reasonably believed to be
genuine.
The Transfer Agent may modify or terminate the telephone redemption privilege at
any time with 60 days notice to shareholders.
During times of drastic economic or market changes, telephone redemptions may be
difficult to make or temporarily suspended.
AUTOMATICALLY THROUGH SWEEP PROGRAMS
Customers of participating securities dealers and banks may participate in sweep
programs by which an account with the dealer or bank is coordinated with an
account in the Fund. Purchases and sales are made by the participating
securities dealer or bank as agent of their customer. For further information
about the sweep program, see the Statement of Additional Information or call us
at (800)243-1574.
ACCOUNT POLICIES
- --------------------------------------------------------------------------------
REDEMPTION OF SMALL ACCOUNTS
Due to the high cost of maintaining small accounts, if your account balance is
less than $10,000, you may receive a notice requesting you to bring the balance
up to $10,000 within 60 days. If you do not, the shares in the account will be
sold at net asset value, and a check will be mailed to the address of record.
Phoenix-Zweig Government Cash Fund 11
<PAGE>
INVESTOR SERVICES
- --------------------------------------------------------------------------------
INVESTO-MATIC is a systematic investment plan that allows you to have a
specified amount automatically deducted from your checking or savings account
and then deposited into your mutual fund account. Just complete the
Investo-Matic Section on the application and include a voided check.
SYSTEMATIC WITHDRAWAL PROGRAM allows you to periodically redeem a portion of
your account on a predetermined monthly, quarterly, semiannual, or annual basis.
Sufficient shares will be redeemed on the 15th of the month at the closing net
asset value so that the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or 25th with proceeds
directed through Automated Clearing House (ACH) to your bank. The minimum
withdrawal is $25, and minimum account balance requirements continue.
Shareholders in the program must own fund shares worth at least $10,000.
DISTRIBUTIONS AND TAXES
- --------------------------------------------------------------------------------
The fund declares dividends at 2:00 PM eastern time on each day the NYSE is open
for trading of all its net investment income and short-term capital gains and
losses. Distributions are reinvested at net asset value on the last business day
of each month unless a shareholder elects to receive them in cash. Distributions
of income and short-term capital gains are taxable to shareholders as ordinary
income, whether taken in cash or reinvested. (The fund does not expect to
realize any long-term capital gains.) All distributions, cash or additional
shares, are subject to federal income tax and may be subject to state, local and
other taxes.
12 Phoenix-Zweig Government Cash Fund
<PAGE>
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
These tables are intended to help you understand the fund's financial
performance over a five-year period. Certain information reflects financial
results for a single fund share. The total returns in the table represent the
rate that an investor would have earned or lost on an investment in the fund
(assuming reinvestment of all dividends and distributions). This information has
been audited by PricewaterhouseCoopers LLP, independent accountants. Their
report, together with the fund's financial statements, are included in the
fund's most recent Annual Report, which is available upon request.
<TABLE>
<CAPTION>
CLASS M
------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.04
------- ------- ------- ------- -------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.04)
------- ------- ------- ------- -------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
======= ======= ======= ======= =======
Total return 5.16% 5.22% 5.09% 5.32% 3.67%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $75,264 $56,599 $45,271 $48,515 $78,149
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(1) 0.41% 0.41% 0.40% 0.64% 0.70%
Net investment income 5.01% 5.09% 4.98% 5.20% 3.58%
</TABLE>
- -----------
(1) During 1998, 1997, 1996, 1995, and 1994, the manager voluntarily reimbursed
the fund's Class M Shares $0.003, $0.003, $0.003, $0.001, and $0.002 per share
(0.28%, 0.32%, $0.32%, 0.10%, and 0.15% ratio of expenses to average net
assets), respectively.
Phoenix-Zweig Government Cash Fund 13
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS A
-------------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED DECEMBER 31, 5/1/94 TO
1998 1997 1996 1995 12/31/94
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.03)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
Total return 4.91% 4.97% 4.83% 5.08% 2.55%(1)
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $8,290 $2,472 $3,360 $3,661 $4,303
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(2) 0.65% 0.65% 0.65% 0.87% 0.62%(1)
Net investment income 4.75% 4.85% 4.73% 4.97% 2.52%(1)
</TABLE>
- -----------
(1) Not annualized.
(2) Includes reimbursement of operating expenses by investment adviser of
$0.007, $0.11, $0.007, and $0.005 (0.65%, 1.09%, 0.66% and 0.47% ratio of
expenses to average net assets) per share for the periods ending December 31,
1998, 1997, 1996, and 1995, respectively.
14 Phoenix-Zweig Government Cash Fund
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS B CLASS I
----------------------------------- ----------------------------------
FROM FROM
YEAR ENDED INCEPTION YEAR ENDED INCEPTION
DECEMBER 31, 4/8/96 TO DECEMBER 31, 11/1/96 TO
1998 1997 12/31/96 1998 1997 12/31/96
---- ---- -------- ---- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.04 0.04 0.03 0.05 0.05 0.01
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.04) (0.04) (0.03) (0.05) (0.05) (0.01)
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ====== ======
Total return(1) 4.18% 4.24% 3.03%(3) 5.23% 5.28% 0.80%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $1,738 $336 $33 $2,884 $100 $1,401
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(4) 1.35% 1.35% 1.35%(2) 0.35% 0.35% 0.35%(2)
Net investment income 3.97% 4.15% 4.03%(2) 5.15% 5.15% 5.03%(2)
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized.
(3) Not annualized.
(4) Includes reimbursement of operating expenses by adviser of $0.024, $0.58,
and $0.007 per share (2.35%, 6.14% and 0.60% ratio of expenses to average net
assets) for Class B Shares, and $0.011, $0.005, and $0.004 per share (1.12%,
0.47% and 0.38% ratio of expenses to average net assets) for Class I Shares for
the periods ending December 31, 1998, 1997, and 1996, respectively.
Phoenix-Zweig Government Cash Fund 15
<PAGE>
FINANCIAL HIGHLIGHTS (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CLASS C
-------------------------------------------------------------------
FROM
INCEPTION
YEAR ENDED DECEMBER 31, 5/1/94 TO
1998 1997 1996 1995 12/31/94
---- ---- ---- ---- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $1.00 $1.00 $1.00 $1.00 $1.00
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS
Net investment income 0.05 0.05 0.05 0.05 0.03
------ ------ ------ ------ ------
LESS DISTRIBUTIONS
Dividends from net investment income (0.05) (0.05) (0.05) (0.05) (0.03)
------ ------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD $1.00 $1.00 $1.00 $1.00 $1.00
====== ====== ====== ====== ======
Total return(1) 4.91% 4.97% 4.83% 5.08% 2.55%(2)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $6,624 $2,661 $4,535 $4,458 $5,040
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses(3) 0.65% 0.65% 0.65% 0.87% 0.62%(2)
Net investment income 4.73% 4.85% 4.73% 4.97% 2.52%(2)
</TABLE>
- ----------
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Not annualized.
(3) Includes reimbursement of operating expenses by investment adviser of
$0.007, $0.01, $0.006, and $0.003 (0.73%, 1.00%, 0.60% and 0.28% ratio of
expenses to average net assets) per share for the periods ending December 31,
1998, 1997, 1996, and 1995, respectively.
16 Phoenix-Zweig Government Cash Fund
<PAGE>
ADDITIONAL INFORMATION
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
The fund has filed a Statement of Additional Information, dated May 1, 1999 with
the Securities and Exchange Commission. The Statement contains more detailed
information about the fund. It is incorporated into this prospectus by reference
and is legally part of the prospectus. You may obtain a free copy of the
Statement:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200, or
[arrow] by calling (800) 243-1574.
You may also obtain information about the fund from the Securities and Exchange
Commission:
[arrow] through its internet site (http://www.sec.gov),
[arrow] by visiting its Public Reference Room in Washington, DC, or
[arrow] by writing to its Public Reference Section, Washington, DC 20549-6009 (a
fee may be charged).
Information about the operation of the Public Reference Room may be obtained by
calling (800) SEC-0330.
SHAREHOLDER REPORTS
The Trust semiannually mails to its shareholders detailed reports containing
information about the fund's investments. The Trust's Annual Report contains a
detailed discussion of the market conditions and investment strategies that
significantly affected the Trust's performance from January 1 through December
31. You may request a free copy of the Trust's Annual and Semiannual Reports:
[arrow] by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200, or
[arrow] by calling (800) 243-1574.
CUSTOMER SERVICE AND MARKETING: (800) 243-1574
TELEPHONE ORDERS: (800) 243-1574
SEC File Nos. 2-93538 & 811-04116 Printed on recycled paper using soybean ink
Phoenix-Zweig Government Cash Fund 17
<PAGE>
PHOENIX EQUITY PLANNING CORPORATION
PO Box 2200
Enfield CT 06083-2200
[LOGO] PHOENIX
INVESTMENT PARTNERS
Phoenix Investment Partners PXP 1196 (5/99)
is pleased to welcome you
as a Phoenix-Zweig
Shareholder.
<PAGE>
PHOENIX-ZWEIG TRUST
PHOENIX-ZWEIG APPRECIATION FUND
PHOENIX-ZWEIG FOREIGN EQUITY FUND
PHOENIX-ZWEIG GOVERNMENT CASH FUND
PHOENIX-ZWEIG GOVERNMENT FUND
PHOENIX-ZWEIG GROWTH & INCOME FUND
PHOENIX-ZWEIG MANAGED ASSETS
PHOENIX-ZWEIG STRATEGY FUND
900 Third Avenue, 31st Floor
New York, New York 10022
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Zweig Trust (the "Trust"), dated May 1, 1999, and should be read in
conjunction with it. The Trust's Prospectus may be obtained by calling (800)
243-1574 or by writing to Phoenix Equity Planning Corporation at 100 Bright
Meadow Boulevard, P.O. Box 2200, Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
THE TRUST ............................................................... 1
INVESTMENT OBJECTIVES AND POLICIES ...................................... 1
INVESTMENT RESTRICTIONS ................................................. 7
PERFORMANCE ............................................................. 9
PERFORMANCE COMPARISONS ................................................. 11
PORTFOLIO TURNOVER ...................................................... 11
PORTFOLIO TRANSACTIONS AND BROKERAGE..................................... 12
INVESTMENT ADVISERS ..................................................... 13
DETERMINATION OF NET ASSET VALUE ........................................ 14
HOW TO BUY SHARES ....................................................... 16
ALTERNATIVE PURCHASE ARRANGEMENTS ....................................... 16
INVESTOR ACCOUNT SERVICES ............................................... 19
HOW TO REDEEM SHARES .................................................... 20
TAX SHELTERED RETIREMENT PLANS .......................................... 22
DIVIDENDS, DISTRIBUTIONS AND TAXES ...................................... 22
THE DISTRIBUTOR ......................................................... 23
DISTRIBUTION PLANS....................................................... 25
MANAGEMENT OF THE TRUST.................................................. 26
ADDITIONAL INFORMATION .................................................. 31
APPENDIX................................................................. 33
Customer Service and Marketing: (800) 243-1574
Telephone Orders: (800) 243-1574
PXP1202 (5/99)
<PAGE>
THE TRUST
Phoenix-Zweig Trust (the "Trust") is an open-end management investment
company which was organized in 1984 as a Massachusetts business trust, then
reorganized as a Delaware business trust in 1996.
The Trust's Prospectus describes the investment objectives of the
Phoenix-Zweig Appreciation Fund (the "Appreciation Fund"), the Phoenix-Zweig
Foreign Equity Fund (the "Foreign Equity Fund"), the Phoenix-Zweig Government
Cash Fund (the "Government Cash Fund"), the Phoenix-Zweig Government Fund (the
"Government Fund"), the Phoenix-Zweig Growth & Income Fund (the "Growth & Income
Fund"), Phoenix-Zweig Managed Assets ("Managed Assets"), and the Phoenix-Zweig
Strategy Fund (the "Strategy Fund") (each, a "Fund" and, together, the "Funds"),
the seven Funds currently offered by the Trust, and summarizes the investment
policies and investment techniques each Fund will employ in seeking to achieve
its investment objective. The following discussion supplements the description
of the Funds' investment policies and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of each Fund, except Managed Assets, is deemed to be
a fundamental policy and may not be changed without the approval of the
shareholders of that Fund. Investment restrictions described in this Statement
of Additional Information are fundamental policies of the Trust and may not be
changed as to any Fund without the approval of such Fund's shareholders.
REPURCHASE AGREEMENTS (ALL FUNDS)
Repurchase agreements involve purchases of securities by a Fund. In such a
transaction, at the time the Fund purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller who also
simultaneously agrees to buy back the security at a fixed price and time. This
assumes a predetermined yield for the Fund during its holding period, since the
resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an opportunity for the Fund to
invest temporarily available cash. Repurchase agreements may be considered loans
to the seller collateralized by the underlying securities. The risk to the Fund
is limited to the ability of the seller to pay the agreed-upon sum on the
repurchase date; in the event of default, the repurchase agreement provides that
the Fund is entitled to sell the underlying collateral. If the value of the
collateral declines after the agreement is entered into, however, and if the
seller defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Fund could incur a loss of
both principal and interest. The manager monitors the value of the collateral at
the time the transaction is entered into and at all times subsequent during the
term of the repurchase agreement in an effort to determine that the value of the
collateral always equals or exceeds the agreed-upon repurchase price to be paid
to the Fund. If the seller were to be subject to a federal bankruptcy
proceeding, the ability of the Fund to liquidate the collateral could be delayed
or impaired because of certain provisions of the bankruptcy laws. Except for
temporary defensive purposes, no Fund other than the Government Cash Fund
intends to invest more than 20% of its assets in repurchase agreements.
OPTIONS (ALL FUNDS EXCEPT THE GOVERNMENT CASH FUND)
When a Fund writes an option, an amount equal to the premium received by the
Fund is recorded as an asset and as an offsetting liability. The amount of the
liability is "marked-to-market" daily to reflect the current market value of the
option, which is the last sale price on the principal exchange on which such
option is traded or, in the absence of a sale, the mean between the latest bid
and offering prices. If an option written by the Fund expires, or a Fund enters
into a closing purchase transaction, the Fund will realize a gain (or, in the
latter case, a loss, if the cost of a closing transaction exceeds the premium
received) and the liability related to such option will be extinguished.
The premium paid by a Fund for the purchase of a put option (its cost) is
recorded initially as an investment, the value of which is subsequently adjusted
to the current market value of the option. If the current market value of a put
option exceeds its premium, the excess represents unrealized appreciation;
conversely, if the premium exceeds the current market value, the excess
represents unrealized depreciation. The current market value of an option
purchased by a Fund equals the option's last sale price on the principal
exchange on which it is traded or, in the absence of a sale, the mean between
the latest bid and offering prices.
An option position may be closed out only on an exchange which provides a
secondary market for an option of the same series. Although a Fund generally
will purchase or write only those options for which there appears to be an
active secondary market, there is no assurance that a liquid secondary market on
an exchange will exist for any particular option, or at any particular time, and
for some options no secondary market on an exchange may exist. In such event, it
might not be possible to effect closing transactions in particular options, with
the result that the Fund would have to exercise its options in order to realize
any profit and would incur transaction costs on the sale of underlying
securities pursuant to the exercise of put options. If a Fund, as a covered call
option writer, is unable to effect a closing purchase transaction in a secondary
market, it will not be able to sell the underlying security until the option
expires or it delivers the underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange include
the following: (a) there may be insufficient interest in trading certain
options; (b) restrictions may be imposed by an exchange on opening transactions
or closing transactions or both;
1
<PAGE>
(c) trading halts, suspensions or other restrictions may be imposed with
respect to particular classes or series of options or underlying securities; (d)
unusual or unforeseen circumstances may interrupt normal operations on an
exchange; (e) the facilities of an exchange or the Options Clearing Corporation
(the "OCC") may not at all times be adequate to handle current trading volume;
or (f) one or more exchanges might, for economic or other reasons, decide or be
compelled at some future date to discontinue the trading of options (or a
particular class or series of options), in which event the secondary market on
that exchange (or in that class or series of options) would cease to exist,
although outstanding options on that exchange that had been issued by the OCC as
a result of trades on that exchange would continue to be exercisable in
accordance with their terms.
In addition, there is no assurance that higher-than-anticipated trading
activity or other unforeseen events might not, at times, render certain of the
facilities of the OCC inadequate, and thereby result in the institution by an
exchange of special procedures which may interfere with the timely execution of
customers' orders.
The amount of the premiums which a Fund may pay or receive may be adversely
affected as new or existing institutions, including other investment companies,
engage in or increase their option purchasing and writing activities.
In the event of a shortage of the underlying securities deliverable on
exercise of a listed option, the OCC has the authority to permit other,
generally comparable securities to be delivered in fulfillment of option
exercise obligations. If the OCC exercises its discretionary authority to allow
such other securities to be delivered, it may also adjust the exercise prices of
the affected options by setting different prices at which otherwise ineligible
securities may be delivered. As an alternative to permitting such substitute
deliveries, the OCC may impose special exercise settlement procedures.
FUTURES CONTRACTS (ALL FUNDS EXCEPT THE GOVERNMENT CASH FUND)
Upon entering into a futures contract, a Fund will initially be required to
deposit with the custodian an amount of initial margin using cash or U.S.
Treasury bills equal to approximately 1 1/2% of the contract amount. The nature
of initial margin in futures transactions is different from that of margin in
securities transactions in that futures contract's initial margin does not
involve the borrowing of funds by customers to finance the transactions. Rather,
the initial margin is in the nature of a performance bond or good faith deposit
on the contract which is returned to the Fund upon termination of the futures
contract, assuming all contractual obligations have been satisfied. In addition
to initial margin, the Fund is required to deposit cash, liquid debt
obligations, liquid equity securities or cash equivalents in an amount equal to
the notional value of all long futures contracts, less the initial margin
amount, in a segregated account with the custodian to ensure that the use of
such futures contracts is not leveraged. If the value of the securities placed
in the segregated account declines, additional securities, cash or cash
equivalents must be placed in the segregated account so that the value of the
account will at least equal the amount of the Fund's commitments with respect to
such futures contracts.
Subsequent payments, called maintenance margin, to and from the broker, will
be made on a daily basis as the price of the underlying security fluctuates,
making the long and short positions in the futures contract more or less
valuable, a process known as "marking to market." For example, when the Fund has
purchased a futures contract and the price of the underlying security has risen,
that position will have increased in value and the Fund will receive from the
broker a maintenance margin payment equal to that increase in value. Conversely,
when the Fund has purchased a futures contract and the price of the underlying
security has declined, the position would be less valuable and the Fund would be
required to make a maintenance margin payment to the broker. At any time prior
to expiration of the futures contract, the Fund may elect to close the position
by taking an opposite position which will operate to terminate the Fund's
position in the futures contract. A final determination of maintenance margin is
then made, additional cash is required to be paid by or released to the Fund,
and the Fund realizes a loss or a gain.
While futures contracts based on securities do provide for the delivery and
acceptance of securities, such deliveries and acceptances are very seldom made.
Generally, the futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction for a futures contract sale is effected
by the Fund entering into a futures contract purchase for the same aggregate
amount of the specific type of financial instrument with the same delivery date.
If the price in the sale exceeds the price in the offsetting purchase, the Fund
immediately is paid the difference and thus realizes a gain. If the offsetting
purchase price exceeds the sale price, the Fund pays the difference and realizes
a loss. Similarly, the closing out of a futures contract purchase is effected by
the Fund entering into a futures contract sale. If the offsetting sale price
exceeds the purchase price, the Fund realizes a gain, and if the purchase price
exceeds the offsetting price, the Fund realizes a loss.
There are several risks in connection with the use of futures contracts as a
hedging device. One risk arises due to the imperfect correlation between
movements in the price of the futures contracts and movements in the price of
the subject of the hedge. The price of the futures contract may move more than
or less than the price of the securities or currency being hedged.
If the price of the futures contracts moves less than the price of the
securities or currency hedged, the hedge will not be fully effective, but, if
the price of the securities or currency being hedged has moved in an unfavorable
direction, the Fund would be in a better position than if it had not hedged at
all. If the price of the securities or currency being hedged has moved in a
favorable direction, this advantage will be partially offset by the movement in
the price of the futures contract. If the price of the futures contract moves
more than the price of the security or currency, the Fund will experience either
a loss or gain on the futures which will not be completely offset by movements
in the prices of the securities or currency which is the subject of the hedge.
2
<PAGE>
To compensate for the imperfect correlation of such movements in price, the
Fund may buy or sell futures contracts in a greater dollar amount than the
dollar amount of the securities or currency being hedged if the historical
volatility of the prices of such securities or currency has been greater than
the historical volatility of the futures contracts. Conversely, the Fund may buy
or sell fewer futures contracts if the historical volatility of the price of the
securities or currency being hedged is less than the historical volatility of
the futures contracts.
It is also possible that, where a Fund has sold futures to hedge its
portfolio against a decline in the market, the market may advance and the value
of securities held in the Fund's portfolio may decline. If this occurred, the
Fund would lose money on the futures contracts and also experience a decline in
value in its portfolio securities. However, while this could occur for a very
brief period or to a very small degree, over time, the value of a diversified
portfolio will tend to move in the same direction as the futures contracts.
Where futures are purchased to hedge against a possible increase in the cost
of securities before a Fund is able to invest its cash (or cash equivalents) in
an orderly fashion, it is possible that the market may decline instead; if the
Fund then concludes not to invest in the relevant securities at that time
because of concern as to possible further market decline or for other reasons,
the Fund will realize a loss on the futures contract that is not offset by a
reduction in the price of securities purchased.
Another risk arises because the market prices of futures contracts may be
affected by certain factors. First, all participants in the futures market are
subject to initial margin and maintenance margin requirements. Rather than
meeting maintenance margin requirements, investors may close futures contracts
through offsetting transactions which could distort the normal relationship
between the debt securities and futures markets. Second, from the point of view
of speculators, the margin requirements in the futures market are less onerous
than margin requirements in the securities market. Therefore, increased
participation by speculators in the futures market may also cause temporary
price distortions.
Due to the possibility of price distortion in the futures market and because
of the imperfect correlation between movements in securities and movements in
the prices of futures contracts, a correct forecast of interest rate trends by
the Manager may still not result in a successful hedging transaction over a very
short period of time.
The hours of trading for futures contracts may not conform to the hours
during which the underlying securities are traded. To the extent that the
futures contracts markets close after the markets for the underlying securities,
significant price movements can take place in the futures contracts markets that
cannot be reflected in the markets of the underlying securities.
Positions in futures contracts may be closed out only on an exchange or board
of trade which provides a secondary market for such futures. Although the Trust
intends to purchase or sell futures only on exchanges or boards of trade where
there appears to be an active secondary market, there is no assurance that a
liquid secondary market on an exchange or board of trade will exist for any
particular contract or at any particular time. In such event, it may not be
possible to close a futures position and, in the event of adverse price
movements, the Fund would continue to be required to make daily cash payments of
maintenance margin. However, in the event futures contracts have been used to
hedge portfolio securities, such securities will not be sold until the futures
contracts can be terminated. In such circumstances, an increase in the price of
the securities, if any, may partially or completely offset losses on the futures
contract. However, as described above, there is no guarantee that the price of
the securities will, in fact, correlate with the price movements in the futures
contract and thus provide an offset to losses on a futures contract.
Successful use of futures contracts by the Trust is also subject to the
Manager's ability to correctly predict movements in the direction of interest
rates and other factors affecting markets for securities. For example, if a Fund
has hedged against the possibility of an increase in interest rates which would
adversely affect securities held in its portfolio and prices of such securities
increase instead, the Fund will lose part or all of the benefit of the increased
value of its securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such situations, if the Fund
has insufficient cash, it may have to sell securities to meet maintenance margin
requirements. Such sales of securities may be, but will not necessarily be, at
increased prices which reflect the rising market. The Fund may have to sell
securities at a time when it may be disadvantageous to do so.
FOREIGN SECURITIES
A Fund may invest in securities of foreign issuers, including equities and
non-U.S. dollar-denominated money market securities, and sponsored and
unsponsored ADRs, ADSs, EDRs, EDSs, GDRs, and GDSs. Shareholders should consider
carefully the substantial risks involved in investing in securities issued by
companies and governments of foreign nations which are in addition to the usual
risks inherent in domestic investments.
Although the Trust intends to invest only in nations that the Manager
considers to have relatively stable and friendly governments, there is the
possibility of expropriation, nationalization, repatriation or confiscatory
taxation, taxation of income earned in a foreign country and other foreign
taxes, foreign exchange controls (which may include suspension of the ability to
transfer currency from a given country), default in foreign government
securities, political or social instability or diplomatic developments which
could affect investments in securities of issuers in those nations. In addition,
in many countries there is less publicly available information about issuers
than is available for U.S. companies. For example, ownership of unsponsored ADRs
may not entitle the owner to financial or other reports from the issuer to which
it might otherwise be entitled as the owner of a
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sponsored ADR. Moreover, foreign companies are not generally subject to uniform
accounting, auditing and financial reporting standards, and auditing practices
and requirements may not be comparable to those applicable to U.S. companies. In
many foreign countries, there is less government supervision and regulation of
business and industry practices, stock exchanges, brokers and listed companies
than in the United States. Foreign securities transactions may also be subject
to higher brokerage costs than domestic securities transactions. The foreign
securities markets of many of the countries in which the Fund may invest may
also be smaller, less liquid and subject to greater price volatility than those
in the United States. In addition, the Fund may encounter difficulties or be
unable to pursue legal remedies and obtain judgment in foreign courts.
Foreign stock markets have different clearance and settlement procedures and
in certain markets there have been times when settlements have been unable to
keep pace with the volume of securities transactions, making it difficult to
conduct such transactions. Delays in settlement could result in temporary
periods when assets of the Fund are uninvested and no return is earned thereon.
The inability of the Fund to make intended security purchases due to settlement
problems could cause the Fund to miss attractive investment opportunities.
Further, the inability to dispose of portfolio securities due to settlement
problems could result either in losses because of subsequent declines in the
value of the portfolio security or, if the Fund has entered into a contract to
sell the security, in possible liability to the purchaser. Fixed commissions on
some foreign securities exchanges are generally higher than negotiated
commissions on U.S. exchanges, although the Manager will endeavor to achieve the
most favorable net results on the Fund's portfolio transactions. It may be more
difficult for the Fund's agents to keep currently informed about corporate
actions such as stock dividends or other matters that may affect the prices of
portfolio securities. Communications between the United States and foreign
countries may be less reliable than within the United States, thus increasing
the risk of delayed settlements of portfolio transactions or loss of
certificates for portfolio securities. Moreover, individual foreign economies
may differ favorably or unfavorably from the United States economy in such
respects as growth of gross domestic product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position. The
Manager seeks to mitigate the risks to the Fund associated with the foregoing
considerations through diversification and continuous professional management.
Brokerage commissions, custodial services, and other costs relating to
investment in foreign countries are generally more expensive than in the United
States. Clearance and settlement procedures on foreign markets are different and
problems with settling security transactions could result in temporary periods
when assets of the fund are uninvested and no return is earned on such amounts.
Depository receipts are typically issued by foreign banks or trust companies,
although they may also be issued by U.S. banks or trust companies, and evidence
ownership of underlying securities issued by either a foreign or a U.S.
corporation. Depository receipts may be issued pursuant to a sponsored program,
where an issuer has made arrangements to have its securities traded in the form
of depository receipts, or in unsponsored programs, where the issuer may not be
directly involved in the creation of the program. Depository receipts may not
necessarily be denominated in the same currency as the underlying securities
into which they may be converted. In addition, the issuers of the securities
underlying unsponsored depository receipts are not obligated to disclose
material information in the U.S. and, therefore, there may be less information
available regarding such issuers and there may not be a correlation between such
information and the market value of the depository receipts. Depository receipts
also involve the risks of other investments in foreign stocks, as discussed
above.
INVESTMENT COMPANIES (ALL FUNDS EXCEPT THE GOVERNMENT CASH FUND)
Investments by the Trust in investment companies will be effected by
independent investment managers, and the Trust will have no control over the
investment management, custodial arrangements or operations of any investments
made by such investment managers. Some of the funds in which a Fund may invest
could also incur more risks than would be the case for direct investments. For
example, they may engage in investment practices that entail greater risks or
invest in companies whose securities and other investments are more volatile. In
addition, the funds in which a Fund of the Trust invests may or may not have the
same fundamental investment limitations as those of the Fund itself. While a
potential benefit of investing in closed-end investment companies would be to
realize value from a decrease in the discount from net asset value at which some
closed-end funds trade, there is also the potential that such discount could
grow, rather than decrease.
By investing in investment companies indirectly through the Trust, a
shareholder of the investing Fund will bear not only a proportionate share of
the expenses of that Fund (including operating costs and investment advisory and
administrative fees) but also, indirectly, similar expenses of the investment
companies in which the Fund invests. A shareholder may also indirectly bear
expenses paid by investment companies in which the Fund invests related to the
distribution of such investment companies' shares. Some of the open-end
investment companies in which the Fund may invest may limit the ability of
shareholders (including a Fund of the Trust) to redeem their shares.
Closed-end investment companies frequently trade at a discount from net asset
value. Only if the discount is sufficiently large will the additional income
earned by a portfolio purchased at a discount offset the additional layer of
expense. If shares of another investment company are purchased at a discount
which subsequently declines, performance will be better than it would have been
had the underlying instruments been purchased directly. Our funds will invest in
another investment company only if the portfolio manager believes that the
fund's investment objective will be furthered by doing so. No more than 10% of a
fund's
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assets will be invested in other investment companies. No more than 5% will be
invested in any one. The Government Cash Fund will not normally invest in any
other investment companies.
The Government Cash Fund may not invest in securities of investment
companies, except as they may be acquired as part of a merger, consolidation or
acquisition of assets. The other Funds may not invest in investment companies
except by purchase in the open market involving only customary brokers'
commissions, in connection with a merger, consolidation, reorganization, or
acquisition of assets, or as otherwise permitted by applicable law. Current law
prohibits any Fund from (i) owning more than 3% of the voting securities of any
one investment company; (ii) investing more than 5% of its assets in the
securities of any one investment company; or (iii) investing more than 10% of
its assets in securities issued by investment companies. Any Fund is also
prohibited from owning more than 10% of the voting securities of a registered
closed-end investment company. If the investment securities of another
investment company were the only investment securities held by a Fund, these
restrictions would not apply to that Fund. All Funds may also invest in other
investment companies to facilitate the implementation of a master-feeder
structure.
STRATEGY FUND, APPRECIATION FUND AND GROWTH & INCOME FUND
The portfolio manager of the Strategy, Appreciation and Growth & Income
Funds uses proprietary computer-driven models developed by Dr. Zweig and his
associates to choose stocks for those funds. The models evaluate and rank 3,000
stocks based primarily on earnings momentum, relative valuation, changes in
analysts' earnings estimates, earnings growth, price momentum, cash flow trend,
payout ratio trend and other market measurements. The stock selection models may
evolve or be replaced by other techniques intended to select stocks with the
potential for growth. We will notify shareholders of any material change to the
stock selection models.
MANAGED ASSETS
Each foreign country in which Managed Assets intends to invest has a currency
model, as well as stock and bond models similar to those used for determining
the domestic asset allocation strategy. The Subadviser will normally allocate
the Fund's assets within the following parameters: 0-60% in stocks, 0-60% in
bonds and 0-100% in short-term debt instruments. A neutral mix will consist of
35% stocks, 35% bonds and 30% cash equivalents. This will occur when the
research indicates that conditions do not favor one asset class over another.
The Fund may use futures, forward currency contracts and options to increase or
decrease its exposure to changing securities prices, interest rates or currency
exchange rates.
FOREIGN EQUITY FUND
The level of stocks and money market instruments, as well as the total level
of investment in any particular country, will vary over time depending on the
level of risk the Subadviser's models determine. As a model points to increasing
levels of market risk in a particular country, the Fund will reduce its exposure
to that country by selling stocks, by hedging market exposure with foreign stock
index futures or options or by selling short.
In selecting stocks, our models rank industry groups when available. From the
higher ranked industry groups, we select stocks by evaluating and ranking them
based on technical and fundamental factors. Additionally, we may invest in
investment vehicles or groups of foreign stocks that, in the aggregate, are
expected to perform similarly to a particular major foreign stock market index
or foreign stock industry group, and in investment companies that invest in the
securities of a particular country, commonly referred to as "Country Funds,"
that invest in the securities of a particular country.
The Subadviser's currency model for each country provides a disciplined
approach to managing currency risk. When the model indicates a strong likelihood
that the foreign currency is going to increase in value against the U.S. dollar,
the Fund will not hedge its exposure to the foreign currency. Otherwise, it will
hedge its entire position using currency exchange contracts. In those countries
where there is no mechanism to hedge against currency fluctuations, we will only
invest in such countries when our models are bullish on both the equity market
and the foreign currency. Some of the indicators in the currency model include
the relative trend of real and nominal short-term interest rates, the movement
of the trade-weighted foreign currency, and the momentum of the foreign currency
against the U.S. dollar.
GOVERNMENT FUND
The Government Fund seeks a high total return from current income and capital
appreciation consistent with preservation of capital over the long term by
investing primarily in U.S. Government and agency securities, including
Government National Mortgage Association ("GNMA") mortgage-backed certificates
and repurchase agreements collateralized by such securities. THE GOVERNMENT FUND
MAY NOT INVEST IN STOCKS.
Not all U.S. Government securities are backed by the full faith and credit of
the United States. Some are supported only by the credit of the agency or
instrumentality. Agencies and instrumentalities include: Bank for Cooperatives,
Export-Import Bank of the U.S., Farmers Home Administration, Federal Financing
Bank, Federal Home Loan Banks, Federal Home Loan Mortgage Corp., Federal Housing
Administration, Federal Intermediate Credit Banks, Federal Land Banks, Federal
National Mortgage Association, Government National Mortgage Association (GNMA),
Resolution Funding Corp., Student Loan Marketing Association, Tennessee Valley
Authority and the U.S. Postal Service.
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It is the Government Fund's policy that at least 65% of its total assets will
be invested in U.S. Government securities (including GNMA certificates), except
during times when the Subadviser believes that adoption of a temporary defensive
position is desirable. For temporary defensive purposes, the Fund may hold cash
or invest in money market instruments without limit.
Investments for the Government Fund are chosen primarily by utilizing a model
that incorporates various indicators such as: momentum of bond prices,
short-term interest rate trends, inflation indicators, general economic and
liquidity indicators, and other market indicators and statistics.
The Fund may write covered call options and secured put options, and purchase
put options on U.S. Government securities which are traded on an exchange or
over-the-counter. The Fund also may purchase and sell interest rate futures
contracts and purchase and write put and call options on such futures contracts
as a means of hedging against changes in interest rates.
OPTIONS ON GOVERNMENT SECURITIES
(i) On Treasury Bonds and Notes. Because the trading interest in Treasury
bonds and notes tends to center on the most recently auctioned issues, the
exchanges will not continue indefinitely to introduce new expirations with
respect to such options to replace expiring options on particular issues. The
expirations introduced at the commencement of options trading on a particular
issue will be allowed to run, with the possible addition of a limited number of
new expirations, as the original expirations expire. Options trading on each
issue of bonds or notes will thus be phased out as new options are listed on
more recent issues, and a full range of expirations will not ordinarily be
available on the exchange for every issue on which options are traded.
(ii) On Treasury Bills. Because the deliverable Treasury bill changes from
week to week, writers of Treasury bill calls cannot provide in advance for their
potential exercise settlement obligations by acquiring and holding the
underlying security. However, if the Fund holds a long position in Treasury
bills with a principal amount corresponding to the contract size of the option,
it may be hedged from a risk standpoint. In addition, the Fund will maintain
Treasury bills, maturing no later than those which would be deliverable in the
event of exercise of a call option it has written, in a segregated account with
its custodian so that it will be treated as being covered for margin purposes.
(iii) On GNMA Certificates. Options on GNMA certificates are not currently
traded on any national securities exchange, although the Securities and Exchange
Commission (the "Commission") has approved such options for trading on the
Chicago Board Options Exchange. Since the remaining principal balance of GNMA
certificates declines each month as mortgage payments are made, the Fund, as a
writer of a GNMA call, may find that the GNMA certificates it holds no longer
have a sufficient remaining principal balance to satisfy its delivery obligation
in the event of exercise of the call option it has written. Should this occur,
additional GNMA certificates from the same pool (if obtainable), or replacement
GNMA certificates, will have to be purchased in the cash market to meet delivery
obligations. The Fund will either replace GNMA certificates representing cover
for call options it has written, or maintain in a segregated account with its
custodian cash or U.S. Government securities or other appropriate high grade
debt obligations having an aggregate value equal to the market value of the GNMA
certificates underlying the call options it has written.
The hours of trading for options on U.S. Government securities may not
conform to the hours during which the underlying securities are traded. To the
extent that the options markets close before the markets for the underlying
securities, significant price and rate movements can take place in the
underlying markets that cannot be reflected in the options markets.
Options are traded on exchanges on only a limited number of U.S. Government
securities, and exchange regulations limit the maximum number of options which
may be written or purchased by a single investor or a group of investors acting
in concert. The Trust and other clients advised by the Manager may be deemed to
constitute a group for these purposes. In light of these limits, the Trust's
Board of Trustees (the "Board of Trustees" or the "Board") may determine at any
time to restrict or terminate the public offering of the Fund's shares
(including through exchanges from the other Funds).
Exchange markets in options on U.S. Government securities are a relatively
new and untested concept and it is impossible to predict the amount of trading
interest that may exist in such options. There can be no assurance that viable
exchange markets will develop or continue.
FUTURES CONTRACTS ON GOVERNMENT SECURITIES
Currently futures contracts can be purchased and sold with respect to U.S.
Treasury bonds, U.S. Treasury notes and GNMA certificates on the Chicago Board
of Trade, and with respect to U.S. Treasury bills on the International Monetary
Market at the Chicago Mercantile Exchange.
OPTIONS ON FUTURES CONTRACTS
Currently, options can be purchased or sold with respect to futures contracts
on U.S. Treasury bonds on the Chicago Board of Trade.
The Fund is required to deposit initial margin and maintenance margin with
respect to put and call options on futures contracts written by it pursuant to
brokers' requirements similar to those applicable to interest rate futures
contracts described above. In addition, net option premiums are included as
initial margin deposits. As with options on debt securities, the writer of an
option on
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a futures contract may terminate his position by selling or purchasing an option
of the same series. The ability to establish and close out positions on such
options is subject to the existence of a liquid secondary market. The Fund will
not purchase options on futures contracts on any exchange unless and until, in
the Manager's opinion, the market for such options is sufficiently liquid that
the risks in connection with options on futures contracts are not greater than
the risks in connection with futures contracts.
Compared to the purchase or sale of futures contracts, the purchase of
options on futures contracts involves less potential risk to the Fund because
the maximum amount at risk is the premium paid for the options (plus transaction
costs). However, there may be circumstances when the use of an option on a
futures contract would result in a loss to the Fund when the use of a futures
contract would not, such as when there is no movement in the prices of debt
securities. Writing an option on a futures contract involves risks similar to
those arising in the sale of futures contracts, as described above.
In purchasing and selling futures contracts and in purchasing options on
futures contracts, the Fund will comply with rules and interpretations of the
Commodity Futures Trading Commission ("CFTC") under which it is exempted from
regulation as a commodity pool operator. The CFTC regulations which exempt the
Fund from regulation as a commodity pool operator require, among other things,
(i) that futures and related options be used solely for bona fide hedging
purposes, as defined in CFTC regulations or, alternatively, with respect to each
long futures or options position, the Fund will ensure that the underlying
commodity value of such contract does not exceed the sum of segregated cash or
money market instruments, margin deposits on such contracts, cash proceeds from
investments due in 30 days and accrued profits on such contracts held by the
commodity broker, and (ii) that the Fund not enter into futures and related
options for which the aggregate initial margin and premiums exceed 5% of the
fair market value of the Fund's total assets. There is no other limitation on
the percentage of the Fund's assets that may be invested in futures and related
options. The Internal Revenue Code's requirements for qualification as a
regulated investment company may limit the extent to which the Fund can engage
in futures transactions.
GOVERNMENT CASH FUND
The Government Cash Fund may invest in U.S. Treasury issues, such as bills,
certificates of indebtedness, notes and bonds, and issues of U.S. Government
agencies and instrumentalities which are established under the authority of an
act of Congress, such as the Bank for Cooperatives, Export-Import Bank of the
U.S., Farmers Home Administration, Federal Financing Bank, Federal Home Loan
Banks, Federal Home Loan Mortgage Corp., Federal Housing Administration, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Government National Mortgage Association (GNMA), Resolution Funding
Corp., Student Loan Marketing Association, Tennessee Valley Authority and the
U.S. Postal Service. Some of these securities, such as Federal Housing
Administration debenture obligations, are supported by the full faith and credit
of the U.S. Treasury; others, such as obligations of Federal Home Loan Banks,
are supported by the right of the issuer to borrow from the U.S. Treasury;
others, such as those of the Federal National Mortgage Association, are
supported by the discretionary authority of the U.S. Government to purchase the
agency's obligations; and still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
The Fund will not invest in obligations of the International Bank for
Reconstruction and Development (the World Bank), the Asian Development Bank, or
the Inter-American Development Bank, or in FHA or VA pooled mortgages.
INVESTMENT RESTRICTIONS
(Applicable to all Funds Except the Government Cash Fund)
The investment restrictions set forth below are fundamental policies of each
Fund (other than the Government Cash Fund, the investment restrictions of which
are set forth separately below), which cannot be changed with respect to a Fund
without the approval of the holders of a majority of the outstanding voting
securities of that Fund as defined in the Investment Company Act of 1940, as
amended (the "1940 Act") as the lesser of: (1) 67% or more of a Fund's voting
securities present at a meeting of shareholders, if the holders of more than 50%
of a Fund's outstanding voting securities are present in person or by proxy, or
(2) more than 50% of a Fund's outstanding voting securities. However, these
policies may be modified by the Trustees, in their discretion, without
shareholder approval, to the extent necessary to facilitate the implementation
of a master-feeder structure for any or all of the Funds (i.e., a structure
under which a particular Fund acts as a feeder and invests all of its assets in
a single pooled master fund with substantially the same investment objectives
and policies). Unless otherwise indicated, all percentage limitations apply to
each Fund on an individual basis, and apply only at the time an investment is
made; a later increase or decrease in percentage resulting from changes in
values or net assets will not be deemed to be an investment that is contrary to
these restrictions. Pursuant to such restrictions and policies, except as stated
above with respect to a master-feeder structure, no Fund may:
1. Purchase the securities of issuers conducting their principal business
activities in the same industry if immediately after such purchase the value of
its investments in such industry would be 25% or more of the value of the total
assets of the Fund (there is no such limitation with respect to obligations of
the U.S. Government, its agencies and instrumentalities);
2. With respect to 75% of a Fund's assets, purchase the securities of any
one issuer, if immediately after such purchase (i) more than 5% of the value of
the total assets of any Fund would be invested in such issuer or (ii) the Fund
would own more than
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10% of the outstanding voting securities of such issuer (such limitations do not
apply to securities issued by the U.S. Government, its agencies or
instrumentalities);
3. Invest in real estate or real estate mortgage loans, interests in oil,
gas and/or mineral exploration or development programs, provided that this
limitation shall not prohibit the purchase of securities issued by companies
that invest in real estate or interests therein, including real estate
investment trusts;
4. Make loans, except that this restriction shall not prohibit the purchase
and holding of a portion of an issue of publicly distributed debt securities,
the lending of portfolio securities (if the aggregate value of the loaned
securities does not at any time exceed one-third of the total assets of the
Fund), or the entry into repurchase agreements;
5. Issue "senior securities," except as permitted under the Investment
Company Act of 1940;
6. Act as an underwriter, except that Fund may technically be deemed an
underwriter under the Securities Act of 1933, as amended (the "1933 Act"), in a
registration under such Act necessary to resell certain restricted securities;
7. Invest in commodities or commodity contracts, except as described in the
Prospectus or purchase or sell physical commodities unless acquired as a result
of ownership of securities, provided that this limitation shall not prevent a
Fund from purchasing and selling options and futures contracts; and
8. The Strategy Fund, Appreciation Fund, Growth & Income Fund, and
Government Fund may not borrow amounts in excess of 20% of its total assets
taken at cost or at market value, whichever is lower, and then only from banks
as a temporary measure for extraordinary or emergency purposes. If such
borrowings exceed 5% of the Fund's total assets, the Fund will make no further
investments until such borrowing is repaid. Each such Fund may pledge up to 10%
of its total assets as security for such borrowing. For purposes of these
restrictions, the deposit of initial or maintenance margin in connection with
futures contracts will not be deemed to be a pledge of such Fund's assets.
Managed Assets may not borrow money, unless from a bank, for temporary or
emergency purposes (not for leveraging or investment) in an amount not exceeding
1/3 of the value of the total assets of Managed Assets less liabilities (other
than borrowings). Any borrowings that come to exceed 1/3 of the value of Managed
Assets' total assets by reason of a decline in net assets will be reduced within
three days to the extent necessary to comply with the 1/3 limitations.
NON-FUNDAMENTAL RESTRICTIONS
The investment restrictions set forth below are other investment policies of
each Fund (except the Government Cash Fund) that are non-fundamental and that
can be changed by the Board of Trustees without a shareholder vote. Pursuant to
such restrictions and policies, no Fund may:
9. Borrow money, except from banks for temporary purposes, in an amount up
to 5% of the value of the Fund's total assets. A Fund will borrow money only to
accommodate requests for the redemption of shares, to effect an orderly
liquidation of portfolio securities or to clear securities transactions and not
for leveraging purposes.
10. Purchase securities of any other investment company, except (i) by
purchase in the open market involving only customary brokers' commissions, (ii)
in connection with a merger, consolidation, reorganization or acquisition of
assets, or (iii) as otherwise permitted by applicable law;
11. Participate on a joint or a joint and several basis in any trading
account in securities. (The bunching of orders for two or more accounts managed
by the Manager or its affiliates shall not be considered participation in a
joint securities trading account);
12. Purchase securities on margin, except for such short-term credits as are
necessary for the clearance of transactions and initial and variation margin
payments in connection with transactions in futures contracts and options
contracts;
13. Sell securities short, except as described in the Prospectus. (Short
sales may be made in a margin account).
14. Purchase securities which are not readily marketable (such as certain
securities which are subject to legal or contractual restrictions on resale) or
securities which are otherwise illiquid (including non-marketable securities and
repurchase agreements having more than seven days remaining to maturity) if, as
a result, more than 15% of the Fund's net assets would consist of such
securities.
INVESTMENT RESTRICTIONS APPLICABLE TO THE GOVERNMENT CASH FUND
The Government Cash Fund has adopted certain restrictions and fundamental
policies which cannot be changed without a vote of a majority of its outstanding
voting securities. However, these policies may be modified by the Trustees
without shareholder approval to the extent necessary to facilitate the
implementation of a master-feeder structure for the Government Cash Fund. Except
as stated above with respect to a master-feeder structure, the Government Cash
Fund may not:
[bullet] Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds, industrial revenue bonds or corporate
bonds or debentures;
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[bullet] Borrow money, except from banks for temporary purposes in an amount
up to 10% of the value of its total assets. The Government Cash Fund may only
pledge its assets in an amount up to 10% of the value of its total assets, and
then only to secure such borrowings. The Government Cash Fund will borrow money
only to accommodate requests to redeem shares to effect an orderly liquidation
of portfolio securities or to clear securities transactions and not for
leveraging purposes; accordingly, it is anticipated that any such borrowing will
be repaid before additional investments are made. The Government Cash Fund
currently does not intend to borrow money to an extent exceeding 5% of its total
assets. The Government Cash Fund may not issue any securities which would be
deemed to be senior securities in contravention of the 1940 Act;
[bullet] With respect to 75% of the value of its total assets, invest more
than 5% of the value of its total assets in the securities of any one issuer,
except securities issued or guaranteed as to the payment of principal and
interest by the U.S. Government, its agencies or instrumentalities;
[bullet] Sell securities short;
[bullet] Write or purchase put or call options;
[bullet] Underwrite the securities of other issuers;
[bullet] Purchase or sell real estate, real estate investment trust
securities, commodities or oil and gas interests;
[bullet] Make loans to others, except that engaging in permissible activities
specified in the Prospectus under the heading "Principal Investment Strategies"
and in this Statement of Additional Information under the headings "Investment
Objectives and Policies" and "Investment Restrictions" shall not be viewed as
loans for this purpose;
[bullet] Invest more than an aggregate of 10% of its net assets (taken at
current value) in repurchase agreements maturing in more than seven days and
other illiquid investments (such as non-negotiable certificates of deposit,
non-negotiable time deposits or other non-marketable securities);
[bullet] Invest in companies for the purpose of exercising control; or
[bullet] Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
The foregoing percentage restrictions apply at the time an investment is
made; a later increase or decrease in percentage may result from changes in
values or the Government Cash Fund's net assets but will not be deemed to result
in an investment which is contrary to these restrictions.
PERFORMANCE
GOVERNMENT CASH FUND
From time to time, the Trust determines a current yield and effective yield
for each class of shares of the Government Cash Fund. For a further discussion
of how the Trust calculates yield, see "Pricing of Fund Shares" in the
Prospectus.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. The effective yield will be slightly higher
than the yield or seven-day current yield because of the compounding effect of
the assumed reinvestment.
These yields are each computed in accordance with a standard method
prescribed by the rules of the Commission, by first determining the net change
in account value for a hypothetical account having a share balance of one share
at the beginning of a seven-day period (the "beginning account value"). The net
change in account value equals the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares. The unannualized base period return equals
the net change in account value divided by the beginning account value. Realized
gains or losses or changes in unrealized appreciation or depreciation are not
taken into account in determining the net change in account value.
The yields are then calculated as follows:
Net Change in Account Value 365
Current Yield = --------------------------- X -----
Beginning Account Value 7
365
Effective Yield = [(1 + Base Period Return) ----- ] - 1
7
For the seven days ended December 31, 1998, the Government Cash Fund's
effective (compounded) and current yields were 4.50% and 4.41%, respectively,
for Class A Shares; 3.77% and 3.71%, respectively, for Class B Shares; 4.50% and
4.41%, respectively, for Class C Shares; and 4.81% and 4.71%, respectively, for
Class I Shares.
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<PAGE>
Yield is a function of portfolio quality and composition, portfolio maturity
and operating expenses. Yields fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments or other investment companies that may use a different
method of calculating yield.
OTHER FUNDS
The Trust will include performance data for Class A, Class B, Class C and
Class I Shares of each Fund in its advertisements, sales literature and other
information distributed to the public that includes performance data of a Fund.
Such performance information will be based on investment yields or total returns
for the Fund.
YIELD
Yield may not be the same as the distribution rate or the income reported in
the Fund's financial statements. We compute yield by taking the interest and
dividend income a Fund earns in a 30-day period, net of expenses, and dividing
that amount by the average number of shares entitled to receive dividends. Yield
will be calculated, using a one-month base period, according to the following
formula:
Yield = 2 X [(a-b/cd) + 1] 6 - 1
Where:
a = dividends and interest earned during the period
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period that
were entitled to receive dividends
d = the maximum offering price per share on the last day of the period.
The annualized yield for the Class A, Class B, Class C and Class I Shares of
the Government Fund at December 31, 1998 was 3.81%, 3.34%, 3.54% and 4.23%.
AVERAGE ANNUAL TOTAL RETURN
Total return represents the average annual compounded rate of return on an
investment of $1,000 at the maximum public offering price (in the case of Class
A Shares) or reflecting the deduction of any applicable CDSC. All data are based
on past investment results.
Average annual total return for a given period is computed by finding the
average annual compounded rate of return over the period that would equate the
initial amount invested to the ending redeemable value, according to the
following formula:
P(1 + T)n = ERV
Where:
P = a hypothetical initial investment in the Fund of $1,000
T = average annual total return
n = number of years in period
ERV = ending redeemable value at the end of the period of a hypothetical
$1,000 investment in the Fund made at the beginning of the period.
The following table summarizes the calculation of total return for each Fund
(including the effect of the maximum sales charge) where applicable, through
December 31, 1998.
AVERAGE ANNUAL TOTAL RETURNS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
Year Ended Five Years Ended Ten Years Ended Commencement of Operations*
Fund 12/31/98 12/31/98 12/31/98 to 12/31/98
- ---- -------- -------- -------- -----------
Class A Shares
- --------------
<S> <C> <C> <C> <C>
Appreciation Fund (6.4)% 10.2% -- 11.3%
Foreign Equity Fund 3.1% -- -- 3.8%
Government Cash Fund 4.9% -- -- 4.8%
Government Fund 3.7% 4.4% 6.9% 6.9%
Growth & Income Fund (7.0)% -- -- 6.9%
Managed Assets 8.6% 9.2% -- 9.8%
Strategy Fund (7.3)% 9.4% -- 9.9%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED FIVE YEARS ENDED COMMENCEMENT OF OPERATIONS*
12/31/98 12/31/98 TO 12/31/98
-------- -------- -----------
CLASS B SHARES
- --------------
<S> <C> <C> <C>
Appreciation Fund (6.6)% -- 10.2%
Foreign Equity Fund 2.9% -- 3.6%
Government Cash Fund 4.2% -- 4.2%
Government Fund 2.8% -- 6.1%
Growth & Income Fund (7.2)% -- 6.9%
Managed Assets 8.4% -- 12.6%
Strategy Fund (7.5)% -- 6.8%
CLASS C SHARES
- --------------
Appreciation Fund (2.9)% 10.7% 10.5%
Foreign Equity Fund 6.9% -- 8.5%
Government Cash Fund 4.9% -- 4.8%
Government Fund 7.1% 4.9% 5.8%
Growth & Income Fund (3.6)% -- 9.0%
Managed Assets 12.6% 9.7% 10.1%
Strategy Fund (3.9)% 9.8% 10.0%
CLASS I SHARES
- --------------
Appreciation Fund (0.7)% -- 13.3%
Foreign Equity Fund 9.3% -- 9.6%
Government Cash Fund 5.2% -- 5.2%
Government Fund 9.3% -- 9.9%
Growth & Income Fund (1.3)% -- 10.1%
Managed Assets 15.2% -- 16.3%
Strategy Fund (1.7)% -- 10.1%
</TABLE>
*Since inception, March 25, 1985 for Class A Shares of the Government Fund;
December 29, 1989 for Class A Shares of the Strategy Fund; October 7, 1991 for
Class A Shares of the Appreciation Fund, Strategy Fund, and the Government Fund;
and February 4, 1992 for Class C Shares of the Appreciation Fund, Strategy Fund,
and the Government Fund; February 8, 1993 for Class A and Class C Shares of
Managed Assets; May 1, 1994 for Class A and Class C Shares of the Government
Cash Fund; April 8, 1996 for Class B Shares of the Appreciation Fund, Government
Cash Fund, Strategy Fund, Managed Assets, and Government Fund; November 1, 1996
for Class I Shares of the Appreciation Fund, Strategy Fund, Government Cash
Fund, and Managed Assets; November 26, 1996 for Class A, Class B, Class C and
Class I Shares of the Growth & Income Fund; July 14, 1997 for Class I Shares of
the Government Fund; and November 24, 1997 for Class A, Class B, Class C and
Class I Shares of the Foreign Equity Fund.
The investment results of the Class A, Class B, Class C and Class I Shares of
a Fund will tend to fluctuate over time, so that historical yields, current
distributions and total returns should not be considered representations of what
an investment may earn in any future period. Actual dividends will tend to
reflect changes in market yields, and will also depend upon the level of a
Class's or Fund's expenses, realized or unrealized investment gains and losses,
and the results of such Fund's investment policies. Thus, at any point in time,
investment yields, current distributions or total returns may be either higher
or lower than past results, and there is no assurance that any historical
performance record will continue.
PERFORMANCE COMPARISONS
The Trust or a Fund also may include in its advertisements data from Age
Wave, Inc.; the American Association of Retired Persons; Barron's; Business
Week; CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's
Money Fund Report; Financial Planning; Financial World; Forbes; Fortune;
Fundscope, Hulbert Financial Digest; Ibbotson Associates; Individual Investor;
Investment Advisor; Investors Business Daily; The Liscio Report; Lipper
Analytical Services, Inc.; Micropal Inc.; Money; Morningstar Mutual Funds;
Mutual Fund Forecaster; Mutual Funds Magazine; The National Center for Education
Statistics; The New York Times; The Philatelic Foundation; Smart Money; USA
Today; U.S. News & World Report; The Wall Street Journal; Worth and other
industry publications.
PORTFOLIO TURNOVER
The Funds pay brokerage commissions for purchases and sales of portfolio
securities. A high rate of portfolio turnover generally involves a
correspondingly greater amount of brokerage commissions and other costs which
must be borne directly by a Fund and
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<PAGE>
thus indirectly by its shareholders. It may also result in the realization of
larger amounts of short-term capital gains, which are taxable to shareholders as
ordinary income. If such rate of turnover exceeds 100%, the Funds will pay more
in brokerage commissions than would be the case if they had lower portfolio
turnover rates. Historical turnover rates can be found under the heading
"Financial Highlights" located in the Trust's Prospectus.
PORTFOLIO TRANSACTIONS AND BROKERAGE
ALL FUNDS OTHER THAN THE GOVERNMENT CASH FUND
The current Distributor, Phoenix Equity Planning Corporation ("Equity
Planning"), began distribution activities as of March 1, 1999. No principal
transactions are effected with Equity Planning. The prior Distributor for the
Trust was Zweig Securities Corp. ("ZSC", an affiliate of Equity Planning).
Officers and Trustees of the Trust and Officers of the Adviser who are also
Officers or Directors of ZSC or its affiliates receive indirect benefits from
the Trust as a result of its usual and customary brokerage commissions which ZSC
may receive for acting as broker to the Trust in the purchase and sale of
portfolio securities. The Management Agreement does not provide for a reduction
of the advisory fee by any portion of the brokerage fees generated by portfolio
transactions of the Trust which ZSC may receive. For the year ended December 31,
1998, Strategy Fund, Appreciation Fund, Growth & Income Fund, Managed Assets,
Foreign Equity Fund, and Government Fund paid total brokerage commissions of
$2,208,393, $1,489,767, $108,804, $841,813, $26,369, and $0, respectively. The
amount paid by the Foreign Equity Fund for the period November 24, 1997
(commencement of operations) to December 31, 1997 was $7,571. For the years
ended December 31, 1997 and 1996, respectively, Strategy Fund, Appreciation
Fund, Managed Assets and Government Fund paid total brokerage commissions of
$2,622,109, $855,258, $1,645,297, and $0, respectively, and $3,738,437,
$933,468, $2,130,073 and $0, respectively. Total brokerage commissions for the
Growth & Income Fund for the year ended December 31, 1997 were $71,111.
For the year ended December 31, 1998, the Trust paid ZSC $670,940 in
brokerage commissions or 14.35% of total brokerage commissions for the year
ended December 31, 1998. For the years ended December 31, 1997 and 1996,
$420,251 and $633,637, respectively, was paid to ZSC.
Allocation of transactions, including their frequency, to various dealers is
determined by the Adviser in its best judgment and in a manner deemed fair and
reasonable to shareholders. The primary consideration is prompt and efficient
execution of orders in an effective manner at the most favorable price. Subject
to this consideration, dealers who provide supplemental investment research,
statistical or other services to the Adviser may receive orders for transactions
by the Trust. Information so received will enable the Adviser to supplement its
own research and analysis with the views and information of other securities
firms. Such information may be useful and of value to the Adviser and its
affiliates in servicing other clients as well as the Trust; in addition,
information obtained by the Adviser and its affiliates in servicing other
clients may be useful and of value to the Adviser in servicing the Trust. In
allocating brokerage, the Adviser may also consider research provided to its
Subadviser pursuant to the Servicing Agreement.
The Trust may from time to time allocate brokerage commissions to firms that
furnish research and statistical information to the Adviser. The supplementary
research supplied by such firms is useful in varying degrees and is of
indeterminable value. Such research may, among other things, include advice
regarding economic factors and trends, advice as to occasional transactions in
specific securities and similar information relating to securities. No formula
has been established for the allocation of business to such brokers.
Consideration may be given to research provided and payment may be made of a fee
higher than that charged by another broker-dealer which does not furnish
research services or which furnishes research services deemed to be of lesser
value, so long as the criteria of Section 28(e) of the Securities Exchange Act
of 1934, as amended (the "1934 Act") are met. Section 28(e) of the 1934 Act
specifies that a person with investment discretion shall not be deemed to have
acted unlawfully or to have breached a fiduciary duty solely because such person
has caused the account to pay a higher commission than the lowest available
under certain circumstances. To obtain the benefit of Section 28(e), the person
so exercising investment discretion must make a good faith determination that
the commissions paid are reasonable in relation to the value of the brokerage
and research services provided viewed in terms of either that particular
transaction or his overall responsibilities with respect to the accounts as to
which he exercises investment discretion.
Currently, it is not possible to determine the extent to which commissions
that reflect an element of value for research services might exceed commissions
that would be payable for execution series alone, nor generally can the value of
research services be measured. Research services furnished might be useful and
of value to the Adviser and its affiliates in serving other clients as well as
the Trust, but on the other hand any research service obtained by the Adviser or
the Distributor from the placement of portfolio brokerage of other clients might
be useful and of value to the Adviser in carrying out its obligation to the
Trust.
There are no fixed limitations regarding the Trust's portfolio turnover rate.
In computing the portfolio turnover rate, all securities, including options, the
maturities or expiration dates of which at the time of acquisition are one year
or less, are excluded. Subject to this exclusion, the turnover rate is
calculated by dividing (A) the lesser of purchases or sales of portfolio
securities of a particular Fund for the fiscal year by (B) the monthly average
of the value of portfolio securities owned by the particular Fund during the
fiscal year.
12
<PAGE>
The options activities of the Strategy Fund, Appreciation Fund, Growth &
Income Fund, Managed Assets, Foreign Equity Fund and Government Fund may affect
their respective turnover rates, the amount of brokerage commissions paid by
each Fund and the realization of net short-term capital gains. Such gains, when
distributed, are taxed to shareholders (other than retirement plans) at ordinary
income tax rates. There are no fixed limitations regarding the Strategy Fund's
portfolio turnover. Securities satisfying the basic policies and objectives of
the Strategy Fund may be disposed of when they are no longer deemed to be
suitable. High portfolio turnover involves correspondingly greater brokerage
commissions, other transaction costs, and a possible increase in short-term
capital gains or losses. See "Determination of Net Asset Value" and "Dividends,
Distributions and Taxes."
The exercise of calls written by a Fund may cause the Fund to sell portfolio
securities, thus increasing its turnover rate. The exercise of puts also may
cause a sale of securities and increase turnover. Although such exercise is
within the Fund's control, holding a protective put might cause the Fund to sell
the underlying securities for reasons which would not exist in the absence of
the put. A Fund will pay a brokerage commission each time it buys or sells a
security in connection with the exercise of a put or call. Some commissions may
be higher than those which would apply to direct purchases or sales of portfolio
securities.
GOVERNMENT CASH FUND
The Adviser places orders for the purchase and sale of securities for the
Government Cash Fund. All the Government Cash Fund's portfolio transactions are
principal transactions with major dealers in money market instruments on which
no brokerage commission is paid. Purchases from or sales to dealers serving as
market-makers include the spread between the bid and asked prices. Transactions
are allocated to various dealers according to the best judgment of the Adviser
and in a manner deemed fair and reasonable to shareholders. The primary
consideration is prompt and effective execution of orders at the most favorable
price. Subject to this consideration, dealers who provide supplemental
investment research, statistical or other services to the Adviser may receive
orders for transactions by the Government Cash Fund.
INVESTMENT ADVISERS
Zweig/Glaser Advisers LLC ("Zweig/Glaser" or the "Adviser") is the
investment adviser to each of the funds and is located at 900 Third Avenue, New
York, NY 10022. As of December 31, 1998, Zweig/Glaser was managing eleven funds
with net assets of approximately $2.6 billion and as administrator to two
closed-end funds with assets in excess of $1.4 billion. Zweig/Glaser has been
managing funds since September 1989.
Zweig/Glaser is a wholly-owned subsidiary of Phoenix Investment Partners,
Ltd. ("PXP"), a Delaware corporation, located at 56 Prospect St., Hartford, CT
06115. PXP is a publicly-traded independent registered investment advisory firm,
and has served investors for over 70 years. As of March 31, 1998, PXP had over
$57 billion in assets under management through its investment partners: Aberdeen
Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago
and Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; Zweig/Glaser in New York; and
Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions) in
Hartford, Sarasota, and Scotts Valley, CA, respectively.
Overall responsibility for the management and supervision of the Trust and
the Funds rests with the Trustees of the Phoenix-Zweig Trust (the "Trustees").
Zweig/Glaser's services under its Management Agreement are subject to the
direction of the Trustees.
The Management Agreement will continue in effect for two years if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or interested persons of any such party. The
Management Agreement may be terminated without penalty by either of the parties
on 60 days' written notice and must terminate in the event of its assignment.
The Management Agreement was last approved by the Trustees on January 12, 1999
and by shareholders on February 25, 1999.
The Management Agreement provides that the Adviser is liable only for its
acts or omissions caused by its willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Adviser to render services to others and to engage in other activities.
Pursuant to the Management Agreement, the Adviser: (a) supervises and assists
in the management of the assets of each Fund, furnishes each Fund with research,
statistical and advisory services and provides regular reports to the Trustees;
(b) provides advice and assistance with the operations of the Trust, compliance
support, preparation of the Trust's registration statements, proxy materials and
other documents and advice and assistance of the Adviser's General Counsel; (c)
makes investment decisions for the Trust; (d) selects brokers and dealers to
execute transactions for each Fund; (e) ensures that investments follow the
investment objective, strategies, and policies of that Fund and comply with
government regulations; and (f) furnishes office facilities, personnel necessary
to provide advisory services to the Funds, personnel to serve without salaries
as officers or agents of the Trust and compensation and expenses of any Trustees
who are also full-time employees of the Adviser or any of its affiliates.
Pursuant to the Servicing Agreement, Zweig/Glaser has delegated to Zweig the
responsibility for making asset allocation decisions for the Funds.
The Funds' Subadviser is Zweig Consulting, LLC ("Zweig" or the "Subadviser").
Its principal offices are located at 900 Third Ave., New York, NY 10022. Zweig's
services under the Servicing Agreement are subject to the direction of both the
Trustees and
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<PAGE>
Zweig/Glaser. Under a Servicing Agreement with Zweig/Glaser, Zweig's duties to
each Fund include: (1) promoting the interests of the Trust; and (2) performing
asset allocation research and analysis.
In managing the assets of the Funds, the Adviser furnishes continuously an
investment program for each Fund consistent with the investment objectives and
policies of that Fund. More specifically, the Adviser determines from time to
time what securities shall be purchased for the Trust and what securities shall
be held or sold by the Trust. The Subadviser determines what portion of the
Trust's assets shall be allocated between stocks, bonds and cash, as
appropriate, taking into account each Fund's investment objective. Both the
Subadviser and Adviser are subject always to the provisions of the Trust's
Agreement and Declaration of Trust, By-Laws and its registration statement under
the 1940 Act and under the 1933 Act covering the Trust's shares, as filed with
the SEC, and to the investment objectives, policies and restrictions of the
Trust, as each of the same shall be from time to time in effect, and subject,
further, to such policies and instructions as the Trustees of the Trust may from
time to time establish. To carry out such determinations, the Adviser places
order for the investment and reinvestment of each Fund's assets (see "Portfolio
Transactions and Brokerage").
The Trust pays the Adviser for its services, pursuant to the Management
Agreement, a monthly fee at the annual rate of 0.50% of the average daily net
assets of the Government Cash Fund, 0.60% of the average daily net assets of the
Government Fund, 0.75% of the average daily net assets of the Strategy Fund and
the Growth & Income Fund, and 1.00% of the average daily net assets of the
Appreciation Fund, Managed Assets, and Foreign Equity Fund.
For the fiscal year ended December 31, 1998, Zweig/Glaser earned investment
management fees as follows: Strategy Fund: $8,625,971; Appreciation Fund:
$5,478,055; Growth & Income Fund: $303,824; Managed Assets: $5,677,160;
Government Fund: $249,834; Government Cash Fund: $433,374; and Foreign Equity
Fund: $66,869.
For the years ended December 31, 1997 and 1996, the fees paid to Zweig/Glaser
for each Fund were as follows: Strategy Fund: $9,154,436 and $9,070,222;
Appreciation Fund: $5,195,484 and $4,876,108; Managed Assets: $5,454,174 and
$6,109,364; Government Fund: $257,892 and $322,034; Government Cash Fund:
$302,623 and $325,301; and Growth & Income Fund: $160,389 and $5,354
(commencement to year end). For the period from November 24 (commencement of
operations) to December 31, 1997, the management fees for the Foreign Equity
Fund were $2,927.
The Adviser has voluntarily undertaken to limit the expenses of the
Government Cash Fund (exclusive of taxes, interest, brokerage commissions, 12b-1
fees and extraordinary expenses) until December 31, 1999 to 0.35% of its average
daily net assets. During the years ended December 31, 1998, 1997 and 1996, the
Adviser's reimbursements to the Government Cash Fund aggregated $296,837,
$251,454 and $247,233, respectively. The Adviser reserves the right to
discontinue this policy at any time after December 31, 1999.
The Adviser had voluntarily undertaken to limit the expenses of the Foreign
Equity Fund (exclusive of taxes, interest, brokerage commissions, 12b-1 fees and
extraordinary expenses) until April 30, 1999 to 1.50% of its average daily net
assets. For the year ended December 31, 1998, the Adviser reimbursed $148,672 to
the Foreign Equity Fund. During the period November 24, 1997 (commencement of
operations) to December 31, 1997, the Adviser's reimbursement to the Foreign
Equity Fund aggregated $10,260.
The Adviser had also voluntarily undertaken to limit the expenses of the
Growth & Income Fund (exclusive of taxes, interest, brokerage commissions, 12b-1
fees and extraordinary expenses) until April 30, 1998 to 1.00% of its average
daily net assets. During the years ended December 31, 1998 and 1997, the
Adviser's reimbursements to the Growth & Income Fund aggregated $13,761 and
$148,969, respectively.
The Adviser may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Trust. The Distributor or its
affiliates may provide the Adviser (without charge to the Trust) with investment
information and recommendations that may serve as the principal basis for
investment decisions with respect to certain Funds of the Trust.
The Adviser has adopted a Code of Ethics (the "Code") that requires all
persons subject to the Code to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in any
of the Funds' or client accounts. In the event that a client of the Adviser's
affiliates also owns such security, or it is proposed that such client purchase
such security, available investments or opportunities for sales will be
allocated in a manner deemed to be equitable by the Adviser.
DETERMINATION OF NET ASSET VALUE
FOR ALL FUNDS, the net asset value per share of each class of shares of each
Fund is determined as of the close of regular trading on the NYSE (normally 4:00
p.m. eastern time), and as of 2:00 p.m. eastern time for the Government Cash
Fund, on each day that the NYSE is open. The NYSE is closed on the following
holidays (or the weekdays on which these holidays are celebrated when they fall
on a weekend): New Year's Day, Martin Luther King, Jr. Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and
Christmas Day.
14
<PAGE>
Shares are entitled to dividends as declared by the Board and, on liquidation
of a Fund, are entitled to receive their share of the net assets of the Fund.
Shareholders have no preemptive rights. The Trust's fiscal year ends on December
31.
We subtract the non-class specific liabilities of a Fund from the Fund's
assets to determine its total net assets. We then determine each class's
proportionate interest in the Fund's net assets. The liabilities attributable to
that class, including its distribution fees, are then deducted and the resulting
amount is divided by the number of shares of that class outstanding to produce
its net asset value per share.
Stocks, futures and options are valued at the closing prices reported on
recognized securities exchanges or, if no sale was reported, and for unlisted
securities, at the mean between the last-reported bid and asked prices. Bonds
and other fixed-income securities are valued at prices obtained from an
established bond-pricing service when such prices are available. Forward foreign
currency contracts are valued using forward currency exchange rates supplied by
a quotation service. Securities for which market quotations are not readily
available are valued at fair value as determined in good faith by or under the
direction of the Board of Trustees. Short-term obligations having a remaining
maturity of 60 days or less are valued at amortized cost (which approximates
market value). The Government Cash Fund values all short-term investments using
the amortized cost method pursuant to Rule 2a-7 under the Investment Company Act
of 1940.
THE GOVERNMENT CASH FUND. The Board of Trustees (the "Board") has determined
that it is in the best interests of the Government Cash Fund and its
shareholders to seek to maintain a stable net asset value per share, and that
the appropriate method for valuing portfolio securities is the amortized cost
method, provided that such method continues to fairly reflect the market-based
net asset value per share. The Board shall continuously review this method of
valuation and make changes that may be necessary to assure that the Government
Cash Fund's instruments are valued at their fair value as determined by the
Board in good faith.
The Board has determined that the Government Cash Fund will comply with the
conditions of Rule 2a-7 under the Act regarding the amortized cost method of
valuing portfolio securities. Under Rule 2a-7, the Board is obligated, as a
particular responsibility within the overall duty of care owed to the Fund's
shareholders, to establish procedures reasonably designed, taking into account
current market conditions and the Fund's investment objectives, to stabilize the
net asset value per share of the Fund for purposes of distribution and
redemption, at $1.00 per share. These procedures include periodically
monitoring, as the Board deems appropriate, at such intervals as are reasonable
in light of current market conditions, the relationship between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon available indications of market value. The
Board will consider what steps should be taken, if any, in the event of a
difference of more than 1/2 of 1% between the amortized cost value and the
market value per share. The Board will take such steps as it considers
appropriate (e.g., redemption in kind, selling portfolio instruments prior to
maturity to realize capital gains or losses, shortening the average portfolio
maturity, withholding dividends, or utilizing a net asset value per share
determined by using market quotations) to minimize any material dilution or
other unfair results that might arise from differences between the net asset
value per share based upon the amortized cost method of valuation and the net
asset value per share based upon market value.
Rule 2a-7 requires that a dollar-weighted average portfolio maturity of not
more than 90 days, appropriate to the objective of maintaining a stable net
asset value of $1.00 per share, be maintained, and precludes the purchase of any
instrument with a remaining time to maturity of more than 397 calendar days.
However, the underlying securities used as collateral for repurchase agreements
are not subject to these restrictions, because a repurchase agreement is deemed
to have a maturity equal to the period remaining until the date on which the
repurchase of the underlying securities is deemed to occur. Should the
disposition of a portfolio security result in a dollar-weighted average
portfolio maturity of more than 90 days, the Government Cash Fund will invest
its available cash in a manner that will reduce such average maturity to 90 days
or less as soon as reasonably practicable. Rule 2a-7 also requires the
Government Cash Fund to limit its investments to instruments that the Board
determines present minimal credit risks and that have been given one of the two
highest rating categories by nationally recognized statistical rating
organizations, or, in the case of instruments that are not so rated, are of
comparable quality as determined under procedures established by the Board.
It is the normal practice of the Government Cash Fund to hold portfolio
securities to maturity and realize their par values, unless a prior sale or
other disposition thereof is mandated by redemption requirements or other
extraordinary circumstances. A debt security held to maturity is redeemable by
its issuer at its principal amount plus accrued interest. Under the amortized
cost method of valuation traditionally employed by institutions for valuation of
money market instruments, neither the amount of daily income nor the net asset
value is affected by any unrealized appreciation or depreciation of the
portfolio. In periods of declining interest rates, the indicated daily yield on
shares of the Government Cash Fund (computed by dividing the annualized daily
income on the Fund's portfolio by the net asset value computed as above) may
tend to be higher than a similar computation made by utilizing a method of
valuation based upon market prices and estimates. The Government Cash Fund may,
to a limited extent, engage in short-term trading to attempt to take advantage
of short-term market variations, or may dispose of a portfolio security prior to
its maturity if the Adviser believes such disposition advisable, or necessary to
generate cash to satisfy redemptions. In such cases, the Government Cash Fund
may realize a gain or loss.
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HOW TO BUY SHARES
The minimum initial investment is $500, and the minimum subsequent investment
is $25 for Class A, Class B or Class C Shares. However, both the minimum initial
and subsequent investment amounts are $25 for investments pursuant to the
"Investo-Matic" plan (a bank draft investing program administered by the
Distributor), or pursuant to the Systematic Exchange privilege, or for an
individual retirement account (IRA). In addition, there are no subsequent
investment minimum amounts in connection with the reinvestment of dividend or
capital gain distributions. The minimum initial investment for Class I Shares is
$1,000,000 with no minimum subsequent investment. Completed applications for the
purchase of shares should be mailed to: Phoenix-Zweig Funds, c/o State Street
Bank and Trust Company, P.O. Box 8301, Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their net
asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the "deferred
sales charge alternative"). Orders received by dealers prior to the close of
trading on the New York Stock Exchange (2:00 p.m. for shares of the Government
Cash Fund) are confirmed at the offering price effective at that time, provided
the order is received by the Authorized Agent prior to its close of business.
The alternative purchase arrangements permit an investor to choose the method
of purchasing shares that is more beneficial given the amount of the purchase,
the length of time the investor expects to hold the shares, whether the investor
wishes to receive distributions in cash or to reinvest them in additional shares
of the Funds, and other circumstances. Investors should consider whether, during
the anticipated life of their investment in the Fund, the accumulated continuing
distribution and services fees and contingent deferred sales charges on Class B
or C Shares would be less than the initial sales charge and accumulated
distribution services fee on Class A Shares purchased at the same time.
Dividends paid by the Fund, if any, with respect to each Class of Shares will
be calculated in the same manner at the same time on the same day, except that
fees such as higher distribution and services fees and any incremental transfer
agency costs relating to each Class of Shares will be borne exclusively by that
class. See "Dividends, Distributions and Taxes."
CLASS A SHARES
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed, except
that a 1.00% deferred sales charge applies to shares purchased by an investor in
amounts over $1 million if redeemed within 12 months of purchase. Such deferred
sales charge may be waived under certain conditions. Class A Shares are subject
to ongoing distribution and services fees at an annual rate of 0.30% of the
Fund's aggregate average daily net assets attributable to the Class A Shares. In
addition, certain purchases of Class A Shares qualify for reduced initial sales
charges. See Class A Shares--Reduced Initial Sales Charge.
CLASS B SHARES
Class B Shares do not incur a sales charge when they are purchased, but they
are subject to a sales charge if they are redeemed within six years of purchase.
The deferred sales charge may be waived in connection with certain qualifying
redemptions. See Class B and C Shares--Waiver of Sales Charges.
Class B Shares are subject to ongoing distribution and services fees at an
aggregate annual rate of up to 1.00% of the Fund's aggregate average daily net
assets attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment is
made. The higher ongoing distribution and services fees paid by Class B Shares
will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares seven years
after the end of the calendar month in which the shareholder's order to purchase
was accepted subject to the qualifications described in the Funds' Prospectus.
The purpose of the conversion feature is to relieve the holders of the Class B
Shares that have been outstanding for a period of time from most of the burden
of such distribution related expenses. The seven-year time limit has been deemed
sufficient for the Adviser and the Distributor to have been compensated for
distribution expenses related to the Class B Shares.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
seven years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and services fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
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For purposes of conversion to Class A Shares, shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares in
a shareholder's Fund account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Fund account
(other than those in the sub-account) convert to Class A, an equal pro rata
portion of the Class B Share dividends in the sub-account will also convert to
Class A Shares.
CLASS C SHARES
Class C Shares are purchased without an initial sales charge but are subject
to a deferred sales charge if redeemed within one year of purchase. The deferred
sales charge may be waived in connection with certain qualifying redemptions.
Shares issued in conjunction with the automatic reinvestment of income
distributions and capital gain distributions are not subject to any sales
charges. Class C Shares are subject to ongoing distribution and services fees at
an aggregate annual rate of up to 1.00% of the Fund's aggregate average daily
net assets attributable to Class C Shares for the Strategy Fund, Appreciation
Fund, Growth & Income Fund, Managed Assets and Foreign Equity Fund, and 0.75%
and 0.30% for the Government and Government Cash Funds, respectively. See the
Funds' current Prospectus for more information.
CLASS I SHARES
Class I Shares are offered primarily to persons subject to the Investment
Adviser's Code of Ethics relating to personal securities transactions and to
tax-exempt retirement plans specifically affiliated with the Investment Adviser,
as well as certain institutional investors. If you are eligible to purchase and
do purchase Class I Shares, you will pay no sales charge at any time. There are
no distribution and service fees applicable to Class I Shares. Class I Shares
are not available in all states.
CLASS A SHARES--REDUCED INITIAL SALES CHARGES
Investors choosing Class A Shares may be entitled to reduced sales charges.
The five ways in which sales charges may be avoided or reduced are described
below.
QUALIFIED PURCHASERS. If you fall within any one of the following categories,
you will not have to pay a sales charge on your purchase of Class A Shares: (1)
trustee, director or officer of the Phoenix Funds, the Phoenix-Zweig Funds, the
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund advised,
subadvised or distributed by the Adviser, Distributor or any of their corporate
affiliates (an "Affiliated Phoenix Fund"); (2) any director or officer, or any
full-time employee or sales representative (for at least 90 days) of the Adviser
or Distributor; (3) registered representatives and employees of securities
dealers with whom Distributor has sales agreements; (4) any qualified retirement
plan exclusively for persons described above; (5) any officer, director or
employee of a corporate affiliate of the Adviser or Distributor; (6) any spouse,
child, parent, grandparent, brother or sister of any person named in (1), (2),
(3) or (5) above; (7) employee benefit plans for employees of the Adviser,
Distributor and/or their corporate affiliates; (8) any employee or agent who
retires from Phoenix Home Life, Distributor and/or their corporate affiliates;
(9) any account held in the name of a qualified employee benefit plan, endowment
fund or foundation if, on the date of the initial investment, the plan, fund or
foundation has assets of $10,000,000 or more or at least 100 eligible employees;
(10) any person with a direct rollover transfer of shares from an established
Phoenix-Zweig Funds qualified plan; (11) any Phoenix Home Life separate account
which funds group annuity contracts offered to qualified employee benefit plans;
(12) any state, county, city, department, authority or similar agency prohibited
by law from paying a sales charge; (13) any fully matriculated student in any
U.S. service academy; (14) any unallocated account held by a third party
administrator, registered investment adviser, trust company, or bank trust
department which exercises discretionary authority and holds the account in a
fiduciary, agency, custodial or similar capacity, if in the aggregate such
accounts held by such entity equal or exceed $1,000,000 and by retirement plans
with assets of $1,000,000 or more or at least 50 eligible employees; (15) any
person who is investing redemption proceeds from investment companies other than
the Phoenix Funds, Phoenix-Zweig Funds, Phoenix-Engemann Funds or Phoenix-Seneca
Funds if, in connection with the purchases or redemption of the redeemed shares,
the investor paid a prior sales charge provided such investor supplies
verification that the redemption occurred within 90 days of the Phoenix Fund
purchase and that a sales charge was paid; (16) any deferred compensation plan
established for the benefit of any Phoenix Fund, Phoenix-Zweig Fund,
Phoenix-Engemann Fund or Phoenix-Seneca Fund trustee or director; provided that
sales to persons listed in (1) through (16) above are made upon the written
assurance of the purchaser that the purchase is made for investment purposes and
that the shares so acquired will not be resold except to the Fund; (17)
purchasers of Class A Shares bought through investment advisers and financial
planners who charge an advisory, consulting or other fee for their services and
buy shares for their own accounts or the accounts of their clients; (18)
retirement plans and deferred compensation plans and trusts used to fund those
plans (including, for example, plans qualified or created under sections 401(a),
403(b) or 457 of the Internal Revenue Code), and "rabbi trusts" that buy shares
for their own accounts, in each case if those purchases are made through a
broker or agent or other financial intermediary that has made special
arrangements with the Distributor for such purchases; (19) 401(k) participants
in the Merrill Lynch Daily K Plan (the "Plan") if the Plan has at least $3
million in assets or 500 or more eligible employees; or (20) clients of
investment advisors or financial planners who buy shares for their own accounts
but only if their accounts are linked to a master account of their investment
advisor or financial planner on the books and records of the broker, agent or
financial intermediary with which the Distributor has made such special
arrangements (each of the investors described in (17) through (20) may be
charged a fee by the broker, agent or financial intermediary for purchasing
shares).
COMBINATION PURCHASE PRIVILEGE. Your purchase of any class of shares of the
Phoenix-Zweig Funds (other than Phoenix-Zweig Government Cash Fund Class A or M
Shares), if made at the same time by the same "person," will be added together
to determine whether the combined sum entitles you to an immediate reduction in
sales charges. A "person" is defined in this and the
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following sections as (a) any individual, their spouse and minor children
purchasing shares for his or their own account (including an IRA account)
including his or their own trust; (b) a trustee or other fiduciary purchasing
for a single trust, estate or single fiduciary account (even though more than
one beneficiary may exist); (c) multiple employer trusts or Section 403(b) plans
for the same employer; (d) multiple accounts (up to 200) under a qualified
employee benefit plan or administered by a third party administrator; or (e)
trust companies, bank trust departments, registered investment advisers, and
similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority and
which are held in a fiduciary, agency, custodial or similar capacity, provided
all shares are held of record in the name, or nominee name, of the entity
placing the order.
LETTER OF INTENT. If you sign a Letter of Intent, your purchase of any class
of shares of the Phoenix-Zweig Funds (other than Phoenix-Zweig Government Cash
Fund Class A or M Shares), if made by the same person within a 13-month period,
will be added together to determine whether you are entitled to an immediate
reduction in sales charges. Sales charges are reduced based on the overall
amount you indicate that you will buy under the Letter of Intent. The Letter of
Intent is a mutually non-binding arrangement between you and the Distributor.
Since the Distributor doesn't know whether you will ultimately fulfill the
Letter of Intent, shares worth 5% of the amount of each purchase will be set
aside until you fulfill the Letter of Intent. When you buy enough shares to
fulfill the Letter of Intent, these shares will no longer be restricted. If, on
the other hand, you do not satisfy the Letter of Intent, or otherwise wish to
sell any restricted shares, you will be given the choice of either buying enough
shares to fulfill the Letter of Intent or paying the difference between any
sales charge you previously paid and the otherwise applicable sales charge based
on the intended aggregate purchases described in the Letter of Intent. You will
be given 20 days to make this decision. If you do not exercise either election,
the Distributor will automatically redeem the number of your restricted shares
needed to make up the deficiency in sales charges received. The Distributor will
redeem restricted Class A Shares before Class C or B Shares, respectively.
Oldest shares will be redeemed before selling newer shares. Any remaining shares
will then be deposited to your account.
RIGHT OF ACCUMULATION. Your purchase of any class of shares of the
Phoenix-Zweig Funds, if made over time by the same person may be added together
to determine whether the combined sum entitles you to a prospective reduction in
sales charges. You must provide certain account information to the Distributor
to exercise this right.
ASSOCIATIONS. Certain groups or associations may be treated as a "person" and
qualify for reduced Class A Share sales charges. The group or association must:
(1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge; (3)
work through an investment dealer; or (4) not be a group whose sole reason for
existing is to consist of members who are credit card holders of a particular
company, policyholders of an insurance company, customers of a bank or a
broker-dealer or clients of an investment adviser.
CLASS A SHARES--WAIVER OF DEFERRED SALES CHARGE
The 1% CDSC will be waived where the investor's dealer of record, due to the
nature of the investor's account, notifies the distributor prior to the time of
the investment that the dealer waives the commission otherwise payable to the
dealer, or agrees to receive such commissions ratably over a 12-month period.
CLASS B AND C SHARES--WAIVER OF SALES CHARGES
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse, or (iii) of the beneficiary of a Uniform Gifts to
Minors Act (UGMA), Uniform Transfers to Minors Act (UTMA) or other custodial
account; (b) within one year of disability, as defined in Code Section 72(m)(7);
(c) as a mandatory distribution upon reaching age 70 1/2 under any retirement
plan qualified under Code Sections 401, 408 or 403(b) or resulting from the
tax-free return of an excess contribution to an IRA; (d) by 401(k) plans using
an approved participant tracking system for participant hardships, death,
disability or normal retirement, and loans which are subsequently repaid; (e)
from certain other Class A and Class C Share retirement plans; (f) from the
Merrill Lynch Daily K Plan ("Plan") invested in Class B Shares, in which such
shares the Distributor has not paid the dealer the Class B sales commission; (g)
based on the exercise of exchange privileges among Class B and C Shares of these
Funds; (h) based on any direct rollover transfer of shares from an established
Fund qualified plan into another Affiliated Phoenix Fund IRA by participants
terminating from the qualified plan; and (i) based on the systematic withdrawal
program. If, as described in condition (a) above, an account is transferred to
an account registered in the name of a deceased's estate, the CDSC will be
waived on any redemption from the estate account occurring within one year of
the death. If the Class B or C Shares are not redeemed within one year of the
death, they will remain subject to the applicable CDSC when redeemed.
Shareholders between the ages of 59 1/2 and 70 1/2 receiving a CDSC waiver on
mandatory distributions under retirement plans described in condition (c) above
prior to May 1, 1999, will continue to receive the waiver.
CONVERSION FEATURE--CLASS B SHARES
Class B Shares will automatically convert to Class A Shares of the same Fund
seven years after they are bought. Conversion will be on the basis of the then
prevailing net asset value of Class A and B Shares. There is no sales load, fee
or other charge for this feature. Class B Shares acquired through dividend or
distribution reinvestments will be converted into Class A Shares at the same
time that other Class B Shares are converted based on the proportion that the
reinvested shares bear to purchased Class B Shares. The conversion
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feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution fees and associated costs with respect to Class B Shares does not
result in any dividends or distributions constituting "preferential dividends"
under the Code, and that the conversion of shares does not constitute a taxable
event under federal income tax law. If the conversion feature is suspended,
Class B Shares would continue to be subject to the higher distribution fee for
an indefinite period. Even if the Trust were unable to obtain such assurances,
it might continue to make distributions if doing so would assist in complying
with its general practice of distributing sufficient income to reduce or
eliminate federal taxes otherwise payable by the Funds.
IMMEDIATE INVESTMENT
In order to obtain immediate investment of funds, initial and subsequent
purchases of shares of a Fund may also be made by wiring Federal Funds (monies
held in a bank account with a Federal Reserve Bank) directly pursuant to the
following instructions:
(1) For initial investments, telephone the Trust at (800) 367-5877. Certain
information will be requested from you regarding the account, and an
account number will be assigned.
(2) Once an account number has been assigned, direct your bank to wire the
Federal Funds to State Street Bank and Trust Company, Custody &
Shareholder Services Division, Boston, Massachusetts 02105, attention of
the appropriate Fund of the Phoenix-Zweig Trust. Your bank must include
the account number and the name(s) in which your account is registered in
its wire and also request a telephone advice. Your bank may charge a fee
to you for transmitting funds by wire.
An order for shares of a Fund purchased with Federal Funds will be accepted
on the business day Federal Funds are wired provided the Federal Funds are
received by 4:00 p.m. on that day; otherwise, the order will not be accepted
until the next business day. Shareholders should bear in mind that wire
transfers may take two or more hours to complete.
Promptly after an initial purchase of shares made by wiring Federal Funds
directly, the shareholder should complete and mail an Account Application to
Equity Planning.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges. Certain privileges may not be available in connection with
all classes. In most cases, changes to account services may be accomplished over
the phone. Inquiries regarding policies and procedures relating to shareholder
account services should be directed to Shareholder Services at (800) 243-1574.
The Trust and the Distributor reserve the right to modify or terminate these
services upon reasonable notice.
EXCHANGES. Under certain circumstances, shares of any Phoenix-Zweig Fund may
be exchanged for shares of the same class of another Phoenix-Zweig Fund on the
basis of the relative net asset values per share at the time of the exchange.
Exchanges are subject to the minimum initial investment requirement of the
designated Fund, except if made in connection with the Systematic Exchange
privilege. Shareholders may exchange shares held in book-entry form for an
equivalent number (value) of the same class of shares of any other Phoenix-Zweig
Fund, if currently offered. On exchanges with share classes that carry a
contingent deferred sales charge, the CDSC schedule of the original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see also "Dividends, Distributions and
Taxes").
SYSTEMATIC EXCHANGES. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Phoenix-Zweig Fund automatically on a
monthly, quarterly, semiannual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net asset
value of the shares held in a single account), you may direct that shares be
automatically exchanged at predetermined intervals for shares of the same class
of another Phoenix-Zweig Fund. This requirement does not apply to Phoenix "Self
Security" program participants. Systematic exchanges will be executed upon the
close of business on the 10th day of each month or the next succeeding business
day. Systematic exchange forms are available from the Distributor. Exchanges
will be based upon each Fund's net asset value per share next computed after the
close of business on the 10th day of each month (or next succeeding business
day), without sales charge.
DIVIDEND REINVESTMENT ACROSS ACCOUNTS. If you maintain an account balance of
at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account of one
of the other Phoenix-Zweig Funds at net asset value. You should obtain a current
prospectus and consider the objectives and policies of each Fund carefully
before directing dividends and distributions to another Fund. Reinvestment
election forms and prospectuses are available from Equity Planning.
Distributions may also be mailed to a second payee and/or address. Requests for
directing distributions to an alternate payee must be made in writing with a
signature guarantee of the registered owner(s). To be effective with respect to
a particular dividend or distribution, notification of the new distribution
option must be received by the Transfer Agent at least three days prior to the
record date of such dividend or distribution. If all shares in your account are
repurchased or
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redeemed or transferred between the record date and the payment date of a
dividend or distribution, you will receive cash for the dividend or distribution
regardless of the distribution option selected.
INVEST-BY-PHONE. This expedited investment service allows a shareholder to
make an investment in an account by requesting a transfer of funds from the
balance of their bank account. Once a request is phoned in, Equity Planning will
initiate the transaction by wiring a request for monies to the shareholder's
commercial bank, savings bank or credit union via Automated Clearing House
(ACH). The shareholder's bank, which must be an ACH member, will in turn forward
the monies to Equity Planning for credit to the shareholder's account. ACH is a
computer based clearing and settlement operation established for the exchange of
electronic transactions among participating depository institutions.
To establish this service, please complete an Invest-by-Phone Application and
attach a voided check if applicable. Upon Equity Planning's acceptance of the
authorization form (usually within two weeks) shareholders may call toll free
(800) 367-5877 prior to 3:00 p.m. (New York time) to place their purchase
request. Instructions as to the account number and amount to be invested must be
communicated to Equity Planning. Equity Planning will then contact the
shareholder's bank via ACH with appropriate instructions. The purchase is
normally credited to the shareholder's account the day following receipt of the
verbal instructions. The Trust may delay the mailing of a check for redemption
proceeds of Trust shares purchased with a check or via Invest-by-Phone service
until the Trust has assured itself that good payment has been collected for the
purchase of the shares, which may take up to 15 days.
The Trust and Equity Planning reserve the right to modify or terminate the
Invest-by-Phone service for any reason or to institute charges for maintaining
an Invest-by-Phone account.
SYSTEMATIC WITHDRAWAL PROGRAM. The Systematic Withdrawal Program allows you
to periodically redeem a portion of your account on a predetermined monthly,
quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations stated
below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Fund worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. The purchase
of shares while participating in the withdrawal program will ordinarily be
disadvantageous to the Class A Shares investor since a sales charge will be paid
by the investor on the purchase of Class A Shares at the same time as other
shares are being redeemed. For this reason, investors in Class A Shares may not
participate in an automatic investment program while participating in the
Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any applicable
contingent deferred sales charge on all shares redeemed. Accordingly, the
purchase of Class B Shares will generally not be suitable for an investor who
anticipates withdrawing sums in excess of the above limits shortly after
purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefore postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for the Trust to dispose of its securities or to determine fairly the value of
its net assets or during any other period permitted by order of the Securities
and Exchange Commission for the protection of investors. Furthermore, the
Transfer Agent will not mail redemption proceeds until checks received for
shares purchased have cleared, which may take up to 15 days or more after
receipt of the check. See the Funds' current Prospectus for further information.
The Trust has authorized one or more brokers to accept on its behalf purchase
and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemptions by Class B and Class C shareholders will be subject to the
applicable deferred sales charge, if any.
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REDEMPTION OF SMALL ACCOUNTS
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the giving
of not less than 60 days written notice to the shareholder mailed to the address
of record. During the 60-day period the shareholder has the right to add to the
account to bring its value to $200 or more. See the Funds' current Prospectus
for more information.
BY MAIL
Shareholders may redeem shares by making a written request, executed in the
full name of the account, directly to Phoenix-Zweig Funds, c/o State Street Bank
and Trust Company, P.O. Box 8301, Boston, MA 02266-8301. However, when
certificates for shares are in the possession of the shareholder, they must be
mailed or presented, duly endorsed in the full name of the account, with a
written request to Equity Planning that the Trust redeem the shares. See the
Funds' current Prospectus for more information.
TELEPHONE REDEMPTIONS
Shareholders who do not have certificated shares may redeem up to $50,000
worth of their shares by telephone. See the Funds' current Prospectus for
additional information.
BY CHECK (GOVERNMENT AND GOVERNMENT CASH FUNDS ONLY)
Any shareholder of these Funds may elect to redeem shares held in his/her
Open Account by check. Checks will be sent to an investor upon receipt by Equity
Planning of a completed application and signature card (attached to the
application). If the signature card accompanies an individual's initial account
application, the signature guarantee section of the form may be disregarded.
However, the Trust reserves the right to require that all signatures be
guaranteed prior to the establishment of a check writing service account. When
an authorization form is submitted after receipt of the initial account
application, all signatures must be guaranteed regardless of account value.
Checks may be drawn payable to any person in an amount of not less than $500,
provided that immediately after the payment of the redemption proceeds the
balance in the shareholder's Open Account is $500 or more.
When a check is presented to Equity Planning for payment, a sufficient number
of full and fractional shares in the shareholder's Open Account will be redeemed
to cover the amount of the check. The number of shares to be redeemed will be
determined on the date the check is received by the Transfer Agent. Presently
there is no charge to the shareholder for the check writing service, but this
may be changed or modified in the future upon two weeks written notice to
shareholders. Checks drawn from Class B and Class C accounts are subject to the
applicable deferred sales charge, if any.
The checkwriting procedure for redemption enables a shareholder to receive
income accruing on the shares to be redeemed until such time as the check is
presented to Equity Planning for payment. Inasmuch as canceled checks are
returned to shareholders monthly, no confirmation statement is issued at the
time of redemption.
Shareholders utilizing withdrawal checks will be subject to Equity Planning's
rules governing checking accounts. A shareholder should make sure that there are
sufficient shares in his Open Account to cover the amount of any check drawn. If
insufficient shares are in the account and the check is presented to Equity
Planning on a banking day on which the Trust does not redeem shares (for
example, a day on which the New York Stock Exchange is closed), or if the check
is presented against redemption proceeds of an investment made by check which
has not been in the account for at least fifteen calendar days, the check may be
returned marked "non-sufficient Funds" and no shares will be redeemed. A
shareholder may not close his account by a withdrawal check because the exact
value of the account will not be known until after the check is received by
Equity Planning.
REDEMPTION IN KIND
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price either in cash or in kind. However, the Funds
have elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Funds at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to them
in computing the net asset value per share of a Fund. A shareholder receiving
such securities would incur brokerage costs when he sold the securities.
ACCOUNT REINSTATEMENT PRIVILEGE
Shareholders who may have overlooked features of their investment at the time
they redeemed have a privilege of reinvestment of their investment at net asset
value. See the Funds' current Prospectus for more information.
21
<PAGE>
TAX SHELTERED RETIREMENT PLANS
Shares of the Trust are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning (800) 243-4361 for further information
about the plans.
MERRILL LYNCH DAILY K PLAN
Class A Shares of a Fund are made available to Merrill Lynch Daily K Plan
(the "Plan") participants at NAV without an initial sales charge if:
(i) the Plan is recordkept on a daily valuation basis by Merrill Lynch and,
on the date the Plan Sponsor signs the Merrill Lynch Recordkeeping Service
Agreement, the Plan has $3 million or more in assets invested in broker/dealer
funds not advised or managed by Merrill Lynch Asset Management L.P. ("MLAM")
that are made available pursuant to a Service Agreement between Merrill Lynch
and the fund's principal underwriter or distributor and in funds advised or
managed by MLAM (collectively, the "Applicable Investments");
(ii) the Plan is recordkept on a daily valuation basis by an independent
recordkeeper whose services are provided through a contract or alliance
arrangement with Merrill Lynch, and, on the date the Plan Sponsor signs the
Merrill Lynch Recordkeeping Service Agreement, the Plan has $3 million or more
in assets, excluding money market funds, invested in Applicable Investments; or
(iii) the Plan has 500 or more eligible employees, as determined by a Merrill
Lynch plan conversion manager, on the date the Plan Sponsor signs the Merrill
Lynch Recordkeeping Service Agreement.
Alternatively, Class B Shares of a Fund are made available to Plan
participants at NAV without a CDSC if the Plan conforms with the requirements
for eligibility set forth in (i) through (iii) above but either does not meet
the $3 million asset threshold or does not have 500 or more eligible employees.
Plans recordkept on a daily basis by Merrill Lynch or an independent
recordkeeper under a contract with Merrill Lynch that are currently investing in
Class B Shares of a Fund convert to Class A Shares once the Plan has reached $5
million invested in Applicable Investments, or after the normal holding period
of seven years from the initial date of purchase.
DIVIDENDS, DISTRIBUTIONS AND TAXES
TAX STATUS
Each Fund of the Trust will be treated as a separate corporation for purposes
of the Internal Revenue Code of 1986, as amended (the Code) (except for purposes
of the definitional requirements for regulated investment companies under Code
Section 851(a)). By paying dividends representing its investment company taxable
income within the time periods specified in the Code and by meeting certain
other requirements, each Fund intends to qualify as a regulated investment
company under the Code. Since each Fund intends to distribute at least annually
its investment company taxable income, net capital gains, and capital gain net
income, it will not be subject to income or excise taxes otherwise applicable to
undistributed income of a regulated investment company. If a Series were to fail
to distribute all its income and gains, it would be subject to income tax and,
in certain circumstances, a 4% excise tax.
TAXATION OF SHAREHOLDERS
Dividends from net investment income and distributions from short-term
capital gains are taxable to shareholders as ordinary income. Distributions from
net capital gains that are properly designated as capital gains dividends are
taxable to shareholders as long-term capital gains regardless of the length of
time the shares in respect of which such distributions are received have been
held.
Dividends from Phoenix-Zweig Government Cash Fund and the Phoenix-Zweig
Government Fund are not expected to qualify for the 70% dividends received
deduction available to corporate shareholders. Phoenix-Zweig Government Cash
Fund's dividends include all accrued interest, earned discounts and realized
gains and losses, less amortized premiums and accrued expenses. Distributions by
other Funds out of their dividend income from domestic corporations may qualify
in whole or in part for the deduction if the distributing Fund does not sell the
stock in respect of which it received such dividends before satisfying a 46-day
holding period requirement (91 days for certain preferred stock), and the
shareholder holds his Trust shares in the distributing Fund for at least 46
days. For this purpose, the distributing Fund holding period in such stock may
be reduced for periods during which the Fund reduces its risk of loss from
holding the stock (e.g., by entering into option contracts).
Investors who purchase shares shortly before the record date for a
distribution will pay a share price that includes the value of the anticipated
distribution and will be taxed on the distribution when it is received even
though with respect to them the distribution represents in effect a return of a
portion of their purchase price. Any loss realized on a sale or exchange of
shares will be disallowed if the shares disposed of are replaced within a period
of 61 days beginning 30 days before the shares are sold or exchanged. If
disallowed, the loss will be reflected in an adjustment to the basis of the
shares acquired.
22
<PAGE>
Individuals and certain other non-exempt payees will be subject to a 31%
backup Federal withholding tax on dividends and other distributions from the
Funds, as well as on the proceeds of redemptions of Funds other than the
Phoenix-Zweig Government Cash Fund, if the affected Fund is not provided with
the shareholder's correct taxpayer identification number and certification that
the shareholder is not subject to such backup withholding, or if the Internal
Revenue Service notifies such Fund that the shareholder has failed to report
proper interest or dividends. For most individuals, the taxpayer identification
number is the taxpayer's social security number.
TAX TREATMENT OF CERTAIN TRANSACTIONS
In general, and as explained more fully below, if the Trust enters into
combinations of investment positions by virtue of which its risk of loss from
holding an investment position is reduced on account of one (or more) other
positions (i) losses realized on one position may be deferred to the extent of
any unrecognized gain on another position and (ii) long-term capital gains or
short-term capital losses may be recharacterized, respectively, as short-term
gains and long-term losses. Investments in foreign currency denominated
instruments or securities may generate, in whole or in part, ordinary income or
loss. The Federal income tax treatment of gains and losses realized from
transactions involving options on stock or securities entered into by a Fund
will be as follows: Gain or loss from a closing transaction with respect to
options written by a Fund, or gain from the lapse of any such option, will be
treated as short-term capital gain or loss. Gain or loss from the sale of put
and call options that a Fund purchases, and loss attributable to the lapse of
such options, will be treated as capital gain or loss. The capital gain or loss
will be long- or short-term depending on whether or not the affected option has
been held for more than one year. For this purpose, an unexercised option will
be deemed to have been sold on the date it expired. It should be noted, however,
that if a put is acquired at a time when the underlying stock or security has
been held for not more than one year, or if shares of the underlying stock or
security are acquired while such put is held, any gain on the subsequent
exercise, sale or expiration of the put will generally be short-term gain.
Any regulated futures contract or listed non-equity option held by a Fund at
the close of its taxable year will be treated as sold for its fair market value
on the last business day of such taxable year. Sixty percent of any gain or loss
with respect to such deemed sales, as well as the gain or loss from the
termination during the taxable year of the Fund's obligation (or rights) with
respect to such contracts by offsetting, by taking or making delivery, by
exercise or being exercised, by assignment or being assigned, by lapse, or
otherwise, will be treated as long-term capital gain or loss and the remaining
forty percent will be treated as short term capital gain or loss. A Fund may
make certain elections that modify the above tax treatment with respect to
regulated futures contracts or listed non-equity options that are part of a
mixed straddle, as defined by the Code.
The Trust may invest in certain investments that may cause it to realize
income prior to the receipt of cash distributions, including securities bearing
original issue discount. The level of such investments is not expected to affect
a Fund's ability to distribute adequate income to qualify as a regulated
investment company.
Treasury Regulations pursuant to Section 1092 provide for the coordination of
the wash sale rules and the short sale rules with the straddle rules. Generally,
the wash sale rules prevent the recognition of loss where a position is sold at
a loss and a substantially identical position is acquired within a prescribed
period. The short sale rules generally prevent the use of short sales to convert
short-term capital gain to long-term capital gain and long-term capital loss to
short-term capital loss.
In addition to the Federal income tax consequences described above relating
to an investment in the Trust, there may be other Federal, state, local or
foreign tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisers with respect to the effects of this investment on their specific
situations.
THE DISTRIBUTOR
Pursuant to its Distribution Agreement with the Trust (the "Distribution
Agreement"), Phoenix Equity Planning Corporation ("Equity Planning") acts as
distributor of the Trust's shares and receives: with respect to Class A Shares,
a front-end sales commission, as described in the Prospectus under "Sales
Charges," and a 1% CDSC which may apply on redemptions within 12 months of
purchases not subject to a sales charge; with respect to Class B Shares, a
declining CDSC ranging from 5% to 1% of the gross proceeds of a redemption of
shares held for less than seven years; and, with respect to Class C Shares, a
CDSC of 1.25% of the gross proceeds of a redemption of shares held for less than
one year. The Distributor also is compensated under the Rule 12b-1 distribution
plans as described more fully below. The amendment of the Distribution Agreement
naming Equity Planning as Distributor was last approved by the Trustees on
January 12, 1999.
Equity Planning has undertaken to use its best efforts to find purchasers for
shares of the Trust. Shares of each Fund are offered on a continuous basis.
Pursuant to distribution agreements for each class of shares or distribution
method, the Distributor will purchase shares of the Trust for resale to the
public, either directly or through securities dealers or agents, and is
obligated to purchase only those shares for which it has received purchase
orders. Equity Planning may also sell Trust shares pursuant to sales agreements
entered into with bank-affiliated securities brokers who, acting as agent for
their customers, place orders for Trust shares with Equity Planning. Although
the Glass-Steagall Act prohibits banks and bank affiliates from engaging in the
business of underwriting, distributing or selling securities (including mutual
fund shares), banking regulators have not indicated that such
23
<PAGE>
institutions are prohibited from purchasing mutual fund shares upon the order
and for the account of their customers. In addition, state securities laws on
this issue may differ from the interpretations of federal law and banks and
financial institutions may be required to register as dealers pursuant to state
law. If, because of changes in law or regulations, or because of new
interpretations of existing law, it is determined that agency transactions of
bank-affiliated securities brokers are not permitted, the Trustees will consider
what action, if any, is appropriate. It is not anticipated that termination of
sales agreements with bank-affiliated securities brokers would result in a loss
to their customers or a change in the net asset value per share of a Fund.
For the fiscal year ended December 31, 1998 and prior years, Zweig Securities
Corp. acted as Distributor for the Trust. The gross commissions paid to Zweig
Securities Corp. on sales of Trust shares totaled $670,941, $420,251 and
$633,637 for the years ended December 31, 1998, 1997 and 1996, respectively,
under the former distribution arrangement.
For the fiscal year ended December 31, 1998, $18,222, $577,702, and $208,502
in sales charges were collected on Class A, Class B and Class C Shares,
respectively.
Dealers with whom the Distributor has entered into sales agreements receive a
discount or commission as set forth below.
DEALER CONCESSIONS
<TABLE>
CLASS A SHARES -- ALL FUNDS (EXCEPT THE GOVERNMENT AND GOVERNMENT CASH FUNDS)
<CAPTION>
DEALER DISCOUNT
SALES CHARGE SALES CHARGE OR AGENCY FEE
AMOUNT OF TRANSACTION AS PERCENTAGE AS PERCENTAGE AS PERCENTAGE OF
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED OFFERING PRICE
----------------- ----------------- ------------------ --------------
<S> <C> <C> <C> <C>
Less than $50,000 5.50% 5.82% 4.75%
$50,000 but under $100,000 4.75% 4.99% 4.00%
$100,000 but under $250,000 3.75% 3.90% 3.25%
$250,000 but under $500,000 2.75% 2.83% 2.25%
$500,000 but under $1,000,000 1.75% 1.78% 1.50%
$1,000,000 or more None None None
CLASS A SHARES -- GOVERNMENT FUND
DEALER DISCOUNT
SALES CHARGE SALES CHARGE OR AGENCY FEE
AMOUNT OF TRANSACTION AS PERCENTAGE AS PERCENTAGE AS PERCENTAGE OF
AT OFFERING PRICE OF OFFERING PRICE OF AMOUNT INVESTED OFFERING PRICE
----------------- ----------------- ------------------ --------------
Less than $50,000 4.75% 4.99% 4.00%
$50,000 but under $100,000 4.00% 4.17% 3.50%
$100,000 but under $250,000 3.00% 3.09% 2.50%
$250,000 but under $500,000 2.25% 2.30% 1.75%
$500,000 but under $1,000,000 1.75% 1.78% 1.50%
$1,000,000 or more None None None
</TABLE>
Class A Shares of the Government Cash Fund are offered to the public at their
constant net asset value of $1.00 per share with no sales charge or dealer
discount.
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. This sales commission will not be paid to
dealers for sales of Class B or Class C Shares purchased by 401(k) participants
of the Merrill Lynch Daily K Plan (the "Plan") due to waiver of the CDSC for
these Plan participants' purchases. There is no dealer compensation payable on
Class I Shares. Your broker, dealer or investment adviser may also charge you
additional commissions or fees for their services in selling shares to you
provided they notify the Distributor of their intention to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of the
Funds and/or for providing other shareholder services. Such fees are in addition
to the sales commissions referenced above and may be based upon the amount of
sales of fund shares by a dealer; the provision of assistance in marketing of
fund shares; access to sales personnel and information dissemination services;
provision of recordkeeping and administrative services to qualified employee
benefit plans; and other criteria as established by the Distributor. Depending
on the nature of the services, these fees may be paid either from the Funds
through distribution fees, service fees or transfer agent fees or in some cases,
the Distributor may pay certain fees from its own profits and resources. From
its own profits and resources, the Distributor does intend to: (a) sponsor
training and educational meetings and provide additional compensation to
qualifying dealers in the form of trips, merchandise or expense reimbursements;
(b) from time to time pay special incentive and retention fees to qualified
wholesalers, registered financial institutions and third party marketers; (c)
pay broker/dealers an amount equal to 1% of the first $3 million of Class A
Share purchases by an account held in the name of a qualified employee benefit
plan with at least 100 eligible employees, 0.50% on the next $3 million, plus
0.25% on the amount in excess of $6 million; and (d) excluding purchases as
described in (c) above, pay broker/dealers an amount equal to 1% of the amount
of Class A Shares sold above $1 million but under
24
<PAGE>
$3 million, 0.50% on the next $3 million, plus 0.25% on the amount in excess of
$6 million. If part or all of such investment as described in (c) and (d) above,
including investments by qualified employee benefit plans, is subsequently
redeemed within one year of the investment date, a 1% CDSC will apply, except
for redemptions of shares purchased by an investor in amounts of $1 million or
more where such investor's dealer of record, due to the nature of the investor's
account, notifies the distributor prior to the time of the investment that the
dealer waives the commission otherwise payable to the dealer, or agrees to
receive such commissions ratably over a 12 month period. In addition, the
Distributor may pay the entire applicable sales charge on purchases of Class A
Shares to selected dealers and agents. Any dealer who receives more than 90% of
a sales charge may be deemed to be an "underwriter" under the Securities Act of
1933. Equity Planning reserves the right to discontinue or alter such fee
payment plans at any time.
ADMINISTRATIVE SERVICES
Zweig/Glaser also acts as administrative agent of the Funds and as such
performs administrative, bookkeeping and pricing functions for the Funds.
Reimbursement for such services is included as part of the management fees.
DISTRIBUTION PLANS
The Trust has adopted a distribution plan for each class of shares of each
Fund except Class I Shares (i.e., a plan for the Class A and C Shares and a plan
for the Class B Shares; collectively, the "Plans") in accordance with Rule 12b-1
under the Act, to compensate the Distributor for the services it provides and
for the expenses it bears under the Distribution Agreement. Each class of shares
of each Fund (other than Class M Shares of the Government Cash Fund and Class I
Shares) pays a service fee at a rate of 0.25% per annum of the average daily net
assets of such class of the Fund and a distribution fee based on average daily
net assets at the following rates: for Class A Shares of all Funds at a rate of
0.05% per annum; for Class B Shares of all Funds at a rate of 0.75% per annum;
for Class C Shares at a rate of 0.75% per annum for the Appreciation Fund,
Strategy Fund, Growth & Income Fund, Managed Assets and Foreign Equity Fund,
0.50% per annum for the Government Fund and 0.05% per annum for the Government
Cash Fund.
The Rule 12b-1 Plan for the Class M Shares issued by Zweig Government Cash
Fund (the "Class M Plan") provides that the Distributor may enter into Service
Agreements with securities dealers, financial institutions, banks, and other
industry professionals for distribution, promotion and administration of and/or
servicing investors in Class M Shares. Such service organizations are paid
directly or indirectly by Zweig Government Cash Fund and the Manager. Service
payments under the Class M Plan are paid in equal amounts by Zweig Government
Cash Fund and the Manager, or Zweig Government Cash Fund and the Manager
reimburse the Distributor equally for service payments to a service
organization, in an amount not exceeding 0.30% per annum of the average daily
net asset value of the Class M Shares. The Class M Plan also provides that Zweig
Government Cash Fund will pay the costs and expenses connected with the printing
and distribution of Zweig Government Cash Fund's prospectuses, shareholder
reports, and any promotional material for other than current Fund shareholders,
in an amount not to exceed $100,000 per annum.
A report of the amounts expended under the Plans must be made to the Board of
Trustees and reviewed by the Board at least quarterly. In addition, the Plans
provide that they may not be amended to increase materially the costs which the
Trust may bear for distribution pursuant to the Plans without shareholder
approval and that other material amendments to the Plans must be approved by a
majority of the Board, including a majority of the Board who are neither
interested persons of the Trust (as defined in the 1940 Act) nor have any direct
or indirect financial interest in the operation of the Plans (the "Qualified
Trustees"), by vote cast in person at a meeting called for the purpose of
considering such amendments.
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans. The Plans are
terminable at any time by vote of a majority of the Qualified Trustees or, with
respect to any Class or Fund, by vote of a majority of the shares of such Class
or Fund. Pursuant to the Plans, any new trustees who are not interested persons
must be nominated by existing trustees who are not interested persons.
If the Plans are terminated (or not renewed) with respect to one or more
Classes or Funds, they may continue in effect with respect to any Class or Fund
as to which they have not been terminated (or have not been renewed).
For the fiscal year ended December 31, 1998, the Funds paid Rule 12b-1 Fees
in the amount of $16,876,859. Unaffiliated broker-dealers received $49,184.
Distributor expenses under the Plans consisted of: (1) advertising $7,802,102;
(2) compensation to dealers $16,784,507; and (3) other $152,027.
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
Benefits from the Plans may accrue to the Trust and its shareholders from the
growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Fund's net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Fund's assets, and facilitating economies
of
25
<PAGE>
scale (e.g., block purchases) in the Fund's securities transactions. Under their
terms, the Plans will continue from year to year, provided that such continuance
is approved annually by a vote of the Trustees in the manner described above.
The continuance of the Plans for Class A, Class B and C Shares and the Plan
for Class M Shares was approved by the Board of Trustees, including a majority
of the Qualified Trustees, at a meeting held on January 12, 1999. Prior to
approving the continuance of the Plans and, the Board requested and received
from the Distributor all the information which it deemed necessary to arrive at
an informed determination as to such continuance and adoption of the Plans. In
making its determination to continue the Plans, the Board considered, among
other factors: (1) the Trust's experience under the Plan's and the previous Rule
12b-1 Plan's of the Trust, and whether such experience indicates that the Plans
would operate as anticipated; (2) the benefits the Trust had obtained under the
Plans and would be likely to obtain under the Plans; (3) what services would be
provided under the Plans by the Distributor to the Trust and its shareholders;
and (4) the reasonableness of the fees to be paid to the Distributor for its
services under the Plans. Based upon their review, the Board, including each of
the Qualified Trustees, determined that the continuance of the Plans would be in
the best interest of the Trust, and that there was a reasonable likelihood that
the Plans would benefit the Trust and its shareholders. In the Board's quarterly
review of the Plans, they will consider their continued appropriateness and the
level of compensation provided therein.
The Board of Trustees has the right to terminate the Rule 12b-1 Plan for the
Class B Shares, and in the event of such termination, no further payments would
be made thereunder. However, in the event the Board of Trustees were to
terminate the Rule 12b-1 Plan for the Class B Shares for any Fund, the Trust may
not thereafter adopt a new Rule 12b-1 Plan for a class of that Fund having, in
the good faith determination of the Board of Trustees, substantially similar
economic characteristics to the Class B Shares. Termination of the Rule 12b-1
Plan for the Class B Shares or the Distribution Agreement does not affect the
obligation of the Class B shareholders to pay CDSCs. The Distributor has sold
its right to receive certain payments under the Distribution Agreement to a
financial institution in order to finance the distribution of the Class B
Shares.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
MANAGEMENT OF THE TRUST
The Trustees have responsibility for management of the business of the Trust.
The officers of the Trust are responsible for its day to day operations. Set
forth below is certain information concerning the Trustees and officers.
Trustees and Officers
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
Claire B. Benenson (80) Trustee Consultant on Financial Conferences The New School for Social
870 U.N. Plaza Research, Director of The Burnham Fund Inc. and Trustee of the
New York, NY 10017 Phoenix-Euclid Funds. Former Director of Financial Conferences
and Chairman, Department of Business and Financial Affairs, The
New School for Social Research, President of the Money
Marketeers of New York University, Trustee of Simms Global
Fund and Director of Phoenix-Zweig Government Cash Fund Inc.
James Balog (70) Trustee Retired; Director and Member of the Audit, Investment, Stock
2205 N. Southwinds Blvd. Option and Compensation Committees of Transatlantic Holdings,
Vero Beach, FL 32963 Inc. (reinsurance); Director and Member of the Executive
Committee of Elan, Plc (pharmaceuticals); Director and Member
of the Executive and Investment & Credit Committees of Great
West Life and Annuity Insurance Company; Member of the
Technical Advisory Board of Galen Partners (health care) and
Trustee of the Phoenix-Euclid Funds. Former Director, Chairman
of the Audit Committee and Member of the Executive Committee of
A.L. Pharma, Inc. (health care); Chairman of 1838 Investment
Advisors, L.P. and Chairman of Lambert Brussels Capital
Corporation (investments).
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
S. Leland Dill (69) Trustee Retired; Director of Coutts Trust Holdings Limited, Coutts
5070 North Ocean Dr. Group, Coutts (USA) International (private banking), Trustee of
Singer Island, FL 33404 BT Portfolios and BT Investment Funds and Trustee of the
Phoenix-Euclid Funds. Former partner of KPMG Peat Marwick and
Director of Zweig Cash Fund Inc. and Vintners International
Company, Inc. (winery).
Eugene J. Glaser (58)* Chairman, President of the Adviser and Phoenix-Euclid Advisors LLC;
900 Third Avenue Chief Executive Officer President and Director of the Zweig Securities Corp.; Chairman,
New York, NY 10022 and Trustee President, Chief Executive Officer and Trustee of the
Phoenix-Euclid Funds. Former Director of Zweig Cash Fund Inc.,
The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.
Donald B. Romans (68) Trustee President of Romans & Company, (private investors and financial
233 East Wacker Dr. consultants); Director of the Burnham Fund Inc. and Trustee of
Chicago, IL 60601 the Phoenix-Euclid Funds. Former Consultant to and Executive
Vice President and Chief Financial Officer of Bally
Manufacturing Corporation, and Director of Phoenix-Zweig
Government Cash Fund Inc.
Martin E. Zweig (56) President President of the Subadviser; Chairman of the Board and
900 Third Avenue President of The Zweig Total Return Fund, Inc. and The Zweig
New York, NY 10022 Fund, Inc.; President and Director of Zweig-DiMenna
International Managers, Inc. and Zweig Securities Advisory
Service Inc.; Managing Director of Zweig-DiMenna Associates
LLC; President and Director of Gotham Advisors, Inc.; Member of
the Undergraduate Executive Board of the Wharton School,
University of Pennsylvania. Former President of Zweig Cash Fund
Inc. Former President and Director of Zweig Advisors Inc. and
Zweig Total Return Advisors, Inc. General Partner of Zweig
Katzen Investors, L.P.; Former Chairman of the Adviser.
Michael E. Haylon (41) Executive Vice Director and Executive Vice President--Investments, Phoenix
56 Prospect Street President Investment Partners, Ltd. (1995-present). Executive Vice
Hartford, CT 06115 President, Zweig/Glaser Advisers LLC (1999-present). Director
(1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present), President
(1996-present), Executive Vice President (1994-1996), Vice
President (1993-1994), National Securities & Research
Corporation. Director, Phoenix Equity Planning Corporation
(1995-present). Executive Vice President, Phoenix Funds
(1993-present) and Phoenix-Aberdeen Series Fund (1996-present).
Executive Vice President (1997-present), Vice President
(1996-1997), Phoenix Duff & Phelps Institutional Mutual Funds.
Senior Vice President, Securities Investments, Phoenix Home
Life Mutual Insurance Company (1993-1995).
John F. Sharry (46) Executive Vice President, Retail Division, Phoenix Investment Partners, Ltd.
56 Prospect Street President (1999-president). Managing Director, Retail Distribution,
Hartford, CT 06115 Phoenix Equity Planning Corporation (1995-present). Executive
Vice President, Phoenix Funds and Phoenix-Aberdeen Series Funds
(1998-present). Managing Director, Director and National Sales
Manager, Putnam Mutual Funds (until 1995).
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
David Katzen (41) Senior Vice President Senior Vice President of the Adviser and Executive Vice
900 Third Avenue President of Euclid Advisors LLC; Executive Vice President of
New York, NY 10022 the Phoenix-Euclid Funds. Former Director of Quantitative
Research at Avatar Investors Associates, Corp.; Director of
Equity Research for Zweig Total Return Advisors, Inc.; Research
Director of Zweig Advisors, Inc.; and Vice President of The
Zweig Fund, Inc. and ZZK Management, Inc. Former Vice President
of Zweig Advisors, Inc. and former Trustee of Euclid Mutual
Funds.
Thomas N. Steenburg (50) Senior Vice President Senior Vice President (1999-present), Vice President, Secretary
55 East Monroe Street and Counsel (1995-1999), Phoenix Investment Partners, Ltd.
Chicago, IL 60603 Executive Vice President (1999-present), Vice President and
Counsel (1996-1999), Duff & Phelps Investment Management Co.
Senior Vice President, Zweig/Glaser Advisers LLC
(1999-present). Vice President, Counsel and Secretary, Phoenix
Investment Counsel, Inc., National Securities & Research
Corporation and Phoenix Equity Planning Corporation
(1996-present). Vice President--Compliance, Phoenix-Aberdeen
International Advisors LLC (1996-present). Vice President,
Counsel and Compliance Officer, Seneca Capital Management, LLC
(1997-present). Vice President, Counsel and Secretary, Roger
Engemann & Associates, Inc. (1998-present). Counsel, Phoenix
Home Life Mutual Insurance Company (1991-1995).
Barry Mandinach (43) First Vice President Executive Vice President of the Zweig Corp., Senior
900 Third Avenue Vice President of the Adviser and Euclid Advisors LLC, and
New York, NY 10022 First Vice President of the Phoenix-Euclid Funds.
Carlton Neel (31) First Vice President First Vice President of the Adviser; Vice President of Zweig
900 Third Avenue Advisors Inc. and Zweig Total Return Advisors, Inc.; Former
New York, NY 10022 Vice President of J.P. Morgan & Co., Inc.
Alfred J. Ratcliffe (51) First Vice President, First Vice President of the Adviser and Euclid Advisors LLC,
900 Third Avenue Treasurer, Principal and First Vice President, Treasurer, Principal Accounting
New York, NY 10022 Accounting Officer Officer and Assistant Secretary of the Phoenix-Euclid Funds.
and Assistant Secretary Former Vice President of The Bank of New York.
Charles I. Leone (37) First Vice President and First Vice President and Chief Financial Officer of the Adviser
900 Third Avenue Assistant Secretary and Euclid Advisors LLC, First Vice President, Chief Financial
New York, NY 10022 Officer and Assistant Secretary of Zweig Securities Corp. and
First Vice President and Assistant Secretary of the
Phoenix-Euclid Funds. Former Assistant Treasurer of Zweig Cash
Fund Inc.
Annemarie Gilly (47) First Vice President First Vice President of the Adviser, Zweig Securities Corp. and
900 Third Avenue Euclid Advisors LLC, and First Vice President of the
New York, NY 10022 Phoenix-Euclid Funds. Former Vice President of Concord
Financial Group and former Director of The Zweig Fund, Inc. and
The Zweig Total Return Fund, Inc.
Jeffrey Lazar (39) Vice President Vice President and Treasurer of The Zweig Fund, Inc. and Zweig
900 Third Avenue Total Return Fund, Inc.; Executive Vice President, Treasurer
New York, NY 10022 and Secretary of Zweig Advisors Inc. and Zweig Total Return
Advisors, Inc. Former Director of The Zweig Fund, Inc. and The
Zweig Total Return Fund, Inc.
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
Beth Abraham (43) Assistant Vice President Assistant Vice President of The Adviser and the Phoenix-Euclid
900 Third Avenue Funds. Former self-employed consultant to the mutual fund New
York, NY 10022 industry.
Tom Disbrow (33) Assistant Vice Vice President of the Adviser and Euclid Advisors LLC and
900 Third Avenue President and Assistant Assistant Vice President and Assistant Treasurer of the
New York, NY 10022 Treasurer Phoenix-Euclid Funds
Rhonda Lee Berzner (34) Assistant Vice Senior Research Analyst for the Adviser and Euclid Advisors LLC
900 Third Avenue President and Assistant Vice President of the Phoenix-Euclid Funds.
New York, NY 10022
Marc Baltuch (53) Secretary First Vice President of the Adviser and Euclid Advisors LLC;
900 Third Avenue First Vice President, Director, Chief Compliance Officer of
New York, NY 10022 Watermark Securities, Inc.; Secretary of Zweig Securities
Corp.; Assistant Secretary of Gotham Advisors, Inc. Former
Assistant Secretary of Zweig Total Return Advisors, Inc. and
Zweig Advisors Inc.; Secretary of the Phoenix-Euclid Funds.
Former Secretary of Zweig Cash Fund Inc.
</TABLE>
*Designates a trustee who is an interested person of the trust within the
meaning of the 1940 Act.
COMPENSATION OF TRUSTEES AND OFFICERS
Those trustees and officers of the Trust who are affiliated with the
Subadviser or the Adviser are not separately compensated for their services as
trustees or officers of the Trust. The Trust currently pays each of its
disinterested trustees a fee of $5,000 per year, plus $1,500 per meeting
attended ($500 per phone meeting) and reimburses their expenses for attendance
at meetings, all of which is prorated on the basis of the assets of each Fund.
In addition, each such trustee receives a fee of $1,000 per year from each Fund.
For the fiscal year ended December 31, 1998, the fees and expenses of
disinterested trustees, as a group, were $74,967.
Trustees may be removed from office at any meeting of shareholders by a vote
of two-thirds of the outstanding shares of the Trust. Except as set forth above,
the trustees shall continue to hold office and may appoint their successors.
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS COMPENSATION
NAME FROM ZWEIG FUNDS OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
---- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
James Balog $18,000 $18,000
Claire B. Benenson $18,000 None None $18,000
S. Leland Dill $19,400 for any for any $19,400
Eugene J. Glaser* $0 Trustee Trustee $0
Donald B. Romans $19,567 $19,567
</TABLE>
*"Interested Person" as defined under the Investment Company Act.
The Board of Trustees met four times during the Trust's fiscal year ended
December 31, 1998. Each Trustee attended all of the meetings of the Board. The
Board does not have any committees.
At April 22, 1999, except for Dr. Martin E. Zweig and David Katzen, the
Trustees and officers as a group owned less than 1% of any class of any fund of
the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of April 14, 1999 with respect
to each person who beneficially owns 5% or more of any class of the Fund's
equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS PERCENT OF CLASS
- ------------------- -------------- ----------------
<S> <C> <C>
A.G. Edwards & Sons Inc. C/F Foreign Equity Fund--Class B 5.42%
Scott Deperro
2941 Lamplight Lane
Willoughby Hill, OH 44094
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS PERCENT OF CLASS
- ------------------- -------------- ----------------
<S> <C> <C>
Kate D. Clark Government Cash Fund--Class B 5.04%
4 E. Kirke Street
Chevy Chase, MD 20815
David Katzen Government Cash Fund--Class I 28.57%
134 W. Mountain Road
Sparta, NJ 07871
Manhattan Brass & Copper Co. Foreign Equity Fund--Class A 8.89%
Profit Sharing Plan Growth & Income Fund--Class A 6.67%
5671 49th Street
Maspeth, NY 11378
PaineWebber FBO Government Cash Fund--Class B 8.92%
Robert E. Carlin
P. O. Box 3321
Weehawken, NJ 07087
PaineWebber FBO Government Cash Fund--Class B 7.23%
Robert E. Carlin Sr.
P. O. Box 33572
Palm Beach, FL 33420
Prudential Bank & Trust FBO Appreciation Fund--Class I 5.86%
Its Defined Contribution Plan Customers 30
Scranton Office Park
Scranton, PA 18507
Prudential Securities Inc. Cust. Government Cash Fund--Class B 7.15%
Jordan I. Matulef
8707 Skokie Boulevard, Ste. 404
Skokie, IL 60077
Nicholas Schaus and Barbara Schaus Government Cash Fund--Class A 5.31%
137 Anchor Drive
Vero Beach, FL 32963
State Street Bank & Trust Co. Cust. Government Cash Fund--Class B 5.73%
James Ayers
2107 S. Branch Drive
White House Station, NJ 08889
State Street Bank & Trust Co. Cust. Government Cash Fund--Class A 12.04%
Harold Cohen
3606 Spring Brook Drive
Edison, NJ 08820
Martin E. Zweig and immediate family Government Cash Fund--Class I 71.14%
900 Third Avenue Government Cash Fund--Class M 46.06%
New York, NY 10022 Government Fund--Class I 59.73%
</TABLE>
The following table sets forth information as of April 14, 1999 with respect
to each person owning of record 5% or more of any class of the Registrant's
equity securities.
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS PERCENT OF CLASS
- ------------------- -------------- ----------------
<S> <C> <C>
Donaldson Lufkin Jenrette Securities Government Cash Fund--Class A 31.91%
Corporation Inc.
P. O. Box 2052
Jersey City, NJ 07303
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
NAME OF SHAREHOLDER FUND AND CLASS PERCENT OF CLASS
- ------------------- -------------- ----------------
<S> <C> <C>
MLPF&S for the sole benefit of its customers Appreciation Fund--Class B 12.06%
Attn: Fund Administration Foreign Equity Fund--Class B 14.77%
4800 Deer Lake Drive East Foreign Equity Fund--Class C 8.97%
Jacksonville, FL 32246 Government Fund--Class B 37.91%
Government Fund--Class C 36.24%
Growth & Income Fund--Class B 17.31%
Growth & Income Fund--Class C 14.03%
Managed Assets--Class A 8.67%
Managed Assets--Class B 24.75%
Managed Assets--Class C 19.44%
Strategy Fund--Class A 12.63%
Strategy Fund--Class B 16.65%
Strategy Fund--Class C 20.01%
Prudential Securities Inc. FBO Appreciation Fund--Class I 91.66%
Zweig Advisors Inc. MPP/PS Plan Foreign Equity Fund--Class I 100%
900 Third Avenue Government Fund--Class I 40.27%
New York, NY 10022 Growth & Income Fund--Class I 99.99%
Managed Assets--Class I 97.61%
Strategy Fund--Class I 99.99%
Salomon Smith Barney Inc. Government Fund--Class B 5.51%
333 West 34th Street
New York, NY 10001
</TABLE>
ADDITIONAL INFORMATION
CAPITAL STOCK
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
Funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund. Shareholders of all Funds vote on the
election of Trustees. On matters affecting an individual Fund (such as approval
of an investment advisory agreement or a change in fundamental investment
policies) and on matters affecting an individual class (such as approval of
matters relating to a Plan of Distribution for a particular class of shares), a
separate vote of that Fund or Class is required. The Trust does not hold regular
meetings of shareholders. The Trustees will call a meeting when at least 10% of
the outstanding shares so request in writing. If the Trustees fail to call a
meeting after being so notified, the Shareholders may call the meeting. The
Trustees will assist the Shareholders by identifying other shareholders or
mailing communications, as required under Section 16(c) of the 1940 Act.
Shares are fully paid, nonassessable, redeemable and fully transferable when
they are issued. Shares do not have cumulative voting rights, preemptive rights
or subscription rights. The assets received by the Trust for the issue or sale
of shares of each Fund, and any class thereof and all income, earnings, profits
and proceeds thereof, are allocated to such Fund, and class, respectively,
subject only to the rights of creditors, and constitute the underlying assets of
such Fund or class. The underlying assets of each Fund are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such Fund and with a share of the general expenses of the Trust. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund or class will be allocated by or under the direction of the
Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY 10036,
serves as the independent accountants for the Trust. PricewaterhouseCoopers LLP
audits the Trust's annual financial statements and expresses an opinion thereon.
31
<PAGE>
CUSTODIAN AND TRANSFER AGENT
The Bank of New York, One Wall Street, New York, New York 10286, serves as
custodian of the Trust's assets. State Street Bank and Trust Company, P.O. Box
8505, Boston, Massachusetts 02266-8505, serves as transfer agent and dividend
paying agent for the Trust.
REPORT TO SHAREHOLDERS
The fiscal year of the Trust ends on December 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual Report
containing financial statements audited by the Trust's independent accountants
will be sent to shareholders each year.
FINANCIAL STATEMENTS
The Financial Statements for the Fund's fiscal year ended December 31, 1998,
appearing in the Fund's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
32
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
DESCRIPTION OF MOODY'S CORPORATE BOND RATINGS:
Aaa Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
gilt-edge. Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of protective
elements may be of greater amplitude or there may be other elements present
which make the long-term risks appear somewhat larger than in Aaa securities.
A Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa Bonds which are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present, but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
DESCRIPTION OF S&P CORPORATE BOND RATINGS:
AAA Bonds rated AAA have the highest rating assigned by Standard & Poor's to
a debt obligation. Capacity to pay interest and repay principal is extremely
strong.
AA Bonds rated AA have a strong capacity to pay interest and repay principal
and differ from the highest rated issues only in small degrees.
A Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than bonds in higher rated categories.
BBB Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than for bonds in higher rated categories.
BB, B, CCC Bonds rated BB, B or CCC are regarded, on balance, as
predominantly speculative with respect to capacity to pay interest and repay
principal in accordance with the terms of the obligation. BB indicates the
lowest degree of speculation and CCC a higher degree of speculation. While such
debt will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major risk exposures to adverse conditions.
Bonds rated BBB or lower by S&P and Bonds rated Baa or less by Moody's
(non-investment grade securities) are considered to be speculative in nature.
Non-investment grade securities will generally be less sensitive to interest
rate changes than investment grade securities (those rated A or higher by S&P
and BBB or higher by Moody's) but will be more sensitive to adverse economic
changes or specific corporate developments. The liquidity risk of non-investment
grade securities will be higher than investment grade securities and their value
will be more difficult to ascertain due to the lack of an established secondary
market. These securities may also be adversely affected by new laws or proposed
new laws on the high yield market (e.g., tax proposals).
COMMERCIAL PAPER RATINGS
DESCRIPTION OF MOODY'S COMMERCIAL PAPER RATINGS:
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and
33
<PAGE>
(8) recognition by the management of obligations which may be present or may
arise as a result of public interest questions and preparations to meet
obligations. Description of S&P's Commercial Paper Ratings:
Commercial paper rated A-1 by S&P has the following characteristics:
Liquidity ratios are adequate to meet cash requirements: long-term senior debt
is rated A or better, the issuer has access to at least two additional channels
of borrowing; and basic earnings and cash flow have an upward trend with
allowance made for unusual circumstances. Typically, the issuer's industry is
well established and the issuer has a strong position in the industry. The
reliability and quality of management are unquestioned. Relative strength or
weakness of the above factors determines whether the issuer's commercial paper
is rated A-1, A-2 or A-3.
34
<PAGE>
PHOENIX-ZWEIG TRUST
PHOENIX-ZWEIG GOVERNMENT CASH FUND
CLASS M SHARES
900 Third Avenue, 31st Floor
New York, New York 10022
STATEMENT OF ADDITIONAL INFORMATION
May 1, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current Prospectus of
Phoenix-Zweig Government Cash Fund (the "Fund"), dated May 1, 1999, which
describes the Class M Shares of the Fund, and should be read in conjunction with
it. This Statement of Additional Information describes the Class M Shares of the
Fund only. Class M Shares currently have no exchange feature, and may not be
exchanged for Class A, Class B, Class C or Class I Shares of the Fund, or shares
of any other fund of the Phoenix-Zweig Trust (the "Trust") or any other
Affiliated Phoenix Fund. The Fund's Prospectus may be obtained by calling
Phoenix Equity Planning Corporation ("Equity Planning") at (800) 243-1574 or by
writing to Equity Planning at 100 Bright Meadow Boulevard, P.O. Box 2200,
Enfield, CT 06083-2200.
TABLE OF CONTENTS
PAGE
THE TRUST ............................................................... 1
INVESTMENT OBJECTIVES AND POLICIES ...................................... 1
PERFORMANCE ............................................................. 2
PERFORMANCE COMPARISONS ................................................. 3
INVESTMENT ADVISERS ..................................................... 3
DETERMINATION OF NET ASSET VALUE ........................................ 4
HOW TO BUY AND SELL SHARES .............................................. 5
TAX SHELTERED RETIREMENT PLANS .......................................... 6
THE DISTRIBUTOR AND DISTRIBUTION PLANS................................... 6
MANAGEMENT OF THE TRUST.................................................. 7
ADDITIONAL INFORMATION................................................... 11
Customer Service and Marketing: (800) 243-1574
Telephone Orders: (800) 24301574
PXP1203 (5/99)
<PAGE>
THE TRUST
The Trust is an open-end management investment company which was organized in
1984 as a Massachusetts business trust, then reorganized as a Delaware business
trust in 1996.
The Fund's Prospectus describes the investment objectives of the
Phoenix-Zweig Government Cash Fund (the "Fund"), and summarizes the investment
policies and investment techniques the Fund will employ in seeking to achieve
its investment objective. The following discussion supplements the description
of the Fund's investment policies and investment techniques in the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective of the Fund is deemed to be a fundamental policy and
may not be changed without the approval of the shareholders of the Fund.
Investment restrictions described in this Statement of Additional Information
are fundamental policies of the Fund and may not be changed without the approval
of the Fund's shareholders.
REPURCHASE AGREEMENTS
Repurchase agreements involve purchases of securities by the Fund. In such a
transaction, at the time the Fund purchases the security, it simultaneously
agrees to resell and redeliver the security to the seller who also
simultaneously agrees to buy back the security at a fixed price and time. This
assumes a predetermined yield for the Fund during its holding period, since the
resale price is always greater than the purchase price and reflects an
agreed-upon market rate. Such transactions afford an opportunity for the Fund to
invest temporarily available cash. Repurchase agreements may be considered loans
to the seller collateralized by the underlying securities. The risk to the Fund
is limited to the ability of the seller to pay the agreed-upon sum on the
repurchase date; in the event of default, the repurchase agreement provides that
the Fund is entitled to sell the underlying collateral. If the value of the
collateral declines after the agreement is entered into, however, and if the
seller defaults under a repurchase agreement when the value of the underlying
collateral is less than the repurchase price, the Fund could incur a loss of
both principal and interest. The Adviser monitors the value of the collateral at
the time the transaction is entered into and at all times subsequent during the
term of the repurchase agreement in an effort to determine that the value of the
collateral always equals or exceeds the agreed-upon repurchase price to be paid
to the Fund. If the seller were to be subject to a federal bankruptcy
proceeding, the ability of the Fund to liquidate the collateral could be delayed
or impaired because of certain provisions of the bankruptcy laws. The Fund
intends to invest more than 20% of its assets in repurchase agreements only with
respect to obligations of the U.S. Government, its agencies or instrumentalities
and only with member banks of the Federal Reserve System or primary dealers in
U.S. Government securities. The Fund's repurchase agreements must be fully
backed by collateral (U.S. Government securities) that is marked to market, or
priced, each day.
U.S. TREASURY ISSUES
The Fund may invest in U.S. Treasury issues, such as bills, certificates of
indebtedness, notes and bonds, and issues of U.S. Government agencies and
instrumentalities which are established under the authority of an act of
Congress, such as the Bank for Cooperatives, Export-Import Bank of the U.S.,
Farmers Home Administration, Federal Financing Bank, Federal Home Loan Banks,
Federal Home Loan Mortgage Corp., Federal Housing Administration, Federal
Intermediate Credit Banks, Federal Land Banks, Federal National Mortgage
Association, Government National Mortgage Association (GNMA), Resolution Funding
Corp., Student Loan Marketing Association, Tennessee Valley Authority and the
U.S. Postal Service. Some of these securities, such as Federal Housing
Administration debenture obligations, are supported by the full faith and credit
of the U.S. Treasury; others, such as obligations of Federal Home Loan Banks,
are supported by the right of the issuer to borrow from the U.S. Treasury;
others, such as those of the Federal National Mortgage Association, are
supported by the discretionary authority of the U.S. Government to purchase the
agency's obligations; and still others, such as those of the Student Loan
Marketing Association, are supported only by the credit of the instrumentality.
The Fund will not invest in obligations of the International Bank for
Reconstruction and Development (the World Bank), the Asian Development Bank, or
the Inter-American Development Bank, or in FHA or VA pooled mortgages.
INVESTMENT RESTRICTIONS
The Fund has adopted certain restrictions and fundamental policies which
cannot be changed without a vote of a majority of its outstanding voting
securities. A majority for this purpose is defined as the lesser of: (a) 67% of
the shares represented at a meeting if at least 50% of all shares are
represented; or (b) more than 50% of all outstanding shares. However, these
policies may be modified by the Trustees without shareholder approval to the
extent necessary to facilitate the implementation of a master-feeder structure
for the Fund. Except as stated above with respect to a master-feeder structure,
the Fund may not:
[bullet] Purchase common stocks, preferred stocks, warrants, other equity
securities, state bonds, municipal bonds, industrial revenue bonds or corporate
bonds or debentures;
[bullet] Borrow money, except from banks for temporary purposes in an amount
up to 10% of the value of its total assets. The Fund may only pledge its assets
in an amount up to 10% of the value of its total assets, and then only to secure
such borrowings. The Fund will
1
<PAGE>
borrow money only to accommodate requests to redeem shares to effect an orderly
liquidation of portfolio securities or to clear securities transactions and not
for leveraging purposes; accordingly, it is anticipated that any such borrowing
will be repaid before additional investments are made. The Fund currently does
not intend to borrow money to an extent exceeding 5% of its total assets. The
Fund may not issue any securities which would be deemed to be senior securities
in contravention of the 1940 Act;
[bullet] With respect to 75% of the value of its total assets, invest more
than 5% of the value of its total assets in the securities of any one issuer,
except securities issued or guaranteed as to the payment of principal and
interest by the U.S. Government, its agencies or instrumentalities;
[bullet] Sell securities short;
[bullet] Write or purchase put or call options;
[bullet] Underwrite the securities of other issuers;
[bullet] Purchase or sell real estate, real estate investment trust
securities, commodities or oil and gas interests;
[bullet] Make loans to others, except that engaging in permissible activities
specified in the Prospectus under the heading "Principal Investment Strategies"
and in this Statement of Additional Information under the headings "Investment
Objectives and Policies" and "Investment Restrictions" shall not be viewed as
loans for this purpose;
[bullet] Invest more than an aggregate of 10% of its net assets (taken at
current value) in repurchase agreements maturing in more than seven days and
other illiquid investments (such as non-negotiable certificates of deposit,
non-negotiable time deposits or other non-marketable securities);
[bullet] Invest in companies for the purpose of exercising control; or
[bullet] Invest in securities of other investment companies, except as they
may be acquired as part of a merger, consolidation or acquisition of assets.
The foregoing percentage restrictions apply at the time an investment is
made; a later increase or decrease in percentage may result from changes in
values or the Fund's net assets but will not be deemed to result in an
investment which is contrary to these restrictions.
PERFORMANCE
From time to time, the Trust determines a current yield and effective yield
for each class of shares of the Fund. For a further discussion of how the Trust
calculates yield, see "Pricing of Fund Shares" in the Prospectus.
The effective yield is an annualized yield based on a compounding of the
unannualized base period return. The effective yield will be slightly higher
than the yield or seven-day current yield because of the compounding effect of
the assumed reinvestment.
These yields are each computed in accordance with a standard method
prescribed by the rules of the Commission, by first determining the net change
in account value for a hypothetical account having a share balance of one share
at the beginning of a seven-day period (the "beginning account value"). The net
change in account value equals the value of additional shares purchased with
dividends from the original share and dividends declared on both the original
share and any such additional shares. The unannualized base period return equals
the net change in account value divided by the beginning account value. Realized
gains or losses or changes in unrealized appreciation or depreciation are not
taken into account in determining the net change in account value.
The yields are then calculated as follows:
Net Change in Account Value 365
Current Yield = --------------------------- X -----
Beginning Account Value 7
365
Effective Yield = [(1 + Base Period Return) ----- ] - 1
7
For the seven days ended December 31, 1998, the Fund's effective (compounded)
and current yields were 4.75% and 4.65%, respectively, for Class M Shares; 4.50%
and 4.41%, respectively, for Class A Shares; 3.77% and 3.71%, respectively, for
Class B Shares; 4.50% and 4.41%, respectively, for Class C Shares; and 4.81% and
4.71%, respectively, for Class I Shares.
Yield is a function of portfolio quality and composition, portfolio maturity
and operating expenses. Yields fluctuate and do not necessarily indicate future
results. While yield information may be useful in reviewing the performance of
the Fund, it may not provide a basis for comparison with bank deposits, other
fixed rate investments or other investment companies that may use a different
method of calculating yield.
2
<PAGE>
The investment results of the Class M, Class A, Class B, Class C and Class I
Shares of the Fund will tend to fluctuate over time, so that historical yields,
current distributions and total returns should not be considered representations
of what an investment may earn in any future period. Actual dividends will tend
to reflect changes in market yields, and will also depend upon the level of a
Class or the Fund's expenses, realized or unrealized investment gains and
losses, and the results of the Fund's investment policies. Thus, at any point in
time, investment yields, current distributions or total returns may be either
higher or lower than past results, and there is no assurance that any historical
performance record will continue.
PERFORMANCE COMPARISONS
The Fund also may include in its advertisements data from Age Wave, Inc.; the
American Association of Retired Persons; Barron's; Business Week;
CDA/Wiesenberger Investment Companies Service; Dalbar Surveys; Donoghue's Money
Fund Report; Financial Planning; Financial World; Forbes; Fortune; Fundscope,
Hulbert Financial Digest; Ibbotson Associates; Individual Investor; Investment
Advisor; Investors Business Daily; The Liscio Report; Lipper Analytical
Services, Inc.; Micropal Inc.; Money; Morningstar Mutual Funds; Mutual Fund
Forecaster; Mutual Funds Magazine; The National Center for Education Statistics;
The New York Times; The Philatelic Foundation; Smart Money; USA Today; U.S. News
& World Report; The Wall Street Journal; Worth and other industry publications.
INVESTMENT ADVISERS
Zweig/Glaser Advisers LLC ("Zweig/Glaser") is the investment adviser to the
Fund and is located at 900 Third Avenue, New York, NY 10022. As of December 31,
1998, Zweig/Glaser was managing twelve funds with net assets of approximately
$2.6 billion and acting as administrator for two closed-end funds with assets in
excess of $1.4 billion. Zweig/Glaser has been managing funds since September
1989.
Zweig/Glaser is a wholly-owned subsidiary of Phoenix Investment Partners,
Ltd. (`PXP"), a Delaware corporation, located at 56 Prospect St., Hartford, CT
06115. PXP is a publicly-traded independent registered investment advisory firm
and has served investors for over 70 years. As of March 31, 1998, PXP had over
$57 billion in assets under management through its investment partners: Aberdeen
Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago
and Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco, Zweig/Glaser in New York; and
Phoenix Investment Counsel, Inc. (Goodwin, Hollister, and Oakhurst divisions) in
Hartford, Sarasota, and Scotts Valley, CA, respectively.
Overall responsibility for the management and supervision of the Trust and
the Fund rests with the Trustees of the Phoenix-Zweig Trust (the "Trustees").
Zweig/Glaser's services under its Management Agreement are subject to the
direction of the Trustees.
The Management Agreement will continue in effect for two years if
specifically approved annually by a majority of the Board of Trustees who are
not parties to such contract or interested persons of any such party. The
Management Agreement may be terminated without penalty by either of the parties
on 60 days' written notice and must terminate in the event of its assignment.
The Management Agreement was last approved by the Trustees on January 12, 1999
and by the shareholders on February 25, 1999.
The Management Agreement provides that the Adviser is liable only for its
acts or omissions caused by its willful misfeasance, bad faith, or gross
negligence in the performance of its duties or reckless disregard of its
obligations under the Management Agreement. The Management Agreement permits the
Adviser to render services to others and to engage in other activities.
Pursuant to the Management Agreement, the Adviser: (a) supervises and assists
in the management of the assets of the Fund, furnishes the Fund with research,
statistical and advisory services and provides regular reports to the Trustees;
(b) provides advice and assistance with the operations of the Trust, compliance
support, preparation of the Trust's registration statements, proxy materials and
other documents and advice and assistance of the Adviser's General Counsel; (c)
makes investment decisions for the Trust; (d) ensures that investments follow
the investment objective, strategies, and policies of the Fund and comply with
government regulations; (e) selects brokers and dealers to execute transactions
for the Fund; and (f) furnishes office facilities, personnel necessary to
provide advisory services to the Fund, personnel to serve without salaries as
officers or agents of the Trust and compensation and expenses of any Trustees
who are also full-time employees of the Adviser or any of its affiliates.
The Fund's Subadviser is Zweig Consulting, LLC ("Zweig"). Its principal
offices are located at 900 Third Ave., New York, NY 10022. Zweig's services
under the Servicing Agreement are subject to the direction of both the Trustees
and Zweig/Glaser. Under a Servicing Agreement with Zweig/Glaser, Zweig's duties
to the Fund include promoting the interests of the Trust and research and
analysis.
In managing the assets of the Fund, the Adviser furnishes continuously an
investment program for the Fund consistent with the investment objectives and
policies of the Fund. More specifically, the Adviser determines from time to
time what securities shall be purchased for the Fund and what securities shall
be held or sold by the Fund. The Subadviser provides information that assists
the Adviser in determining dollar-weighted average portfolio maturity. Both the
Subadviser and Adviser are subject always to the provisions of the Trust's
Agreement and Declaration of Trust, By-Laws and its registration statement under
the 1940 Act and under
3
<PAGE>
the 1933 Act covering the Trust's shares, as filed with the SEC, and to the
investment objectives, policies and restrictions of the Fund, as each of the
same shall be from time to time in effect, and subject, further, to such
policies and instructions as the Trustees of the Trust may from time to time
establish. To carry out such determinations, the Adviser places order for the
investment and reinvestment of the Fund's assets.
The Trust pays the Adviser for its services pursuant to the Management
Agreement a monthly fee at the annual rate of 0.50% of the average daily net
assets of the Fund.
For the fiscal year ended December 31, 1998, Zweig/Glaser earned investment
management fees of $433,374.
For the years ended December 31, 1997 and 1996, the fees paid to Zweig/Glaser
for the Fund were $257,892 and $322,034, respectively.
The Adviser has voluntarily undertaken to limit the expenses of the Fund
(exclusive of taxes, interest, brokerage commissions, 12b-1 fees and
extraordinary expenses) until April 30, 2000 to 0.35% of its average daily net
assets. During the years ended December 31, 1998, 1997 and 1996, the Adviser's
reimbursements to the Fund aggregated $296,837, $251,454 and $247,233,
respectively. The Adviser reserves the right to discontinue this policy at any
time after April 30, 2000.
The Adviser may draw upon the resources of the Distributor and its qualified
affiliates in rendering its services to the Trust. The Distributor or its
affiliates may provide the Adviser (without charge to the Trust) with investment
information and recommendations that may serve as the principal basis for
investment decisions with respect to certain assets of the Trust.
The Adviser has adopted a Code of Ethics (the "Code") that requires all
persons subject to the Code to pre-clear any proposed non-exempt personal
securities transaction. Permission for any proposed transaction will be granted
provided it is determined that such would not negatively impact activity in
client accounts. In the event that a client of the Adviser's affiliates also
owns such security, or it is proposed that such client purchase such security,
available investments or opportunities for sales will be allocated in a manner
deemed to be equitable by the Adviser.
DETERMINATION OF NET ASSET VALUE
The net asset value per share of each class of shares is determined as of
2:00 p.m. eastern time and as of the close of regular trading on the New York
Stock Exchange ("NYSE") (normally 4:00 PM eastern time) on each day that the
NYSE is open. The NYSE is closed on the following holidays (or the weekdays on
which these holidays are celebrated when they fall on a weekend): New Year's
Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
The Board of Trustees ("the Board") has determined that it is in the best
interests of the Fund and its shareholders to seek to maintain a stable net
asset value per share, and that the appropriate method for valuing portfolio
securities is the amortized cost method, provided that such method continues to
fairly reflect the market-based net asset value per share. The Board shall
continuously review this method of valuation and make changes that may be
necessary to assure that the Fund's instruments are valued at their fair value
as determined by the Board in good faith.
The Board has determined that the Fund will comply with the conditions of
Rule 2a-7 under the Act regarding the amortized cost method of valuing portfolio
securities. Under Rule 2a-7, the Board is obligated, as a particular
responsibility within the overall duty of care owed to the Fund's shareholders,
to establish procedures reasonably designed, taking into account current market
conditions and the Fund's investment objectives, to stabilize the net asset
value per share of the Fund for purposes of distribution and redemption, at
$1.00 per share. These procedures include periodically monitoring, as the Board
deems appropriate, at such intervals as are reasonable in light of current
market conditions, the relationship between the net asset value per share based
upon the amortized cost method of valuation and the net asset value per share
based upon available indications of market value. The Board will consider what
steps should be taken, if any, in the event of a difference of more than 1/2 of
1% between the amortized cost value and the market value per share. The Board
will take such steps as it considers appropriate (e.g., redemption in kind,
selling portfolio instruments prior to maturity to realize capital gains or
losses, shortening the average portfolio maturity, withholding dividends, or
utilizing a net asset value per share determined by using market quotations) to
minimize any material dilution or other unfair results that might arise from
differences between the net asset value per share based upon the amortized cost
method of valuation and the net asset value per share based upon market value.
Rule 2a-7 requires that a dollar-weighted average portfolio maturity of not
more than 90 days, appropriate to the objective of maintaining a stable net
asset value of $1.00 per share, be maintained, and precludes the purchase of any
instrument with a remaining time to maturity of more than 397 calendar days.
However, the underlying securities used as collateral for repurchase agreements
are not subject to these restrictions, because a repurchase agreement is deemed
to have a maturity equal to the period remaining until the date on which the
repurchase of the underlying securities is deemed to occur. Should the
disposition of a portfolio security result in a dollar-weighted average
portfolio maturity of more than 90 days, the Fund will invest its available cash
in a manner that will reduce such average maturity to 90 days or less as soon as
reasonably practicable. Rule 2a-7 also requires the Fund to limit its
investments to instruments that the Board determines present minimal credit
risks and that have been given one of
4
<PAGE>
the two highest rating categories by nationally recognized statistical rating
organizations, or, in the case of instruments that are not so rated, are of
comparable quality as determined under procedures established by the Board.
It is the normal practice of the Fund to hold portfolio securities to
maturity and realize their par values, unless a prior sale or other disposition
thereof is mandated by redemption requirements or other extraordinary
circumstances. A debt security held to maturity is redeemable by its issuer at
its principal amount plus accrued interest. Under the amortized cost method of
valuation traditionally employed by institutions for valuation of money market
instruments, neither the amount of daily income nor the net asset value is
affected by any unrealized appreciation or depreciation of the portfolio. In
periods of declining interest rates, the indicated daily yield on shares of the
Fund (computed by dividing the annualized daily income on the Fund's portfolio
by the net asset value computed as above) may tend to be higher than a similar
computation made by utilizing a method of valuation based upon market prices and
estimates. The Fund may, to a limited extent, engage in short-term trading to
attempt to take advantage of short-term market variations, or may dispose of a
portfolio security prior to its maturity if the Adviser believes such
disposition advisable, or necessary to generate cash to satisfy redemptions. In
such cases, the Fund may realize a gain or loss.
Class M Shares are entitled to dividends as declared by the Board and, on
liquidation of the Fund, are entitled to receive their share of the net assets
of the Fund. Shareholders have no preemptive rights. The Trust's fiscal year
ends on December 31.
HOW TO BUY AND SELL SHARES
Reference is made to the materials in the Prospectus under the headings "How
to Buy Shares" and "How to Redeem Shares," which describe the methods of
purchase and redemption of Fund shares. The following is additional information
related to certain of those methods. Class M Shares are not exchangeable with
any of the Phoenix-Zweig Funds or any other Affiliated Phoenix Fund.
SWEEP PROGRAMS
Class M Shares of the Fund may be purchased through certain participating
securities dealers and/or banks (Institutions) which have established sweep
programs under which cash in their customers' accounts may be automatically
invested in the Fund. The customers' rights under these programs are governed by
the provisions of the particular Institution's program and the details of the
programs vary. The description below, while generally followed, should be
considered as illustrative of how such programs work, but may not be true of a
particular program.
Typically, in these programs each participating customer, pursuant to an
agreement executed with a particular Institution, becomes the beneficial owner
of specific shares of the Fund which may be purchased, redeemed and held by the
Institution in accordance with the customer's instructions and may fully
exercise all rights as a shareholder. The participating Institution holds shares
registered in its name, as agent for the customer, on the books of the Fund. A
statement regarding the customer's shares is generally supplied to the customer
monthly, and confirmations of all transactions for the account of the customer
normally are available to the customer promptly upon request. In addition, each
customer is sent proxies, periodic reports and other information from the Trust
with regard to the shares. The customer's shares are fully assignable and may be
encumbered by the customer. The sweep agreement can be terminated by the
customer at any time, without affecting beneficial ownership of the shares. In
order to obtain the benefits of this service, a customer typically is required
to maintain a minimum balance subject to a monthly maintenance fee, or a higher
minimum balance for which no monthly fee would be imposed. In either case, a
penalty fee is imposed if the minimum is not maintained. In general, the
automatic investment in shares of the Fund occurs on the same day that
withdrawals are made from the customer's account by the participating
Institution, but there may be a greater time lag between the removal of funds
from an account and their investment in shares of the Fund. Depending on the
particular program of the participating Institution, the customer may or may not
earn interest on the funds being swept during this lag.
All agreements which relate to the service are with the participating
Institution. Neither the Distributor nor the Fund is a party to any of those
agreements and no part of the compensation received by the participating
Institution flows to the Fund or to the Distributor or to any of their
affiliates either directly or indirectly. Information concerning those programs
and any related charges or fees is provided by the particular Institution prior
to purchases of the Class M Shares. Any fees charged by a participating
Institution effectively reduces the Fund's yield for those customers.
If a participating bank were prohibited from offering the sweep program, it
is expected that customers of the participating bank who seek to invest in the
Fund would have to purchase and redeem shares directly through the Fund's
transfer agent, State Street Bank and Trust Company.
CHECK SERVICE
An investor may request in writing that the Fund establish a check service
("Check Service") with Equity Planning as agent to draw against the investor's
Fund account. Upon receipt of such request, the Fund will provide checks
("Checks"). Checks may be made payable to the order of anyone in an amount of
$500 or more. Class M Shares held under retirement plans or IRAs are not
eligible for the Check Service. The Check Service is subject to Equity
Planning's customary rules and regulations governing checking accounts, and the
Fund and Equity Planning each reserve the right to change or suspend the Check
Service. The Check
5
<PAGE>
Service may be discontinued at any time or for any investor. The Check Service
does not create a checking or other bank account relationship between the
shareholder and Equity Planning or the Fund.
When a Check is presented to Equity Planning for payment, through normal
banking channels, Equity Planning, as the investor's agent, causes the Fund to
redeem at the net asset value a sufficient number of full and fractional Class M
Shares to cover the amount of the Check. If there is an insufficient number of
shares in your account, the Check is marked insufficient funds and is returned
unpaid to the presenting bank. Checks will only clear Equity Planning if drawn
against funds which have been invested for at least 15 days, except for wire
investments. Cancelled (paid) Checks are returned to you; however, this practice
may be discontinued in the future or a charge for such service may be imposed.
By requesting the Check Service, you agree to indemnify and hold harmless Equity
Planning, the Fund, and any of their agents from any liability for honoring
Checks or for effecting or facilitating redemptions pursuant to the Check
Service or for returning Checks which have not been accepted. The Check Service
enables you to receive the daily dividends declared on the shares to be redeemed
until the day that the Check is presented to Equity Planning for payment. Since
the aggregate amount in your account changes each day because of the daily
dividend, you should not attempt to withdraw the full amount in your account by
using the Check Service.
The Fund reserves the right in its sole discretion to reject any purchase
order in whole or in part for any reason that it deems sufficient and to change
the minimum investment and subsequent purchases in the Fund.
No stock certificates will be issued unless specifically requested in writing
by an investor. Instead, an account will be established for each investor and
all shares purchased or received, including those obtained through reinvestment
of distributions, will be registered on the books of the Fund and credited to
such account.
TAX SHELTERED RETIREMENT PLANS
Shares of the Trust are offered in connection with the following qualified
prototype retirement plans: IRA, Rollover IRA, SEP-IRA, SIMPLE IRA, Roth IRA,
401(k), Profit-Sharing, Money Purchase Pension Plans and 403(b) Retirement
Plans. Write or call Equity Planning at (800) 243-1574 for further information
about the plans.
THE DISTRIBUTOR AND DISTRIBUTION PLANS
Pursuant to its Distribution Agreement with the Trust (the "Distribution
Agreement"), Phoenix Equity Planning Corporation ("Equity Planning") acts as
distributor of the Trust's shares. The Trust has adopted a separate Rule 12b-1
Plan for the Class M Shares (the "Class M Plan"). The Class M Plan provides that
the Distributor may enter into Service Agreements with securities dealers,
financial institutions, banks, and other industry professionals for
distribution, promotion and administration of and/or servicing investors in
Class M Shares. Service payments under the Class M Plan are paid in equal
amounts by the Fund and the Adviser, or the Fund and the Adviser reimburse the
Distributor equally for service payments to a service organization, in an amount
not exceeding 0.30% per annum of the average daily net asset value of the Class
M Shares. The Class M Plan also provides that the Fund will pay the costs and
expenses connected with the printing and distribution of the Fund's
prospectuses, shareholder reports, and any promotional material for other than
current Fund shareholders, in an amount not to exceed $100,000 per annum. The
Distribution Agreement was last approved by the Trustees on January 12, 1999.
The Trust has also adopted a distribution plan for the Class A and Class C
Shares, and for the Class B Shares of the Fund (the "Class A and C and Class B
Plans"), in accordance with Rule 12b-1 under the 1940 Act, to compensate the
Distributor for the services it provides and for the expenses it bears under the
Distribution Agreement. Each class of shares subject to the Class A and C and
Class B Plans pays a service fee at the rate of 0.25% per annum of the daily
average net assets of such class and a distribution fee based on average daily
net assets at the following rates: for Class A Shares, 0.05% per annum; for
Class B Shares, 0.75% per annum, and for Class C Shares, 0.05% per annum.
A report of the amounts expended under the Class M Plan and the Class A and
Class C and Class B Plans (collectively, the "Plans") must be made to the Board
of Trustees and reviewed by the Board at least quarterly. In addition, the Plans
provide that they may not be amended to increase materially the costs which the
Trust may bear for distribution pursuant to the Plans without shareholder
approval and that other material amendments to the Plans must be approved by a
majority of the Board, including a majority of the Board who are neither
interested persons of the Trust (as defined in the 1940 Act) nor have any direct
or indirect financial interest in the operation of the Plans (the "Qualified
Trustees"), by vote cast in person at a meeting called for the purpose of
considering such amendments.
The Plans are subject to annual approval by a majority of the Board of
Trustees, including a majority of the Qualified Trustees, by vote cast in person
at a meeting called for the purpose of voting on the Plans. The Plans are
terminable at any time by vote of a majority of the Qualified Trustees or, with
respect to any Class of a Series, by vote of a majority of the shares of such
Class. Pursuant to the Plans, any new trustees who are not interested persons
must be nominated by existing trustees who are not interested persons. If the
Plans are terminated (or not renewed) with respect to one or more Classes of
shares, they may continue in effect with respect to any Class or Fund as to
which they have not been terminated (or have been renewed).
6
<PAGE>
Because all amounts paid pursuant to the Plans are paid to the Distributor,
the Distributor and its officers, directors and employees, all may be deemed to
have a direct or indirect financial interest in the operation of the Plans. None
of the Trustees who is not an interested person of the Trust has a direct or
indirect financial interest in the operation of the Plans.
Benefits from the Plans may accrue to the Trust and its shareholders from the
growth in assets due to sales of shares to the public pursuant to the Plans.
Increases in a Fund's net assets from sales pursuant to its Plan may benefit
shareholders by reducing per share expenses, permitting increased investment
flexibility and diversification of the Fund's assets, and facilitating economies
of scale (e.g., block purchases) in the Fund's securities transactions. Under
their terms, the Plans will continue from year to year, provided that such
continuance is approved annually by a vote of the Trustees in the manner
described above. The continuance of the Plan was last approved by the Board of
Trustees, including a majority of the Qualified Trustees, at a meeting held on
January 12, 1999. The adoption of the Class M Plan was approved by the Board of
Trustees at a meeting held on December 14, 1993, and was approved by the initial
shareholders of the Class M Shares on April 25, 1994. Prior to approving the
continuance of the Plan and the adoption of the Class M Plan, the Board
requested and received from the Distributor all the information which it deemed
necessary to arrive at an informed determination as to such continuance and
adoption of the Plans. In making its determination to continue the Plan and
adopt the Class M Plan, the Board considered, among other factors: (1) the
Trust's experience under the Plan and the previous Rule 12b-1 Plan for the Class
A Shares of the Trust, and whether such experience indicates that the Plans
would operate as anticipated; (2) the benefits the Trust had obtained under the
Plan and the previous Class A Rule 12b-1 Plan and would be likely to obtain
under the Plans; (3) what services would be provided under the Plans by the
Distributor to the Trust and its shareholders; and (4) the reasonableness of the
fees to be paid to the Distributor for its services under the Plans. Based upon
its review, the Board, including each of the Qualified Trustees, determined that
the continuance of the Plan and the adoption of the Class M Plan would be in the
best interest of the Trust, and that there was a reasonable likelihood that the
Plans would benefit the Trust and its shareholders. In the Board's quarterly
review of the Plans, they will consider their continued appropriateness and the
level of compensation provided therein.
The Board of Trustees has also adopted a Rule 18f-3 Multi-Class Share Plan
permitting the issuance of shares in multiple classes.
MANAGEMENT OF THE TRUST
The Trustees have responsibility for management of the business of the Trust.
The officers of the Trust are responsible for its day to day operations. Set
forth below is certain information concerning the Trustees and officers.
Trustees and Officers
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
Claire B. Benenson (80) Trustee Consultant on Financial Conferences The New School for Social
870 U.N. Plaza Research, Director of The Burnham Fund Inc. and Trustee of the
New York, NY 10017 Phoenix-Euclid Funds. Former Director of Financial Conferences
and Chairman, Department of Business and Financial Affairs, The
New School for Social Research, President of the Money
Marketeers of New York University, Trustee of Simms Global
Fund and Director of Phoenix-Zweig Government Cash Fund Inc.
James Balog (70) Trustee Retired; Director and Member of the Audit, Investment, Stock
2205 N. Southwinds Blvd. Option and Compensation Committees of Transatlantic Holdings,
Vero Beach, FL 32963 Inc. (reinsurance); Director and Member of the Executive
Committee of Elan, Plc (pharmaceuticals); Director and Member
of the Executive and Investment & Credit Committees of Great
West Life and Annuity Insurance Company; Member of the
Technical Advisory Board of Galen Partners (health care) and
Trustee of the Phoenix-Euclid Funds. Former Director, Chairman
of the Audit Committee and Member of the Executive Committee of
A.L. Pharma, Inc. (health care); Chairman of 1838 Investment
Advisors, L.P. and Chairman of Lambert Brussels Capital
Corporation (investments).
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
S. Leland Dill (69) Trustee Retired; Director of Coutts Trust Holdings Limited, Coutts
5070 North Ocean Dr. Group, Coutts (USA) International (private banking), Trustee of
Singer Island, FL 33404 BT Portfolios and BT Investment Funds and Trustee of the
Phoenix-Euclid Funds. Former partner of KPMG Peat Marwick and
Director of Zweig Cash Fund Inc. and Vintners International
Company, Inc. (winery).
Eugene J. Glaser (58)* Chairman, President of the Adviser and Phoenix-Euclid Advisors LLC;
900 Third Avenue Chief Executive Officer President and Director of the Zweig Securities Corp.; Chairman,
New York, NY 10022 and Trustee President, Chief Executive Officer and Trustee of the
Phoenix-Euclid Funds. Former Director of Zweig Cash Fund Inc.,
The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.
Donald B. Romans (68) Trustee President of Romans & Company, (private investors and financial
233 East Wacker Dr. consultants); Director of the Burnham Fund Inc. and Trustee of
Chicago, IL 60601 the Phoenix-Euclid Funds. Former Consultant to and Executive
Vice President and Chief Financial Officer of Bally
Manufacturing Corporation, and Director of Phoenix-Zweig
Government Cash Fund Inc.
Martin E. Zweig (56) President President of the Subadviser; Chairman of the Board and
900 Third Avenue President of The Zweig Total Return Fund, Inc. and The Zweig
New York, NY 10022 Fund, Inc.; President and Director of Zweig-DiMenna
International Managers, Inc. and Zweig Securities Advisory
Service Inc.; Managing Director of Zweig-DiMenna Associates
LLC; President and Director of Gotham Advisors, Inc.; Member of
the Undergraduate Executive Board of the Wharton School,
University of Pennsylvania. Former President of Zweig Cash Fund
Inc. Former President and Director of Zweig Advisors Inc. and
Zweig Total Return Advisors, Inc. General Partner of Zweig
Katzen Investors, L.P.; Former Chairman of the Adviser.
Michael E. Haylon (41) Executive Vice Director and Executive Vice President--Investments, Phoenix
56 Prospect St. President Investment Partners, Ltd. (1995-present). Executive Vice
Hartford, CT 06115 President, Zweig/Glaser Advisers LLC (1999-present). Director
(1994-present), President (1995-present), Executive Vice
President (1994-1995), Vice President (1991-1994), Phoenix
Investment Counsel, Inc. Director (1994-present), President
(1996-present), Executive Vice President (1994-1996),
Vice President (1993-1994), National Securities & Research
Corporation. Director, Phoenix Equity Planning Corporation
(1995-present). Executive Vice President, Phoenix Funds
(1993-present) and Phoenix-Aberdeen Series Fund (1996-present).
Executive Vice President (1997-present), Vice President
(1996-1997), Phoenix Duff & Phelps Institutional Mutual Funds.
Senior Vice President, Securities Investments, Phoenix Home
Life Mutual Insurance Company (1993-1995).
John F. Sharry (46) Executive Vice Managing Director, Retail Distribution, Phoenix Equity Planning
56 Prospect Street President Corporation (1995-present). Executive Vice President, Phoenix
Hartford, CT 06115 Funds and Phoenix-Aberdeen Series Funds (1998-present).
Managing Director, Director and National Sales Manager, Putnam
Mutual Funds (until 1995).
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
David Katzen (41) Senior Vice President Senior Vice President of the Adviser and Executive Vice
900 Third Avenue President of Euclid Advisors LLC; Executive Vice President of
New York, NY 10022 the Phoenix-Euclid Funds. Former Director of Quantitative
Research at Avatar Investors Associates, Corp.; Director of
Equity Research for Zweig Total Return Advisors, Inc.; Research
Director of Zweig Advisors, Inc.; and Vice President of The
Zweig Fund, Inc. and ZZK Management, Inc. Former Vice President
of Zweig Advisors, Inc. and former Trustee of Euclid Mutual
Funds.
Thomas N. Steenburg (50) Senior Vice President Senior Vice President (1999-present), Vice President, Secretary
55 East Monroe Street and Counsel (1995-1999), Phoenix Investment Partners, Ltd.
Chicago, IL 60603 Executive Vice President (1999-present), Vice President and
Counsel (1996-1999), Duff & Phelps Investment Management Co.
Senior Vice President, Zweig/Glaser Advisers LLC
(1999-present). Vice President, Counsel and Secretary, Phoenix
Investment Counsel, Inc., National Securities & Research
Corporation and Phoenix Equity Planning Corporation
(1996-present). Vice President--Compliance, Phoenix-Aberdeen
International Advisors LLC (1996-present). Vice President,
Counsel and Compliance Officer, Seneca Capital Management, LLC
(1997-present). Vice President, Counsel and Secretary, Roger
Engemann & Associates, Inc. (1998-present). Counsel, Phoenix
Home Life Mutual Insurance Company (1991-1995).
Barry Mandinach (43) First Vice President Executive Vice President of Zweig Securities Corp., Senior Vice
900 Third Avenue President of the Adviser and Euclid Advisors LLC, and First
New York, NY 10022 Vice President of the Phoenix-Euclid Funds.
Carlton Neel (31) First Vice President First Vice President of the Adviser; Vice President of Zweig
900 Third Avenue Advisors Inc. and Zweig Total Return Advisors, Inc.; Former
New York, NY 10022 Vice President of J.P. Morgan & Co., Inc.
Alfred J. Ratcliffe (51) First Vice President, First Vice President of the Adviser and Euclid Advisors LLC,
900 Third Avenue Treasurer, Principal and First Vice President, Treasurer, Principal Accounting
New York, NY 10022 Accounting Officer Officer and Assistant Secretary of the Phoenix-Euclid Funds.
and Assistant Secretary Former Vice President of The Bank of New York.
Charles I. Leone (37) First Vice President and First Vice President and Chief Financial Officer of the Adviser
900 Third Avenue Assistant Secretary and Euclid Advisors LLC, First Vice President, Chief Financial
New York, NY 10022 Officer and Assistant Secretary of Zweig Securities Corp.
and First Vice President and Assistant Secretary of the
Phoenix-Euclid Funds. Former Assistant Treasurer of Zweig Cash
Fund Inc.
Annemarie Gilly (47) First Vice President First Vice President of the Adviser, Zweig Securities Corp. and
900 Third Avenue Euclid Advisors LLC, and First Vice President of the
New York, NY 10022 Phoenix-Euclid Funds. Former Vice President of Concord
Financial Group and former Director of The Zweig Fund, Inc. and
The Zweig Total Return Fund, Inc.
Jeffrey Lazar (39) Vice President Vice President and Treasurer of The Zweig Fund, Inc. and Zweig
900 Third Avenue Total Return Fund, Inc.; Executive Vice President, Treasurer
New York, NY 10022 and Secretary of Zweig Advisors Inc. and Zweig Total Return
Advisors, Inc. Former Director of The Zweig Fund, Inc. and The
Zweig Total Return Fund, Inc.
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
POSITION WITH
NAME, ADDRESS AND AGE THE TRUST PRINCIPAL OCCUPATION DURING PAST 5 YEARS
- --------------------- --------- ----------------------------------------
<S> <C> <C>
Beth Abraham (43) Assistant Vice President Assistant Vice President of The Adviser and the Phoenix-Euclid
900 Third Avenue Funds. Former self-employed consultant to the mutual fund
New York, NY 10022 industry.
Tom Disbrow (33) Assistant Vice Vice President of the Adviser and Euclid Advisors LLC and
900 Third Avenue President and Assistant Assistant Vice President and Assistant Treasurer of the
New York, NY 10022 Treasurer Phoenix-Euclid Funds
Rhonda Lee Berzner (34) Assistant Vice Senior Research Analyst for the Adviser and Euclid Advisors LLC
900 Third Avenue President and Assistant Vice President of the Phoenix-Euclid Funds.
New York, NY 10022
Marc Baltuch (53) Secretary First Vice President of the Adviser and Euclid Advisors LLC;
900 Third Avenue First Vice President, Director, Chief Compliance Officer of
New York, NY 10022 Watermark Securities, Inc.; Secretary of Zweig Securities
Corp.; Assistant Secretary of Gotham Advisors, Inc. Former
Assistant Secretary of Zweig Total Return Advisors, Inc. and
Zweig Advisors Inc.; Secretary of the Phoenix-Euclid Funds.
Former Secretary of Zweig Cash Fund Inc.
</TABLE>
*Designates a trustee who is an interested person of the trust within the
meaning of the 1940 Act.
COMPENSATION OF TRUSTEES AND OFFICERS
Those trustees and officers of the Trust who are affiliated with the
Subadviser or the Adviser are not separately compensated for their services as
trustees or officers of the Trust. The Trust currently pays each of its
disinterested trustees a fee of $5,000 per year, plus $1,500 per meeting
attended ($500 per phone meeting) and reimburses their expenses for attendance
at meetings, all of which is prorated on the basis of the assets of each fund.
In addition, each such trustee receives a fee of $1,000 per year from each fund.
For the fiscal year ended December 31, 1998, the fees and expenses of
disinterested trustees, as a group, were $74,967.
Trustees may be removed from office at any meeting of shareholders by a vote
of two-thirds of the outstanding shares of the Trust. Except as set forth above,
the trustees shall continue to hold office and may appoint their successors.
For the Trust's last fiscal year, the Trustees received the following
compensation:
<TABLE>
<CAPTION>
PENSION OR
AGGREGATE RETIREMENT BENEFITS ESTIMATED TOTAL
COMPENSATION ACCRUED AS PART ANNUAL BENEFITS COMPENSATION
NAME FROM ZWEIG FUNDS OF FUND EXPENSES UPON RETIREMENT PAID TO TRUSTEES
---- ---------------- ---------------- --------------- ----------------
<S> <C> <C> <C> <C>
James Balog $18,000 $18,000
Claire B. Benenson $18,000 None None $18,000
S. Leland Dill $19,400 for any for any $19,400
Eugene J. Glaser* $0 Trustee Trustee $0
Donald B. Romans $19,567 $19,567
</TABLE>
*"Interested Person" as defined under the Investment Company Act.
The Board of Trustees met four times during the Trust's fiscal year ended
December 31, 1998. Each Trustee attended all of the meetings of the Board. The
Board does not have any committees.
At April 22, 1999, except for Dr. Martin E. Zweig and David Katzen, the
Trustees and officers as a group owned less than 1% of any Class of any Fund of
the Trust.
PRINCIPAL SHAREHOLDERS
The following table sets forth information as of April 14, 1999 with respect
to each person who beneficially owns 5% or more of any class of the Fund's
equity securities.
NAME OF SHAREHOLDER PERCENT OF FUND
- ------------------- ---------------
Dr. Martin E. Zweig 46.06%
900 Third Avenue
New York, NY 10022
10
<PAGE>
NAME OF SHAREHOLDER PERCENT OF FUND
- ------------------- ---------------
Hare & Co. 25.96%
Bank of New York
Attn Stif/Master Note
Wall Street, Floor 2
New York, NY 10005
ADDITIONAL INFORMATION
CAPITAL STOCK
The capitalization of the Trust consists solely of an unlimited number of
shares of beneficial interest. The Trust currently offers shares in different
Funds and different classes of those Funds. Holders of shares of a Fund have
equal rights with regard to voting, redemptions, dividends, distributions, and
liquidations with respect to that Fund. Shareholders of all Funds vote on the
election of Trustees. On matters affecting an individual Fund (such as approval
of an investment advisory agreement or a change in fundamental investment
policies) and on matters affecting an individual class (such as approval of
matters relating to a Plan of Distribution for a particular class of shares), a
separate vote of that Fund or Class is required. The Trust does not hold regular
meetings of shareholders. The Trustees will call a meeting when at least 10% of
the outstanding shares so request in writing. If the Trustees fail to call a
meeting after being so notified, the Shareholders may call the meeting. The
Trustees will assist the Shareholders by identifying other shareholders or
mailing communications, as required under Section 16(c) of the 1940 Act.
Shares are fully paid, nonassessable, redeemable and fully transferable when
they are issued. Shares do not have cumulative voting rights, preemptive rights
or subscription rights. The assets received by the Trust for the issue or sale
of shares of each Fund, and any class thereof and all income, earnings, profits
and proceeds thereof, are allocated to such Fund, and class, respectively,
subject only to the rights of creditors, and constitute the underlying assets of
such Fund or class. The underlying assets of each Fund are required to be
segregated on the books of account, and are to be charged with the expenses in
respect to such Fund and with a share of the general expenses of the Trust. Any
general expenses of the Trust not readily identifiable as belonging to a
particular Fund or class will be allocated by or under the direction of the
Trustees as they determine fair and equitable.
Unlike the stockholders of a corporation, there is a possibility that the
shareholders of a business trust such as the Trust may be personally liable for
debts or claims against the Trust. The Declaration of Trust provides that
shareholders shall not be subject to any personal liability for the acts or
obligations of the Trust and that every written agreement, undertaking or
obligation made or issued by the Trust shall contain a provision to that effect.
The Declaration of Trust provides for indemnification out of the Trust property
for all losses and expenses of any shareholder held personally liable for the
obligations of the Trust. Thus, the risk of a shareholder incurring financial
loss on account of shareholder liability, which is considered remote, is limited
to circumstances in which the Trust itself would be unable to meet its
obligations.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 1177 Avenue of the Americas, New York, NY 10036,
serves as the independent accountants for the Trust. PricewaterhouseCoopers LLP
audits the Trust's annual financial statements and expresses an opinion thereon.
CUSTODIAN AND TRANSFER AGENT
The Bank of New York, One Wall Street, New York, New York 10286, serves as
custodian of the Trust's assets. State Street Bank and Trust Company, P.O. Box
8505, Boston, Massachusetts 02266-8505, serves as transfer agent and dividend
paying agent for the Trust.
REPORT TO SHAREHOLDERS
The fiscal year of the Trust ends on December 31. The Trust will send
financial statements to its shareholders at least semiannually. An Annual Report
containing financial statements audited by the Trust's independent accountants
will be sent to shareholders each year.
FINANCIAL STATEMENTS
The Financial Statements for the Fund's fiscal year ended December 31, 1998,
appearing in the Trust's 1998 Annual Report to Shareholders, are incorporated
herein by reference.
11
<PAGE>
16
ZWEIG STRATEGY FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 75.52%
AEROSPACE AND DEFENSE: 0.97%
Cordant Technologies Inc................ 92,700 $ 3,476,250
General Dynamics Corp................... 14,400 844,200
Northrop Grumman Corp................... 8,700 636,188
Sundstrand Corp......................... 76,300 3,958,062
--------------
8,914,700
--------------
AGRICULTURAL PRODUCTS: 0.07%
Universal Corp.......................... 18,900 663,863
--------------
AIRLINES: 4.28%
AMR Corp................................ 209,200 12,421,250
Comair Holdings, Inc.................... 74,200 2,504,250
Delta Air Lines, Inc.................... 25,800 1,341,600
KLM Royal Dutch Air..................... 26,200 786,000
Southwest Airlines Co................... 506,600 11,366,838
US Airways Group Inc.................... 208,300 10,831,600
--------------
39,251,538
--------------
ALUMINUM: 0.34%
Reynolds Metals Co...................... 60,100 3,166,519
--------------
AUTO PARTS AND EQUIPMENT: 0.51%
Arvin Industries, Inc................... 67,100 2,797,231
Borg-Warner Automotive, Inc............. 17,800 993,463
Modine Manufacturing Co................. 23,300 844,625
--------------
4,635,319
--------------
AUTOMOBILES: 2.09%
Ford Motor Co........................... 303,100 17,788,181
General Motors Corp..................... 19,600 1,402,625
--------------
19,190,806
--------------
BANKS - REGIONAL: 0.05%
Old Kent Financial Corp................. 9,800 455,700
--------------
BEVERAGES: 1.12%
Adolph Coors Co., Class B............... 131,100 7,398,956
Anheuser-Busch Companies, Inc........... 43,400 2,848,125
--------------
10,247,081
--------------
BIOTECHNOLOGY: 0.20%
Amgen Inc............................... 17,300 1,808,931
--------------
BUILDING MATERIALS: 0.03%
Armstrong World Industries Inc.......... 4,200 253,313
--------------
CHEMICALS: 0.17%
B.F. Goodrich & Co...................... 43,000 1,542,625
--------------
CHEMICALS - SPECIALTY: 0.24%
Albemarle Corp.......................... 66,400 1,577,000
International Specialty Products Inc.... 46,600 632,013
--------------
2,209,013
--------------
COMMUNICATION EQUIPMENT: 0.81%
ECI Telecom Ltd......................... 78,000 2,778,750
Lucent Technologies Inc................. 14,200 1,562,000
Nokia Corp., ADR........................ 12,500 1,505,469
Tellabs, Inc............................ 22,700 1,556,369
--------------
7,402,588
--------------
COMPUTER HARDWARE: 4.76%
Apple Computer, Inc..................... 159,900 6,545,906
EMC Corp................................ 199,300 16,940,500
Lexmark International Group, Inc., Class
A..................................... 172,200 17,306,100
Network Appliance Inc................... 63,400 2,853,000
--------------
43,645,506
--------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
COMPUTER SERVICES: 0.03%
Affiliated Computer Services, Inc.,
Class A............................... 5,200 $ 234,000
--------------
COMPUTER SOFTWARE: 2.26%
Check Point Software Technology Corp.... 25,900 1,186,544
Citrix Systems, Inc..................... 34,900 3,387,481
Computer Associates International,
Inc................................... 30,000 1,278,750
Compuware Corp.......................... 22,000 1,718,750
HBO & Co................................ 54,000 1,549,125
Microsoft Corp.......................... 10,700 1,483,956
Oracle Corp............................. 71,800 3,096,375
Sterling Software Inc................... 260,600 7,052,487
--------------
20,753,468
--------------
COMPUTERS - NETWORKING: 0.22%
Adaptec Inc............................. 116,500 2,046,031
--------------
CONSTRUCTION - CEMENT AND AGGREGATES:
2.39%
Lafarge Corp............................ 75,000 3,037,500
Lone Star Industries, Inc............... 52,200 1,921,613
Southdown, Inc.......................... 135,200 8,002,150
USG Corp................................ 175,800 8,954,812
--------------
21,916,075
--------------
CONSUMER - JEWELRY, NOVELTY AND GIFTS:
0.08%
American Greetings Corp., Class A....... 17,600 722,700
--------------
CONSUMER FINANCE: 1.83%
Capital One Financial Corp.............. 26,400 3,036,000
Countrywide Credit Industries, Inc...... 207,300 10,403,869
PMI Group Inc........................... 22,000 1,086,250
Providian Financial Corp................ 30,000 2,250,000
--------------
16,776,119
--------------
CONTAINERS - METAL AND GLASS: 0.32%
Ball Corp............................... 63,700 2,914,275
--------------
DISTRIBUTORS - FOOD AND HEALTH: 1.28%
Bergen Brunswig Corp., Class A.......... 25,200 878,850
Supervalu Inc........................... 382,400 10,707,200
United Stationers Inc................... 5,200 135,200
--------------
11,721,250
--------------
DRUGS: 0.15%
Eli Lilly and Co........................ 15,800 1,404,225
--------------
ELECTRIC UTILITIES: 8.46%
Allegheny Energy Inc.................... 21,700 748,650
Baltimore Gas & Electric Co............. 50,800 1,568,450
BEC Energy Holding Co................... 107,000 4,407,062
Central & South West Corp............... 203,200 5,575,300
DTE Energy Co........................... 190,800 8,180,550
Edison International Corp............... 272,300 7,590,362
Endesa SA, ADR.......................... 53,600 1,447,200
Entergy Corp............................ 60,000 1,867,500
Florida Progress Corp................... 41,900 1,877,644
GPU, Inc................................ 193,500 8,550,281
Kansas City Power & Light Co............ 23,400 693,225
Minnesota Power & Light Co.............. 22,900 1,007,600
Montana Power Co........................ 99,300 5,616,656
New England Electric System............. 52,200 2,512,125
Niagara Mohawk Power Corp............... 90,000 1,451,250
OGE Energy Corp......................... 16,200 469,800
PECO Energy Co.......................... 53,200 2,214,450
PG&E Corp............................... 180,800 5,695,200
Public Service Enterprise Group Inc..... 200,800 8,032,000
</TABLE>
<PAGE>
17
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES: (continued)
Unicom Corp............................. 144,400 $ 5,568,425
UtiliCorp United Inc.................... 67,400 2,472,738
--------------
77,546,468
--------------
ELECTRICAL EQUIPMENT: 0.65%
American Power Conversion Corp.......... 11,000 532,812
AMP Inc................................. 28,000 1,457,750
Sanmina Corp............................ 52,100 3,256,250
Symbol Technologies Inc................. 10,800 690,525
--------------
5,937,337
--------------
ELECTRONICS AND INSTRUMENTATION: 0.07%
Waters Corp............................. 7,200 628,200
--------------
ENGINEERING AND CONSTRUCTION: 0.22%
McDermott International, Inc............ 81,800 2,019,438
--------------
FINANCIAL - DIVERSIFIED: 5.28%
AMBAC Financial Group Inc............... 149,800 9,016,087
Apartment Investment & Management Co.,
Class A............................... 97,800 3,636,937
Avalon Bay Communities, Inc............. 71,200 2,438,600
Duke Realty Investments Inc............. 36,100 839,325
Equity Office Properties Trust.......... 153,200 3,676,800
Federal National Mortgage Association... 96,300 7,126,200
Federal Home Loan Mortgage Corp......... 230,600 14,859,287
Kimco Realty Corp....................... 5,400 214,313
Liberty Property Trust.................. 9,400 231,475
Public Storage Inc...................... 13,200 357,225
Starwood Hotel & Resorts................ 265,400 6,021,262
--------------
48,417,511
--------------
FOODS: 0.78%
Earthgrains Co.......................... 219,400 6,787,687
Flowers Industries, Inc................. 13,800 330,337
--------------
7,118,024
--------------
GOLD AND PRECIOUS METAL MINING: 0.19%
Barrick Gold Corp....................... 60,000 1,170,000
Placer Dome Inc......................... 46,600 535,900
--------------
1,705,900
--------------
HEALTH CARE - DIVERSIFIED: 0.12%
Allergan, Inc........................... 16,400 1,061,900
--------------
HEALTH CARE - MEDICAL PRODUCTS AND
SUPPLIES: 0.23%
Medtronic, Inc.......................... 28,100 2,086,425
--------------
HEALTH CARE - SPECIAL SERVICES: 0.39%
Healthsouth Rehabilitation Corp......... 120,000 1,852,500
Lincare Holdings........................ 42,000 1,703,625
--------------
3,556,125
--------------
HOMEBUILDING: 2.10%
Centex Corp............................. 347,500 15,659,219
Pulte Corp.............................. 129,200 3,593,375
--------------
19,252,594
--------------
HOSPITALS AND MANAGED CARE: 0.88%
Humana Inc.............................. 130,400 2,322,750
Pacificare Health Systems, Inc.......... 56,000 4,452,000
Trigon Healthcare Inc................... 35,900 1,339,519
--------------
8,114,269
--------------
HOTELS AND GAMING: 0.82%
Royal Caribbean Cruises Ltd............. 202,800 7,503,600
--------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
HOUSEHOLD FURNISHINGS: 1.40%
Furniture Brands International, Inc..... 9,600 $ 261,600
Maytag Corp............................. 32,400 2,016,900
Mohawk Industries Inc................... 113,200 4,761,475
Westpoint Stevens Inc................... 120,700 3,809,594
Whirlpool Corp.......................... 36,000 1,993,500
--------------
12,843,069
--------------
HOUSEWARES AND HOUSEHOLD PRODUCTS: 0.42%
Clorox Co............................... 24,700 2,885,269
Estee Lauder Companies Inc.............. 11,400 974,700
--------------
3,859,969
--------------
INSURANCE - LIFE AND HEALTH: 0.93%
AFLAC Inc............................... 12,200 536,800
Conseco Inc............................. 90,000 2,750,625
Reliastar Financial Corp................ 69,200 3,191,850
UNUM Corp............................... 35,300 2,060,638
--------------
8,539,913
--------------
INSURANCE - MULTI-LINE: 1.01%
Loews Corp.............................. 94,400 9,274,800
--------------
INSURANCE - PROPERTY AND CASUALTY: 2.00%
Everest Reinsurance Holdings Inc........ 7,000 272,563
Financial Security Assurance Holdings
Ltd................................... 46,500 2,522,625
Fremont General Corp.................... 204,200 5,053,950
MBIA Inc................................ 17,600 1,153,900
Old Republic International Corp......... 377,350 8,490,375
Progressive Corp........................ 5,100 863,813
--------------
18,357,226
--------------
INVESTMENT BANKING AND BROKERAGE: 0.87%
A.G. Edwards, Inc....................... 213,750 7,962,187
--------------
IRON AND STEEL: 0.04%
AK Steel Holding Corp................... 16,800 394,800
--------------
MACHINERY: 0.61%
Ingersoll-Rand Co....................... 118,300 5,552,706
--------------
MANUFACTURING - DIVERSIFIED: 4.65%
Crane Co................................ 10,200 307,912
Hanson PLC, ADR......................... 50,300 1,961,700
Premark International Inc............... 143,400 4,965,225
Trinity Industries, Inc................. 212,000 8,162,000
Tyco International Ltd.................. 127,700 9,633,369
United Technologies Corp................ 161,600 17,574,000
--------------
42,604,206
--------------
MANUFACTURING - SPECIALIZED: 0.28%
York International Inc.................. 63,700 2,599,756
--------------
NATURAL GAS: 1.31%
Coastal Corp............................ 278,500 9,730,094
Keyspan Energy.......................... 68,072 2,110,232
MDU Resources Group Inc................. 7,200 189,450
--------------
12,029,776
--------------
OIL AND GAS - DRILLING AND EQUIPMENT:
0.35%
Transocean Offshore Inc................. 120,000 3,217,500
--------------
OIL AND GAS - REFINING AND MARKETING:
1.28%
Ashland Inc............................. 242,900 11,750,287
--------------
</TABLE>
<PAGE>
18
ZWEIG STRATEGY FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
PAPER AND FOREST PRODUCTS: 0.04%
Boise Cascade Corp...................... 13,000 $ 403,000
--------------
PUBLISHING: 0.18%
Knight-Ridder, Inc...................... 32,000 1,636,000
--------------
RAILROADS: 1.52%
Burlington Northern Santa Fe Corp....... 187,200 6,318,000
Canadian National Railway Co............ 114,400 5,934,500
GATX Corp............................... 43,500 1,647,563
--------------
13,900,063
--------------
RESTAURANTS: 1.23%
Brinker International Inc............... 164,100 4,738,387
Darden Restaurants, Inc................. 364,200 6,555,600
--------------
11,293,987
--------------
RETAIL: 3.21%
Dillards Department Stores, Inc., Class
A..................................... 97,600 2,769,400
Dollar Tree Stores, Inc................. 40,200 1,756,237
Federated Department Stores, Inc........ 224,000 9,758,000
K Mart Corp............................. 90,000 1,378,125
Ross Stores, Inc........................ 312,000 12,285,000
Wal-Mart Stores Inc..................... 18,600 1,514,738
--------------
29,461,500
--------------
RETAIL - APPAREL: 0.36%
Gap, Inc................................ 27,000 1,518,750
TJX Co.................................. 60,000 1,740,000
--------------
3,258,750
--------------
RETAIL - BUILDING SUPPLIES: 0.17%
Lowes Companies, Inc.................... 30,000 1,535,625
--------------
RETAIL - DRUG STORES: 0.02%
Longs Drug Stores Corp.................. 5,600 210,000
--------------
RETAIL - FOOD CHAINS: 1.45%
Safeway Inc............................. 218,600 13,320,938
--------------
RETAIL - HOME SHOPPING: 0.09%
CDW Computer Centers, Inc............... 8,600 825,063
--------------
RETAIL - SPECIALTY: 0.34%
Officemax Inc........................... 151,300 1,853,425
Zale Corp............................... 40,100 1,293,225
--------------
3,146,650
--------------
SAVINGS AND LOAN COMPANIES: 0.82%
Golden West Financial Corp.............. 7,400 678,487
Greenpoint Financial Corp............... 24,900 874,613
TR Financial Corp....................... 15,400 606,375
Washington Mutual Inc................... 139,248 5,317,533
--------------
7,477,008
--------------
SEMICONDUCTOR EQUIPMENT: 0.97%
Advanced Micro Devices, Inc............. 259,200 7,500,600
Intel Corp.............................. 11,700 1,387,181
--------------
8,887,781
--------------
SERVICE - COMMERCIAL AND CONSUMER: 0.21%
Sylvan Learning Systems, Inc............ 63,500 1,936,750
--------------
SPECIALTY PRINTING: 0.25%
Deluxe Corp............................. 12,200 446,062
World Color Press, Inc.................. 61,300 1,865,819
--------------
2,311,881
--------------
TELECOM - LONG DISTANCE: 0.16%
Sprint Corp............................. 17,300 1,455,363
--------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
TELEPHONE: 3.20%
Bell Atlantic Corp...................... 213,800 $ 11,331,400
Bellsouth Corp.......................... 30,800 1,536,150
Century Telephone Enterprises, Inc...... 66,200 4,468,500
Citizens Utilities Co................... 247,845 1,998,750
Portugal Telecommunications, S.A., ADR.. 44,600 1,990,275
Tele Danmark, ADR....................... 21,900 1,486,463
Telefonica De Argentina, ADR............ 234,700 6,556,931
--------------
29,368,469
--------------
TEXTILES - APPAREL AND SPECIALTY: 1.61%
Fruit of The Loom, Inc.................. 69,000 953,062
Tommy Hilfiger Corp..................... 160,400 9,624,000
V.F. Corp............................... 89,600 4,200,000
--------------
14,777,062
--------------
TRUCKERS: 0.04%
Ryder System, Inc....................... 13,200 343,200
--------------
TRUCKS AND PARTS: 0.11%
Navistar International Corp............. 26,600 758,100
PACCAR Inc.............................. 6,600 271,425
--------------
1,029,525
--------------
TOTAL COMMON STOCKS
(Cost $577,736,166)................................ 692,388,246
--------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS: 15.64%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 10.32%
5.11%, 1/15/99........................ $20,000,000 19,958,126
5.08%, 1/22/99........................ 20,000,000 19,937,910
4.77%, 1/29/99........................ 20,000,000 19,918,315
4.83%, 2/1/99......................... 5,000,000 4,977,922
5.11%, 2/3/99......................... 10,000,000 9,951,739
5.01%, 2/12/99........................ 20,000,000 19,880,315
--------------
94,624,327
--------------
FEDERAL NATIONAL MORTGAGE ASSN.,
DISCOUNT NOTES: 4.34%
5.05%, 2/4/99......................... 20,000,000 19,901,804
5.00%, 2/5/99......................... 20,000,000 19,899,670
--------------
39,801,474
--------------
UNITED STATES TREASURY BILLS: 0.98%
3.69%, 1/7/99......................... 2,000,000(a) 1,998,450
4.00%, 1/14/99........................ 5,000,000(a) 4,992,542
3.83%, 1/21/99........................ 1,000,000(a) 997,588
4.13%, 1/21/99........................ 1,000,000(a) 997,588
--------------
8,986,168
--------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $143,432,099)................................ 143,411,969
--------------
REPURCHASE AGREEMENTS: 9.16%
With Morgan Stanley & Co., Inc., (dated
12/31/98), 5.00%, due 1/4/99
(Repurchase proceeds $41,973,306);
collateralized by: $41,783,438
Federal National Mortgage Association
Bonds, 7.071%, due 11/1/2037
(Market value $43,182,494)............ 41,950,000 41,950,000
</TABLE>
<PAGE>
19
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------------------------------------------------------------
<S> <C> <C>
With Prudential Securities Inc., (dated
12/31/98), 5.05%, due 1/4/99
(Repurchase proceeds $42,023,567);
collateralized by: $41,797,844 of
various United States Government and
Agency Obligations, 3.30% - 9.875%,
due 1/7/99 - 3/1/2035
(Market value $42,840,134)............ $42,000,000 $ 42,000,000
--------------
TOTAL REPURCHASE AGREEMENTS
(Cost $83,950,000)................................. 83,950,000
--------------
TOTAL INVESTMENTS
(Cost $805,118,265)................... 100.32% 919,750,215
Other Assets............................ 0.40 3,627,360
------- --------------
Total Assets.......................... 100.72% 923,377,575
Total Liabilities (Note 6)............ (0.72) (6,583,980)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 916,793,595
------- --------------
------- --------------
- - ------------------------------------------------------------------
NUMBER
OF
CONTRACTS
-------
NET UNREALIZED APPRECIATION ON FUTURES
CONTRACTS: 0.76%
Standard & Poor's 500 March 1999
Long futures (b)...................... 355 $ 6,904,199
--------------
- - ------------------------------------------------------------------
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share
($409,065,015/27,648,699 shares)...... $ 14.80
------
------
Maximum public offering price per share
-
NAV/(1 - maximum sales charge)
($14.80/.945)......................... $ 15.66
------
------
CLASS B SHARES
Net asset value and offering price per
share ($82,530,432/5,540,410
shares)............................... $ 14.90
------
------
Redemption price per share.............. **
------
------
CLASS C SHARES
Net asset value and offering price per
share ($423,791,364/28,513,355
shares)............................... $ 14.86
------
------
Redemption price per share.............. **
------
------
CLASS I SHARES
Net asset value, offering and redemption
price per share ($1,406,784/94,144
shares)............................... $ 14.94
------
------
</TABLE>
- - ------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held (Note 3b).
(a) Pledged as collateral for futures transactions.
(b) The extended market value of the Long futures was $110,538,125 (repesenting
12.06% of the Fund's net assets) with a cost of $103,633,926.
For Federal income tax purposes, the tax basis of investments owned at December
31, 1998 was $807,093,374 and net unrealized appreciation on investments
consisted of:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation..................... $126,020,070
Gross unrealized depreciation..................... (6,459,030)
------------
Net unrealized appreciation....................... $119,561,040
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
20
ZWEIG APPRECIATION FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 87.70%
AEROSPACE AND DEFENSE: 2.46%
AAR Corp................................ 98,000 $ 2,339,750
Alliant Techsystems Inc................. 1,800 148,387
Aviall Inc.............................. 31,200 366,600
BE Aerospace, Inc....................... 137,300 2,883,300
Cordant Technologies Inc................ 15,000 562,500
Curtiss-Wright Corp..................... 33,700 1,284,813
Moog Inc., Class A...................... 20,800 813,800
Precision Castparts Corp................ 33,500 1,482,375
Sequa Corp.............................. 30,790 1,843,551
------------
11,725,076
------------
AGRICULTURAL PRODUCTS: 0.53%
Universal Corp.......................... 71,900 2,525,487
------------
AIR FREIGHT: 1.16%
Airborne Freight Corp................... 43,800 1,579,538
CNF Transportation Inc.................. 105,000 3,944,063
------------
5,523,601
------------
AIRLINES: 1.69%
Alaska Air Group Inc.................... 92,100 4,075,425
America West Holdings................... 62,800 1,067,600
Amtran Inc.............................. 25,900 702,538
Mesaba Holdings Inc..................... 7,550 155,719
Midwest Express Holdings................ 18,450 485,466
Skywest, Inc............................ 47,500 1,552,656
------------
8,039,404
------------
AUTO PARTS AND EQUIPMENT: 1.65%
Arvin Industries, Inc................... 41,300 1,721,694
Borg-Warner Automotive, Inc............. 9,000 502,313
Intermet Corp........................... 138,600 1,810,463
Mark IV Industries, Inc................. 14,400 187,200
Mascotech, Inc.......................... 15,500 265,437
Meritor Automotive...................... 47,800 1,012,763
Wynn's International Inc................ 106,700 2,360,737
------------
7,860,607
------------
AUTOMOBILES: 0.09%
Monaco Coach Corp....................... 16,350 433,275
------------
BANKS - REGIONAL: 1.13%
Bancorpsouth Inc........................ 700 12,644
Bancwest Corp........................... 5,000 240,000
BHI Corp................................ 11,600 356,700
Cullen/Frost Bankers, Inc............... 2,400 131,700
CVB Financial Corp...................... 2,066 46,481
Flagstar Bancorp Inc.................... 40,600 1,060,675
GBC Bancorp............................. 12,600 324,450
Imperial Bancorp........................ 9,897 164,538
NBT Bancorp Inc......................... 8,610 201,259
Pacific Century Financial Corp.......... 25,900 631,313
Republic Bancorp Inc.................... 73,600 1,002,800
Sterling Bancorp........................ 32,930 751,216
Trust Company of New Jersey............. 18,000 441,000
------------
5,364,776
------------
BEVERAGES: 0.65%
Adolph Coors Co., Class B............... 20,600 1,162,612
Canandaigua Brands, Class A............. 28,500 1,647,656
Robert Mondavi Corp..................... 7,400 302,475
------------
3,112,743
------------
BIOTECHNOLOGY: 0.01%
Regeneron Pharmaceuticals, Inc.......... 7,800 57,525
------------
BUILDING MATERIALS: 1.01%
Mestek, Inc............................. 44,200 884,000
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
NCI Building Systems Inc................ 77,800 $ 2,188,125
Nortek Inc.............................. 40,500 1,118,812
Premdor Inc............................. 21,400 212,662
Simpson Manufacturing Co., Inc.......... 10,800 404,325
------------
4,807,924
------------
CHEMICALS - SPECIALTY: 1.51%
A. Schulman, Inc........................ 21,000 476,438
Albemarle Corp.......................... 20,900 496,375
Cambrex Corp............................ 37,300 895,200
Ethyl Corp.............................. 128,300 745,744
Foamex International, Inc............... 31,900 394,763
International Specialty Products Inc.... 47,000 637,438
Mine Safety Appliances Co............... 15,900 1,128,900
Minerals Technologies Inc............... 3,700 151,469
Spartech Corp........................... 100,600 2,213,200
Velcro Industries N.V................... 200 29,800
------------
7,169,327
------------
COMMUNICATION EQUIPMENT: 0.25%
Cable Design Technologies Corp.......... 32,900 608,650
Plantronics, Inc........................ 1,500 129,000
Tekelec................................. 25,900 428,969
------------
1,166,619
------------
COMPUTER HARDWARE: 0.78%
Comdisco, Inc........................... 16,650 280,969
Cybex Computer Products Corp............ 6,900 202,688
Pinnacle Systems, Inc................... 31,100 1,111,825
Telxon Corp............................. 66,600 924,075
Xircom Inc.............................. 35,600 1,210,400
------------
3,729,957
------------
COMPUTER SERVICES: 0.70%
Affiliated Computer Services, Inc.,
Class A............................... 15,400 693,000
Ciber, Inc.............................. 41,700 1,164,994
Computer Horizons Corp.................. 27,500 732,187
Computer Task Group, Inc................ 12,600 341,775
National Computer Systems, Inc.......... 5,800 214,600
National Data Corp...................... 4,200 204,487
------------
3,351,043
------------
COMPUTER SOFTWARE: 2.54%
American Management Systems............. 2,000 80,000
Avant Corp.............................. 233,300 3,732,800
CBT Group Plc ADR....................... 2,000 29,750
Check Point Software Technology Corp.... 19,000 870,437
Cognos Inc.............................. 2,900 72,500
Mapics Inc.............................. 104,700 1,727,550
Mercury Interactive Corp................ 13,900 879,175
New Dimension Software Ltd.............. 34,900 1,679,562
Platinum Software Corp.................. 8,100 103,781
Progress Software Corp.................. 61,000 2,058,750
Software AG Systems Inc................. 12,400 224,750
Symantec Corp........................... 28,000 609,000
------------
12,068,055
------------
COMPUTERS - NETWORKING: 0.63%
Scitex Corp. Ltd........................ 12,700 149,225
Transwitch Corp......................... 73,500 2,861,906
------------
3,011,131
------------
CONSTRUCTION - CEMENT AND AGGREGATES:
2.65%
Calmat Co............................... 9,600 296,400
Centex Construction Products Inc........ 89,944 3,653,975
Elcor Corp.............................. 18,000 581,625
Florida Rock Industries, Inc............ 61,700 1,912,700
</TABLE>
<PAGE>
21
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
CONSTRUCTION - CEMENT AND AGGREGATES: (continued)
Lone Star Industries, Inc............... 135,800 $ 4,999,137
Southdown, Inc.......................... 19,552 1,157,234
------------
12,601,071
------------
CONSUMER - JEWELRY, NOVELTY AND GIFTS:
0.09%
Fossil, Inc............................. 15,200 437,000
------------
CONSUMER FINANCE: 1.98%
AmeriCredit Corp........................ 184,900 2,553,931
Cash America International Inc.......... 2,000 30,375
Doral Financial Corp.................... 174,400 3,858,600
Fund American Enterprises Holdings,
Inc................................... 1,500 210,094
Greyhound Lines Inc..................... 86,100 511,219
Healthcare Financial Partners Inc....... 6,700 267,162
PMI Group, Inc.......................... 40,600 2,004,625
------------
9,436,006
------------
CONTAINERS - METAL AND GLASS: 0.25%
Ball Corp............................... 26,100 1,194,075
------------
CONTAINERS AND PACKAGES - PAPER: 0.17%
Greif Brothers Corp., Class A........... 16,300 475,757
Shorewood Packaging Corp................ 17,100 350,550
------------
826,307
------------
DISTRIBUTORS - FOOD AND HEALTH: 1.10%
Aviation Sales Co....................... 34,500 1,401,562
Handleman Co............................ 32,900 462,656
Owens & Minor Inc....................... 22,700 357,525
United Stationers Inc................... 116,000 3,016,000
------------
5,237,743
------------
DRUGS: 0.40%
Barr Laboratories Inc................... 3,500 168,000
Liposome Co., Inc. ..................... 41,400 639,112
Roberts Pharmaceutical Corp............. 49,700 1,080,975
------------
1,888,087
------------
ELECTRIC UTILITIES: 2.90%
BEC Energy Holding Co................... 67,100 2,763,681
El Paso Electric Co..................... 68,500 599,375
Empire District Electric Co............. 41,600 1,029,600
Hawaiian Electric Industries Inc........ 1,700 68,425
IdaCorp Inc............................. 18,600 673,088
IPALCO Enterprises, Inc................. 8,000 443,500
Midamerican Energy Holding Co........... 5,400 145,125
Minnesota Power & Light Co.............. 52,500 2,310,000
Nevada Power Co......................... 19,900 517,400
Public Service Co. of New Mexico........ 67,900 1,387,706
Rochester Gas & Electric Corp........... 43,400 1,356,250
Sierra Pacific Resources................ 41,900 1,592,200
SIGCORP, Inc............................ 25,300 902,894
TNP Enterprises, Inc.................... 200 7,587
------------
13,796,831
------------
ELECTRICAL EQUIPMENT: 1.68%
Alpine Group, Inc....................... 9,000 135,000
Genlyte Group, Inc...................... 91,500 1,715,625
Juno Lighting, Inc...................... 30,900 722,288
Kuhlman Corp............................ 27,300 1,033,987
SLI Inc................................. 40,800 1,132,200
Superior Telecom Inc.................... 44,000 2,079,000
Technitrol Inc.......................... 25,000 796,875
Watsco, Inc............................. 21,400 358,450
------------
7,973,425
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS - COMPONENT DISTRIBUTOR:
0.40%
CHS Electronics, Inc.................... 49,400 $ 836,712
InaCom Corp............................. 34,700 516,163
Safeguard Scientifics, Inc.............. 19,700 540,519
------------
1,893,394
------------
ELECTRONICS AND INSTRUMENTATION: 0.21%
GenRad, Inc............................. 16,800 264,600
MTS Systems Corp........................ 54,300 733,050
------------
997,650
------------
ENGINEERING AND CONSTRUCTION: 1.07%
Dycom Industries Inc.................... 69,800 3,987,325
Jacobs Engineering Group Inc............ 6,000 244,500
McDermott International, Inc............ 34,200 844,313
------------
5,076,138
------------
FINANCIAL - DIVERSIFIED: 3.98%
Apartment Investment & Management Co.,
Class A............................... 19,300 717,719
Avis Rent A Car Inc..................... 32,900 795,769
Bradley Real Estate, Inc................ 45,300 928,650
Brandywine Realty Trust................. 41,800 747,175
BRE Properties Inc...................... 1,600 39,600
Camden Property Trust................... 10,800 280,800
Carramerica Realty Corp................. 12,100 290,400
Catellus Development Corp............... 40,600 581,088
CBL & Associates Properties, Inc........ 84,500 2,181,156
Cousins Properties Inc.................. 5,800 187,050
Developers Diversified Realty Corp...... 2,000 35,500
Electro Rent Corp....................... 150,250 2,422,781
Equity Inns Inc......................... 27,800 267,575
Essex Property Trust, Inc............... 15,200 452,200
FelCor Lodging Trust.................... 1,411 32,541
First Industrial Realty Trust Inc....... 12,400 332,475
Franchise Finance Corp. of America...... 1,700 40,800
General Growth Properties, Inc.......... 9,700 367,388
Health Care Reit, Inc................... 16,100 416,587
Healthcare Realty Trust Inc............. 2,000 44,625
Highwoods Properties, Inc............... 14,100 363,075
Hospitality Properties Trust............ 4,300 103,738
Innkeepers USA Trust.................... 94,900 1,121,006
Irvine Apartment Communities, Inc....... 8,400 267,750
Liberty Financial Companies, Inc........ 33,650 908,550
Liberty Property Trust.................. 34,600 852,025
Macerich Co............................. 1,600 41,000
McGrath Rentcorp........................ 19,200 422,400
MGI Properties.......................... 7,800 217,913
Pacific Gulf Properties Inc............. 4,200 84,263
Pan Pacific Retail Properties Inc....... 46,000 917,125
Prentiss Properties Trust............... 22,400 499,800
Price Enterprises Inc................... 132,000 701,250
Reckson Associates Realty Corp.......... 9,900 219,656
Rental Service Corp..................... 24,600 385,912
United Rentals Inc...................... 785 26,003
XTRA Corp............................... 16,100 666,138
------------
18,959,483
------------
FOODS: 1.87%
Earthgrains Co.......................... 111,400 3,446,438
Fresh Del Monte Produce Inc............. 23,800 516,163
Pilgrim's Pride Corp.................... 210,500 4,196,844
Smithfield Foods, Inc................... 18,900 640,237
Universal Foods Corp.................... 3,900 107,006
------------
8,906,688
------------
FOOTWEAR: 0.09%
Stride Rite Corp........................ 34,000 297,500
</TABLE>
<PAGE>
22
ZWEIG APPRECIATION FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
FOOTWEAR: (continued)
Timberland Co., Class A................. 1,900 $ 86,569
Weyco Group, Inc........................ 2,400 60,900
------------
444,969
------------
GOLD AND PRECIOUS METAL MINING: 0.17%
Stillwater Mining Co.................... 19,500 799,500
------------
HEALTH CARE - DIVERSIFIED: 0.15%
Medicis Pharmaceutical Corp., Class A... 12,300 733,388
------------
HEALTH CARE - MEDICAL PRODUCTS AND
SUPPLIES: 1.23%
Amerisource Health Corp., Class A....... 2,400 156,000
Cooper Companies, Inc................... 95,100 1,967,381
Hanger Orthopedic Group, Inc............ 10,200 229,500
VISX, Inc............................... 39,900 3,488,756
------------
5,841,637
------------
HOMEBUILDING: 3.53%
Castle & Cooke Inc...................... 18,400 271,400
Centex Corp............................. 23,000 1,036,437
Champion Enterprises Inc................ 31,000 848,625
Crossmann Communities, Inc.............. 6,800 187,850
D.R. Horton Inc......................... 118,250 2,719,750
Del Webb Corp........................... 45,600 1,256,850
Fleetwood Enterprises, Inc.............. 15,700 545,575
Kaufman & Broad Home Corp............... 72,600 2,087,250
Lennar Corp............................. 15,003 378,826
M.D.C. Holdings, Inc.................... 22,600 483,075
NVR, Inc................................ 11,500 548,406
Palm Harbor Homes, Inc.................. 16,200 408,038
Pulte Corp.............................. 74,200 2,063,688
Ryland Group, Inc. ..................... 27,500 794,062
Standard Pacific Corp................... 90,900 1,283,963
Toll Brothers Inc....................... 54,700 1,234,169
U.S. Home Corp.......................... 19,829 659,314
------------
16,807,278
------------
HOSPITALS AND MANAGED CARE: 0.44%
Ameripath, Inc.......................... 55,100 492,456
TLC, The Laser Center Inc............... 3,000 61,500
Trigon Healthcare Inc................... 25,700 958,931
Universal Health Services, Inc., Class
B..................................... 10,700 555,062
------------
2,067,949
------------
HOTELS AND GAMING: 0.17%
Anchor Gaming........................... 4,600 259,325
Harveys Casino Resorts.................. 5,800 160,587
Sun International Hotels Ltd............ 8,200 372,587
------------
792,499
------------
HOUSEHOLD FURNISHINGS: 1.78%
Department 56 Inc....................... 4,800 180,300
Ethan Allen Interiors Inc............... 78,100 3,202,100
Furniture Brands International, Inc..... 59,800 1,629,550
Helen of Troy Ltd....................... 7,500 110,156
Interface Inc........................... 59,400 551,306
La-Z-Boy Inc............................ 18,700 333,094
Mohawk Industries Inc................... 25,300 1,064,181
Oneida Ltd.............................. 72,550 1,074,647
O'Sullivan Industries Holdings, Inc..... 7,100 74,550
Pillowtex Corp.......................... 8,600 230,050
------------
8,449,934
------------
HOUSEWARES AND HOUSEHOLD PRODUCTS: 0.11%
First Brands Corp....................... 13,500 532,406
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
INSURANCE - LIFE AND HEALTH: 1.46%
American Annuity Group, Inc............. 84,600 $ 1,945,800
Delphi Financial Group, Inc., Class A... 34,441 1,806,000
FBL Financial Group Inc., Class A....... 18,400 446,200
National Western Life Insurance Co.,
Class A .............................. 6,400 752,000
Presidential Life Corp.................. 97,400 1,935,825
Reinsurance Group America Inc........... 1,100 77,000
------------
6,962,825
------------
INSURANCE - PROPERTY AND CASUALTY: 4.59%
Alfa Corp............................... 31,700 768,725
Alleghany Corp.......................... 7,100 1,333,912
Amerin Corp............................. 85,900 2,029,388
Chartwell Re Corp....................... 10,200 242,250
CMAC Investment Corp.................... 67,900 3,119,156
Commerce Group Inc...................... 8,200 290,588
Enhance Financial Services Group Inc.... 46,200 1,386,000
Fidelity National Financial, Inc........ 39,710 1,211,155
Financial Security Assurance Holdings
Ltd................................... 34,300 1,860,775
First American Financial Corp. ......... 43,750 1,405,469
Foremost Corp. of America............... 6,600 138,600
Fremont General Corp.................... 97,400 2,410,650
HCC Insurance Holdings, Inc............. 1,900 33,487
LandAmerica Financial Group, Inc........ 18,000 1,004,625
Medical Assurance Inc................... 13,126 433,988
NAC Re Corp............................. 14,200 666,512
NYMAGIC, Inc............................ 17,600 365,200
Reliance Group Holdings, Inc............ 55,200 710,700
Renaissance Re Holdings Ltd............. 10,100 369,912
RLI Corp................................ 22,700 754,775
State Auto Financial Corp............... 11,000 136,125
Stewart Information Services Corp....... 16,500 957,000
United Fire & Casualty Co............... 5,500 184,937
------------
21,813,929
------------
INSURANCE BROKERS: 0.17%
E.W. Blanch Holdings Inc................ 6,700 317,831
Hooper Holmes Inc....................... 16,300 472,700
------------
790,531
------------
INVESTMENT BANKING AND BROKERAGE: 1.09%
Investment Technology Group, Inc........ 6,700 415,819
Jefferies Group, Inc.................... 69,800 3,463,825
Legg Mason, Inc......................... 10,600 334,562
Morgan Keegan, Inc...................... 8,400 158,025
Raymond James Financial Corp............ 24,617 520,034
Southwest Securities Group Inc.......... 14,668 295,193
------------
5,187,458
------------
IRON AND STEEL: 0.40%
AK Steel Holding Corp................... 41,300 970,550
Bethlehem Steel Corp.................... 3,800 31,825
Roanoke Electric Steel Corp............. 61,300 900,344
------------
1,902,719
------------
LEISURE TIME - PRODUCTS: 1.65%
Acclaim Entertainment Inc............... 85,000 1,041,250
Action Performance Cos. Inc............. 95,100 3,364,163
Coachmen Industries, Inc................ 12,000 315,000
GTECH Holdings Corp..................... 9,100 233,187
National R.V. Holdings, Inc............. 43,200 1,112,400
Polaris Industries Inc.................. 20,700 811,181
Score Board Inc......................... 786 25
Thor Industries Inc..................... 14,100 359,550
Winnebago Industries, Inc............... 40,200 608,025
------------
7,844,781
------------
</TABLE>
<PAGE>
23
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
MACHINERY: 5.53%
Ampco-Pittsburgh Corp................... 60,900 $ 662,287
Applied Power Inc., Class A............. 75,100 2,835,025
Avondale Industries, Inc................ 121,000 3,509,000
Gardner Denver Machinery, Inc........... 154,700 2,281,825
Gleason Corp............................ 85,000 1,540,625
Kaydon Corp............................. 19,600 785,225
Manitowoc Company, Inc.................. 18,250 809,844
Metals USA Corp......................... 101,600 990,600
Met-Pro Corp............................ 12,700 158,750
MotivePower Industries Inc.............. 97,300 3,131,844
Mueller Industries, Inc................. 99,100 2,012,969
NACCO Industries Inc., Class A.......... 4,800 441,600
RTI International Metals, Inc........... 81,400 1,139,600
Specialty Equipment Companies Inc....... 74,700 2,021,569
Tecumseh Products Co., Class A.......... 35,600 1,659,850
Tower Automotive Inc.................... 75,800 1,890,262
Varlen Corp............................. 19,200 442,800
------------
26,313,675
------------
MANUFACTURING - DIVERSIFIED: 2.86%
Barnes Group Inc........................ 89,900 2,618,338
Carlisle Companies Inc.................. 20,500 1,058,313
Myers Industries, Inc................... 15,300 438,926
Pentair Inc............................. 2,200 87,587
Premark International Inc............... 100 3,463
Thomas Industries Inc................... 57,190 1,122,354
Tredegar Industries Inc................. 157,900 3,552,750
Trinity Industries, Inc................. 97,500 3,753,750
United Dominion Industries Ltd.......... 34,900 711,087
Valhi, Inc.............................. 22,300 253,662
------------
13,600,230
------------
MANUFACTURING - SPECIALIZED: 2.90%
AptarGroup Inc.......................... 64,800 1,818,450
Astec Industries, Inc................... 14,400 801,000
Briggs & Stratton Corp.................. 8,400 418,950
CTS Corp................................ 80,300 3,493,050
Dionex Corp............................. 15,800 578,675
Reliance Steel & Aluminum Co............ 40,500 1,118,813
Robbins & Myers, Inc.................... 19,700 435,862
SPS Technologies Inc.................... 61,200 3,465,450
York International Inc.................. 41,200 1,681,475
------------
13,811,725
------------
METALS AND MINING: 0.05%
Sociedad Quimica Y Minera de Chile S.A.,
ADR................................... 7,000 235,813
------------
NATURAL GAS: 1.15%
AGL Resources Inc....................... 10,300 237,544
Atmos Energy Corp....................... 5,900 190,275
Eastern Enterprises Inc................. 2,400 105,000
Equitable Resources, Inc................ 23,200 675,700
MDU Resources Group Inc................. 74,650 1,964,228
National Fuel Gas Co.................... 14,800 668,775
Peoples Energy Corp..................... 1,300 51,837
Southwest Gas Corp...................... 58,600 1,574,875
------------
5,468,234
------------
OFFICE EQUIPMENT AND SUPPLIES: 0.46%
Knoll Inc............................... 24,800 734,700
New England Business Service, Inc....... 1,400 54,775
Polycom Inc............................. 62,000 1,379,500
------------
2,168,975
------------
OIL AND GAS - DRILLING AND EQUIPMENT:
0.62%
Coflexip, ADR........................... 18,900 607,163
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
Helmerich & Payne, Inc.................. 5,200 $ 100,750
J. Ray McDermott S.A. ADR............... 14,200 347,012
Lufkin Industries, Inc.................. 3,700 68,450
Petrofina S.A. ADR...................... 8,500 63,750
R & B Falcon Corp....................... 18,290 139,461
RPC Inc................................. 118,700 875,412
Seitel, Inc............................. 18,600 231,337
Tuboscope Vetco International Corp...... 700 5,687
Veritas DGC Inc......................... 255 3,315
Zapata Corp............................. 41,600 509,600
------------
2,951,937
------------
PAPER AND FOREST PRODUCTS: 0.24%
MacMillan Bloedel Ltd................... 46,700 467,000
Wausau-Mosinee Paper Corp............... 38,408 679,341
------------
1,146,341
------------
POWER PRODUCERS - INDEPENDENT: 0.13%
Calenergy Company, Inc.................. 2,000 69,375
Calpine Corp............................ 21,600 545,400
------------
614,775
------------
PUBLISHING: 0.06%
Hollinger International Inc............. 5,600 78,050
Houghton Mifflin Co..................... 4,300 203,175
------------
281,225
------------
RAILROADS: 0.53%
Florida East Coast Industries Inc....... 10,200 358,913
GATX Corp............................... 57,100 2,162,663
------------
2,521,576
------------
RESTAURANTS: 2.27%
Bob Evans Farms, Inc.................... 18,200 474,338
Brinker International Inc............... 61,500 1,775,812
CEC Entertainment Inc................... 18,100 502,275
CKE Restaurants, Inc.................... 92,830 2,732,683
Foodmaker, Inc.......................... 137,000 3,022,631
Papa John's International, Inc.......... 9,700 428,012
Ruby Tuesday, Inc....................... 37,300 792,625
Ryan's Family Steak Houses, Inc......... 87,000 1,076,625
------------
10,805,001
------------
RETAIL: 0.58%
Ames Department Stores, Inc............. 57,800 1,560,600
Neiman Marcus Group..................... 2,900 72,319
Ross Stores, Inc........................ 25,300 996,188
Shopko Stores Inc....................... 4,400 146,300
------------
2,775,407
------------
RETAIL - APPAREL: 1.70%
Ann Taylor Stores Corp.................. 132,300 5,217,581
Buckle Inc.............................. 37,000 888,000
Cato Corp., Class A..................... 73,100 719,578
Pacific Sunwear of California, Inc...... 76,900 1,259,238
------------
8,084,397
------------
RETAIL - BUILDING SUPPLIES: 1.46%
Eagle Hardware & Garden Inc............. 175,700 5,710,250
Hughes Supply, Inc...................... 41,850 1,224,113
------------
6,934,363
------------
RETAIL - COMPUTERS AND ELECTRONICS:
0.76%
Hollywood Entertainment Corp............ 24,800 675,800
Musicland Stores Corp................... 95,800 1,431,012
Trans World Entertainment Corp.......... 78,550 1,497,359
------------
3,604,171
------------
</TABLE>
<PAGE>
24
ZWEIG APPRECIATION FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
RETAIL - DRUG STORES: 0.03%
Longs Drug Stores Corp.................. 4,100 $ 153,750
------------
RETAIL - FOOD CHAINS: 0.20%
Companhia Brasileira ADR................ 21,600 334,800
Great Atlantic & Pacific Tea Company,
Inc................................... 20,000 592,500
------------
927,300
------------
RETAIL - HOME SHOPPING: 1.25%
Fingerhut Companies, Inc................ 77,000 1,188,688
Insight Enterprises, Inc................ 93,600 4,761,900
------------
5,950,588
------------
RETAIL - SPECIALTY: 0.53%
Jo-Ann Stores Inc., Class A............. 41,000 661,125
Michaels Stores Inc..................... 23,500 425,203
Zale Corp............................... 44,400 1,431,900
------------
2,518,228
------------
SAVINGS AND LOAN COMPANIES: 2.17%
Anchor Bancorp Wisconsin, Inc........... 11,300 271,200
Bank United Corp........................ 7,900 310,075
BSB Bancorp, Inc........................ 19,200 631,200
Coast Federal Litigation Trust, CPR
Certificates.......................... 14,900 98,713
Downey Financial Corp................... 35,280 897,453
FirstFed Financial Corp................. 92,600 1,655,225
MAF Bancorp Inc......................... 47,325 1,254,112
Ocwen Financial Corp.................... 15,600 192,075
Roslyn Bancorp.......................... 37,200 799,800
TR Financial Corp....................... 107,300 4,224,938
------------
10,334,791
------------
SEMICONDUCTOR EQUIPMENT: 1.57%
Cirrus Logic, Inc....................... 56,200 551,462
Esterline Technologies Corp............. 86,600 1,883,550
Level One Communications Inc............ 21,100 749,050
Orbotech Ltd............................ 90,300 4,277,962
------------
7,462,024
------------
SERVICE - ADVERTISING AND MARKETING:
0.27%
Advo Inc................................ 16,100 424,638
HA-LO Industries, Inc................... 23,200 872,900
------------
1,297,538
------------
SERVICE - COMMERCIAL AND CONSUMER: 1.05%
Copart, Inc............................. 16,800 543,900
Ogden Corp.............................. 28,800 721,800
Personnel Group of America, Inc......... 114,800 2,009,000
Primark Corp............................ 878 23,816
Romac International, Inc................ 25,700 571,825
Sylvan Learning Systems, Inc............ 11,900 362,950
TeleSpectrum Worldwide, Inc............. 79,200 777,150
------------
5,010,441
------------
SERVICE - EMPLOYMENT: 0.91%
Interim Services Inc.................... 118,000 2,758,250
Protection One, Inc..................... 1,300 11,131
Veterinary Centers of America........... 77,300 1,541,169
------------
4,310,550
------------
SHIPPING: 0.51%
Oglebay Norton Co....................... 3,700 91,575
Sea Containers Ltd., Class A............ 18,300 547,856
SEACOR Smit Inc......................... 36,100 1,784,694
------------
2,424,125
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
SPECIALTY PRINTING: 1.48%
Big Flower Holdings Inc................. 21,600 $ 476,550
Bowne & Co., Inc........................ 54,500 974,188
Consolidated Graphics, Inc.............. 37,800 2,553,863
Mail-Well, Inc.......................... 79,800 912,712
Quebecor Inc., Class A.................. 32,000 674,374
Valassis Communications Inc............. 6,600 340,725
World Color Press, Inc.................. 36,200 1,101,838
------------
7,034,250
------------
TEXTILES - APPAREL AND SPECIALTY: 1.65%
Fruit of The Loom, Inc.................. 69,900 965,494
Nautica Enterprises Inc................. 98,300 1,474,500
Oshkosh B'Gosh Inc...................... 71,900 1,451,481
Phillips-Van Heusen Corp................ 100,600 723,062
Tarrant Apparel Group................... 81,000 3,219,750
------------
7,834,287
------------
TRUCKERS: 1.41%
Landstar System, Inc.................... 53,400 2,176,050
M S Carriers Inc........................ 45,600 1,501,950
Rollins Truck Leasing Corp.............. 55,400 817,150
Swift Transportation Co., Inc........... 52,400 1,468,838
USFreightways Corp...................... 26,000 757,250
Werner Enterprises, Inc................. 25 442
------------
6,721,680
------------
TRUCKS AND PARTS: 0.40%
Navistar International Corp............. 28,900 823,650
Terex Corp.............................. 38,400 1,096,800
------------
1,920,450
------------
WASTE MANAGEMENT: 0.40%
Aqua Alliance Inc., Class A............. 246,700 508,819
Catalytica Inc.......................... 54,300 977,400
Eastern Environmental Services, Inc..... 6,200 183,675
URS Corp................................ 10,400 243,100
------------
1,912,994
------------
TOTAL COMMON STOCKS
(Cost $322,640,669)................................ 417,273,092
------------
<CAPTION>
PRINCIPAL
AMOUNT
-----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS: 6.70%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 4.19%
5.11%, 1/15/99........................ $20,000,000 19,958,126
------------
FEDERAL NATIONAL MORTGAGE ASSN.,
DISCOUNT NOTES: 2.09%
5.00%, 2/5/99......................... 10,000,000 9,949,835
------------
UNITED STATES TREASURY BILLS: 0.42%
3.69%, 1/7/99......................... 1,000,000 999,225
3.70%, 1/14/99........................ 1,000,000 998,508
------------
1,997,733
------------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $31,909,693)................................. 31,905,694
------------
</TABLE>
<PAGE>
25
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENTS: 5.86%
With Morgan Stanley & Co., Inc., (dated
12/31/98), 5.00%, due 1/4/99
(Repurchase proceeds $13,893,714);
collateralized by: $13,883,034 Federal
National Mortgage Association Bond,
7.879%, due 11/1/2024
(Market value $14,166,635)............ $13,886,000 $ 13,886,000
With Prudential Securities Inc., (dated
12/31/98), 5.05%, due 1/4/99
(Repurchase proceeds $14,007,856);
collateralized by: $10,654,084 of
various United States Government and
Agency Obligations, 6.029% - 9.875%,
due 11/15/2015 - 11/1/2028
(Market value $14,281,124)............ 14,000,000 14,000,000
------------
TOTAL REPURCHASE AGREEMENTS
(Cost $27,886,000)................................. 27,886,000
------------
TOTAL INVESTMENTS
(Cost $382,436,362)................... 100.26% 477,064,786
Other Assets............................ 0.46 2,198,861
------- --------------
Total Assets.......................... 100.72% 479,263,647
Total Liabilities (Note 6)............ (0.72) (3,445,101)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 475,818,546
------- --------------
------- --------------
- - ------------------------------------------------------------------
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share
($240,899,748/14,858,958 shares)...... $ 16.21
------
------
Maximum public offering price per share
-
NAV/(1- maximum sales charge)
($16.21/.945)......................... $ 17.15
------
------
CLASS B SHARES
Net asset value and offering price per
share ($30,370,047/1,896,101
shares)............................... $ 16.02
------
------
Redemption price per share.............. **
------
------
CLASS C SHARES
Net asset value and offering price per
share ($201,788,737/12,621,580
shares)............................... $ 15.99
------
------
Redemption price per share.............. **
------
------
CLASS I SHARES
Net asset value, offering and redemption
price per share ($2,760,014/167,991
shares)............................... $ 16.43
------
------
</TABLE>
- - ------------------------------------------------------------------
* 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 December
31, 1998 was $382,469,655 and net unrealized appreciation on investments
consisted of:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation..................... $100,028,333
Gross unrealized depreciation..................... (5,433,202)
------------
Net unrealized appreciation....................... $ 94,595,131
------------
------------
</TABLE>
See notes to financial statements.
<PAGE>
26
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 53.78%
UNITED STATES: 27.75%
AEROSPACE AND DEFENSE: 0.08%
Northrop Grumman Corp................... 6,000 $ 438,750
------------
AIRFREIGHT: 0.19%
CNF Transportation Inc.................. 29,000 1,089,313
------------
AIRLINES: 0.33%
AMR Corp................................ 8,000 475,000
UAL Corp................................ 25,000 1,492,187
------------
1,967,187
------------
APPAREL AND TEXTILES: 0.23%
Spring Industries Inc., Class A......... 33,000 1,367,437
------------
AUTOMOBILES: 0.59%
DaimlerChrysler Corp., AG............... 9,810 942,373
General Motors Corp..................... 35,000 2,504,687
------------
3,447,060
------------
AUTOMOTIVE PARTS AND EQUIPMENT: 0.13%
Snap-On Inc............................. 22,000 765,875
------------
BANKS: 2.20%
Bankers Trust New York Corp............. 21,000 1,794,187
Chase Manhattan Corp.................... 30,000 2,041,875
Fleet Financial Group Inc............... 68,000 3,038,750
J.P. Morgan & Company, Inc.............. 18,000 1,891,125
PNC Bank Corp........................... 77,000 4,167,625
------------
12,933,562
------------
BIOTECHNOLOGY: 0.63%
Amgen Inc............................... 25,000 2,614,063
Biogen Inc.............................. 13,000 1,079,000
------------
3,693,063
------------
BROADCASTING: 0.45%
Viacom Inc., Class B.................... 36,000 2,664,000
------------
BUILDING MATERIALS AND PRODUCTS: 0.42%
Owens Corning Inc....................... 30,000 1,063,125
USG Corp................................ 28,000 1,426,250
------------
2,489,375
------------
CHEMICALS: 0.66%
Dow Chemical Corp....................... 18,000 1,636,875
Ethyl Corp.............................. 70,000 406,875
Union Carbide Corp...................... 43,000 1,827,500
------------
3,871,250
------------
COMPUTER SERVICES: 0.26%
Electronic Data Systems Corp............ 24,000 1,206,000
Shared Medical Systems Inc.............. 6,000 299,250
------------
1,505,250
------------
COMPUTERS AND SOFTWARE: 2.26%
Compaq Computer Corp.................... 42,000 1,761,375
Hewlett-Packard Co...................... 28,000 1,912,750
International Business Machines Corp.... 31,000 5,727,250
Oracle Corp............................. 89,000 3,838,125
------------
13,239,500
------------
CONGLOMERATES: 0.21%
ITT Industries Inc...................... 11,000 437,250
National Service Industries, Inc........ 21,000 798,000
------------
1,235,250
------------
CONSUMER PRODUCTS AND SERVICES: 0.45%
Colgate-Palmolive Co.................... 20,000 1,857,500
Interpublic Group of Companies, Inc..... 4,000 319,000
Ralston-Purina Group Inc................ 14,000 453,250
------------
2,629,750
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
ELECTRONICS: 0.86%
Computer Sciences Corp.................. 18,000 $ 1,159,875
Harris Corp............................. 36,000 1,318,500
Intel Corp.............................. 10,000 1,185,625
Litton Industries Inc................... 13,000 848,250
Scientific-Atlanta Inc.................. 22,000 501,875
------------
5,014,125
------------
ENGINEERING: 0.07%
McDermott International Inc............. 16,000 395,000
------------
ENTERTAINMENT: 0.61%
Gaylord Entertainment Inc., Class A..... 48,333 1,456,032
King World Productions Inc.............. 73,000 2,148,938
------------
3,604,970
------------
FINANCE: 1.28%
Federal National Mortgage Association... 66,000 4,884,000
Household International Corp............ 12,599 499,235
Morgan Stanley, Dean Witter, Discover &
Co.................................... 10,000 710,000
TransAmerica Corp....................... 12,000 1,386,000
------------
7,479,235
------------
FOOD AND BEVERAGES: 1.20%
Adolph Coors Co., Class B............... 9,000 507,938
Conagra Inc............................. 87,000 2,740,500
IBP Inc................................. 60,000 1,747,500
Kellogg Company, Inc.................... 18,000 614,250
Unilever NV, ADR........................ 17,000 1,409,938
------------
7,020,126
------------
FOREST AND PAPER PRODUCTS: 0.04%
Weyerhauser Co.......................... 5,000 254,062
------------
HOSPITALS AND HEALTHCARE: 0.30%
Aetna Inc............................... 4,000 314,500
Humana Inc.............................. 81,000 1,442,812
------------
1,757,312
------------
HOTELS AND GAMING: 0.19%
Harrah's Entertainment Inc.............. 41,000 643,188
Marriott International Inc., Class A.... 17,000 493,000
------------
1,136,188
------------
HOUSEHOLD PRODUCTS: 0.99%
Maytag Corp............................. 42,000 2,614,500
Procter & Gamble Co..................... 21,000 1,917,563
Whirlpool Corp.......................... 23,000 1,273,625
------------
5,805,688
------------
INDUSTRIAL PRODUCTS, SERVICES AND
MACHINERY: 0.09%
NACCO Industries Inc., Class A.......... 6,000 552,000
------------
INSURANCE: 1.09%
AFLAC Inc............................... 31,000 1,364,000
CIGNA Corp.............................. 32,000 2,474,000
CNA Financial Corp...................... 30,000 1,207,500
Conseco Inc............................. 10,539 322,098
EXEL Limited, Class A................... 14,000 1,050,000
------------
6,417,598
------------
INVESTMENT BANKING AND BROKERAGE: 0.08%
Merrill Lynch & Co...................... 7,000 467,250
------------
INVESTMENT MANAGEMENT: 0.06%
Equitable Companies, Inc................ 6,000 347,250
------------
MANUFACTURING: 0.69%
Crane Co................................ 20,000 603,750
Minnesota Mining & Manufacturing Co..... 20,000 1,422,500
Tenneco Inc............................. 59,000 2,009,687
------------
4,035,937
------------
</TABLE>
<PAGE>
27
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
METALS AND MINING: 0.31%
Aluminum Co. of America................. 6,000 $ 447,375
Freeport McMoran Copper & Gold Co.,
Class B............................... 23,000 240,062
Newmont Mining Corp..................... 64,000 1,156,000
------------
1,843,437
------------
NATURAL GAS: 0.08%
Consolidated Natural Gas Co............. 9,000 486,000
------------
NEWSPAPERS: 0.21%
New York Times Co., Class A............. 35,000 1,214,063
------------
OFFICE AUTOMATION AND EQUIPMENT: 0.18%
Xerox Corp.............................. 9,000 1,062,000
------------
OIL AND GAS: 1.80%
Ashland Inc............................. 66,000 3,192,750
Halliburton Co.......................... 11,000 325,875
Phillips Petroleum Co................... 52,000 2,216,500
Sunoco Inc.............................. 83,000 2,993,188
Texaco Inc.............................. 29,000 1,533,375
Unocal Corp............................. 10,000 291,875
------------
10,553,563
------------
PERSONAL CARE PRODUCTS: 0.24%
Alberto-Culver Co., Class B............. 52,000 1,387,750
------------
PHARMACEUTICALS: 1.97%
Allergan Inc............................ 66,000 4,273,500
Merck & Company, Inc.................... 25,000 3,692,188
Pfizer Inc.............................. 11,000 1,379,813
Schering-Plough Inc..................... 40,000 2,210,000
------------
11,555,501
------------
PRINTING AND PUBLISHING: 0.43%
Knight-Ridder Inc....................... 27,000 1,380,375
McGraw-Hill Companies, Inc.............. 11,000 1,120,625
------------
2,501,000
------------
REAL ESTATE INVESTMENT TRUSTS: 0.10%
Starwood Hotels & Resorts Inc........... 26,000 589,875
------------
RECREATIONAL PRODUCTS: 0.18%
Brunswick Corp.......................... 34,000 841,500
Mattel Inc.............................. 10,000 228,125
------------
1,069,625
------------
RESTAURANTS: 0.26%
Brinker International Inc............... 52,000 1,501,500
------------
RETAIL TRADE: 1.56%
Autozone Inc............................ 14,000 461,125
Federated Deptartment Stores Inc........ 56,000 2,439,500
Kmart Corp.............................. 40,000 612,500
Limited Inc............................. 46,000 1,339,750
Sears Roebuck & Co...................... 56,000 2,380,000
Supervalu Inc........................... 32,000 896,000
TJX Companies Inc....................... 26,000 754,000
Toys R Us, Inc.......................... 16,000 270,000
------------
9,152,875
------------
SHOES: 0.07%
Reebok International, Ltd............... 27,000 401,625
------------
STEEL: 0.04%
USX-U.S. Steel Group Inc................ 10,000 230,000
------------
TELECOMMUNICATIONS: 2.43%
Airtouch Communications Corp............ 17,000 1,226,125
Ameritech Corp.......................... 17,000 1,077,375
AT&T Corp............................... 70,000 5,267,500
Bell Atlantic Corp...................... 30,720 1,628,160
Lucent Technologies Inc................. 13,000 1,430,000
MCI WorldCom Inc........................ 3,731 267,699
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
United States Cellular Corp............. 38,100 $ 1,447,800
U S West Communications Group Inc....... 30,000 1,938,750
------------
14,283,409
------------
TOBACCO: 0.56%
Philip Morris Companies Inc............. 61,000 3,263,500
------------
TRUCKS AND PARTS: 0.24%
Navistar International Corp............. 50,000 1,425,000
------------
UTILITIES: 0.31%
FirstEnergy Corp........................ 17,000 553,562
UtiliCorp United Inc.................... 35,000 1,284,062
------------
1,837,624
------------
WASTE MANAGEMENT: 0.14%
Browning-Ferris Industries Inc.......... 29,000 824,688
------------
TOTAL UNITED STATES
(Cost $127,369,433)................................ 162,806,398
------------
FOREIGN STOCKS: 26.03%
CANADA: 1.59%
AEROSPACE AND DEFENSE: 0.08%
Bombardier Inc., Class B................ 31,600 452,604
------------
BANKS: 0.36%
Bank of Montreal........................ 15,900 638,691
Canadian Imperial Bank of Commerce...... 29,000 717,448
Royal Bank of Canada.................... 14,700 732,607
------------
2,088,746
------------
BROADCASTING: 0.06%
Thomson Corp............................ 16,400 383,307
------------
BUSINESS SERVICES: 0.05%
Laidlaw Inc............................. 17,800 179,043
Moore Corp., Ltd........................ 8,700 94,873
------------
273,916
------------
CONGLOMERATES: 0.16%
Canadian Pacific Ltd.................... 24,900 465,254
Imasco Ltd.............................. 23,600 502,422
------------
967,676
------------
ENERGY: 0.08%
Petro-Canada Inc........................ 18,900 199,951
Talisman Energy Inc..................... 15,000 263,184
------------
463,135
------------
FOREST AND PAPER PRODUCTS: 0.03%
Abitibi Consolidated Inc................ 17,000 157,162
------------
METALS AND MINING: 0.24%
Alcan Aluminum Ltd...................... 23,400 632,227
Barrick Gold Corp....................... 32,900 638,294
Dofasco Inc............................. 10,200 130,156
------------
1,400,677
------------
RETAIL TRADE: 0.08%
Canadian Tire Corp...................... 18,400 482,162
------------
TELECOMMUNICATIONS: 0.34%
BCE Inc................................. 33,600 1,265,469
Northern Telecom Ltd.................... 15,000 748,047
------------
2,013,516
------------
UTILITIES: 0.11%
Transalta Corp.......................... 25,200 370,781
TransCanada Pipelines Ltd............... 20,400 298,164
------------
668,945
------------
TOTAL CANADA......................................... 9,351,846
------------
</TABLE>
<PAGE>
28
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
DENMARK: 0.99%
AIRLINES: 0.01%
SAS Danmark AS.......................... 6,600 $ 74,664
------------
BANKS: 0.19%
Den Danske Bank......................... 4,600 617,959
Unidanmark AS, Class A.................. 5,200 469,793
------------
1,087,752
------------
BUSINESS SERVICES: 0.03%
ISS International Service Systems, Class
B..................................... 2,700 175,630
------------
FOOD AND BEVERAGES: 0.12%
Carlsberg, Class A...................... 5,000 290,675
Danisco................................. 8,100 439,076
------------
729,751
------------
HOMEBUILDERS: 0.02%
Superfos AS............................. 7,600 112,248
------------
HOSPITALS AND HEALTHCARE: 0.16%
Novo-Nordisk AS, Class B................ 7,200 950,271
------------
HOUSEHOLD PRODUCTS: 0.02%
Bang & Olufsen Holdings................. 2,200 134,119
------------
TELECOMMUNICATIONS: 0.28%
GN Store Nord........................... 10,100 357,059
Tele Danmark AS, Class B................ 9,400 1,268,694
------------
1,625,753
------------
TRANSPORTATION: 0.16%
D/S 1912, Class B....................... 95 664,231
D/S Svendborg, Class B.................. 24 243,224
------------
907,455
------------
TOTAL DENMARK........................................ 5,797,643
------------
FRANCE: 3.41%
BANKS: 0.17%
Banque Nationale De Paris............... 9,150 753,791
Societe Generale Paris.................. 1,350 218,709
------------
972,500
------------
BUSINESS SERVICES: 0.35%
Vivendi................................. 7,850 2,037,611
------------
CHEMICALS: 0.19%
Air Liquide Co.......................... 5,906 1,083,679
------------
CONSUMER PRODUCTS AND SERVICES: 0.52%
L'Oreal Co.............................. 3,400 2,458,917
Promodes................................ 800 582,006
------------
3,040,923
------------
ELECTRONICS: 0.22%
Alcatel Alsthom......................... 7,500 918,334
Schneider SA............................ 6,250 379,283
------------
1,297,617
------------
FOOD AND BEVERAGES: 0.12%
LVMH Moet Hennessy...................... 3,550 702,857
------------
INSURANCE: 0.55%
AXA UAP................................. 22,300 3,233,504
------------
OIL AND GAS: 0.22%
Societe Nationale Elf Aquitaine......... 11,300 1,306,756
------------
REAL ESTATE: 0.10%
Simco................................... 6,600 599,012
------------
RETAIL TRADE: 0.41%
Carrefour............................... 2,030 1,533,166
Cie De St. Gobain....................... 6,150 868,632
------------
2,401,798
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS: 0.45%
France Telecom SA....................... 33,200 $ 2,638,788
------------
UTILITIES: 0.11%
Total SA, Class B....................... 6,650 673,785
------------
TOTAL FRANCE......................................... 19,988,830
------------
GERMANY: 3.68%
AUTOMOBILES: 0.60%
DaimlerChrysler AG...................... 20,160 2,003,170
Volkswagen AG........................... 19,150 1,529,149
------------
3,532,319
------------
BANKS: 0.66%
Bayerische Vereinsbank AG............... 12,500 979,377
Deutsche Bank AG........................ 26,200 1,542,333
Dresdner Bank AG........................ 32,400 1,361,671
------------
3,883,381
------------
CHEMICALS: 0.58%
Bayer AG................................ 48,650 2,031,465
Hoechst AG.............................. 33,050 1,371,130
------------
3,402,595
------------
CONGLOMERATES: 0.13%
Viag AG................................. 1,300 762,548
------------
CONSUMER PRODUCTS AND SERVICES: 0.07%
Karstadt AG............................. 750 391,751
------------
ELECTRONICS: 0.30%
Siemens AG.............................. 26,950 1,739,388
------------
INSURANCE: 0.67%
Allianz AG Holding...................... 10,750 3,943,474
------------
MACHINERY AND EQUIPMENT: 0.33%
Mannesmann AG........................... 16,700 1,932,592
------------
TELECOMMUNICATIONS: 0.08%
Deutsche Telekom AG..................... 15,000 493,066
------------
UTILITIES: 0.26%
RWE AG.................................. 27,700 1,517,546
------------
TOTAL GERMANY........................................ 21,598,660
------------
ITALY: 2.22%
APPAREL AND TEXTILES: 0.05%
Benetton Group SPA...................... 144,100 291,007
------------
AUTOMOBILES: 0.17%
Fiat SPA................................ 205,900 716,742
Fiat SPA Priv........................... 147,700 285,289
------------
1,002,031
------------
BANKS: 0.46%
Istituto Banc San Paolo SPA............. 55,500 982,812
Mediobanca SPA.......................... 34,500 480,171
Un Credito Italiano SPA................. 212,500 1,262,287
------------
2,725,270
------------
BROADCASTING: 0.06%
Mediaset SPA............................ 44,000 357,563
------------
BUILDING MATERIALS AND PRODUCTS: 0.02%
Sirti SPA............................... 22,000 133,019
------------
CONGLOMERATES: 0.02%
Snia BPD................................ 65,000 102,490
------------
ENERGY: 0.30%
Eni SPA................................. 265,000 1,735,658
------------
INDUSTRIAL PRODUCTS, SERVICES AND
MACHINERY: 0.10%
Pirelli SPA............................. 175,000 561,951
------------
</TABLE>
<PAGE>
29
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
INSURANCE: 0.50%
Assicurazioni Generali SPA.............. 62,000 $ 2,594,391
Ras Riun Adriat Di Sicurta SPA.......... 23,000 334,063
------------
2,928,454
------------
TELECOMMUNICATIONS: 0.49%
Telecom Italia Mobile SPA............... 227,500 1,683,200
Telecom Italia SPA...................... 138,888 1,187,622
------------
2,870,822
------------
UTILITIES: 0.05%
Edison SPA.............................. 27,000 318,722
------------
TOTAL ITALY.......................................... 13,026,987
------------
JAPAN: 1.50%
AUTOMOBILES: 0.03%
Honda Motor Co.......................... 5,000 164,450
------------
BANKS: 0.12%
Sanwa Bank Ltd.......................... 10,000 77,216
Sumitomo Bank........................... 28,000 287,943
The Bank of Tokyo-Mitsubishi............ 34,000 352,660
------------
717,819
------------
CHEMICALS: 0.25%
Kuraray Co., Ltd........................ 49,000 541,693
Kyowa Hakko Kogyo....................... 53,000 262,181
Takeda Chemical Industries.............. 17,000 655,585
------------
1,459,459
------------
ELECTRONICS: 0.05%
Sony Corp............................... 4,100 299,140
------------
FINANCE: 0.26%
Acom Co................................. 4,500 289,628
Aiful Corp.............................. 5,700 346,649
Hitachi Credit Corp..................... 15,100 336,002
Promise Co., Ltd........................ 4,100 213,723
Takefuji Corp........................... 4,800 351,064
------------
1,537,066
------------
FOOD AND BEVERAGES: 0.11%
Asahi Breweries Ltd..................... 14,000 206,649
Nichirei Corp........................... 45,000 59,840
Nippon Flour Mills Ltd.................. 30,000 83,245
Nippon Soda Co., Ltd.................... 19,000 98,032
Nisshin Flour Milling Corp.............. 25,000 208,998
------------
656,764
------------
FOREST AND PAPER PRODUCTS: 0.03%
Hokuetsu Paper Mills.................... 42,000 194,734
------------
HOMEBUILDERS: 0.05%
Obayashi Corp........................... 62,000 297,908
Toa Corp................................ 1,000 1,844
------------
299,752
------------
INDUSTRIAL PRODUCTS, SERVICES AND
MACHINERY: 0.04%
Fujikura Ltd............................ 4,000 21,489
Minebea Co., Ltd........................ 17,000 195,018
------------
216,507
------------
INSURANCE: 0.05%
Sumitomo Marine & Fire Co............... 43,000 272,943
------------
MACHINERY AND EQUIPMENT: 0.05%
Mitsubishi Corp......................... 52,000 299,645
------------
MANUFACTURING: 0.06%
NGK Insulators.......................... 24,000 310,000
Shinagawa Refractories.................. 22,000 67,287
------------
377,287
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
METALS AND MINING: 0.11%
Kawasaki Steel Co....................... 410,000 $ 614,273
------------
PHOTOGRAPHIC PRODUCTS: 0.18%
Canon Inc............................... 18,000 385,372
Fuji Photo Film Ltd..................... 18,000 670,213
------------
1,055,585
------------
RAILROADS: 0.05%
Keio Electric Railway Co................ 63,000 268,644
------------
TOURISM: 0.00%
Toho Zinc............................... 6,000 14,628
------------
TRANSPORTATION: 0.03%
Nippon Yusen Kabus Kaish................ 51,000 161,410
------------
UTILITIES: 0.03%
Osaka Gas Co., Ltd...................... 7,000 24,140
Showa Shell Sekiyu...................... 25,000 140,736
------------
164,876
------------
TOTAL JAPAN.......................................... 8,774,982
------------
MEXICO: 0.60%
BROADCASTING: 0.05%
Grupo Televisa SA....................... 21,000 262,022
------------
BUILDING MATERIALS AND PRODUCTS: 0.03%
Cemex SA, Class A....................... 93,000 198,883
------------
CONGLOMERATES: 0.06%
Alfa SA, Class A........................ 53,000 149,515
Grupo Carso SA.......................... 61,000 207,240
------------
356,755
------------
FOOD AND BEVERAGES: 0.12%
Grupo Industrial Bimbo SA............... 128,000 225,456
Grupo Modelo SA......................... 232,000 478,544
------------
704,000
------------
HOSPITALS AND HEALTHCARE: 0.05%
Kimberly Clark De Mexico SA............. 93,000 293,857
------------
METALS AND MINING: 0.02%
Grupo Mexico SA......................... 61,000 143,711
------------
RETAIL TRADE: 0.07%
Cifra SA, Class V....................... 329,352 399,618
------------
TELECOMMUNICATIONS: 0.20%
Telefonos De Mexico SA.................. 67,000 166,992
Telefonos De Mexico SA, Class L......... 413,000 1,000,136
------------
1,167,128
------------
TOTAL MEXICO......................................... 3,525,974
------------
NEW ZEALAND: 1.01%
BUILDING MATERIALS AND PRODUCTS: 0.05%
Fletcher Challenge Building............. 195,300 302,287
------------
FOREST AND PAPER PRODUCTS: 0.18%
Carter Holt Harvey...................... 904,550 812,327
Fletcher Challenge Paper................ 355,400 238,435
------------
1,050,762
------------
INSURANCE: 0.10%
AMP Ltd................................. 48,150 598,250
------------
NATURAL GAS: 0.04%
Natural Gas Corp. Holdings.............. 223,600 244,507
------------
NEWSPAPERS: 0.05%
Independent News Ltd.................... 65,150 258,466
------------
TELECOMMUNICATIONS: 0.46%
Telecom Corp. of New Zealand............ 620,800 2,705,547
------------
</TABLE>
<PAGE>
30
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
TOBACCO: 0.13%
Lion Nathan Ltd......................... 296,350 $ 756,139
------------
TOTAL NEW ZEALAND.................................... 5,915,958
------------
SINGAPORE: 1.14%
AIRLINES: 0.16%
Singapore Airlines...................... 133,000 975,333
------------
BANKS: 0.33%
Development Bank Singapore.............. 96,000 866,909
Overseas Chinese Banking Corp........... 158,000 1,072,485
------------
1,939,394
------------
CONGLOMERATES: 0.08%
Natsteel Ltd............................ 120,000 131,636
Singapore Technologies Eng Ltd.......... 371,000 346,267
------------
477,903
------------
ELECTRONICS: 0.03%
Creative Technology Ltd................. 10,600 149,685
------------
ENGINEERING: 0.04%
Sembcorp Industries Ltd................. 214,000 243,830
------------
FOOD AND BEVERAGES: 0.03%
Fraser & Neave Corp..................... 54,000 157,745
------------
HOTELS AND GAMING: 0.01%
Hotel Properties........................ 129,000 54,727
------------
PRINTING AND PUBLISHING: 0.10%
Singapore Press Holdings Co............. 53,100 563,182
------------
REAL ESTATE: 0.19%
City Developments....................... 161,000 697,667
DBS Land................................ 222,000 326,946
United Industrial Corp.................. 287,000 114,800
------------
1,139,413
------------
TELECOMMUNICATIONS: 0.17%
Singapore Telecommunications Ltd........ 665,000 1,015,636
------------
TOTAL SINGAPORE...................................... 6,716,848
------------
SPAIN: 4.47%
BANKS: 1.67%
Argentaria SA........................... 74,400 1,929,629
Banco Bilbao Vizcaya SA................. 213,300 3,349,381
Banco Central Hispano SA................ 112,800 1,341,383
Banco De Santander SA................... 102,600 2,041,926
Banco Espanol Credito SA................ 85,100 1,123,091
------------
9,785,410
------------
BUSINESS SERVICES: 0.08%
Autopistas Cesa Co., SA................. 28,400 473,014
------------
ENERGY: 0.28%
Repsol Petroleo SA...................... 31,300 1,672,183
------------
ENGINEERING: 0.10%
Dragados & Construcciones SA............ 15,100 557,343
------------
FINANCE: 0.08%
Corporacion Financiera SA............... 2,900 485,054
------------
HOMEBUILDERS: 0.13%
Fomento De Construcion SA............... 10,400 774,336
------------
INSURANCE: 0.04%
Mapfre SA............................... 8,400 228,236
------------
RETAIL TRADE: 0.12%
Centros Com. Pryca SA................... 23,100 717,312
------------
STEEL: 0.04%
Acerinox SA............................. 10,000 233,246
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS: 0.70%
Telefonica De Espana SA................. 90,800 $ 4,043,513
Telefonica De Espana SA, Rights......... 90,800 80,742
------------
4,124,255
------------
TOBACCO: 0.09%
Tabacalera SA, Class A.................. 20,500 517,941
------------
UTILITIES: 1.14%
Endesa SA............................... 108,000 2,865,862
General De Aguas D'Barcelona SA......... 6,800 455,907
Iberdrola I SA.......................... 130,300 2,441,477
Sevillana De Electricidad SA............ 28,300 394,455
Union Electrica Fenosa SA............... 30,000 519,776
------------
6,677,477
------------
TOTAL SPAIN.......................................... 26,245,807
------------
SWEDEN: 1.11%
AUTOMOBILES: 0.10%
Volvo AB, Class A....................... 8,900 199,283
Volvo AB, Class B....................... 15,800 362,555
------------
561,838
------------
BANKS: 0.08%
Svenska Handelsbanken AB, Class A....... 10,900 459,893
------------
BUILDING MATERIALS AND PRODUCTS: 0.03%
Skanska AB, Class B..................... 6,300 174,875
------------
CONSUMER PRODUCTS AND SERVICES: 0.13%
Hennes & Mauritz AB, Class B............ 9,400 767,697
------------
ELECTRONICS: 0.42%
ABB AB, Class B......................... 16,100 170,816
Electrolux AB, Class B.................. 19,500 335,593
Ericsson LM AB, Class B................. 83,800 1,995,287
------------
2,501,696
------------
HOSPITALS AND HEALTHCARE: 0.27%
Astra AB, Class A....................... 60,200 1,229,132
Astra AB, Class B....................... 17,700 360,298
------------
1,589,430
------------
INSURANCE: 0.07%
Skandia Forsakrings AB.................. 26,500 405,389
------------
REAL ESTATE: 0.01%
Drott AB, Class B....................... 6,300 57,903
------------
TOTAL SWEDEN......................................... 6,518,721
------------
SWITZERLAND: 1.05%
BANKS: 0.23%
Credit Suisse Group..................... 3,400 532,217
UBS Namen AG............................ 2,630 808,052
------------
1,340,269
------------
CHEMICALS: 0.02%
Clariant AG............................. 210 98,158
------------
CONGLOMERATES: 0.03%
Alusuisse - Lonza Group................. 140 163,087
------------
CONSUMER PRODUCTS AND SERVICES: 0.01%
Swatch Group AG......................... 600 89,880
------------
FOOD AND BEVERAGES: 0.18%
Nestle SA............................... 485 1,055,806
------------
HOSPITALS AND HEALTHCARE: 0.45%
Novartis Inhaber AG..................... 100 196,578
Novartis Namen AG....................... 730 1,435,020
Roche Holding AG........................ 84 1,025,002
------------
2,656,600
------------
</TABLE>
<PAGE>
31
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
INSURANCE: 0.11%
Schweiz Lebensv & Rentenanst............ 150 $ 111,394
Schweiz Ruckversiche.................... 195 508,406
------------
619,800
------------
MACHINERY AND EQUIPMENT: 0.02%
ABB AG Baden............................ 120 140,663
------------
TOTAL SWITZERLAND.................................... 6,164,263
------------
UNITED KINGDOM: 3.26%
BANKS: 0.53%
Abbey National Plc...................... 25,200 539,641
HSBC Holdings........................... 26,200 662,193
HSBC Holdings, Class A.................. 17,500 476,664
Lloyds TSB Group Plc.................... 50,100 711,070
National Westminster Bank Plc........... 27,650 532,757
Royal Bank of Scotland.................. 12,772 205,499
------------
3,127,824
------------
BROADCASTING: 0.07%
Reed International Corp................. 48,950 389,727
------------
BUILDING MATERIALS AND PRODUCTS: 0.06%
RMC Group Inc........................... 8,500 115,974
Tarmac Plc.............................. 71,600 118,539
Wolseley Plc............................ 15,400 97,243
------------
331,756
------------
BUSINESS SERVICES: 0.04%
Railtrack Group Plc..................... 8,800 230,030
------------
CHEMICALS: 0.08%
BOC Group............................... 16,077 235,404
Imperial Chemical Industries Inc........ 23,700 204,664
------------
440,068
------------
CONGLOMERATES: 0.09%
Hanson Co............................... 10,121 80,033
Siebe Plc............................... 45,200 177,491
TI Group................................ 45,500 245,480
------------
503,004
------------
CONSUMER PRODUCTS AND SERVICES: 0.45%
BAA Plc................................. 13,400 155,627
Caradon Plc............................. 11,340 19,246
De La Rue Plc........................... 4,600 15,805
Glaxo Holdings Plc...................... 50,600 1,735,218
Smithkline Beecham, Class A............. 42,422 595,390
Tomkins Corp............................ 31,400 147,857
------------
2,669,143
------------
FOOD AND BEVERAGES: 0.37%
Allied Domecq Plc....................... 24,500 222,783
Associated British Foods Plc............ 16,200 153,240
BASS Plc................................ 19,114 268,900
Cadbury Schweppes Inc................... 40,800 695,161
Unilever Plc............................ 62,800 705,847
United Biscuits Corp.................... 29,511 117,970
------------
2,163,901
------------
INDUSTRIAL PRODUCTS, SERVICES AND
MACHINERY: 0.01%
Lucasvarity Plc......................... 20,100 67,056
------------
INSURANCE: 0.29%
Allied Zurich Plc....................... 25,950 388,386
Prudential Corp......................... 66,600 1,006,757
Royal Insurance Holdings Co............. 35,200 284,938
------------
1,680,081
------------
MANUFACTURING: 0.03%
Williams Plc............................ 34,628 196,619
------------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
OIL AND GAS: 0.28%
BP Amoco Plc............................ 61,600 $ 919,388
Shell Transport & Trading Co., Plc...... 120,000 734,775
------------
1,654,163
------------
REAL ESTATE: 0.04%
Land Securities Plc..................... 21,400 256,373
------------
RETAIL TRADE: 0.37%
Boots Co................................ 26,764 454,899
Great Universal Stores Plc.............. 15,800 165,492
Kingfisher Plc.......................... 31,400 339,601
Marks & Spencer Plc..................... 111,100 758,844
Sears Plc............................... 5,270 22,799
Selfridges Plc.......................... 5,270 19,291
Tesco Corp.............................. 142,800 409,867
------------
2,170,793
------------
TELECOMMUNICATIONS: 0.34%
British Telecommunications Corp......... 109,600 1,649,471
Cable & Wireless Plc.................... 30,200 371,596
------------
2,021,067
------------
TOBACCO: 0.07%
British American Tobacco Plc............ 33,350 296,044
Imperial Tobacco Group Plc.............. 8,097 86,898
------------
382,942
------------
TOURISM: 0.05%
Ladbroke Group.......................... 18,800 75,075
Rank Group Plc.......................... 10,000 38,103
Scottish & Newscastle Plc............... 18,200 206,378
------------
319,556
------------
UTILITIES: 0.09%
BG Plc.................................. 28,900 182,609
National Power Corp..................... 13,500 119,276
Scottish Power Plc...................... 19,200 196,632
------------
498,517
------------
TOTAL UNITED KINGDOM................................. 19,102,620
------------
TOTAL FOREIGN STOCKS
(Cost $109,246,073)................................ 152,729,139
------------
TOTAL COMMON STOCKS
(Cost $236,615,506)................................ 315,535,537
------------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
BONDS: 36.96%
UNITED STATES GOVERNMENT OBLIGATIONS:
20.62%
UNITED STATES TREASURY BONDS: 3.92%
10.75%, 5/15/2003..................... $ 7,000,000 8,640,625
6.50%, 11/15/2026..................... 700,000 814,844
6.375%, 8/15/2027..................... 11,800,000 13,573,693
------------
23,029,162
------------
UNITED STATES TREASURY NOTES: 16.70%
6.25%, 8/31/2000...................... 10,400,000 10,666,500
7.50%, 2/15/2005...................... 7,100,000 8,129,500
6.50%, 5/15/2005...................... 5,400,000 5,919,750
6.875%, 5/15/2006..................... 19,900,000 22,499,437
6.50%, 10/15/2006..................... 22,800,000 25,315,137
6.625%, 5/15/2007..................... 12,400,000 13,950,000
3.625%, 1/15/2008 (a)................. 11,727,938 11,500,709
------------
97,981,033
------------
TOTAL UNITED STATES GOVERNMENT OBLIGATIONS
(Cost $115,595,847)................................ 121,010,195
------------
</TABLE>
<PAGE>
32
ZWEIG MANAGED ASSETS
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
------------------------------------------------------------------
FOREIGN GOVERNMENT OBLIGATIONS: 16.34%
<S> <C> <C>
AUSTRALIAN COMMONWEALTH GOVERNMENT
BONDS: 2.43%
8.75%, 8/15/2008...................... A$ 9,700,000 $ 7,629,286
7.50%, 9/15/2009...................... A$ 9,000,000 6,646,122
------------
14,275,408
------------
CANADIAN GOVERNMENT BONDS: 1.67%
7.00%, 12/1/2006...................... C$ 13,200,000 9,797,391
------------
DEUTSCHLAND REPUBLIC GOVERNMENT BONDS:
1.81%
6.00%, 7/4/2007....................... DM 15,350,000 10,594,596
------------
FINNISH GOVERNMENT BONDS: 1.06%
7.25%, 4/18/2006...................... Fim 26,000,000 6,230,803
------------
FRANCE O.A.T. BONDS: 1.90%
5.50%, 10/25/2007..................... ff 55,800,000 11,156,604
------------
ITALIAN GOVERNMENT BONDS: 0.92%
6.75%, 7/1/2007....................... Lira 7,500,000,000 5,412,561
------------
NETHERLANDS GOVERNMENT BONDS: 1.12%
5.25%, 7/15/2008...................... NLG 11,200,000 6,570,683
------------
NEW ZEALAND GOVERNMENT BONDS: 1.01%
7.00%, 7/15/2009...................... NZ$ 10,000,000 5,931,992
------------
SPANISH GOVERNMENT BONDS: 1.68%
6.00%, 1/31/2008...................... Pta 1,220,000,000 9,860,610
------------
UNITED KINGDOM TREASURY BONDS: 2.74%
8.50%, 7/16/2007...................... L 6,400,000 13,651,914
7.25%, 12/7/2007...................... L 1,200,000 2,400,998
------------
16,052,912
------------
TOTAL FOREIGN GOVERNMENT OBLIGATIONS
(Cost $85,654,833 )........................................... 95,883,560
------------
TOTAL BONDS
(Cost $201,250,680)........................................... 216,893,755
------------
</TABLE>
<TABLE>
<S> <C> <C>
UNITED STATES SHORT-TERM OBLIGATIONS:
2.04%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 1.70%
5.14%, 1/20/99........................ $ 5,000,000 4,985,722
5.11%, 2/3/99......................... 5,000,000 4,975,869
------------
9,961,591
------------
UNITED STATES TREASURY BILLS: 0.34%
3.99%, 1/14/99........................ 1,000,000 998,509
4.36%, 2/11/99........................ 1,000,000 995,125
------------
1,993,634
------------
TOTAL UNITED STATES SHORT-TERM OBLIGATIONS
(Cost $11,956,609)................................. 11,955,225
------------
UNITED STATES REPURCHASE AGREEMENTS:
5.61%
With Morgan Stanley & Co., Inc. (dated
12/31/98), 5.00%, due 1/4/99
(Repurchase proceeds $15,938,850);
collateralized by: $16,329,604 Federal
National Mortgage Association Bonds,
6.161%, due 6/1/2032
(Market value $16,527,244)............ 15,930,000 15,930,000
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
With Prudential Securities Inc., (dated
12/31/98), 5.05%, due 1/4/99
(Repurchase proceeds $17,009,539);
collateralized by: $13,868,910 various
United States Government Agency
Obligations, 7.416% - 9.875%, due
11/15/2015 - 12/1/2028
(Market value $17,340,288)............ $17,000,000 $ 17,000,000
------------
TOTAL UNITED STATES REPURCHASE AGREEMENTS
(Cost $32,930,000)................................. 32,930,000
------------
TOTAL INVESTMENTS
(Cost $482,752,795)................... 98.39% 577,314,517
Other Assets............................ 1.93 11,344,169
------- --------------
Total Assets.......................... 100.32% 588,658,686
Total Liabilities (Note 6)............ (0.32) (1,898,991)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 586,759,695
------- --------------
------- --------------
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share
($122,084,439/8,609,460 shares)....... $ 14.18
------
------
Maximum public offering price per share
-
NAV/(1- Maximum sales charge)
($14.18/.945)......................... $ 15.01
------
------
CLASS B SHARES
Net asset value and offering price per
share ($33,172,414/2,323,439
shares)............................... $ 14.28
------
------
Redemption price per share.............. **
------
------
CLASS C SHARES
Net asset value and offering price per
share ($429,654,798/30,535,591
shares)............................... $ 14.07
------
------
Redemption price per share.............. **
------
------
CLASS I SHARES
Net asset value, offering and redemption
price per share ($1,848,044/129,151
shares)............................... $ 14.31
------
------
</TABLE>
- - ------------------------------------------------------------------
* Non-income producing security.
** Varies by length of time shares are held (Note 3b).
(a) Principal amount is adjusted monthly pursuant to the change in the Consumer
Price Index.
For Federal income tax purposes, the tax basis of investments owned at December
31, 1998 was $484,642,360 and net unrealized appreciation on investments
consisted of:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation..................... $104,826,929
Gross unrealized depreciation..................... (9,302,371)
------------
Net unrealized appreciation....................... $ 95,524,558
------------
------------
</TABLE>
<PAGE>
33
<TABLE>
<CAPTION>
%NET
INDUSTRY BREAKDOWN - COMMON STOCK VALUE ASSETS
- - -------------------------------------------------------------
<S> <C> <C>
Aerospace and Defense................... $ 891,354 0.15%
Airfreight.............................. 1,089,313 0.19
Airlines................................ 3,017,184 0.51
Apparel and Textiles.................... 1,658,444 0.28
Automobiles............................. 8,707,698 1.48
Automotive Parts and Equipment.......... 765,875 0.13
Banks................................... 41,061,820 7.00
Biotechnology........................... 3,693,063 0.63
Broadcasting............................ 4,056,619 0.69
Building Materials and Products......... 3,630,195 0.62
Business Services....................... 3,190,201 0.54
Chemicals............................... 10,355,209 1.77
Computer Services....................... 1,505,250 0.26
Computers and Software.................. 13,239,500 2.26
Conglomerates........................... 4,568,713 0.78
Consumer Products and Services.......... 9,589,144 1.63
Electronics............................. 11,001,651 1.88
Energy.................................. 3,870,976 0.66
Engineering............................. 1,196,173 0.20
Entertainment........................... 3,604,970 0.61
Finance................................. 9,501,355 1.62
Food and Beverages...................... 13,190,950 2.25
Forest and Paper Products............... 1,656,720 0.28
Homebuilders............................ 1,186,336 0.20
Hospitals and Healthcare................ 7,247,470 1.24
Hotels and Gaming....................... 1,190,915 0.20
Household Products...................... 5,939,807 1.01
Industrial Products, Services and
Machinery............................. 1,397,514 0.24
Insurance............................... 20,327,729 3.46
Investment Banking and Brokerage........ 467,250 0.08
<CAPTION>
%NET
VALUE ASSETS
- - -------------------------------------------------------------
<S> <C> <C>
Investment Management................... $ 347,250 0.06%
Machinery and Equipment................. 2,372,900 0.40
Manufacturing........................... 4,609,843 0.79
Metals and Mining....................... 4,002,098 0.68
Natural Gas............................. 730,507 0.13
Newspapers.............................. 1,472,529 0.25
Office Automation and Equipment......... 1,062,000 0.18
Oil and Gas............................. 13,514,482 2.30
Personal Care Products.................. 1,387,750 0.24
Pharmaceuticals......................... 11,555,501 1.97
Photographic Products................... 1,055,585 0.18
Printing and Publishing................. 3,064,182 0.52
Railroads............................... 268,644 0.05
Real Estate............................. 2,052,701 0.35
Real Estate Investment Trusts........... 589,875 0.10
Recreational Products................... 1,069,625 0.18
Restaurants............................. 1,501,500 0.26
Retail Trade............................ 15,324,558 2.61
Shoes................................... 401,625 0.07
Steel................................... 463,246 0.08
Telecommunications...................... 34,958,987 5.96
Tobacco................................. 4,920,522 0.84
Tourism................................. 334,184 0.06
Transportation.......................... 1,068,865 0.18
Trucks and Parts........................ 1,425,000 0.24
Utilities............................... 12,357,492 2.11
Waste Management........................ 824,688 0.14
------------ -----
$315,535,537 53.78%
------------ -----
------------ -----
</TABLE>
See notes to financial statements.
<PAGE>
34
ZWEIG GROWTH & INCOME FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 85.90%
AEROSPACE AND DEFENSE: 1.57%
AAR Corp................................ 2,900 $ 69,237
Cordant Technologies Inc................ 10,800 405,000
General Dynamics Corp................... 1,300 76,213
Northrop Grumman Corp................... 1,200 87,750
-----------
638,200
-----------
AGRICULTURAL PRODUCTS: 0.35%
Universal Corp.......................... 4,100 144,012
-----------
AIR FREIGHT: 0.21%
CNF Transportation Inc.................. 2,300 86,394
-----------
AIRLINES: 0.90%
Comair Holdings, Inc.................... 10,800 364,500
-----------
ALUMINUM: 0.58%
Alcan Aluminium Ltd..................... 3,300 89,306
Reynolds Metals Co...................... 2,800 147,525
-----------
236,831
-----------
AUTO PARTS AND EQUIPMENT: 2.12%
Arvin Industries, Inc................... 9,700 404,369
Borg-Warner Automotive, Inc............. 4,000 223,250
Intermet Corp........................... 7,700 100,581
Mark IV Industries, Inc................. 10,200 132,600
-----------
860,800
-----------
AUTOMOBILES: 1.49%
Ford Motor Co........................... 9,000 528,187
General Motors Corp..................... 1,100 78,719
-----------
606,906
-----------
BANKS - MONEY CENTER: 0.22%
UnionBanCal Corp........................ 2,600 88,562
-----------
BANKS - REGIONAL: 0.29%
Old Kent Financial Corp................. 1,800 83,700
Pacific Century Financial Corp.......... 1,500 36,562
-----------
120,262
-----------
BEVERAGES: 1.22%
Adolph Coors Co., Class B............... 4,800 270,900
Anheuser-Busch Companies, Inc........... 500 32,813
Canandaigua Brands, Class A............. 1,500 86,719
Robert Mondavi Corp..................... 2,600 106,275
-----------
496,707
-----------
BIOTECHNOLOGY: 0.26%
Amgen Inc............................... 1,000 104,563
-----------
BUILDING MATERIALS: 0.77%
Armstrong World Industries Inc.......... 1,500 90,469
Masco Corp.............................. 2,900 83,375
NCI Building Systems Inc................ 4,900 137,813
-----------
311,657
-----------
CHEMICALS: 0.46%
B.F. Goodrich & Co...................... 2,100 75,338
IMC Global, Inc......................... 4,300 91,912
Olin Corp............................... 700 19,819
-----------
187,069
-----------
CHEMICALS - SPECIALTY: 0.81%
A. Schulman Inc......................... 9,000 204,188
Ethyl Corp.............................. 9,500 55,219
W.R. Grace & Co......................... 4,500 70,594
-----------
330,001
-----------
COMMUNICATION EQUIPMENT: 1.53%
Cable Design Technologies Corp.......... 900 16,650
Comverse Technology Inc................. 500 35,500
ECI Telecom Ltd......................... 3,300 117,563
Lucent Technologies Inc................. 900 99,000
Nokia Corp., ADR........................ 800 96,350
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
Tekelec................................. 9,300 $ 154,031
Tellabs, Inc............................ 1,500 102,844
-----------
621,938
-----------
COMPUTER HARDWARE: 1.60%
Apple Computer, Inc..................... 6,700 274,281
Dell Computer Corp...................... 1,400 102,463
EMC Corp................................ 1,100 93,500
Lexmark International Group, Inc., Class
A..................................... 800 80,400
Network Appliance Inc................... 2,200 99,000
-----------
649,644
-----------
COMPUTER SERVICES: 1.04%
Affiliated Computer Services, Inc.,
Class A............................... 2,000 90,000
Ciber, Inc.............................. 4,100 114,544
Computer Horizons Corp.................. 2,700 71,888
Computer Task Group, Inc................ 3,200 86,800
Keane Inc............................... 400 15,975
Sykes Enterprises Inc................... 1,400 42,700
-----------
421,907
-----------
COMPUTER SOFTWARE: 3.71%
America Online Inc...................... 900 144,000
American Management Systems............. 2,700 108,000
Avant Corp.............................. 8,400 134,400
BMC Software Inc........................ 1,600 71,300
Check Point Software Technology Corp.... 2,700 123,694
Citrix Systems, Inc..................... 1,000 97,063
Computer Associates International,
Inc................................... 1,800 76,725
Compuware Corp.......................... 1,300 101,563
HBO & Co................................ 3,400 97,537
Legato Systems Inc...................... 1,700 112,094
Mercury Interactive Corp................ 1,800 113,850
Microsoft Corp.......................... 700 97,081
Oracle Corp............................. 900 38,812
Rational Software Corp.................. 3,200 84,800
Symantec Corp........................... 800 17,400
VERITAS Software Co..................... 1,500 89,906
-----------
1,508,225
-----------
COMPUTERS - NETWORKING: 0.20%
Adaptec Inc............................. 4,700 82,544
-----------
CONSTRUCTION - CEMENT AND AGGREGATES:
1.81%
Lafarge Corp............................ 11,700 473,850
Southdown, Inc.......................... 1,500 88,781
USG Corp................................ 3,400 173,187
-----------
735,818
-----------
CONSUMER FINANCE: 1.36%
AmeriCredit Corp........................ 12,600 174,038
Capital One Financial Corp.............. 800 92,000
Countrywide Credit Industries, Inc...... 2,300 115,431
Healthcare Financial Partners........... 1,800 71,775
Providian Financial Corp................ 1,350 101,250
-----------
554,494
-----------
CONTAINERS - METAL AND GLASS: 0.79%
Ball Corp............................... 7,000 320,250
-----------
CONTAINERS AND PACKAGES - PAPER: 0.09%
Shorewood Packaging Corp................ 1,700 34,850
-----------
DISTRIBUTORS - FOOD AND HEALTH: 1.19%
Bergen Brunswig Corp., Class A.......... 2,700 94,163
McKesson Corp........................... 1,100 86,969
Owens & Minor Inc....................... 3,500 55,125
Supervalu Inc........................... 8,800 246,400
-----------
482,657
-----------
DRUGS: 0.20%
Eli Lilly and Co........................ 900 79,988
-----------
ELECTRIC UTILITIES: 12.74%
Allegheny Energy Inc.................... 7,200 248,400
Ameren Corp............................. 1,600 68,300
BEC Energy Holding Co................... 6,700 275,956
</TABLE>
<PAGE>
35
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
ELECTRIC UTILITIES: (continued)
Central & South West Corp............... 11,100 $ 304,556
Consolidated Edison Co. of New York,
Inc................................... 1,100 58,163
DTE Energy Co........................... 4,600 197,225
Energy East Corp........................ 10,600 598,900
Entergy Corp............................ 6,700 208,537
Florida Progress Corp................... 5,500 246,469
GPU, Inc................................ 9,200 406,525
Houston Industries Inc.................. 1,748 56,155
IPALCO Enterprises, Inc................. 1,600 88,700
Montana Power Co........................ 1,600 90,500
Northern States Power Co................ 3,800 105,450
OGE Energy Corp......................... 6,100 176,900
PECO Energy Co.......................... 9,300 387,112
PG&E Corp............................... 7,075 222,862
Pinnacle West Capital Corp.............. 2,200 93,225
Potomac Electric Power Co............... 3,700 97,356
PP&L Resources, Inc..................... 5,800 161,675
Public Service Co. of New Mexico........ 15,100 308,606
Public Service Enterprise Group Inc..... 8,400 336,000
Sierra Pacific Resources................ 2,900 110,200
Unicom Corp............................. 3,200 123,400
UtiliCorp United Inc.................... 5,600 205,450
-----------
5,176,622
-----------
ELECTRICAL EQUIPMENT: 1.06%
A.O. Smith Corp......................... 8,400 206,325
American Power Conversion Corp.......... 1,900 92,031
AMP Inc................................. 1,800 93,712
Sanmina Corp............................ 600 37,500
-----------
429,568
-----------
ELECTRONICS - COMPONENT DISTRIBUTOR:
0.51%
CHS Electronics, Inc.................... 5,600 94,850
Flextronics International............... 1,300 111,313
-----------
206,163
-----------
ELECTRONICS AND INSTRUMENTATION: 0.51%
GenRad, Inc............................. 2,100 33,075
Perkin-Elmer Corp....................... 900 87,806
Waters Corp............................. 1,000 87,250
-----------
208,131
-----------
ENGINEERING AND CONSTRUCTION: 0.60%
Fluor Corp.............................. 2,000 85,125
Jacobs Engineering Group Inc............ 1,500 61,125
McDermott International, Inc............ 3,900 96,281
-----------
242,531
-----------
FINANCIAL - DIVERSIFIED: 5.11%
Apartment Investment & Management Co.,
Class A............................... 2,400 89,250
Avis Rent A Car Inc..................... 3,600 87,075
Carramerica Realty Corp................. 4,200 100,800
Catellus Development Corp............... 1,100 15,744
Duke Realty Investments, Inc............ 1,400 32,550
Equity Office Properties Trust.......... 8,200 196,800
Federal National Mortgage Association... 1,200 88,800
Federal Home Loan Mortgage Corp......... 1,400 90,212
FelCor Lodging Trust Inc................ 4,800 110,700
First Industrial Realty Trust Inc....... 1,800 48,262
General Growth Properties, Inc.......... 1,600 60,600
Highwoods Properties, Inc............... 4,500 115,875
Irvine Apartment Communities, Inc....... 2,900 92,437
Liberty Property Trust.................. 5,600 137,900
Macerich Co............................. 1,300 33,313
Prentiss Properties Trust............... 8,000 178,500
Prologis Trust.......................... 1,700 35,275
Public Storage Inc...................... 3,600 97,425
Reckson Associates Realty Corp.......... 4,000 88,750
Starwood Hotel & Resorts Trust.......... 2,400 54,450
Taubman Centers, Inc.................... 2,300 31,625
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
TrizecHahn Corp......................... 5,800 $ 118,900
XTRA Corp............................... 4,100 169,638
-----------
2,074,881
-----------
FOODS: 1.00%
Chiquita Brands International, Inc...... 8,500 81,281
Flowers Industries, Inc................. 1,500 35,906
IBP, Inc................................ 3,100 90,287
Michael Foods Inc....................... 5,900 177,000
Smithfield Foods, Inc................... 700 23,713
-----------
408,187
-----------
FOOTWEAR: 0.22%
Brown Group, Inc........................ 5,000 87,813
-----------
GOLD AND PRECIOUS METAL MINING: 0.53%
Barrick Gold Corp....................... 3,600 70,200
Placer Dome Inc......................... 4,800 55,200
Stillwater Mining Co.................... 2,200 90,200
-----------
215,600
-----------
HEALTH CARE - DIVERSIFIED: 0.59%
Allergan, Inc........................... 1,300 84,175
Mallinckrodt Group Inc.................. 2,500 77,031
Medicis Pharmaceutical Corp............. 1,300 77,513
-----------
238,719
-----------
HEALTH CARE - MEDICAL PRODUCTS AND
SUPPLIES: 0.35%
Medtronic, Inc.......................... 500 37,125
VISX, Inc............................... 1,200 104,925
-----------
142,050
-----------
HEALTH CARE - SPECIAL SERVICES: 0.61%
Lincare Holdings Inc.................... 2,500 101,406
Total Renal Care Holdings, Inc.......... 4,900 144,856
-----------
246,262
-----------
HOMEBUILDING: 2.88%
Centex Corp............................. 7,200 324,450
Del Webb Corp........................... 6,000 165,375
Fleetwood Enterprises, Inc.............. 3,700 128,575
Kaufman & Broad Home Corp............... 11,600 333,500
Pulte Corp.............................. 3,500 97,344
Ryland Group, Inc....................... 4,200 121,275
-----------
1,170,519
-----------
HOSPITALS AND MANAGED CARE: 0.20%
Pacificare Health Systems, Inc.......... 1,000 79,500
-----------
HOTELS AND GAMING: 0.90%
Extended Stay America Inc............... 5,100 53,550
Prime Hospitality Corp.................. 6,000 63,375
Royal Caribbean Cruises Ltd............. 6,700 247,900
-----------
364,825
-----------
HOUSEHOLD FURNISHINGS: 2.67%
Furniture Brands International, Inc..... 9,400 256,150
Interface Inc........................... 7,100 65,897
Maytag Corp............................. 3,100 192,975
Mohawk Industries Inc................... 7,700 323,881
Shaw Industries, Inc.................... 4,100 99,425
Springs Industries, Inc., Class A....... 3,500 145,031
-----------
1,083,359
-----------
HOUSEWARES AND HOUSEHOLD PRODUCTS: 0.78%
Blyth Industries, Inc................... 1,800 56,250
First Brands Corp....................... 2,100 82,819
Estee Lauder Companies Inc., Class A.... 1,100 94,050
Procter & Gamble Co..................... 900 82,181
-----------
315,300
-----------
INSURANCE - LIFE AND HEALTH: 0.68%
AFLAC Inc............................... 2,100 92,400
</TABLE>
<PAGE>
36
ZWEIG GROWTH & INCOME FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
INSURANCE - LIFE AND HEALTH: (continued)
Conseco Inc............................. 3,200 $ 97,800
UNUM Corp............................... 1,500 87,563
-----------
277,763
-----------
INSURANCE - MULTI-LINE: 0.60%
CIGNA Corp.............................. 1,100 85,044
Loews Corp.............................. 1,600 157,200
-----------
242,244
-----------
INSURANCE - PROPERTY AND CASUALTY: 2.28%
CMAC Investment Corp.................... 2,300 105,656
Financial Security Assurance Holdings
Ltd................................... 4,800 260,400
Fremont General Corp.................... 1,000 24,750
Frontier Insurance Group Inc............ 7,400 95,275
IPC Holdings Ltd........................ 700 16,231
Old Republic International Corp......... 7,850 176,625
PartnerRe Ltd........................... 400 18,300
Progressive Corp........................ 600 101,625
TIG Holdings Inc........................ 2,300 35,794
Travelers Property Casualty Corp., Class
A..................................... 2,900 89,900
-----------
924,556
-----------
IRON AND STEEL: 1.47%
AK Steel Holding Corp................... 5,500 129,250
Cleveland-Cliffs Inc.................... 4,400 177,375
LTV Corp. .............................. 3,700 21,506
Quanex Corp............................. 5,400 121,838
USX-U.S. Steel Group.................... 6,400 147,200
-----------
597,169
-----------
LEISURE TIME - PRODUCTS: 0.68%
Brunswick Corp.......................... 2,500 61,875
Coachmen Industries, Inc................ 4,400 115,500
Hasbro, Inc............................. 1,000 36,125
Polaris Industries Inc.................. 1,600 62,700
-----------
276,200
-----------
MACHINERY: 3.62%
Applied Power Inc., Class A............. 3,200 120,800
Ingersoll-Rand Co....................... 2,550 119,691
Inland Steel Industries, Inc............ 3,500 59,062
Manitowoc Company, Inc. ................ 4,400 195,250
Milacron Inc............................ 9,500 182,875
Tecumseh Products Co., Class A.......... 4,800 223,800
Timken Co............................... 7,200 135,900
Tower Automotive Inc.................... 7,600 189,525
Varlen Corp............................. 10,562 243,586
-----------
1,470,489
-----------
MANUFACTURING - DIVERSIFIED: 1.92%
Aeroquip-Vickers Inc.................... 2,600 77,838
Carlisle Companies Inc.................. 1,000 51,625
Crane Co................................ 1,100 33,206
Premark International Inc............... 3,300 114,262
Trinity Industries, Inc................. 6,200 238,700
Tyco International Ltd.................. 1,300 98,069
United Dominion Industries Ltd.......... 3,900 79,462
United Technologies Corp................ 800 87,000
-----------
780,162
-----------
MANUFACTURING - SPECIALIZED: 0.67%
Albany International Corp............... 1,800 34,087
Briggs & Stratton Corp.................. 1,600 79,800
York International Inc.................. 3,900 159,169
-----------
273,056
-----------
NATURAL GAS: 0.34%
Equitable Resources, Inc................ 4,800 139,800
-----------
OFFICE EQUIPMENT AND SUPPLIES: 1.03%
Herman Miller, Inc...................... 14,600 392,375
New England Business Service, Inc....... 700 27,387
-----------
419,762
-----------
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
OIL AND GAS - DRILLING AND EQUIPMENT:
0.17%
Tidewater Inc........................... 3,000 $ 69,562
-----------
OIL AND GAS - REFINING AND MARKETING:
0.42%
Ashland Inc............................. 3,500 169,313
-----------
PAPER AND FOREST PRODUCTS: 0.86%
Boise Cascade Corp...................... 2,200 68,200
Bowater Inc............................. 3,500 145,031
Chesapeake Corp......................... 3,400 125,375
P.H. Glatfelter Co...................... 1,000 12,375
-----------
350,981
-----------
PUBLISHING: 0.19%
Knight-Ridder, Inc...................... 1,500 76,687
-----------
RAILROADS: 1.04%
Burlington Northern Santa Fe Corp....... 3,100 104,625
Canadian National Railway Co............ 1,900 98,563
GATX Corp............................... 5,800 219,675
-----------
422,863
-----------
RESTAURANTS: 0.89%
Bob Evans Farms, Inc.................... 8,500 221,531
Brinker International Inc............... 3,200 92,400
CEC Entertainment Inc................... 1,700 47,175
-----------
361,106
-----------
RETAIL: 0.59%
Dollar Tree Stores, Inc................. 800 34,950
Ross Stores, Inc........................ 2,900 114,188
Wal-Mart Stores Inc..................... 1,100 89,581
-----------
238,719
-----------
RETAIL - APPAREL: 1.73%
Ann Taylor Stores Corp.................. 3,300 130,144
Gap, Inc................................ 1,800 101,250
Talbots Inc............................. 500 15,687
TJX Companies, Inc...................... 15,700 455,300
-----------
702,381
-----------
RETAIL - BUILDING SUPPLIES: 0.52%
Hughes Supply, Inc...................... 3,650 106,762
Lowe's Companies, Inc................... 2,000 102,375
-----------
209,137
-----------
RETAIL - COMPUTERS AND ELECTRONICS:
0.35%
Best Buy Co., Inc....................... 2,000 122,750
Hollywood Entertainment Corp............ 700 19,075
-----------
141,825
-----------
RETAIL - DRUG STORES: 0.08%
Longs Drug Stores Inc................... 900 33,750
-----------
RETAIL - FOOD CHAINS: 0.19%
Great Atlantic & Pacific Tea Company,
Inc................................... 2,600 77,025
-----------
RETAIL - HOME SHOPPING: 0.57%
CDW Computer Centers, Inc............... 1,000 95,938
Micro Warehouse Inc..................... 4,000 135,250
-----------
231,188
-----------
RETAIL - SPECIALTY: 0.09%
Zale Corp............................... 1,200 38,700
-----------
SAVINGS AND LOAN COMPANIES: 0.64%
BSB Bancorp, Inc........................ 1,000 32,875
Greenpoint Financial Corp............... 1,000 35,125
Roslyn Bancorp.......................... 8,900 191,350
-----------
259,350
-----------
SEMICONDUCTOR EQUIPMENT: 0.97%
Cirrus Logic, Inc....................... 6,800 66,725
Intel Corp.............................. 700 82,994
Jabil Circuit Inc....................... 1,500 111,937
Level One Communications Inc............ 3,700 131,350
-----------
393,006
-----------
</TABLE>
<PAGE>
37
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
SERVICE - ADVERTISING AND MARKETING:
0.10%
HA-LO Industries, Inc................... 1,100 $ 41,387
-----------
SERVICE - COMMERCIAL AND CONSUMER: 0.45%
Romac International, Inc................ 4,300 95,675
Sylvan Learning Systems, Inc............ 2,900 88,450
-----------
184,125
-----------
SHIPPING: 0.10%
Alexander & Baldwin, Inc................ 1,700 39,525
-----------
SPECIALTY PRINTING: 1.33%
Banta Corp.............................. 2,600 71,175
Bowne & Co., Inc........................ 13,600 243,100
Consolidated Graphics, Inc.............. 1,400 94,588
Deluxe Corp............................. 2,300 84,094
Harland Corp............................ 2,900 45,856
-----------
538,813
-----------
TELECOM - LONG DISTANCE: 0.45%
AT&T Corp............................... 1,300 97,825
Sprint Corp............................. 1,000 84,125
-----------
181,950
-----------
TELEPHONE: 0.70%
Bellsouth Corp.......................... 1,800 89,775
Century Telephone Enterprises, Inc...... 1,400 94,500
Tele Danmark, ADR....................... 1,500 101,812
-----------
286,087
-----------
TEXTILES - APPAREL AND SPECIALTY: 1.36%
Kellwood Co............................. 7,200 180,000
Quiksilver, Inc......................... 1,100 33,000
Russell Corp............................ 4,000 81,250
V.F. Corp............................... 1,700 79,688
Warnaco Group Inc., Class A............. 3,900 98,475
Wellman, Inc............................ 7,700 78,444
-----------
550,857
-----------
TOBACCO: 0.51%
RJR Nabisco Holdings Corp............... 7,000 207,813
-----------
TRUCKERS: 1.09%
J.B. Hunt Transport Services, Inc....... 4,200 96,600
Ryder System, Inc....................... 6,500 169,000
Swift Transportation Co., Inc........... 800 22,425
USFreightways Corp...................... 5,300 154,362
-----------
442,387
-----------
TRUCKS AND PARTS: 1.19%
Cummins Engine Company, Inc............. 1,400 49,700
Navistar International Corp............. 7,100 202,350
PACCAR Inc.............................. 5,600 230,300
-----------
482,350
-----------
TOTAL COMMON STOCKS
(Cost $32,351,702)................................. 34,890,897
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM OBLIGATIONS: 5.41%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 4.92%
5.11%, 1/15/99........................ $ 2,000,000 $ 1,995,813
-----------
UNITED STATES TREASURY BILLS: 0.49%
4.00%, 1/14/99........................ 100,000 99,851
3.80%, 1/21/99........................ 100,000 99,758
-----------
199,609
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Cost $2,195,670).................................. 2,195,422
-----------
REPURCHASE AGREEMENT: 8.87%
With Morgan Stanley & Co., Inc.,
(dated 12/31/98), 5.00%, due 1/4/99
(Repurchase proceeds $3,606,002);
collateralized by: $3,679,972
Federal National Mortgage Association,
Bonds, 7.4610%, due 7/1/2018
(Market value $3,724,100)............. 3,604,000 3,604,000
-----------
TOTAL REPURCHASE AGREEMENT
(Cost $3,604,000).................................. 3,604,000
-----------
TOTAL INVESTMENTS
(Cost $38,151,372).................... 100.18% 40,690,319
Other Assets............................ 0.59 240,109
------- --------------
Total Assets.......................... 100.77% 40,930,428
Total Liabilities (Note 6)............ (0.77) (314,388)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 40,616,040
------- --------------
------- --------------
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share ($8,172,367/609,993
shares)............................... $ 13.40
------
------
Maximum public offering price per share
-
NAV/(1 - maximum sales charge)
($13.40/.945)......................... $ 14.18
------
------
CLASS B SHARES
Net asset value and offering price per
share ($16,416,105/1,226,031
shares)............................... $ 13.39
------
------
Redemption price per share.............. **
------
------
CLASS C SHARES
Net asset value and offering price per
share ($14,364,138/1,073,977
shares)............................... $ 13.37
------
------
Redemption price per share.............. **
------
------
CLASS I SHARES
Net asset value, offering and redemption
price per share ($1,663,430/123,810
shares)............................... $ 13.44
------
------
</TABLE>
- - ------------------------------------------------------------------
* 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 December
31, 1998 was $38,159,274 and net unrealized appreciation on investments
consisted of:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation..................... $ 3,867,664
Gross unrealized depreciation..................... (1,336,619)
-----------
Net unrealized appreciation....................... $ 2,531,045
-----------
-----------
</TABLE>
See notes to financial statements.
<PAGE>
38
ZWEIG FOREIGN EQUITY FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS: 77.40%
AUSTRALIA: 5.49%
BANKS: 1.33%
National Australia Bank Ltd............. 4,543 $ 68,548
Westpac Banking Corp.................... 6,619 44,334
----------
112,882
----------
CONGLOMERATES: 0.90%
Broken Hill Proprietary Ltd............. 10,338 76,212
----------
INSURANCE: 0.41%
AMP Ltd................................. 2,728 34,595
----------
METALS AND MINING: 0.56%
Rio Tinto Ltd........................... 4,023 47,760
----------
NEWSPAPERS: 0.53%
News Corp., Ltd......................... 6,783 44,850
----------
REAL ESTATE: 0.44%
Lend Lease Corp., Ltd................... 2,789 37,635
----------
RETAIL TRADE: 0.21%
Coles Myer Ltd.......................... 3,451 18,098
----------
TELECOMMUNICATIONS: 0.86%
Telestra Corp., Ltd..................... 15,495 72,516
----------
TRANSPORTATION: 0.25%
Brambles Industries Ltd................. 869 21,187
----------
TOTAL AUSTRALIA..................................... 465,735
----------
AUSTRIA: 1.68%
BANKS: 0.84%
Bank Austria AG......................... 1,400 71,228
----------
CONGLOMERATES: 0.38%
Mayr-Melnhof AG......................... 685 32,033
----------
HOMEBUILDERS: 0.44%
Universale-Bau AG....................... 1,095 37,284
----------
MACHINERY AND EQUIPMENT: 0.02%
Nevia Beteiligungs AG................... 310 2,116
----------
TOTAL AUSTRIA....................................... 142,661
----------
BELGIUM: 3.02%
BANKS: 0.24%
Bancassurance Holdings SA............... 248 19,636
KBC Bankverzekerin...................... 8 682
----------
20,318
----------
CHEMICALS: 0.46%
Solvay SA, Class A...................... 517 38,978
----------
ENERGY: 0.17%
Petrofina SA............................ 31 14,212
----------
INSURANCE: 0.48%
Fortis AG............................... 113 40,952
----------
METALS AND MINING: 0.19%
Union Miniere SA........................ 431 16,410
----------
RETAIL TRADE: 0.58%
Delhaize le Lion SA..................... 560 49,555
----------
UTILITIES: 0.90%
Electrabel SA........................... 173 76,041
----------
TOTAL BELGIUM....................................... 256,466
----------
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
CANADA: 3.11%
AEROSPACE: 0.42%
Bombardier Inc., Class B................ 2,500 $ 35,807
----------
BANKS: 1.00%
Canadian Imperial Bank of Commerce...... 600 14,844
Royal Bank of Canada.................... 1,200 59,805
Toronto-Dominion Bank................... 300 10,508
----------
85,157
----------
BROADCASTING: 0.14%
Thomson Corp............................ 500 11,686
----------
CONGLOMERATES: 0.33%
Imasco Ltd.............................. 1,300 27,676
----------
ENERGY: 0.16%
Talisman Energy Inc..................... 800 14,036
----------
METALS AND MINING: 0.54%
Alcan Aluminum Ltd...................... 500 13,509
Barrick Gold Corp....................... 1,000 19,401
Dofasco Inc............................. 1,000 12,761
----------
45,671
----------
TELECOMMUNICATIONS: 0.52%
BCE Inc................................. 500 18,831
Northern Telecom Ltd.................... 500 24,935
----------
43,766
----------
TOTAL CANADA........................................ 263,799
----------
DENMARK: 1.24%
BANKS: 0.32%
Den Danske Bank......................... 200 26,868
----------
FOOD AND BEVERAGES: 0.51%
Aarhus Oliefabrik, Class A.............. 500 14,534
Carlsberg, Class A...................... 500 29,067
----------
43,601
----------
TRANSPORTATION: 0.41%
D/S 1912, Class B....................... 5 34,960
----------
TOTAL DENMARK....................................... 105,429
----------
FINLAND: 2.22%
BANKS: 0.26%
Merita Ltd., Class A.................... 3,550 22,576
----------
ELECTRONICS: 1.56%
Nokia AB, Class A....................... 1,080 132,243
----------
FOREST AND PAPER PRODUCTS: 0.26%
UPM-Kymmen OY........................... 775 21,734
----------
METALS AND MINING: 0.14%
Outokumpu OY, Class A................... 1,300 12,016
----------
TOTAL FINLAND....................................... 188,569
----------
FRANCE: 7.60%
BANKS: 0.50%
Cie Fin Paribas......................... 297 25,823
Societe Generale Paris.................. 100 16,201
----------
42,024
----------
BUSINESS SERVICES: 0.66%
Vivendi................................. 217 56,326
----------
CONSUMER PRODUCTS AND SERVICES: 1.30%
L'Oreal Co.............................. 153 110,651
----------
</TABLE>
<PAGE>
39
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
ELECTRONICS: 0.40%
Alcatel Alsthom NouVelles............... 125 $ 15,306
Schneider SA............................ 301 18,266
----------
33,572
----------
FOOD AND BEVERAGES: 0.33%
LVMH Moet Hennessy...................... 141 27,916
----------
INSURANCE: 1.25%
AXA UAP................................. 734 106,430
----------
OIL AND GAS: 0.51%
Societe Nationale Elf Aquitaine......... 378 43,713
----------
REAL ESTATE: 0.18%
Simco................................... 166 15,066
----------
RETAIL TRADE: 0.45%
Carrefour Supermarche................... 50 37,763
----------
TELECOMMUNICATIONS: 1.62%
France Telecom SA....................... 1,732 137,662
----------
UTILITIES: 0.40%
Total SA, Class B....................... 332 33,639
----------
TOTAL FRANCE........................................ 644,762
----------
GERMANY: 7.29%
AUTOMOBILES: 1.40%
DaimlerChrysler AG...................... 1,195 118,740
----------
BANKS: 0.59%
Deutsche Bank AG........................ 850 50,155
----------
CHEMICALS: 0.63%
BASF AG................................. 750 28,616
Bayer AG................................ 600 25,198
----------
53,814
----------
ELECTRONICS: 0.62%
Siemens AG.............................. 800 52,594
----------
INSURANCE: 1.88%
Aachener & Muenchener Bet Namen AG...... 100 14,529
Allianz AG Holding...................... 390 145,173
----------
159,702
----------
OIL AND GAS: 0.35%
Veba AG................................. 500 29,629
----------
PHARMACEUTICALS: 0.45%
Schering AG............................. 300 37,734
----------
RETAIL TRADE: 0.09%
Metro Stamm AG.......................... 100 7,865
----------
TELECOMMUNICATIONS: 1.28%
Deutsche Telekom AG..................... 3,300 108,474
----------
TOTAL GERMANY....................................... 618,707
----------
HONG KONG: 1.88%
BANKS: 0.63%
Hang Seng Bank.......................... 1,500 13,408
HSBC Holdings Plc....................... 1,600 39,859
----------
53,267
----------
CONGLOMERATES: 0.33%
Hutchison Whampoa Ltd................... 4,000 28,268
----------
REAL ESTATE: 0.43%
Cheung Kong Holdings.................... 3,000 21,588
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
Sun Hung Kai Properties................. 2,000 $ 14,586
Wharf Holdings Warrants................. 300 25
----------
36,199
----------
TELECOMMUNICATIONS: 0.49%
China Telecom (Hong Kong)............... 10,000 17,296
Hong Kong Telecommunications............ 14,000 24,486
----------
41,782
----------
TOTAL HONG KONG..................................... 159,516
----------
ITALY: 6.90%
AUTOMOBILES: 0.37%
Fiat SPA................................ 9,000 31,329
----------
BANKS: 0.84%
Istituto Banc San Paolo SPA............. 1,500 26,563
Un Credito Italiano SPA................. 7,500 44,551
----------
71,114
----------
ENERGY: 1.23%
Eni SPA................................. 16,000 104,794
----------
INSURANCE: 2.04%
Assicurazioni Generali SPA.............. 3,250 135,996
Istituto Naz Assicuraz SPA.............. 3,000 7,941
Ras Riun Adriat Di Sicurta SPA.......... 2,000 29,049
----------
172,986
----------
REAL ESTATE: 0.02%
Unione Immobiliare SPA.................. 3,000 1,568
----------
TELECOMMUNICATIONS: 1.98%
Telecom Italia Mobile SPA............... 17,000 125,778
Telecom Italia SPA...................... 5,000 42,755
----------
168,533
----------
UTILITIES: 0.42%
Edison SPA.............................. 3,000 35,414
----------
TOTAL ITALY......................................... 585,738
----------
JAPAN: 4.99%
AUTOMOBILES: 0.46%
Suzuki Motor Co., Ltd................... 1,000 11,879
Toyota Motor Corp....................... 1,000 27,216
----------
39,095
----------
BANKS: 0.46%
Sanwa Bank Ltd.......................... 1,000 7,722
Sumitomo Bank........................... 1,000 10,284
The Bank of Tokyo-Mitsubishi............ 2,000 20,745
----------
38,751
----------
CHEMICALS: 0.03%
Dainippon Ink & Chemicals Ltd........... 1,000 2,739
----------
ELECTRONICS: 0.59%
Hitachi Ltd............................. 1,000 6,206
Matsushita Electric Industrial Corp.,
Ltd................................... 1,000 17,722
Nintendo Corp., Ltd..................... 100 9,707
Sharp Corp.............................. 1,000 9,034
Sony Corp............................... 100 7,296
----------
49,965
----------
FINANCE: 0.63%
Acom Co................................. 100 6,436
Hitachi Credit Corp..................... 900 20,027
</TABLE>
<PAGE>
40
ZWEIG FOREIGN EQUITY FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
FINANCE: (continued)
Promise Co., Ltd........................ 100 $ 5,213
Takefuji Corp........................... 300 21,941
----------
53,617
----------
FOOD AND BEVERAGES: 0.48%
Nippon Soda Co., Ltd.................... 3,000 15,479
Nisshin Flour Milling Corp.............. 3,000 25,080
----------
40,559
----------
HOMEBUILDERS: 0.18%
Toa Corp................................ 8,000 14,752
----------
HOSPITALS AND HEALTHCARE: 0.26%
Sankyo Co., Ltd......................... 1,000 21,897
----------
INDUSTRIAL PRODUCTS, SERVICES AND
MACHINERY: 0.46%
Fujikura Ltd............................ 3,000 16,117
Minebea Co., Ltd........................ 2,000 22,943
----------
39,060
----------
INSURANCE: 0.15%
Sumitomo Marine & Fire Co............... 2,000 12,695
----------
PHOTOGRAPHIC PRODUCTS: 0.60%
Fuji Photo Film Ltd..................... 1,000 37,234
Fujitsu Ltd............................. 1,000 13,342
----------
50,576
----------
TELECOMMUNICATIONS: 0.35%
DDI Corp................................ 6 22,340
Nippon Telegraph & Telephone Corp....... 1 7,731
----------
30,071
----------
UTILITIES: 0.23%
Tokyo Electric Power Co................. 800 19,787
----------
WHOLESALE DISTRIBUTORS: 0.11%
Nissho Iwai Corp........................ 11,000 9,362
----------
TOTAL JAPAN......................................... 422,926
----------
MALAYSIA: 0.37%
BANKS: 0.13%
Malayan Banking Bhd..................... 8,000 11,344
----------
CONGLOMERATES: 0.10%
Sime Darby BEhad........................ 10,000 8,030
----------
TELECOMMUNICATIONS: 0.04%
Telekom Malaysia BEhad.................. 2,000 3,683
----------
TRANSPORTATION: 0.10%
Malaysia International Shipping Bhd..... 9,000 8,287
----------
TOTAL MALAYSIA...................................... 31,344
----------
MEXICO: 1.45%
BROADCASTING: 0.30%
Grupo Televisa SA....................... 2,000 24,954
----------
FOOD AND BEVERAGES: 0.39%
Grupo Modelo SA......................... 16,000 33,003
----------
RETAIL TRADE: 0.19%
Cifra SA, Class V....................... 13,397 16,255
----------
TELECOMMUNICATIONS: 0.57%
Telefonos De Mexico SA, Class L......... 20,000 48,433
----------
TOTAL MEXICO........................................ 122,645
----------
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
NETHERLANDS: 5.14%
AIRLINES: 0.07%
KLM Royal Dutch Airlines NV............. 200 $ 6,053
----------
BANKS: 0.44%
ABN Amro Holding NV..................... 1,789 37,654
----------
BROADCASTING: 0.57%
Wolters Kluwer-Cva NV................... 225 48,172
----------
ELECTRONICS: 0.40%
Philips Electronics NV.................. 500 33,570
----------
ENERGY: 1.22%
Royal Dutch Petroleum NV................ 2,084 103,828
----------
FINANCE: 0.76%
ING Groep NV............................ 1,052 64,184
----------
FOOD AND BEVERAGES: 1.29%
Heineken NV............................. 468 28,179
Unilever NV............................. 952 81,418
----------
109,597
----------
FOREST AND PAPER PRODUCTS: 0.24%
Koninklijke KNP BT NV................... 400 20,035
----------
TRANSPORTATION: 0.15%
TNT Post Group NV....................... 400 12,895
----------
TOTAL NETHERLANDS................................... 435,988
----------
NEW ZEALAND: 3.17%
BUILDING MATERIALS AND PRODUCTS: 0.11%
Fletcher Challenge Building............. 6,300 9,751
----------
FINANCE: 0.08%
Brierley Investments Ltd................ 31,500 7,155
----------
FOREST AND PAPER PRODUCTS: 0.60%
Carter Holt Harvey...................... 47,750 42,882
Fletcher Challenge Paper................ 11,500 7,715
----------
50,597
----------
INSURANCE: 0.23%
AMP Ltd................................. 1,550 19,259
----------
NATURAL GAS: 0.09%
Natural Gas Corp. Holdings.............. 7,200 7,873
----------
NEWSPAPERS: 0.10%
Independent News Ltd.................... 2,100 8,331
----------
TELECOMMUNICATIONS: 1.59%
Telecom Corp. of New Zealand............ 30,900 134,667
----------
TOBACCO: 0.34%
Lion Nathan Ltd......................... 11,450 29,215
----------
UTILITIES: 0.03%
Fletcher Challenge Energy............... 1,200 2,282
----------
TOTAL NEW ZEALAND................................... 269,130
----------
SINGAPORE: 1.48%
AIRLINES: 0.34%
Singapore International Airlines........ 4,000 29,333
----------
BANKS: 0.32%
Overseas Chinese Banking Corp........... 4,000 27,152
----------
BROADCASTING: 0.14%
Singapore Press Holdings................ 1,148 12,176
----------
ELECTRONICS: 0.17%
Creative Technology Ltd................. 1,000 14,121
----------
</TABLE>
<PAGE>
41
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
ENGINEERING: 0.06%
Sembcorp Industries Ltd................. 4,426 $ 5,043
----------
REAL ESTATE: 0.21%
City Developments....................... 2,000 8,667
DBS Land................................ 6,000 8,836
----------
17,503
----------
TELECOMMUNICATIONS: 0.13%
Singapore Telecommunications Ltd........ 7,000 10,691
----------
TOURISM: 0.11%
Shangri-La Hotel Ltd.................... 6,000 9,745
----------
TOTAL SINGAPORE..................................... 125,764
----------
SPAIN: 5.89%
BANKS: 2.22%
Argentaria SA........................... 1,600 41,497
Banco Bilbao Vizcaya SA................. 6,775 106,386
Banco De Santander SA................... 2,050 40,799
----------
188,682
----------
BUSINESS SERVICES: 0.10%
Autopistas Cesa Co., SA................. 500 8,328
----------
ENERGY: 0.57%
Repsol Petroleo SA...................... 900 48,082
----------
TELECOMMUNICATIONS: 1.69%
Telefonica De Espana SA................. 3,150 140,276
Telefonica De Espana SA, Rights......... 3,150 2,801
----------
143,077
----------
TOBACCO: 0.15%
Tabacalera SA, Class A.................. 500 12,633
----------
UTILITIES: 1.16%
Endesa SA............................... 2,525 67,003
Iberdrola I SA.......................... 1,700 31,853
----------
98,856
----------
TOTAL SPAIN......................................... 499,658
----------
SWEDEN: 4.45%
BANKS: 0.25%
Sparbanken Sverige AB, Class A.......... 500 12,954
Svenska Handelsbanken AB, Class A....... 200 8,438
----------
21,392
----------
BUSINESS SERVICES: 0.02%
Esselte AB, Class A..................... 100 1,604
----------
CHEMICALS: 0.05%
AGA AB, Class A......................... 300 3,978
----------
CONSUMER PRODUCTS AND SERVICES: 0.38%
Hennes & Mauritz AB, Class B............ 400 32,668
----------
ELECTRONICS: 2.22%
Ericsson LM AB, Class B................. 7,900 188,100
----------
FOREST AND PAPER PRODUCTS: 0.13%
Svenska Cellulosa AB, Class B........... 500 10,918
----------
HOSPITALS AND HEALTHCARE: 1.23%
Astra AB, Class A....................... 5,100 104,129
----------
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
MACHINERY AND EQUIPMENT: 0.17%
Atlas Copco AB, Class A................. 200 $ 4,392
Sandvik AB, Class A..................... 600 10,437
----------
14,829
----------
TOTAL SWEDEN........................................ 377,618
----------
SWITZERLAND: 3.47%
BANKS: 0.36%
Credit Suisse Group..................... 100 15,653
UBS Namen AG............................ 50 15,362
----------
31,015
----------
BUSINESS SERVICES: 0.11%
Adecco SA............................... 20 9,130
----------
FOOD AND BEVERAGES: 0.77%
Nestle SA............................... 30 65,308
----------
HOSPITALS AND HEALTHCARE: 1.64%
Novartis Inhaber AG..................... 10 19,658
Novartis Namen AG....................... 30 58,973
Roche Holding AG........................ 5 61,012
----------
139,643
----------
INSURANCE: 0.31%
Schweizerische Ruexkversicherun......... 10 26,072
----------
MACHINERY AND EQUIPMENT: 0.28%
ABB AG Baden............................ 20 23,444
----------
TOTAL SWITZERLAND................................... 294,612
----------
UNITED KINGDOM: 6.56%
BANKS: 1.45%
Barclays Plc............................ 1,186 25,516
HSBC Holdings........................... 700 17,692
Lloyds TSB Group Plc.................... 5,621 79,779
----------
122,987
----------
BUILDING MATERIALS AND PRODUCTS: 0.18%
Tarmac Plc.............................. 2,400 3,973
Wolseley Plc............................ 1,800 11,366
----------
15,339
----------
BUSINESS SERVICES: 0.06%
Railtrack Group Plc..................... 200 5,228
----------
CONSUMER PRODUCTS AND SERVICES: 1.77%
Glaxo Wellcome Plc...................... 2,715 93,105
Smithkline Beecham, Plc., Class A....... 4,069 57,108
----------
150,213
----------
ENGINEERING: 0.03%
Taylor Woodrow Plc...................... 1,100 2,755
----------
FOOD AND BEVERAGES: 0.33%
Unilever Plc............................ 2,500 28,099
----------
OIL AND GAS: 1.02%
BP Amoco Plc............................ 5,802 86,595
----------
REAL ESTATE: 0.20%
Land Securities Plc..................... 1,400 16,772
----------
RETAIL TRADE: 0.32%
Marks & Spencer Plc..................... 3,900 26,638
----------
TELECOMMUNICATIONS: 1.14%
British Telecommunications Corp......... 6,427 96,726
----------
</TABLE>
<PAGE>
42
ZWEIG FOREIGN EQUITY FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
NUMBER OF VALUE
SHARES (NOTE 2)
- - ----------------------------------------------------------------
<S> <C> <C>
UTILITIES: 0.06%
Scottish Power Plc...................... 500 $ 5,121
----------
TOTAL UNITED KINGDOM................................ 556,473
----------
TOTAL COMMON STOCKS
(Cost $5,903,429)................................. 6,567,540
----------
<CAPTION>
PRINCIPAL
AMOUNT
----------
<S> <C> <C>
UNITED STATES SHORT-TERM OBLIGATIONS:
8.23%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 5.88%
5.08%, 1/22/99........................ $ 500,000 498,448
----------
UNITED STATES TREASURY BILLS: 2.35%
4.24%, 1/21/99........................ 200,000 199,518
----------
TOTAL UNITED STATES SHORT-TERM OBLIGATIONS:
(Cost $698,047)................................... 697,966
----------
UNITED STATES REPURCHASE AGREEMENT:
12.95%
With Morgan Stanley & Co., Inc. (dated
12/31/98), 5.00%, due 1/4/99
(Repurchase proceeds $1,099,611);
collateralized by: $1,085,150 Federal
National Mortgage Association Bonds,
7.50%, due 6/1/2024
(Market value $1,121,436)............. 1,099,000 1,099,000
----------
TOTAL REPURCHASE AGREEMENT
(Cost $1,099,000)................................. 1,099,000
----------
TOTAL INVESTMENTS
(Cost $7,700,476)..................... 98.57% 8,364,506
Other Assets............................ 2.51 212,699
------- --------------
Total Assets.......................... 101.08% 8,577,205
Total Liabilities (Note 6)............ (1.08) (91,569)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 8,485,636
------- --------------
------- --------------
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share ($2,121,357/171,255
shares)............................... $ 12.39
------
------
Maximum public offering price per share
- NAV/(1- Maximum sales charge)
($12.39/.945)......................... $ 13.11
------
------
CLASS B SHARES
Net asset value and offering price per
share ($1,873,339/151,717 shares)..... $ 12.35
------
------
Redemption price per share.............. **
------
------
CLASS C SHARES
Net asset value and offering price per
share ($3,384,277/274,533 shares)..... $ 12.33
------
------
Redemption price per share.............. **
------
------
CLASS I SHARES
Net asset value, offering and redemption
price per share ($1,106,663/89,604
shares)............................... $ 12.35
------
------
</TABLE>
<TABLE>
<CAPTION>
%NET
INDUSTRY BREAKDOWN - FOREIGN STOCKS VALUE ASSETS
- - ------------------------------------------------------------
<S> <C> <C>
Aerospace............................... $ 35,807 0.42%
Airlines................................ 35,386 0.42
Automobiles............................. 189,164 2.23
Banks................................... 1,034,566 12.19
Broadcasting............................ 96,988 1.14
Building Materials and Products......... 25,090 0.30
Business Services....................... 80,616 0.95
Chemicals............................... 99,509 1.17
Conglomerates........................... 172,219 2.03
Consumer Products and Services.......... 293,532 3.46
Electronics............................. 504,165 5.94
Energy.................................. 284,952 3.36
Engineering............................. 7,798 0.09
Finance................................. 124,956 1.47
Food and Beverages...................... 348,083 4.10
Forest and Paper Products............... 103,284 1.22
Homebuilders............................ 52,036 0.61
Hospitals and Healthcare................ 265,669 3.13
Industrial Products, Services and
Machinery............................. 39,060 0.46
Insurance............................... 572,691 6.75
Machinery and Equipment................. 40,389 0.48
Metals and Mining....................... 121,857 1.44
Natural Gas............................. 7,873 0.09
Newspapers.............................. 53,181 0.63
Oil and Gas............................. 159,937 1.89
Pharmaceuticals......................... 37,734 0.44
Photographic Products................... 50,576 0.60
Real Estate............................. 124,743 1.47
Retail Trade............................ 156,174 1.84
Telecommunications...................... 1,040,081 12.26
Tobacco................................. 41,848 0.49
Tourism................................. 9,745 0.11
Transportation.......................... 77,329 0.91
Utilities............................... 271,140 3.20
Wholesale Distributors.................. 9,362 0.11
---------- ------
$6,567,540 77.40%
---------- ------
---------- ------
</TABLE>
- - ------------------------------------------------------------------
* 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 December
31, 1998 was $7,700,476 and net unrealized appreciation on investments consisted
of:
<TABLE>
<CAPTION>
<S> <C>
Gross unrealized appreciation..................... $1,090,730
Gross unrealized depreciation..................... (363,649)
----------
Net unrealized appreciation....................... $ 727,081
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
43
ZWEIG GOVERNMENT FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT & AGENCY
OBLIGATIONS: 85.73%
FEDERAL HOME LOAN MORTGAGE CORP.,
MODIFIED MTGE. PASS-THROUGH
SECURITIES: 0.43%
10.50%, 1/1/2001...................... $ 5,462 $ 5,629
10.50%, 6/1/2011...................... 73,559 80,318
12.00%, 11/1/2015..................... 102,892 116,075
-----------
202,022
-----------
FEDERAL NATIONAL MORTGAGE ASSN.: 2.15%
Deb., 8.25%, 12/18/2000............... 950,000 1,006,955
-----------
GOVERNMENT NATIONAL MORTGAGE ASSN.,
MODIFIED MTGE. PASS-THROUGH
SECURITIES: 0.17%
12.50%, 11/20/2013.................... 8,205 9,333
12.00%, 9/15/2015..................... 51,322 58,427
8.00%, 8/15/2022...................... 9,966 10,365
-----------
78,125
-----------
PRIVATE EXPORT FUNDING CORP.: 2.20%
7.90%, 3/31/2000...................... 1,000,000 1,034,879
-----------
UNITED STATES TREASURY BONDS: 34.42%
10.75%, 2/15/2003..................... 1,000,000 1,221,875
10.75%, 5/15/2003..................... 2,000,000 2,468,750
12.00%, 8/15/2013..................... 1,025,000 1,567,290
7.25%, 8/15/2022...................... 1,900,000 2,369,062
7.50%, 11/15/2024..................... 700,000 907,813
6.50%, 11/15/2026..................... 1,400,000 1,629,688
6.375%, 8/15/2027..................... 5,200,000 5,981,628
-----------
16,146,106
-----------
UNITED STATES TREASURY NOTES: 46.36%
6.25%, 8/31/2000...................... 3,300,000 3,384,562
7.25%, 5/15/2004...................... 1,036,000 1,161,292
6.875%, 5/15/2006..................... 7,900,000 8,931,937
6.50%, 10/15/2006..................... 3,600,000 3,997,127
6.625%, 5/15/2007..................... 3,800,000 4,275,000
-----------
21,749,918
-----------
TOTAL UNITED STATES GOVERNMENT & AGENCY OBLIGATIONS
(Cost $38,572,040)................................. 40,218,005
-----------
UNITED STATES SHORT TERM OBLIGATIONS:
8.51%
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 8.51%
5.11%, 1/15/1999...................... 4,000,000 3,991,625
-----------
TOTAL UNITED STATES SHORT-TERM OBLIGATIONS
(Cost $3,992,051).................................. 3,991,625
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT: 4.87%
With Morgan Stanley & Co., Inc., (dated
12/31/98), 5.00%, due 1/4/99
(Repurchase proceeds $2,288,271);
collateralized by: $2,284,547 Federal
National Mortgage Association Bonds,
7.085%, due 9/1/2036
(Market value $2,351,016)............. $ 2,287,000 $ 2,287,000
-----------
TOTAL REPURCHASE AGREEMENT
(Cost $2,287,000).................................. 2,287,000
-----------
TOTAL INVESTMENTS
(Cost $44,851,091 )................... 99.11% 46,496,630
Other Assets............................ 1.38 644,597
------- --------------
Total Assets.......................... 100.49% 47,141,227
Total Liabilities (Note 6)............ (0.49) (228,652)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 46,912,575
------- --------------
------- --------------
WEIGHTED AVERAGE DURATION............... 6.05 years
--------------
--------------
CLASS A SHARES
Net asset value ("NAV") and redemption
price per share ($29,766,899/2,851,243
shares)............................... $ 10.44
------
------
Maximum public offering price per share
-
NAV / (1 - maximum sales charge )
($10.44/.9525)........................ $ 10.96
------
------
CLASS B SHARES
Net asset value and offering price per
share ($2,198,753/209,026 shares)..... $ 10.52
------
------
Redemption price per share.............. *
------
------
CLASS C SHARES
Net asset value and offering price per
share ($11,858,480/1,138,233
shares)............................... $ 10.42
------
------
Redemption price per share.............. *
------
------
CLASS I SHARES
Net asset value, offering and redemption
price per share ($3,088,443/294,824
shares)............................... $ 10.48
------
------
</TABLE>
- - ------------------------------------------------------------------
* Varies by length of time shares are held. (Note 3b)
For Federal income tax purposes, the tax basis of investments owned at December
31, 1998 was $44,851,091 and net unrealized appreciation on investments
consisted of:
<TABLE>
<S> <C>
Gross unrealized appreciation..................... $1,920,056
Gross unrealized depreciation..................... (274,517)
----------
Net unrealized appreciation....................... $1,645,539
----------
----------
</TABLE>
See notes to financial statements.
<PAGE>
44
ZWEIG GOVERNMENT CASH FUND
STATEMENT OF NET ASSETS AS OF DECEMBER 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
UNITED STATES GOVERNMENT AGENCY
OBLIGATIONS: 97.47%
FEDERAL HOME LOAN BANK, DISCOUNT NOTES:
5.26%
4.98%, 1/25/99........................ $ 5,000,000 $ 4,983,400
-----------
FEDERAL HOME LOAN MORTGAGE CORP.,
DISCOUNT NOTES: 50.29%
5.11%, 1/14/99........................ 5,000,000 4,990,774
5.19%, 1/25/99........................ 5,000,000 4,982,700
5.08%, 1/29/99........................ 3,000,000 2,988,147
4.97%, 2/1/99......................... 3,000,000 2,987,161
4.63%, 2/19/99........................ 3,000,000 2,981,094
5.08%, 2/26/99........................ 10,000,000 9,920,978
5.00%, 3/2/99......................... 5,000,000 4,958,333
4.67%, 3/9/99......................... 4,000,000 3,965,234
4.96%, 3/12/99........................ 5,000,000 4,951,778
5.00%, 3/18/99........................ 5,000,000 4,947,222
-----------
47,673,421
-----------
FEDERAL NATIONAL MORTGAGE ASSN.,
DISCOUNT NOTES: 41.92%
4.86%, 2/2/99......................... 5,000,000 4,978,400
4.95%, 2/5/99......................... 5,000,000 4,975,938
4.97%, 2/5/99......................... 5,000,000 4,975,840
5.03%, 2/10/99........................ 10,000,000 9,944,111
5.06%, 2/19/99........................ 5,000,000 4,965,564
4.83%, 3/18/99........................ 10,000,000 9,898,033
-----------
39,737,886
-----------
TOTAL UNITED STATES GOVERNMENT AGENCY OBLIGATIONS
(Cost $92,394,707)................................. 92,394,707
-----------
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 2)
- - ------------------------------------------------------------------
<S> <C> <C>
REPURCHASE AGREEMENT: 3.02%
With Prudential Securities, Inc. (dated
12/31/98), 5.05%, due 1/4/99
(Repurchase proceeds $2,868,609);
collateralized by: $2,926,000 United
States Treasury Bills, 3.30%, due
1/7/99
(Market value $2,924,578)............. $ 2,867,000 $ 2,867,000
-----------
TOTAL REPURCHASE AGREEMENT
(Cost $2,867,000).................................. 2,867,000
-----------
TOTAL INVESTMENTS
(Cost $95,261,707).................... 100.49% 95,261,707
Other Assets............................ 0.00 5,505
------- --------------
Total Assets.......................... 100.49% 95,267,212
Total Liabilities (Note 6)............ (0.49) (467,202)
------- --------------
NET ASSETS (Note 7)..................... 100.00% $ 94,800,010
------- --------------
------- --------------
Net asset value, offering and redemption
price per share (8,289,342 Class A
Shares, 1,738,168 Class B Shares,
6,624,020 Class C Shares, 2,884,331
Class I Shares and 75,264,149 Class M
Shares)............................... $ 1.00
------
------
WEIGHTED AVERAGE DAYS TO MATURITY....... 47
------
------
</TABLE>
See notes to financial statements.
<PAGE>
45
ZWEIG SERIES TRUST
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (IN THOUSANDS)
<TABLE>
<CAPTION>
ZWEIG
ZWEIG ZWEIG ZWEIG ZWEIG GROWTH ZWEIG ZWEIG GOVERNMENT
STRATEGY APPRECIATION MANAGED & INCOME FOREIGN EQUITY GOVERNMENT CASH
FUND FUND ASSETS FUND FUND FUND FUND
-------- ------------- --------- ------------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Income
Dividends *.......... $ 14,347 $ 5,705 $ 5,772 $ 672 $ 102 $ -- $ --
Interest............. 11,046 4,513 15,584** 298 93 2,664 4,703
- - ----------------------------------------------------------------------------------------------------------------------------
Total income..... 25,393 10,218 21,356 970 195 2,664 4,703
- - ----------------------------------------------------------------------------------------------------------------------------
Expenses (Note 2)
Advisory fees (Note
3)................. 8,626 5,478 5,677 304 67 250 433
Distribution fees,
Class A (Note 3)... 1,542 835 350 25 4 85 15
Distribution fees,
Class B (Note 3)... 856 285 263 157 14 12 7
Distribution fees,
Class C (Note 3)... 5,495 2,387 4,228 150 29 79 12
Distribution fees,
Class M (Note 3)... -- -- -- -- -- -- 49
Transfer agent
fees............... 1,305 652 576 63 35 81 64
Amortization of
organization
expenses........... -- -- 13 5 5 -- --
Custodian fees....... 147 133 135 49 37 12 22
Portfolio accounting
fees............... 227 172 198 35 14 34 9
Professional fees.... 98 65 80 17 19 9 10
Reports to
shareholders....... 203 98 98 8 1 6 16
Registration fees.... 60 39 35 41 70 25 39
Insurance............ 21 10 10 1 -- 1 1
Trustees' fees....... 32 16 17 2 1 2 4
Miscellaneous........ 25 13 15 2 -- 2 3
- - ----------------------------------------------------------------------------------------------------------------------------
Total expenses... 18,637 10,183 11,695 859 296 598 684
Less: Expenses
reimbursed by
investment adviser
(Note 3)........... -- -- -- (14) )(149 -- (297)
- - ----------------------------------------------------------------------------------------------------------------------------
Net expenses..... 18,637 10,183 11,695 845 147 598 387
- - ----------------------------------------------------------------------------------------------------------------------------
Net investment
income......... 6,756 35 9,661 125 48 2,066 4,316
- - ----------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND
UNREALIZED GAINS
(LOSSES)
Net realized gains
(losses) on
Investments.......... 27,755 42,660 29,121 (347) )(236 833 --
Futures and
options............ 5,837 (732) (372) (221) 136 -- --
Foreign currency..... -- -- (12,806) -- )(386 -- --
- - ----------------------------------------------------------------------------------------------------------------------------
Net realized gains
(losses)........... 33,592 41,928 15,943 (568) )(486 833 --
- - ----------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in
unrealized appreciation
on investments, futures
and options, and
foreign currency....... (77,620) (54,600) 49,478 (1,295) 687 474 --
- - ----------------------------------------------------------------------------------------------------------------------------
Net realized and
unrealized gains
(losses) on
investments, futures
and options, and
foreign currency....... (44,028) (12,672) 65,421 (1,863) 201 1,307 --
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations........ $(37,272) $ (12,637) $ 75,082 $ (1,738) $ 249 $ 3,373 $ 4,316
- - ----------------------------------------------------------------------------------------------------------------------------
* Net of taxes withheld
on foreign dividends... $ 46 $ 40 $ 117 $ 5 $ 19 -- --
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Net of taxes withheld on foreign interest of $55.
See notes to financial statements.
<PAGE>
46
ZWEIG SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, 1998 AND
1997 (IN THOUSANDS)
<TABLE>
<CAPTION>
ZWEIG ZWEIG
STRATEGY FUND APPRECIATION FUND
---------------------- ------------------
1998 1997 1998 1997
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS
Net investment income... $ 6,756 $ 10,080 $ 35 $ 1,487
Net realized gains
(losses) on
investments, futures
and options, and
foreign currency...... 33,592 131,682 41,928 53,881
Unrealized appreciation
(depreciation) on
investments, futures
and options, and
foreign currency...... (77,620) 56,468 (54,600) 54,154
- - ---------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ (37,272) 198,230 (12,637) 109,522
- - ---------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT
INCOME
Class A................. (5,289) (6,761) (1,074) (1,474)
Class B................. (265) (297) -- --
Class C................. (1,004) (2,955) -- --
Class I................. (14) (14) (16) (19)
Class M................. -- -- -- --
DISTRIBUTIONS TO
SHAREHOLDERS FROM NET
REALIZED GAINS ON
INVESTMENTS
Class A................. (13,202) (56,611) (23,624) (19,748)
Class B................. (2,617) (7,516) (2,982) (1,403)
Class C................. (13,842) (59,242) (20,467) (16,881)
Class I................. (43) (105) (162) (180)
- - ---------------------------------------------------------------------
Total dividends and
distributions to
shareholders.......... (36,276) (133,501) (48,325) (39,705)
- - ---------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS (Note 7)
NET PROCEEDS FROM SALE
OF SHARES
Class A................. 39,755 44,369 101,998 18,927
Class B................. 23,954 33,255 14,584 12,869
Class C................. 44,887 69,087 25,225 30,703
Class I................. 521 -- 1,080 --
Class M................. -- -- -- --
- - ---------------------------------------------------------------------
109,117 146,711 142,887 62,499
- - ---------------------------------------------------------------------
NET ASSET VALUE OF SHARES
ISSUED TO SHAREHOLDERS
IN REINVESTMENT OF
DIVIDENDS AND
DISTRIBUTIONS
Class A................. 15,081 51,425 21,161 18,250
Class B................. 2,279 6,043 2,521 1,207
Class C................. 11,239 45,967 15,810 12,907
Class I................. 57 120 177 200
Class M................. -- -- -- --
- - ---------------------------------------------------------------------
28,656 103,555 39,669 32,564
- - ---------------------------------------------------------------------
COST OF SHARES REDEEMED
Class A................. (180,481) (141,552) (146,964) (56,792)
Class B................. (14,239) (7,161) (4,697) (1,883)
Class C................. (187,646) (176,862) (60,176) (44,156)
Class I................. (188) -- (1,188) --
Class M................. -- -- -- --
- - ---------------------------------------------------------------------
(382,554) (325,575) (213,025) (102,831)
- - ---------------------------------------------------------------------
Increase (decrease) in
net assets derived
from capital share
transactions.......... (244,781) (75,309) (30,469) (7,768)
- - ---------------------------------------------------------------------
Net increase (decrease)
in net assets......... (318,329) (10,580) (91,431) 62,049
NET ASSETS:
Beginning of year....... 1,235,123 1,245,703 567,250 505,201
- - ---------------------------------------------------------------------
End of year............. $ 916,794 $1,235,123 $475,819 $567,250
- - ---------------------------------------------------------------------
Accumulated net
investment income
(loss)................ $ 65 $ (119) $ (1,396) $ (341)
- - ---------------------------------------------------------------------
</TABLE>
(1) Commenced operations on November 21, 1997.
See notes to financial statements.
<PAGE>
47
<TABLE>
<CAPTION>
ZWEIG ZWEIG
ZWEIG GROWTH & INCOME FOREIGN EQUITY ZWEIG ZWEIG
MANAGED ASSETS FUND FUND GOVERNMENT FUND GOVERNMENT CASH FUND
------------------ ---------------- --------------- ------------------ --------------------
1998 1997 1998 1997 1998 1997(1) 1998 1997 1998 1997
-------- -------- ------- ------- ------ ------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN
NET ASSETS
OPERATIONS
Net investment income... $ 9,661 $ 10,101 $ 125 $ 374 $ 48 $ 3 $ 2,066 $ 2,182 $ 4,316 $ 3,067
Net realized gains
(losses) on
investments, futures
and options, and
foreign currency...... 15,943 50,282 (568) 537 (486) (11) 833 77 -- --
Unrealized appreciation
(depreciation) on
investments, futures
and options, and
foreign currency...... 49,478 15,151 (1,295) 3,781 687 44 474 987 -- --
- - --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets
resulting from
operations............ 75,082 75,534 (1,738) 4,692 249 36 3,373 3,246 4,316 3,067
- - --------------------------------------------------------------------------------------------------------------------------
DIVIDENDS TO SHAREHOLDERS
FROM NET INVESTMENT
INCOME
Class A................. (3,259) -- (68) (107) (17) (1) (1,445) (1,566) (238) (140)
Class B................. (565) -- (24) (98) (9) -- (60) (35) (28) (16)
Class C................. (8,751) -- (22) (145) (18) (1) (504) (556) (186) (165)
Class I................. (85) -- (19) (27) (16) (2) (85) (26) (13) (55)
Class M................. -- -- -- -- -- -- -- -- (3,851) (2,691)
DISTRIBUTIONS TO
SHAREHOLDERS FROM NET
REALIZED GAINS ON
INVESTMENTS
Class A................. (341) (15,304) -- -- -- -- -- -- -- --
Class B................. (89) (2,356) -- -- -- -- -- -- -- --
Class C................. (1,207) (56,346) -- -- -- -- -- -- -- --
Class I................. (5) (349) -- -- -- -- -- -- -- --
- - --------------------------------------------------------------------------------------------------------------------------
Total dividends and
distributions to
shareholders.......... (14,302) (74,355) (133) (377) (60) (4) (2,094) (2,183) (4,316) (3,067)
- - --------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE
TRANSACTIONS (Note 7)
NET PROCEEDS FROM SALE
OF SHARES
Class A................. 21,680 10,120 5,229 4,166 2,264 464 5,104 744 95,695 2,564
Class B................. 15,275 12,184 7,079 8,351 1,246 706 1,519 1,046 2,873 1,318
Class C................. 42,784 34,290 7,191 8,489 3,563 1,166 4,783 954 9,960 3,684
Class I................. 34 300 -- 1,300 -- 1,000 2,921 1,000 4,310 1,359
Class M................. -- -- -- -- -- -- -- -- 425,483 351,104
- - --------------------------------------------------------------------------------------------------------------------------
79,773 56,894 19,499 22,306 7,073 3,336 14,327 3,744 538,321 360,029
- - --------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE OF SHARES
ISSUED TO SHAREHOLDERS
IN REINVESTMENT OF
DIVIDENDS AND
DISTRIBUTIONS
Class A................. 2,999 12,937 60 99 16 1 850 896 145 115
Class B................. 490 1,694 17 70 7 -- 31 20 22 14
Class C................. 7,486 41,433 18 114 14 -- 281 332 157 152
Class I................. 90 349 19 27 16 2 85 27 13 60
Class M................. -- -- -- -- -- -- -- -- 1,659 1,386
- - --------------------------------------------------------------------------------------------------------------------------
11,065 56,413 114 310 53 3 1,247 1,275 1,996 1,727
- - --------------------------------------------------------------------------------------------------------------------------
COST OF SHARES REDEEMED
Class A................. (26,000) (28,093) (3,660) (895) (582) (55) (5,155) (8,184) (90,023) (3,567)
Class B................. (3,272) (1,195) (1,873) (488) (127) -- (599) (399) (1,494) (1,029)
Class C................. (73,692) (95,166) (5,560) (1,392) (1,436) -- (3,712) (5,665) (6,154) (5,710)
Class I................. (1,190) (1,000) -- -- -- -- (1,000) -- (1,537) (2,720)
Class M................. -- -- -- -- -- -- -- -- (408,477) (341,162)
- - --------------------------------------------------------------------------------------------------------------------------
(104,154) (125,454) (11,093) (2,775) (2,145) (55) (10,466) (14,248) (507,685) (354,188)
- - --------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in
net assets derived
from capital share
transactions.......... (13,316) (12,147) 8,520 19,841 4,981 3,284 5,108 (9,229) 32,632 7,568
- - --------------------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets......... 47,464 (10,968) 6,649 24,156 5,170 3,316 6,387 (8,166) 32,632 7,568
NET ASSETS:
Beginning of year....... 539,296 550,264 33,967 9,811 3,316 -- 40,526 48,692 62,168 54,600
- - --------------------------------------------------------------------------------------------------------------------------
End of year............. $586,760 $539,296 $40,616 $33,967 $8,486 $ 3,316 $ 46,913 $ 40,526 $ 94,800 $ 62,168
- - --------------------------------------------------------------------------------------------------------------------------
Accumulated net
investment income
(loss)................ $ (235) $ (94) $ (11) $ (3) $ (13) $ (1) $ 1 $ 29 $ -- $ --
- - --------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Commenced operations on November 21, 1997.
<PAGE>
48
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
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.
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: Investment 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 are valued at
fair value as determined by the Board of Trustees. The repatriation of proceeds
received from the sale of Malaysian securities has been restricted by the
Malaysian government until at least September 1, 1999. As a result, Malaysian
securities are considered illiquid and are being fair valued using methods
determined in good faith 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: As long as management's view is that it is in the best
interests of the shareholders, it is the policy of each Series to continue to
comply with the requirements of the Internal Revenue Code applicable to
regulated investment companies and to distribute all of its net taxable income,
including any net realized gain on investments, to its shareholders; therefore,
no provision for federal income tax is required.
(G) DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS: Dividends and distributions are
declared separately for each class of shares of a Series. 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, 1998 (each Series' tax fiscal year-end), Zweig Foreign Equity
Fund had a capital loss carryforward of $307,743
<PAGE>
49
expiring October 31, 2006; Zweig Growth & Income Fund had a capital loss
carryforward of $39,205 expiring October 31, 2005; and Zweig Government Fund had
capital loss carryforwards of $249,274, $7,227,155 and $1,010,121 expiring
October 31, 1999, 2002 and 2004, respectively; available to offset any net
capital gains subsequently realized, subject to certain limitations. During the
year ended December 31, 1998, Zweig Government Fund reclassified $1,854,734 from
accumulated net realized loss to capital paid-in due to the expiration of
capital loss carryforwards.
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 year ended December 31, 1998
aggregated $20,835,087 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 year ended December 31, 1998, the
Manager's reimbursements to Zweig Government Cash Fund aggregated $296,836. 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 year ended December
31, 1998, the Manager's reimbursements to Zweig Foreign Equity Fund aggregated
$148,672. 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. For the four months ended April
30, 1998, the Manager's reimbursements to Zweig Growth & Income Fund aggregated
$13,761.
Pursuant to an Acquisition Agreement dated December 15, 1998, the Manager and
Zweig Securities Corp. (the "Distributor") have agreed to be acquired by Phoenix
Investment Partners, Ltd. ("Phoenix"), a large diversified financial services
organization listed on the New York Stock Exchange (the "Acquisition"). Since
completion of the Acquisition would provide for the automatic termination of the
current investment management agreement, a new investment management contract
(the "Management Agreement") has been proposed between the Trust and
Zweig/Glaser Advisers. The Management Agreement has been approved by the Board
of Trustees (the "Board") and has been submitted to shareholders for approval.
Except for the effective dates, the Management Agreement is on the same terms as
the current investment management agreement. In addition, in order for the Trust
to continue to avail itself of the services of Dr. Martin E. Zweig and his
associates, a new sub-advisory servicing agreement with Zweig Consulting LLC has
been approved by the Board and submitted to the shareholders for approval. It is
anticipated that the Acquisition will be completed in the first quarter of 1999,
at which time the name of the Trust will be changed to Phoenix-Zweig Trust, and
each Series will add "Phoenix-" to the beginning of its current name.
(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 year ended
December 31, 1998, the Distributor's share of the initial and contingent
deferred sales charges was $205,412 and $804,426, 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 organizations may 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 year ended December 31, 1998, the Trust paid Zweig Securities Corp.
brokerage commissions of $670,941 in connection with portfolio transactions
effected by it.
Since the completion of the Acquisition described in Note 3(a) above would
provide for the automatic termination of the current distribution agreement with
the Distributor, a new distribution agreement has been proposed between the
Trust and Phoenix Equity Planning Corporation, a wholly owned subsidiary of
Phoenix. The new distribution agreement has been approved by the Board and will
become effective with the closing of the Acquisition. The new distribution
agreement is on the same terms as the current distribution agreement with the
Distributor.
One Trustee and all of the officers of the Trust are also officers of the
Manager and/or the Distributor.
<PAGE>
50
NOTE 4--PURCHASES AND SALES OF INVESTMENTS/OUTSTANDING FORWARD FOREIGN CURRENCY
CONTRACTS
During the year ended December 31, 1998, purchases and sales of investments,
excluding repurchase agreements, 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> <C> <C> <C> <C> <C>
Purchases................ $1,086,813,885 $542,166,985 $316,497,252 $ 57,526,810 $5,892,338 $ 20,217,141
Sales.................... 1,477,845,671 656,892,717 337,893,676 52,742,668 1,937,116 17,854,966
</TABLE>
Forward foreign currency contracts outstanding at December 31, 1998, for
Zweig Managed Assets were:
<TABLE>
<CAPTION>
NET UNREALIZED
SETTLEMENT APPRECIATION
CONTRACTS TO DELIVER IN EXCHANGE FOR DATE VALUE (DEPRECIATION)
------------------------- ------------------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales
Australian Dollar...... A$ 24,000,000 $ 14,886,000 1/19/99 $ (14,724,186) $ 161,814
Danish Krone........... DKr 33,500,000 5,351,438 1/19/99 (5,266,350) 85,088
Finnish Markka......... Fim 31,300,000 6,260,000 1/19/99 (6,187,595) 72,405
French Franc........... ff 195,200,000 35,409,789 1/19/99 (34,977,257) 432,532
German Deutsche Mark... DM 60,900,000 37,046,950 1/19/99 (36,598,907) 448,043
Italian Lira........... Lira 38,100,000,000 23,398,637 1/19/99 (23,128,148) 270,489
Japanese Yen........... Y 2,040,000,000 17,801,824 1/19/99 (18,132,518) (330,694)
Netherlands Guilder.... NLG 12,300,000 6,637,884 1/19/99 (6,560,415) 77,469
Spanish Peseta......... Pta 4,900,000,000 35,012,505 1/19/99 (34,614,742) 397,763
Swedish Krona.......... SKr 51,300,000 6,402,896 1/19/99 (6,334,199) 68,697
Swiss Franc............ Sf 8,100,000 6,127,080 1/19/99 (5,909,757) 217,323
U.K. Pound Sterling.... L 22,000,000 37,211,900 1/19/99 (36,580,688) 631,212
------------------------- -------------- ---------------
$ 231,546,903 $ (229,014,762) $2,532,141
------------------------- -------------- ---------------
------------------------- -------------- ---------------
Purchases
French Franc........... $ 5,356,952 ff 30,000,000 1/19/99 $ 5,375,603 $ 18,651
German Deutsche Mark... 5,988,024 DM 10,000,000 1/19/99 6,009,673 21,649
Italian Lira........... 6,170,599 Lira 10,200,000,000 1/19/99 6,191,788 21,189
Japanese Yen........... 8,061,750 Y 940,000,000 1/19/99 8,355,180 293,430
U.K. Pound Sterling.... 3,193,900 L 1,900,000 1/19/99 3,159,241 (34,659)
------------------------- -------------- ---------------
$ 28,771,225 $ 29,091,485 $ 320,260
------------------------- -------------- ---------------
------------------------- -------------- ---------------
Net Unrealized Appreciation on Forward Foreign Currency Contracts........................................... $2,852,401
---------------
---------------
</TABLE>
Forward foreign currency contracts outstanding at December 31, 1998, for
Zweig Foreign Equity Fund were:
<TABLE>
<CAPTION>
NET UNREALIZED
SETTLEMENT APPRECIATION
CONTRACTS TO DELIVER IN EXCHANGE FOR DATE VALUE (DEPRECIATION)
------------------------- ------------------------- ---------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales
Australian Dollar...... A$ 700,000 $ 432,390 1/19/99 $ (429,455) $ 2,935
Austrian Schilling..... AS 1,790,000 154,617 1/19/99 (152,900) 1,717
Belgium Franc.......... BEF 8,140,000 239,856 1/19/99 (237,176) 2,680
Danish Krone........... DKr 640,000 102,237 1/19/99 (100,611) 1,626
Finnish Markka......... Fim 870,000 174,000 1/19/99 (171,987) 2,013
French Franc........... ff 3,390,000 614,955 1/19/99 (607,443) 7,512
German Deutsche Mark... DM 950,000 577,908 1/19/99 (570,919) 6,989
Italian Lira........... Lira 875,000,000 537,370 1/19/99 (531,158) 6,212
Japanese Yen........... Y 105,000,000 916,270 1/19/99 (933,291) (17,021)
Netherlands Guilder.... NLG 760,000 410,146 1/19/99 (405,359) 4,787
Norwegian Krona........ NOK 1,000,000 128,213 1/19/99 (131,009) (2,796)
Spanish Peseta......... Pta 71,500,000 510,897 1/19/99 (505,093) 5,804
Swedish Krona.......... SKr 3,400,000 424,363 1/19/99 (419,810) 4,553
Swiss Franc............ Sf 380,000 287,443 1/19/99 (277,248) 10,195
U.K. Pound Sterling.... L 325,000 549,721 1/19/99 (540,396) 9,325
------------------------- -------------- ---------------
$ 6,060,386 $ (6,013,855) $ 46,531
------------------------- -------------- ---------------
------------------------- -------------- ---------------
Purchases
Japanese Yen........... $ 428,816 Y 50,000,000 1/19/99 $ 444,424 $ 15,608
Norwegian Krona........ 130,097 NOK 1,000,000 1/19/99 131,009 912
------------------------- -------------- ---------------
$ 558,913 $ 575,433 $ 16,520
------------------------- -------------- ---------------
------------------------- -------------- ---------------
Net Unrealized Appreciation on Forward Foreign Currency Contracts........................................... $ 63,051
---------------
---------------
</TABLE>
<PAGE>
51
NOTE 5--CAPITAL SHARES
The Trust has unlimited authorized shares of beneficial interest ($0.10) par
value), divided into Series and issued in classes (see note 1). Capital share
transactions for the years ended December 31, 1998 and 1997 are set forth below.
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C CLASS I
----------------------- ---------------------- ------------------------ ----------------------
1998 1997 1998 1997 1998 1997 1998 1997
----------- ---------- ---------- ---------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND
Sold................... 2,574,127 2,807,598 1,471,884 2,096,572 2,788,560 4,383,171 34,727 10
Issued in reinvestment
of dividends and
distributions........ 1,028,617 3,252,707 157,763 381,258 780,919 2,907,657 3,891 7,517
Redeemed............... (11,819,362) (8,921,797) (933,992) (441,368) (12,480,544) (11,191,028) (11,915) --
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)....... (8,216,618) (2,861,492) 695,655 2,036,462 (8,911,065) (3,900,200) 26,703 7,527
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
ZWEIG APPRECIATION FUND
Sold................... 5,803,260 1,060,202 787,653 734,181 1,399,569 1,773,391 67,519 10
Issued in reinvestment
of dividends and
distributions........ 1,350,165 1,003,794 163,583 67,139 1,027,289 719,068 11,146 10,840
Redeemed............... (8,374,990) (3,337,609) (275,440) (108,903) (3,540,744) (2,605,708) (58,827) --
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)....... (1,221,565) (1,273,613) 675,796 692,417 (1,113,888) (113,249) 19,838 10,850
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
ZWEIG MANAGED ASSETS
Sold................... 1,570,483 742,760 1,108,058 877,242 3,147,226 2,570,807 2,421 20,576
Issued in reinvestment
of dividends and
distributions........ 213,319 1,025,936 34,599 133,637 536,232 3,309,309 6,289 26,984
Redeemed............... (1,893,703) (2,057,937) (235,957) (85,618) (5,428,861) (7,007,366) (82,314) (67,477)
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)....... (109,901) (289,241) 906,700 925,261 (1,745,403) (1,127,250) (73,604) (19,917)
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
ZWEIG GROWTH & INCOME
FUND
Sold................... 384,281 342,607 501,874 665,724 518,964 692,913 -- 111,492
Issued in reinvestment
of dividends......... 4,346 7,885 1,278 5,498 1,309 9,040 1,365 2,097
Redeemed............... (276,404) (73,249) (145,254) (39,965) (432,508) (112,060) -- --
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase....... 112,223 277,243 357,898 631,257 87,765 589,893 1,365 113,589
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
ZWEIG FOREIGN EQUITY FUND
(3)
Sold................... 182,658 40,901 99,679 62,246 287,187 102,702 -- 88,192
Issued in reinvestment
of dividends......... 1,314 40 592 35 1,128 39 1,272 140
Redeemed............... (48,853) (4,805) (10,835) -- (116,523) -- -- --
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase....... 135,119 36,136 89,436 62,281 171,792 102,741 1,272 88,332
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
ZWEIG GOVERNMENT FUND (2)
Sold................... 487,472 75,151 144,175 105,575 461,788 96,406 278,578 101,214
Issued in reinvestment
of dividends......... 82,836 91,379 2,992 2,045 27,410 33,910 8,254 2,655
Redeemed............... (500,204) (834,248) (57,793) (40,014) (362,588) (578,962) (95,877) --
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)....... 70,104 (667,718) 89,374 67,606 126,610 (448,646) 190,955 103,869
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
ZWEIG GOVERNMENT CASH
FUND (1)
Sold................... 95,695,366 2,563,843 2,873,372 1,317,811 9,959,590 3,683,651 4,309,423 1,359,182
Issued in reinvestment
of dividends......... 144,560 115,524 22,211 13,873 157,370 151,967 12,346 59,598
Redeemed............... (90,022,816) (3,567,262) (1,493,667) (1,028,383) (6,153,574) (5,710,310) (1,537,000) (2,720,000)
- - ----------------------------------------------------------------------------------------------------------------------------
Net increase
(decrease)....... 5,817,110 (887,895) 1,401,916 303,301 3,963,386 (1,874,692) 2,784,769 (1,301,220)
- - ----------------------------------------------------------------------------------------------------------------------------
- - ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the years ended December 31, 1998 and 1997, respectively, shares of
Zweig Government Cash Fund Class M sold were 425,483,310 and 351,104,043;
shares issued in reinvestment of dividends were 1,658,994 and 1,386,181;
and shares redeemed were 408,477,447 and 341,161,977 for a net increase of
18,664,857 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 21, 1997.
<PAGE>
52
NOTE 6--LIABILITIES--DECEMBER 31, 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> <C> <C> <C> <C> <C> <C>
Advisory fee............. $ 37 $ 26 $ 32 $ 2 $-- $ 2 $ 3
Distribution and service
fees................... 531 251 417 27 5 17 10
Capital shares
redeemed............... 5,487 2,833 723 234 15 171 --
Dividends................ -- -- -- -- -- -- 422
Securities purchased..... -- -- 37 -- 5 -- --
Variation margin
payable................ 13 36 -- 4 -- -- --
Unrealized depreciation
on forward foreign
currency contracts..... -- -- 365 -- 20 -- --
Accrued expenses......... 516 299 325 47 47 39 32
--------------------------------------------------------------------------------------------------
Total Liabilities.... $6,584 $3,445 $1,899 $314 $92 $229 $ 467
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>
NOTE 7--NET ASSETS--DECEMBER 31, 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> <C> <C> <C> <C> <C> <C>
Net Assets consist of:
Capital paid-in........ $753,157 $368,246 $ 483,337 $38,124 $8,265 $50,506 $94,800
Undistributed net
investment income
(loss)............... 65 (1,396) (235) (11) (13) 1 --
Accumulated net
realized gain
(loss)............... 42,036 14,341 6,161 (36) (497) (5,239) --
Net unrealized
appreciation of
investments.......... 121,536 94,628 97,497 2,539 731 1,645 --
--------------------------------------------------------------------------------------------------
$916,794 $475,819 $ 586,760 $40,616 $8,486 $46,913 $94,800
--------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------
</TABLE>
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 had to use 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.
<PAGE>
53
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE YEARS
INDICATED
<TABLE>
<CAPTION>
NET
NET REALIZED DISTRIBUTIONS
ASSET NET AND DIVIDENDS FROM NET
VALUE INVESTMENT UNREALIZED TOTAL FROM FROM NET REALIZED
YEAR BEGINNING INCOME GAINS INVESTMENT INVESTMENT CAPITAL
ENDED OF YEAR (LOSS) (LOSSES) OPERATIONS INCOME GAINS
- - --------------------------------------- ---------- ----------- ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C> <C>
ZWEIG STRATEGY FUND CLASS A
1998 $ 15.77 $ 0.17 $ (0.48) $ (0.31) $ (0.18) $ (0.48)
1997 15.01 0.20 2.49 2.69 (0.19) (1.74)
1996 14.51 0.20 1.68 1.88 (0.20) (1.18)
1995 12.36 0.27 2.80 3.07 (0.37) (0.55)
1994 12.52 0.24 (0.10) 0.14 (0.20) (0.10)
ZWEIG STRATEGY FUND CLASS B (3)
1998 15.86 0.05 (0.48) (0.43) (0.05) (0.48)
1997 15.07 0.07 2.53 2.60 (0.07) (1.74)
1996 15.12 0.06 1.13 1.19 (0.06) (1.18)
ZWEIG STRATEGY FUND CLASS C
1998 15.81 0.05 (0.48) (0.43) (0.04) (0.48)
1997 15.04 0.07 2.52 2.59 (0.08) (1.74)
1996 14.56 0.11 1.66 1.77 (0.11) (1.18)
1995 12.35 0.16 2.82 2.98 (0.22) (0.55)
1994 12.51 0.15 (0.10) 0.05 (0.11) (0.10)
ZWEIG STRATEGY FUND CLASS I (4)
1998 15.87 0.17 (0.45) (0.28) (0.17) (0.48)
1997 15.07 0.23 2.54 2.77 (0.23) (1.74)
1996 15.42 0.04 0.83 0.87 (0.04) (1.18)
ZWEIG APPRECIATION FUND CLASS A
1998 18.27 0.07 (0.32) (0.25) (0.07) (1.74)
1997 15.90 0.10 3.67 3.77 (0.09) (1.31)
1996 15.91 0.17 2.25 2.42 (0.17) (2.26)
1995 13.54 0.16 3.05 3.21 (0.33) (0.51)
1994 14.33 0.16 (0.43) (0.27) (0.06) (0.46)
ZWEIG APPRECIATION FUND CLASS B (3)
1998 18.13 (0.06) (0.31) (0.37) -- (1.74)
1997 15.82 (0.02) 3.64 3.62 -- (1.31)
1996 16.34 0.03 1.74 1.77 (0.03) (2.26)
ZWEIG APPRECIATION FUND CLASS C
1998 18.10 (0.07) (0.30) (0.37) -- (1.74)
1997 15.79 (0.02) 3.64 3.62 -- (1.31)
1996 15.83 0.06 2.22 2.28 (0.06) (2.26)
1995 13.36 0.06 3.03 3.09 (0.11) (0.51)
1994 14.19 0.06 (0.43) (0.37) -- (0.46)
ZWEIG APPRECIATION FUND CLASS I (4)
1998 18.46 0.09 (0.29) (0.20) (0.09) (1.74)
1997 16.04 0.15 3.71 3.86 (0.13) (1.31)
1996 17.28 0.04 1.02 1.06 (0.04) (2.26)
ZWEIG MANAGED ASSETS CLASS A (1)
1998 12.72 0.38 1.50 1.88 (0.38) (0.04)
1997 12.75 0.13 1.83 1.96 -- (1.99)
1996 12.48 0.35 0.86 1.21 (0.45) (0.49)
1995 11.76 0.47 1.40 1.87 (0.75) (0.40)
1994 12.38 0.33 (0.69) (0.36) (0.26) --
ZWEIG MANAGED ASSETS CLASS B (3)
1998 12.79 0.26 1.53 1.79 (0.26) (0.04)
1997 12.90 0.04 1.84 1.88 -- (1.99)
1996 12.43 0.13 1.00 1.13 (0.17) (0.49)
ZWEIG MANAGED ASSETS CLASS C (1)
1998 12.63 0.29 1.48 1.77 (0.29) (0.04)
1997 12.76 0.04 1.82 1.86 -- (1.99)
1996 12.49 0.27 0.85 1.12 (0.36) (0.49)
1995 11.73 0.38 1.40 1.78 (0.62) (0.40)
1994 12.36 0.23 (0.68) (0.45) (0.18) --
ZWEIG MANAGED ASSETS CLASS I (4)
1998 13.05 0.56 1.41 1.97 (0.67) (0.04)
1997 12.99 0.09 1.96 2.05 -- (1.99)
1996 13.02 0.05 0.45 0.50 (0.04) (0.49)
ZWEIG GROWTH & INCOME FUND CLASS A (5)
1998 (16) 13.73 0.11 (0.33) (0.22) (0.11) --
1997 (15) 11.37 0.24 2.36 2.60 (0.24) --
1996 (14) 11.34 0.01 0.03 0.04 (0.01) --
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
TOTAL NET ASSET ----------------------
DIVIDENDS VALUE NET PORTFOLIO
YEAR AND END TOTAL INVESTMENT TURNOVER
ENDED DISTRIBUTIONS OF YEAR RETURN*** EXPENSES INCOME RATE
- - --------------------------------------- -------------- ---------- ---------- -------- ----------- --------
<S> <C>
ZWEIG STRATEGY FUND CLASS A
1998 $ (0.66) $ 14.80 (1.88)% 1.24% 0.97% 116%
1997 (1.93) 15.77 18.07 1.24 1.20 126
1996 (1.38) 15.01 13.00 1.28 1.27 181
1995 (0.92) 14.51 25.12 1.27 1.92 95
1994 (0.30) 12.36 1.14 1.40 1.90 70
ZWEIG STRATEGY FUND CLASS B (3)
1998 (0.53) 14.90 (2.61) 1.94 0.27 116
1997 (1.81) 15.86 17.33 1.94 0.50 126
1996 (1.24) 15.07 7.88** 1.98* 0.57* 181
ZWEIG STRATEGY FUND CLASS C
1998 (0.52) 14.86 (2.64) 1.94 0.27 116
1997 (1.82) 15.81 17.30 1.94 0.50 126
1996 (1.29) 15.04 12.19 1.98 0.57 181
1995 (0.77) 14.56 24.26 1.97 1.22 95
1994 (0.21) 12.35 0.41 2.10 1.20 70
ZWEIG STRATEGY FUND CLASS I (4)
1998 (0.65) 14.94 (1.66) 0.94 1.27 116
1997 (1.97) 15.87 18.52 0.94 1.50 126
1996 (1.22) 15.07 5.68** 0.98* 1.57* 181
ZWEIG APPRECIATION FUND CLASS A
1998 (1.81) 16.21 (0.97) 1.52 0.34 117
1997 (1.40) 18.27 23.83 1.52 0.61 77
1996 (2.43) 15.90 15.39 1.62 1.03 88
1995 (0.84) 15.91 24.00 1.63 1.10 68
1994 (0.52) 13.54 (1.83) 1.70 1.09 97
ZWEIG APPRECIATION FUND CLASS B (3)
1998 (1.74) 16.02 (1.66) 2.22 (0.36) 117
1997 (1.31) 18.13 22.97 2.22 (0.09) 77
1996 (2.29) 15.82 11.01** 2.32* 0.33* 88
ZWEIG APPRECIATION FUND CLASS C
1998 (1.74) 15.99 (1.67) 2.22 (0.36) 117
1997 (1.31) 18.10 23.01 2.22 (0.09) 77
1996 (2.32) 15.79 14.54 2.32 0.33 88
1995 (0.62) 15.83 23.20 2.33 0.40 68
1994 (0.46) 13.36 (2.55) 2.40 0.39 97
ZWEIG APPRECIATION FUND CLASS I (4)
1998 (1.83) 16.43 (0.67) 1.22 0.64 117
1997 (1.44) 18.46 24.17 1.22 0.91 77
1996 (2.30) 16.04 6.30** 1.32* 1.33* 88
ZWEIG MANAGED ASSETS CLASS A (1)
1998 (0.42) 14.18 14.87 1.51 2.77 62
1997 (1.99) 12.72 15.47 1.59 2.40 168
1996 (0.94) 12.75 9.80 1.64 2.64 187
1995 (1.15) 12.48 16.26 1.59 3.69 239
1994 (0.26) 11.76 (2.93) 1.68 2.70 299
ZWEIG MANAGED ASSETS CLASS B (3)
1998 (0.30) 14.28 14.06 2.21 2.07 62
1997 (1.99) 12.79 14.67 2.29 1.70 168
1996 (0.66) 12.90 9.11** 2.34* 1.94* 187
ZWEIG MANAGED ASSETS CLASS C (1)
1998 (0.33) 14.07 14.03 2.21 2.07 62
1997 (1.99) 12.63 14.67 2.29 1.70 168
1996 (0.85) 12.76 9.03 2.34 1.94 187
1995 (1.02) 12.49 15.44 2.29 2.99 239
1994 (0.18) 11.73 (3.66) 2.38 2.00 299
ZWEIG MANAGED ASSETS CLASS I (4)
1998 (0.71) 14.31 15.16 1.21 3.07 62
1997 (1.99) 13.05 15.88 1.29 2.70 168
1996 (0.53) 12.99 3.83** 1.34* 2.94* 187
ZWEIG GROWTH & INCOME FUND CLASS A (5)
1998 (16) (0.11) 13.40 (1.61) 1.56 0.82 152
1997 (15) (0.24) 13.73 23.12 1.30 2.26 120
1996 (14) (0.01) 11.37 0.39** 1.30* 1.47* 2
<CAPTION>
NET ASSETS
YEAR END OF YEAR
ENDED (IN THOUSANDS)
- - --------------------------------------- ---------------
ZWEIG STRATEGY FUND CLASS A
1998 $ 409,065
1997 565,721
1996 581,149
1995 558,286
1994 424,805
ZWEIG STRATEGY FUND CLASS B (3)
1998 82,531
1997 76,820
1996 42,317
ZWEIG STRATEGY FUND CLASS C
1998 423,791
1997 591,512
1996 621,334
1995 530,300
1994 307,011
ZWEIG STRATEGY FUND CLASS I (4)
1998 1,407
1997 1,070
1996 903
ZWEIG APPRECIATION FUND CLASS A
1998 240,900
1997 293,809
1996 275,935
1995 272,590
1994 213,400
ZWEIG APPRECIATION FUND CLASS B (3)
1998 30,370
1997 22,122
1996 8,350
ZWEIG APPRECIATION FUND CLASS C
1998 201,789
1997 248,584
1996 218,714
1995 195,204
1994 139,397
ZWEIG APPRECIATION FUND CLASS I (4)
1998 2,760
1997 2,735
1996 2,202
ZWEIG MANAGED ASSETS CLASS A (1)
1998 122,085
1997 110,908
1996 114,837
1995 141,110
1994 154,441
ZWEIG MANAGED ASSETS CLASS B (3)
1998 33,172
1997 18,117
1996 6,339
ZWEIG MANAGED ASSETS CLASS C (1)
1998 429,655
1997 407,625
1996 426,194
1995 527,432
1994 570,710
ZWEIG MANAGED ASSETS CLASS I (4)
1998 1,848
1997 2,645
1996 2,893
ZWEIG GROWTH & INCOME FUND CLASS A (5)
1998 (16) 8,172
1997 (15) 6,836
1996 (14) 2,508
</TABLE>
<PAGE>
54
FINANCIAL HIGHLIGHTS (CONTINUED)
SELECTED DATA FOR EACH SHARE OF CAPITAL STOCK OUTSTANDING THROUGHOUT THE YEARS
INDICATED
<TABLE>
<CAPTION>
NET
NET REALIZED DISTRIBUTIONS
ASSET NET AND DIVIDENDS FROM NET
VALUE INVESTMENT UNREALIZED TOTAL FROM FROM NET REALIZED
YEAR BEGINNING INCOME GAINS INVESTMENT INVESTMENT CAPITAL
ENDED OF YEAR (LOSS) (LOSSES) OPERATIONS INCOME GAINS
- - --------------------------------------- ---------- ----------- ----------- ----------- ----------- --------------
ZWEIG GROWTH & INCOME FUND CLASS B (5)
<S> <C> <C> <C> <C> <C> <C>
1998 (16) $ 13.73 $ 0.02 $ (0.34) $ (0.32) $ (0.02) --
1997 (15) 11.37 0.16 2.36 2.52 (0.16) --
1996 (14) 11.34 0.01 0.03 0.04 (0.01) --
ZWEIG GROWTH & INCOME FUND CLASS C (5)
1998 (16) 13.71 0.02 (0.34) (0.32) (0.02) --
1997 (15) 11.38 0.17 2.33 2.50 (0.17) --
1996 (14) 11.34 0.01 0.04 0.05 (0.01) --
ZWEIG GROWTH & INCOME FUND CLASS I (5)
1998 (16) 13.77 0.15 (0.33) (0.18) (0.15) --
1997 (15) 11.37 0.24 2.40 2.64 (0.24) --
1996 (14) 11.34 0.02 0.03 0.05 (0.02) --
ZWEIG FOREIGN EQUITY FUND CLASS A (7)
1998 (18) 11.45 0.08 0.96 1.04 (0.10) --
1997 (17) 11.34 0.01 0.11 0.12 (0.01) --
ZWEIG FOREIGN EQUITY FUND CLASS B (7)
1998 (18) 11.45 0.04 0.92 0.96 (0.06) --
1997 (17) 11.34 0.01 0.11 0.12 (0.01) --
ZWEIG FOREIGN EQUITY FUND CLASS C (7)
1998 (18) 11.45 0.05 0.90 0.95 (0.07) --
1997 (17) 11.34 0.01 0.11 0.12 (0.01) --
ZWEIG FOREIGN EQUITY FUND CLASS I (7)
1998 (18) 11.46 0.16 0.91 1.07 (0.18) --
1997 (17) 11.34 0.02 0.12 0.14 (0.02) --
ZWEIG GOVERNMENT FUND CLASS A
1998 10.09 0.53 0.35 0.88 (0.53) --
1997 9.81 0.52 0.28 0.80 (0.52) --
1996 (13) 10.39 0.53 (0.58) (0.05) (0.53) --
1995+ 9.63 0.52 0.77 1.29 (0.53) --
1994 10.43 0.50 (0.79) (0.29) (0.51) --
ZWEIG GOVERNMENT FUND CLASS B (3)
1998 10.15 0.44 0.37 0.81 (0.44) --
1997 9.86 0.46 0.26 0.72 (0.43) --
1996 (13) 9.76 0.29 0.11 0.40 (0.30) --
ZWEIG GOVERNMENT FUND CLASS C
1998 10.08 0.47 0.36 0.83 (0.49) --
1997 9.81 0.48 0.27 0.75 (0.48) --
1996 (13) 10.38 0.49 (0.58) (0.09) (0.48) --
1995+ 9.62 0.48 0.76 1.24 (0.48) --
1994 10.40 0.46 (0.79) (0.33) (0.45) --
ZWEIG GOVERNMENT FUND CLASS I (6)
1998 10.11 0.55 0.37 0.92 (0.55) --
1997 9.88 0.26 0.23 0.49 (0.26) --
ZWEIG GOVERNMENT CASH FUND CLASS A (2)
1998 (11) 1.00 0.05 -- 0.05 (0.05) --
1997 (10) 1.00 0.05 -- 0.05 (0.05) --
1996 (9) 1.00 0.05 -- 0.05 (0.05) --
1995 (8) 1.00 0.05 -- 0.05 (0.05) --
1994 1.00 0.03 -- 0.03 (0.03) --
ZWEIG GOVERNMENT CASH FUND CLASS B (3)
1998 (11) 1.00 0.04 -- 0.04 (0.04) --
1997 (10) 1.00 0.04 -- 0.04 (0.04) --
1996 (9) 1.00 0.03 -- 0.03 (0.03) --
ZWEIG GOVERNMENT CASH FUND CLASS C (2)
1998 (11) 1.00 0.05 -- 0.05 (0.05) --
1997 (10) 1.00 0.05 -- 0.05 (0.05) --
1996 (9) 1.00 0.05 -- 0.05 (0.05) --
1995 (8) 1.00 0.05 -- 0.05 (0.05) --
1994 1.00 0.03 -- 0.03 (0.03) --
ZWEIG GOVERNMENT CASH FUND CLASS I (4)
1998 (11) 1.00 0.05 -- 0.05 (0.05) --
1997 (10) 1.00 0.05 -- 0.05 (0.05) --
1996 (9) 1.00 0.01 -- 0.01 (0.01) --
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
TOTAL NET ASSET ----------------------
DIVIDENDS VALUE NET PORTFOLIO
YEAR AND END TOTAL INVESTMENT TURNOVER
ENDED DISTRIBUTIONS OF YEAR RETURN*** EXPENSES INCOME RATE
- - --------------------------------------- -------------- ---------- ---------- -------- ----------- --------
ZWEIG GROWTH & INCOME FUND CLASS B (5)
<S> <C>
1998 (16) $ (0.02) $ 13.39 $ (2.33) 2.26% 0.12% 152%
1997 (15) (0.16) 13.73 22.29 2.00 1.56 120
1996 (14) (0.01) 11.37 0.33** 2.00* 0.77* 2
ZWEIG GROWTH & INCOME FUND CLASS C (5)
1998 (16) (0.02) 13.37 (2.34) 2.26 0.12 152
1997 (15) (0.17) 13.71 22.15 2.00 1.56 120
1996 (14) (0.01) 11.38 0.42** 2.00* 0.77* 2
ZWEIG GROWTH & INCOME FUND CLASS I (5)
1998 (16) (0.15) 13.44 (1.31) 1.26 1.12 152
1997 (15) (0.24) 13.77 23.42 1.00 2.56 120
1996 (14) (0.02) 11.37 0.41** 1.00* 1.77* 2
ZWEIG FOREIGN EQUITY FUND CLASS A (7)
1998 (18) (0.10) 12.39 9.08 1.80 1.14 40
1997 (17) (0.01) 11.45 1.09** 1.80* 1.20* 64*
ZWEIG FOREIGN EQUITY FUND CLASS B (7)
1998 (18) (0.06) 12.35 8.36 2.50 0.44 40
1997 (17) (0.01) 11.45 1.03** 2.50* 0.50* 64*
ZWEIG FOREIGN EQUITY FUND CLASS C (7)
1998 (18) (0.07) 12.33 8.27 2.50 0.44 40
1997 (17) (0.01) 11.45 1.03** 2.50* 0.50* 64*
ZWEIG FOREIGN EQUITY FUND CLASS I (7)
1998 (18) (0.18) 12.35 9.32 1.50 1.44 40
1997 (17) (0.02) 11.46 1.22** 1.50* 1.50* 64*
ZWEIG GOVERNMENT FUND CLASS A
1998 (0.53) 10.44 8.91 1.32 5.09 48
1997 (0.52) 10.09 8.42 1.36 5.26 128
1996 (13) (0.53) 9.81 (0.42) 1.14 5.25 170
1995+ (0.53) 10.39 13.84 1.26 5.22 195
1994 (0.51) 9.63 (2.83) 1.28 5.07 191
ZWEIG GOVERNMENT FUND CLASS B (3)
1998 (0.44) 10.52 8.20 2.02 4.39 48
1997 (0.43) 10.15 7.55 2.06 4.56 128
1996 (13) (0.30) 9.86 4.16** 1.84* 4.55* 170
ZWEIG GOVERNMENT FUND CLASS C
1998 (0.49) 10.42 8.46 1.77 4.64 48
1997 (0.48) 10.08 7.86 1.81 4.81 128
1996 (13) (0.48) 9.81 (0.82) 1.59 4.80 170
1995+ (0.48) 10.38 13.27 1.71 4.77 195
1994 (0.45) 9.62 (3.18) 1.73 4.62 191
ZWEIG GOVERNMENT FUND CLASS I (6)
1998 (0.55) 10.48 9.33 1.02 5.39 48
1997 (0.26) 10.11 5.01** 1.06* 5.56* 128
ZWEIG GOVERNMENT CASH FUND CLASS A (2)
1998 (11) (0.05) 1.00 4.91 0.65 4.75 N/A
1997 (10) (0.05) 1.00 4.97 0.65 4.85 N/A
1996 (9) (0.05) 1.00 4.83 0.65 4.73 N/A
1995 (8) (0.05) 1.00 5.08 0.87 4.97 N/A
1994 (0.03) 1.00 2.55** 0.62** 2.52** N/A
ZWEIG GOVERNMENT CASH FUND CLASS B (3)
1998 (11) (0.04) 1.00 4.18 1.35 3.97 N/A
1997 (10) (0.04) 1.00 4.24 1.35 4.15 N/A
1996 (9) (0.03) 1.00 3.03** 1.35* 4.03* N/A
ZWEIG GOVERNMENT CASH FUND CLASS C (2)
1998 (11) (0.05) 1.00 4.91 0.65 4.73 N/A
1997 (10) (0.05) 1.00 4.97 0.65 4.85 N/A
1996 (9) (0.05) 1.00 4.83 0.65 4.73 N/A
1995 (8) (0.05) 1.00 5.08 0.87 4.97 N/A
1994 (0.03) 1.00 2.55** 0.62** 2.52** N/A
ZWEIG GOVERNMENT CASH FUND CLASS I (4)
1998 (11) (0.05) 1.00 5.23 0.35 5.15 N/A
1997 (10) (0.05) 1.00 5.28 0.35 5.15 N/A
1996 (9) (0.01) 1.00 0.80** 0.35* 5.03* N/A
<CAPTION>
NET ASSETS
YEAR END OF YEAR
ENDED (IN THOUSANDS)
- - --------------------------------------- ---------------
ZWEIG GROWTH & INCOME FUND CLASS B (5)
1998 (16) $ 16,416
1997 (15) 11,920
1996 (14) 2,693
ZWEIG GROWTH & INCOME FUND CLASS C (5)
1998 (16) 14,364
1997 (15) 13,525
1996 (14) 4,509
ZWEIG GROWTH & INCOME FUND CLASS I (5)
1998 (16) 1,664
1997 (15) 1,686
1996 (14) 101
ZWEIG FOREIGN EQUITY FUND CLASS A (7)
1998 (18) 2,122
1997 (17) 414
ZWEIG FOREIGN EQUITY FUND CLASS B (7)
1998 (18) 1,873
1997 (17) 713
ZWEIG FOREIGN EQUITY FUND CLASS C (7)
1998 (18) 3,384
1997 (17) 1,177
ZWEIG FOREIGN EQUITY FUND CLASS I (7)
1998 (18) 1,107
1997 (17) 1,012
ZWEIG GOVERNMENT FUND CLASS A
1998 29,767
1997 28,062
1996 (13) 33,848
1995+ 42,207
1994 47,622
ZWEIG GOVERNMENT FUND CLASS B (3)
1998 2,199
1997 1,215
1996 (13) 513
ZWEIG GOVERNMENT FUND CLASS C
1998 11,859
1997 10,199
1996 (13) 14,330
1995+ 19,778
1994 22,599
ZWEIG GOVERNMENT FUND CLASS I (6)
1998 3,088
1997 1,050
ZWEIG GOVERNMENT CASH FUND CLASS A (2)
1998 (11) 8,290
1997 (10) 2,472
1996 (9) 3,360
1995 (8) 3,661
1994 4,303
ZWEIG GOVERNMENT CASH FUND CLASS B (3)
1998 (11) 1,738
1997 (10) 336
1996 (9) 33
ZWEIG GOVERNMENT CASH FUND CLASS C (2)
1998 (11) 6,624
1997 (10) 2,661
1996 (9) 4,535
1995 (8) 4,458
1994 5,040
ZWEIG GOVERNMENT CASH FUND CLASS I (4)
1998 (11) 2,884
1997 (10) 100
1996 (9) 1,401
</TABLE>
<PAGE>
55
<TABLE>
<CAPTION>
NET
NET REALIZED DISTRIBUTIONS
ASSET NET AND DIVIDENDS FROM NET
VALUE INVESTMENT UNREALIZED TOTAL FROM FROM NET REALIZED
YEAR BEGINNING INCOME GAINS INVESTMENT INVESTMENT CAPITAL
ENDED OF YEAR (LOSS) (LOSSES) OPERATIONS INCOME GAINS
- - --------------------------------------- ---------- ----------- ----------- ----------- ----------- --------------
ZWEIG GOVERNMENT CASH FUND CLASS M (12)
<S> <C> <C> <C> <C> <C> <C>
1998 $ 1.00 $ 0.05 -- $ 0.05 $ (0.05) --
1997 1.00 0.05 -- 0.05 (0.05) --
1996 1.00 0.05 -- 0.05 (0.05) --
1995 1.00 0.05 -- 0.05 (0.05) --
1994 1.00 0.04 -- 0.04 (0.04) --
<CAPTION>
RATIOS TO AVERAGE
NET ASSETS
TOTAL NET ASSET ----------------------
DIVIDENDS VALUE NET PORTFOLIO
YEAR AND END TOTAL INVESTMENT TURNOVER
ENDED DISTRIBUTIONS OF YEAR RETURN*** EXPENSES INCOME RATE
- - --------------------------------------- -------------- ---------- ---------- -------- ----------- --------
ZWEIG GOVERNMENT CASH FUND CLASS M (12
<S> <C>
1998 $ (0.05) $ 1.00 $ 5.16 0.41% 5.01% N/A
1997 (0.05) 1.00 5.22 0.41 5.09 N/A
1996 (0.05) 1.00 5.09 0.40 4.98 N/A
1995 (0.05) 1.00 5.32 0.64 5.20 N/A
1994 (0.04) 1.00 3.67 0.70 3.58 N/A
<CAPTION>
NET ASSETS
YEAR END OF YEAR
ENDED (IN THOUSANDS)
- - --------------------------------------- ---------------
ZWEIG GOVERNMENT CASH FUND CLASS M (12
1998 $ 75,264
1997 56,599
1996 45,271
1995 48,515
1994 78,149
</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 21, 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 $.007, $.024, $.007 and $.011 per share
(0.65%, 2.35%, 0.73% and 1.12% ratio of expenses to average net assets),
respectively.
(12) During 1998, 1997, 1996, 1995 and 1994, the Manager voluntarily reimbursed
Zweig Cash Fund Class M $.003, $.003, $.003, $.001 and $.002 per share
(0.28%, 0.32%, 0.32%, 0.10% and 0.15% 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 $.08, $.08, $.08 and $.08 per share
(0.70%, 0.70%, 0.70% and 0.70% 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 (0.05%, 0.05%, 0.05% and 0.05% 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 $.20, $.20, $.20 and $.20 per share
(2.20%, 2.20%, 2.20% and 2.20% 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.
<PAGE>
56
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees of Zweig Series Trust
In our opinion, the accompanying statements of net assets and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
Zweig Series Trust (constituting 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, hereafter referred to as
the "Fund") at December 31, 1998, the results of their operations for the year
then ended, the changes in each of their net assets for each of the two years in
the period then ended and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
January 25, 1999
<PAGE>
PHOENIX-ZWEIG TRUST
PART C--OTHER INFORMATION
ITEM 23. FINANCIAL STATEMENTS AND EXHIBITS
a.1. Agreement and Declaration of Trust.(9)
b. By-Laws of the Trust. (9)
c. Instruments defining shareholder rights incorporated by
reference to Exhibits a.1 and a.2 above.
d.1. Management Agreement between the Trust and Zweig/Glaser
Advisers LLC.(11)
d.2. Servicing Agreement between Zweig/Glaser Advisers LLC and
Zweig Consulting LLC(11)
e.1. Distribution Agreement between the Trust and Phoenix Equity
Planning Corporation.(11)
f. None.
g.1. Form of Custody Agreement (the "Custody Agreement") between
the Registrant and Bank of New York.(3)
h.1. Form of Transfer Agency Agreement (the "Transfer Agency
Agreement") between the Trust and PEPCO.(12)
i. None.
j.1. Consent of PricewaterhouseCoopers LLP, Independent Public
Accountants.(11)
k. None.
l.1. Subscription Agreement for Shares of the Government
Securities.(2)
l.2. Subscription Agreement for Shares of the Zweig Strategy
Fund.(4)
l.3. Subscription Agreement for Class C (f/k/a B Shares) Shares
of the Trust.(6)
l.4. Subscription Agreement for Shares of Zweig Managed Assets.(7)
l.5. Subscription Agreement for Shares of the Zweig Appreciation
Fund.(1)
m.1. Distribution Plan pursuant to Rule 12b-1 as Exhibit 15.(11)
n. Financial Data Schedules, reflected on EDGAR as Exhibit
27.(11)
o.1. Amended and Restated Rule 18f-3 Plan as Exhibit 18.(10)
p.1. Powers of Attorney for S. Leland Dill, Claire B. Benenson,
James Balog, and Donald Romans.(9)
----------
(1) Incorporated by reference to the Trust's Registration
Statement on Form N-1A, filed previously on September 28,
1984.
(2) Incorporated by reference to Post-Effective Amendment No. 2
to the Registration Statement of the Trust on Form N-1A,
filed previously on November 27, 1985.
(3) Incorporated by reference to Post-effective Amendment No. 3
to the Registration Statement of the Trust on Form N-1A,
filed previously on February 28, 1986.
(4) Incorporated by reference to Post-Effective Amendment No. 18
to the Registration Statement of the Trust on Form N-1A,
filed previously on October 20, 1989.
(5) Incorporated by reference to Post Effective Amendment No. 22
to the Registration Statement of the Trust on Form N-1A,
filed previously on April 20, 1990.
(6) Incorporated by reference to Post Effective Amendment No. 34
to the Registration Statement of the Trust on Form N-1A,
filed previously on March 2, 1992.
(7) Incorporated by reference to Post Effective Amendment No. 37
to the Registration Statement of the Trust on Form N-1A,
filed previously on February 26, 1993.
C-1
<PAGE>
(8) Incorporated by reference to Post Effective Amendment No. 40
to the Registration Statement of the Trust on Form N-1A,
filed previously on July 5, 1995.
(9) Incorporated by reference to Post Effective Amendment No. 42
to the Registration Statement of the Trust on Form N-1A,
filed previously on April 30, 1996.
(10) Incorporated by reference to Post Effective Amendment No. 45
to the Registration Statement of the Trust on Form N-1A,
filed previously on August 20, 1997.
(11) Filed with Post-Effective Amendment No. 48 on Form N-1A on
May 3, 1999.
(12) To be filed by amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE FUND
The Fund does not control and is not under common control with any other
person.
ITEM 25. INDEMNIFICATION
The Agreement and Declaration of Trust dated April 26, 1996 and the By-Laws
of the Registrant provide that no trustee or officer will be indemnified against
any liability to which the Registrant would otherwise be subject by reason of or
for willful misfeasance, bad faith, gross negligence or reckless disregard of
such person's duties. The Management Agreement, Underwriting Agreement, Custody
Agreement and Transfer Agency Agreement each provides that the Trust will
indemnify the other party (or parties, as the case may be) to the agreement for
certain losses.
Insofar as indemnification for liability arising under the Securities Act of
1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF THE INVESTMENT ADVISERS
All of the information required by this item is set forth in the Form ADV,
as currently amended, of Zweig/Glaser Advisers LLC and Zweig Consulting LLC (SEC
File Nos. 801-56470 and 801-56184), which is incorporated herein by reference.
ITEM 27. PRINCIPAL UNDERWRITER
(a) PEPCO also serves as the principal underwriter for the following other
investment companies:
Phoenix-Aberdeen Series Fund, Phoenix-Aberdeen Worldwide Opportunities Fund,
Phoenix California Tax Exempt Bonds, Inc., Phoenix Duff & Phelps Institutional
Mutual Funds, Phoenix-Engemann Funds, Phoenix-Euclid Funds, Phoenix Equity
Series Fund, Phoenix Income and Growth Fund, Phoenix Investment Trust 97,
Phoenix Multi-Portfolio Fund, Phoenix Multi-Sector Fixed Income Fund, Inc.,
Phoenix Multi-Sector Short Term Bond Fund, Phoenix-Seneca Funds, Phoenix Series
Fund, Phoenix Strategic Allocation Fund, Inc., Phoenix Strategic Equity Series
Fund, Phoenix Home Life Variable Universal Life Account, Phoenix Home Life
Variable Accumulation Account, PHL Variable Accumulation Account, Phoenix Life
and Annuity Variable Universal Life Account and PHL Variable Separate Account
MVA1.
(b) Directors and executive officers of Phoenix Equity Planning Corporation
are as follows:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
Michael E. Haylon Director None
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President None
56 Prospect St.
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH DISTRIBUTOR WITH REGISTRANT
---------------- ---------------- ---------------
<S> <C> <C>
William R. Moyer Director, Senior Vice President and None
100 Bright Meadow Boulevard Chief Financial Officer
P.O. Box 2200
Enfield, CT 06083-2200
John F. Sharry Executive Vice President, None
56 Prospect St. Retail Distribution
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, None
56 Prospect St. Operations and Services
P.O. Box 150480
Hartford, CT 06115-0480
G. Jeffrey Bohne Vice President, Mutual Fund None
101 Munson Street Customer Service
P.O. Box 810
Greenfield, MA 01302-0810
Nancy G. Curtiss Vice President and Treasurer, None
56 Prospect St. Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and None
56 Prospect St. Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, None
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
All accounts, books and other documents required to be maintained by Section
31(a) of the Investment Company Act of 1940 and the rules thereunder will be
maintained at the offices of (1) the Registrant at 900 Third Avenue, 31st Floor,
New York, New York 10022, (2) Zweig Consulting LLC, at 900 Third Avenue, New
York, New York 10022, (3) State Street Bank and Trust Company, at 1776 Heritage
Drive, North Quincy, Massachusetts 02171-2197, (4) Registrant's Transfer Agent,
Phoenix Equity Planning Corporation, at 100 Bright Meadow Boulevard, Enfield, CT
06082.
ITEM 29. MANAGEMENT SERVICES
The information required by this Item is included in the Statement of
Additional Information.
ITEM 30. UNDERTAKINGS
Not Applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act and the Investment
Company Act, the Fund certifies that it meets all of the requirements for
effectiveness of this registration statement under rule 485(b) under the
Securities Act and has duly caused this amendment to its registration statement
to be signed on its behalf by the undersigned, duly authorized, in the City of
Hartford, and State of Connecticut on the 3rd day of May, 1999.
PHOENIX-ZWEIG TRUST
ATTEST: BY: /S/ EUGENE J. GLASER
-----------------------------------------
EUGENE J. GLASER
CHAIRMAN
Pursuant to the requirements of the Securities Act, this amendment to the
registration statement has been signed below by the following persons in the
capacities indicated, on this 3rd day of May, 1999.
SIGNATURE TITLE
--------- -----
Trustee
---------------------------------------
Claire B. Benenson*
Trustee
---------------------------------------
James Balog*
Trustee
---------------------------------------
S. Leland Dill*
/s/ Eugene J. Glaser Chairman, Chief
---------------------------------------
Eugene J. Glaser Executive Officer,
Trustee
---------------------------------------
Donald Romans*
Trustee
---------------------------------------
*By /s/ Eugene J. Glaser
---------------------------------------
* Eugene J. Glaser, Attorney-in-fact
pursuant to powers of attorney
previously filed.
S-1
Exhibit d.1
Management Agreement between the Trust
and
Zweig/Glaser Advisers LLC
<PAGE>
PHOENIX-ZWEIG TRUST
MANAGEMENT AGREEMENT
March 1,1999
ZWEIG/GLASER ADVISERS
900 Third Avenue
New York, New York 10022
Gentlemen:
The undersigned, Phoenix-Zweig Trust, a Delaware business
trust (the "Trust"), is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"). The Trust currently offers
shares of seven series, Phoenix-Zweig Strategy Fund, Phoenix-Zweig Appreciation
Fund, Phoenix-Zweig Growth & Income Fund, Phoenix- Zweig Managed Assets,
Phoenix-Zweig Government Fund, Phoenix-Zweig Foreign Equity Fund and
Phoenix-Zweig Government Cash Fund. Each series issues four classes of shares,
currently designated as Class A, Class B, Class C and Class I Shares (the "Class
A, Class B, Class C and Class I Shares"), and Phoenix-Zweig Government Cash Fund
also issues a class of shares designated as Class M Shares. In the future, the
Trust may authorize and issue other series and other classes of shares.
Each series of the Trust invests and reinvests its assets in a
portfolio of securities and investments. The Trust hereby engages you to act as
its investment manager for shares of each class of each series of the Trust
authorized now or in the future, subject to the terms and conditions herein set
forth.
SECTION 1. Investment Management Services.
-------------------------------
You shall use your staff and other facilities to conduct and
maintain a continuous review of each series' portfolio of securities and
investments, and shall advise and assist each series of the Trust with respect
to the selection, acquisition, holding and disposal of securities. In so doing,
you shall be guided by the investment objectives and policies of each series as
delineated and limited by the statements contained in documents filed with the
Securities and Exchange Commission (the "SEC"), as amended from time to time, by
policies adopted by the Board of Trustees of the Trust (the "Board") and by the
provisions of the 1940 Act and the rules promulgated thereunder, so that at all
times the Trust shall be in compliance with its policies and the provisions of
the 1940 Act. The Trust agrees to supply you with copies of all such documents
and to notify you of any changes in its investment objectives, policies and
restrictions.
In rendering such investment management services to the Trust
pursuant to this Agreement, you may employ, retain or otherwise avail yourself
of the services or facilities of other persons or organizations, for the purpose
of providing you or the Trust with such statistical and
NYDOCS01/498472 4
<PAGE>
other factual information, such advice regarding economic factors and trends,
such advice as to occasional transactions in specific securities or such other
information, advice or assistance as you may deem necessary, appropriate or
convenient for the discharge of your obligations hereunder or otherwise helpful
to the Trust or in the discharge of your overall responsibilities with respect
to the other accounts which you or your affiliates serve as investment manager.
You and any person performing executive, administrative or
trading functions for the Trust, whose services were made available to the Trust
by you, are specifically authorized to allocate brokerage and principal business
to firms that provide such services or facilities or to cause the Trust to pay a
member of a securities exchange or any other securities broker or dealer an
amount of commission for effecting a securities transaction in excess of the
amount of commission another member of an exchange, broker or dealer would have
charged for effecting that transaction, if you or such person determine in good
faith that such amount of commission is reasonable in relation to the value of
the brokerage and research services (as such services are defined in Section
28(e) of the Securities Exchange Act of 1934, as amended (the "1934 Act"))
provided by such member, broker or dealer, viewed in terms of either that
particular transaction or your or such person's over-all responsibilities with
respect to the accounts as to which you or such person exercises investment
discretion (as that term is defined in Section 3(a)(35) of the 1934 Act).
In acting under this Agreement, you shall be an independent
contractor and shall not be an agent of the Trust.
SECTION 2. Resumes and Reports, Etc.
-------------------------
You shall maintain a continuous record of all the investments
and securities which comprise the portfolios of each series of the Trust and
shall furnish to the Board, at its regularly scheduled meetings and at such
other times as the Board may reasonably request, a resume of the portfolios and
report on all matters pertaining to your services as investment manager. In
addition, you shall furnish the Trust with such statistical information
reasonably available to you as the Board shall reasonably request.
SECTION 3. Additional Services to Be Furnished.
------------------------------------
You shall keep the books and financial records of the Trust
and shall perform such other services as are reasonably incidental to the
foregoing duties. You shall assist in the computation of the net asset value of
the shares of each series of the Trust (in accordance with the Amended and
Restated Agreement and Declaration of Trust and the Trust's Prospectuses and
Statements of Additional Information, each as amended from time to time, and the
instructions of the Board pursuant thereto), and shall furnish to the Trust and
its distributor any statements with respect to the net asset value of the shares
of each series of the Trust and the net asset value per share of each series of
the Trust, at such times, and in such forms, as the Trust may prescribe. You
shall also furnish the Trust with office space reasonably suited to its
operations and with bookkeeping, internal accounting and administrative services
and shall permit such of your
NYDOCS01/498472 4 2
<PAGE>
directors, officers and employees as may be elected as directors or officers of
the Trust to serve in the capacities to which they are elected.
All services to be furnished by you under this Agreement may
be furnished through your, or your affiliates', directors, officers or
employees. However, the investment policies, the administration of its business
and affairs and all other acts of the Trust are and shall at all times be
subject to the approval and direction of the Board.
SECTION 4. Multiple Capacities.
--------------------
Nothing contained in this Agreement shall be deemed to
prohibit you from acting, and being separately compensated for acting, in one or
more capacities on behalf of the Trust, including, but not limited to, the
capacities of broker or distributor. The Trust understands that you and your
affiliates may act as investment manager or in other capacities as aforesaid on
behalf of other investment companies and customers. While information and
recommendations you supply to the Trust shall in your judgment be appropriate
under the circumstances and in light of the investment objectives and policies
of the Trust, they may be different from the information and recommendations you
supply to other investment companies and customers. You shall give the Trust
equitable treatment under the circumstances in supplying information,
recommendations and any other services requested of you, but you shall not be
required to give preferential treatment to the Trust as compared with the
treatment given to any other investment company or customer. Whenever you shall
act in multiple capacities on behalf of the Trust, you shall maintain the
appropriate separate accounts and records for each such capacity. All
information and advice supplied by you to the Trust hereunder shall be for its
own use exclusively.
SECTION 5. Payment of Expenses.
--------------------
You shall assume and pay all of your own costs and expenses
under this Agreement. The Trust shall assume and pay, or reimburse you for, all
expenses incurred in the operation of the Trust (to the extent not specifically
allocated to you hereunder) and, in particular but without limitation, the Trust
shall bear the cost of and pay all interest, taxes, fees and commissions of
every kind, expenses of issue, repurchase or redemption of shares, expenses of
registering or qualifying shares for sale, insurance, association membership
dues, all charges of custodians (including fees as custodian, escrow agent, for
keeping books and performing portfolio valuations), transfer agents, registrars,
dividend disbursing agents, independent auditors and legal counsel, expenses of
preparing, printing and distributing prospectuses and all proxy materials,
reports and notices to shareholders, expenses of distribution of shares in
accordance with a plan adopted pursuant to Rule 12b-1 under the 1940 Act,
out-of-pocket expenses of trustees and fees of trustees who are not "interested
persons", and all other costs incident to the Trust's existence. The preceding
sentence shall govern the allocation of expenses between the parties in all
respects.
NYDOCS01/498472 4 3
<PAGE>
SECTION 6. Compensation for Services.
--------------------------
The Trust will pay to you, with respect to the Class A, Class
B, Class C and Class I Shares of each series, and for Class M Shares of
Phoenix-Zweig Government Cash Fund, a monthly management fee based on the
average daily net assets of each class of the series of the Trust at the
following annual rates:
Phoenix-Zweig Strategy Fund .75%
Phoenix-Zweig Appreciation Fund 1.00%
Phoenix-Zweig Growth & Income Fund .75%
Phoenix-Zweig Managed Assets 1.00%
Phoenix-Zweig Foreign Equity Fund 1.00%
Phoenix-Zweig Government Fund .60%
Phoenix-Zweig Government Cash Fund .50%
The net assets on each such day shall be the net assets used in determining the
price at which shares of a series of the Trust are sold, repurchased or redeemed
on such day.
Notwithstanding the foregoing, nothing shall preclude you or
your affiliates from executing brokerage transactions for the Trust, charging
the Trust brokerage commissions therefor and deriving profit therefrom, provided
such payments to you by the Trust are reviewed at each annual continuation
hereof required by the 1940 Act and Section 9 below.
SECTION 7. Liability of the Investment Manager, Etc.
-----------------------------------------
You shall be liable for your own acts and omissions caused by
your willful misfeasance, bad faith or gross negligence in the performance of
your duties or by your reckless disregard of your obligations under this
Agreement, and nothing herein shall protect you against any such liability to
the Trust or its security holders. You shall not be liable for the acts and
omissions of any agent employed by you, nor for those of any bank, trust
company, broker or other person with whom, or into whose hands, any monies,
shares of the Trust or securities and investments may be deposited or come,
pursuant to the provisions of this Agreement. You shall not be liable for any
defect in title of any property acquired nor for any loss unless it shall occur
through your own willful default. Subject to the first sentence of this section,
you shall not be liable for any action taken or omitted on advice, obtained in
good faith, of counsel, provided such counsel is satisfactory to the Trust.
SECTION 8. Termination of Agreement, Assignment, Etc.
------------------------------------------
This Agreement may be terminated at any time, without the
payment of any penalty, upon sixty (60) days' written notice by the terminating
party to the other party, by you or by the Trust, acting pursuant to a
resolution adopted by its Board, or by a vote of the holders of the lesser of
(1) 67% of the Trust's voting shares present if the holders of more than 50% of
the outstanding
NYDOCS01/498472 4 4
<PAGE>
shares are present in person or in proxy, or (2) more than 50% of the
outstanding shares of the Trust.
This Agreement shall automatically terminate in the event of
its assignment. Termination shall not affect rights of the parties which have
accrued prior thereto.
SECTION 9. Duration of Agreement.
----------------------
Unless sooner terminated, this Agreement shall continue in
effect for two years, and thereafter until terminated, provided that the
continuation of this Agreement and the terms thereof are specifically approved
annually in accordance with the requirements of the 1940 Act by a majority of
the Trustees, including a majority of the Trustees who are not "interested
persons" of you or of the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
SECTION 10. Definition.
-----------
The terms "assignment" and "interested person" when used in
this Agreement shall have the meanings given such terms in the 1940 Act and the
rules and regulations thereunder.
SECTION 11. Obligation of the Trust.
------------------------
The Trust's Amended and Restated Agreement and Declaration of
Trust, as amended, is on file with the Secretary of the State of Delaware and
notice is hereby given that this Agreement is made and executed on behalf of the
Trust, and not by the Trustees or officers of the Trust individually, and the
obligations of or arising out of this Agreement are not binding upon the
Trustees, officers or shareholders of the Trust individually but are binding
only upon the assets and property of the Trust.
SECTION 12. Concerning Applicable Provisions of Law, Etc.
---------------------------------------------
This Agreement shall be subject to all applicable provisions
of law, including, without limitation, the applicable provisions of the 1940
Act, and, to the extent that any provisions herein contained conflict with any
such applicable provisions of law, the latter shall control.
SECTION 13. Change in the Partnership.
--------------------------
You shall notify the Trust in writing of any change in the
membership of partners of the Zweig/Glaser Advisers general partnership within
fifteen (15) days after such change.
SECTION 14. Counterparts.
-------------
This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
NYDOCS01/498472 4 5
<PAGE>
SECTION 15. Effective Date.
---------------
This Agreement shall be effective upon the closing of the
acquisition of Zweig/Glaser Advisers by Phoenix Investment Partners, Ltd., and
after its initial approval by the Board of Trustees and shareholders in
accordance with the 1940 Act.
Very truly yours,
PHOENIX-ZWEIG TRUST
By: /s/Eugene J. Glaser
-----------------------------------
Name: Eugene J. Glaser
Title: Chairman
Attest:-------------------------------
Accepted and agreed to this 1st day of March 1999.
ZWEIG/GLASER ADVISERS
By: /s/Charles I. Leone
--------------------------------------
Name: Charles I. Leone
Title: First Vice President & CFO
Attest:----------------------------------
NYDOCS01/498472 4 6
Exhibit d.2
Servicing Agreement between Zweig/Glaser Advisers LLC
and
Zweig Consulting LLC
<PAGE>
SERVICING AGREEMENT
THIS SERVICING AGREEMENT is made and entered into as of
this 1st day of March, 1999 by and among Zweig/Glaser Advisers, a New York
general partnership, Zweig Total Return Advisors, Inc., a Delaware corporation,
and Zweig Advisors Inc., a Delaware corporation (collectively, the "Company"),
and Zweig Consulting LLC, a New York limited liability company ("Zweig").
WHEREAS Phoenix Investment Partners, Ltd., a Delaware
corporation ("Phoenix"), has entered into an Acquisition Agreement (the
"Acquisition Agreement") with Zweig/Glaser Advisers, a New York general
partnership, Euclid Advisors LLC, a New York limited liability company, Zweig
Advisors Inc., a Delaware corporation, Zweig Total Return Advisors, Inc., a
Delaware corporation, and Zweig Securities Corp., a New York corporation
(collectively, the "Sellers"), and the Equityholders named therein providing
for, among other things, the acquisition of all of the capital stock and
partnership interests of the Companies by Phoenix and/or one or more
wholly-owned subsidiaries of Phoenix (capitalized terms defined in the
Acquisition Agreement and not otherwise defined herein are used herein with such
defined meanings);
WHEREAS Zweig has heretofore performed services to the Company
and the Company is desirous of obtaining certain services and Martin E. Zweig,
as the President of Zweig (the "President"), has indicated to the Company that
he and his designated research associates (the "Associates") will provide the
Company and its Affiliates with such services as are specified in this
Agreement; and
WHEREAS the Company and Zweig have provided investment
advisory services to investment companies registered under the Investment
Company Act of 1940 (each a "Fund" and collectively "Funds") and desire to
continue to provide those investment advisory services;
NOW, THEREFORE, in consideration of the mutual promises herein
contained, the parties hereto, intending to be legally bound, agree as follows:
1. Services
1.1 For this engagement, the President and the Associates will
devote their skill and approximately one-half of their full working time
consistent with the practices of Zweig prior to the Closing Date, to the
business and affairs of the Company and its Affiliates and to the promotion of
its and their interests, in particular, performing asset allocation research and
analysis and providing advice thereon at a level and in a manner consistent with
the practices of Zweig and the Company prior to the Closing Date (the
"Services"). The Services will be performed by the President and the Associates
in a manner and at a level consistent with the practices of Zweig and the
Company prior to the Closing Date. This Agreement shall be effective as of the
Closing Date for the term described in Section 2 below.
NYDOCS01/583556 3 1
<PAGE>
1.2 The Services will be provided to the Company and its
Affiliates during normal business hours at the offices of the Company in New
York City or at such other times and places mutually agreed upon and reasonably
convenient to both parties, taking into account the nature, exigencies and
reasons for the assistance required.
1.3 Notwithstanding Section 1.2, but subject to all of the
other terms and conditions of this Agreement, including in particular Sections 4
and 13, Zweig may continue to provide consulting services (whether in a
managerial, employee, consultant or other capacity) to the Affiliated Investment
Partnership Management Companies and the related investment partnerships and
Watermark Securities, Inc. and their successor or affiliate entities, as may
exist from time to time; provided, however, that in no event may Zweig provide
services to any "Competing Business" as defined in the
Noncompetition/Nonsolicitation Agreement dated the date hereof between the
President and Phoenix (the "Noncompetition/Nonsolicitation Agreement"). The
President shall also continue to be permitted to serve as the President of Zweig
Series Trust, The Zweig Fund, Inc. and The Zweig Total Return Fund, Inc.
2. Term
2.1 This Agreement shall be effective as of the Closing Date
and shall continue until the third anniversary thereof (the "Term") or such
earlier date as provided in Section 2.2; and with respect to any Fund, unless
sooner terminated, this Agreement shall continue in effect for two years, and
thereafter until terminated, provided that the continuation of this Agreement
and the terms thereof are specifically approved annually in accordance with the
requirements of the Investment Company Act of 1940 by a majority of such Fund's
outstanding voting securities or a majority of its board of directors or
trustees, and, in any event, by a majority of the directors or trustees who are
not "interested persons", as defined in the Investment Company Act of 1940, cast
in person at a meeting called for the purpose of voting on such approval.
2.2 The Company may terminate this Agreement immediately for
Cause and in the event of the President's death or Disability, and upon 30 days'
notice in the event of termination without Cause; and with respect to any Fund,
this Agreement may be terminated at any time, without payment of any penalty, by
the board of directors or trustees of that Fund, or by a vote of a majority (as
defined in the Investment Company Act of 1940) of the outstanding voting
securities of the Fund to which this Agreement is applicable, upon not less than
sixty (60) days' written notice. With respect to any Fund, this Agreement shall
automatically terminate in the event of its assignment, within the meaning of
the Investment Company Act of 1940, unless such automatic termination shall be
prevented by an exemptive order of the Securities and Exchange Commission, and
shall automatically terminate upon the termination of the Fund's investment
advisory agreement with the company that serves as its investment adviser.
2.3 Upon termination of this Agreement by the Company for
Cause or in the event of the President's death or Disability, the Company's
payment to Zweig of fees earned to the date of such termination shall be in full
satisfaction of all claims against the Company under
NYDOCS01/583556 3 2
<PAGE>
this Agreement. If Zweig's engagement with the Company hereunder is terminated
by the Company other than for Cause or the President's death or Disability, the
Company shall continue to pay to Zweig the Consulting Fees at a rate equal to
the average of the monthly Consulting Fees for the six months immediately
preceding the month in which such termination occurred (or for the number of
months in the Term that have elapsed as of the date of termination, if fewer)
for the remainder of the Term.
2.4 (i) For purposes of this Agreement, a termination of
Zweig's engagement hereunder is for "Cause" if the termination is evidenced by a
reasonable determination made by the Chief Executive Officer of Phoenix that:
(a) Zweig has willfully neglected its assigned duties with the Company, which
neglect has continued for a period of at least thirty (30) days after a written
notice of such neglect was delivered to the President specifying the claimed
neglect, (b) the President has been enjoined (other than temporary suspensions
of not more than ninety-one (91) days) by the Securities and Exchange
Commission, the National Association of Securities Dealers, Inc. or any other
industry regulatory authority from working in the investment advisory or
securities industry, (c) the President has been convicted by a court of
competent jurisdiction of, or has pleaded guilty or nolo contendere to, any
felony or misdemeanor involving an investment or investment-related business,
(d) Zweig has engaged in a continuing violation of a material provision of this
Agreement, which violation has continued for a period of at least thirty (30)
days after a written notice of such violation was delivered to the President
specifying the claimed violation, or (e) the President has breached the
Noncompetition/Nonsolicitation Agreement.
(ii) For purposes of this Agreement, "Disability" means the
President's inability to perform the services he is required to perform under
this Agreement by reason of sickness, accident, injury, illness or any similar
event and which condition has existed for at least 180 consecutive days, or for
such shorter periods aggregating 180 days during any twelve month period.
3. Compensation
3.1 During the Term, for the Services to be provided by Zweig
under this Agreement, the Company agrees, on a joint and several basis, to pay
Zweig an annual consulting fee of $2,500,000 (the "Consulting Fees"). The
Consulting Fees shall be payable monthly in arrears on the fifth day of each
month. The Company shall allocate the Consulting Fees among the advisers
comprising the Company based on assets of each Fund managed by such advisers.
3.2 The Company shall provide or share with Zweig research
information, benefits and services, as defined in Section 28(e) of the
Securities Exchange Act of 1934, that results from brokerage transactions
implemented by the Company for the benefit of its clients.
3.3 The Company shall not have any liability with respect to
the compensation of employees retained by Zweig or by any affiliated entities.
NYDOCS01/583556 3 3
<PAGE>
3.4 Subject to the provisions of Section 2.3 hereof, upon
termination of this engagement for any reason, the Company shall have no further
obligations under this Agreement, but Zweig shall continue to be bound by
Section 4 and the Company shall continue to be bound by Section 5 hereof.
4. Confidentiality of Zweig
4.1 Zweig shall not at any time during the period of its
engagement with the Company hereunder or after the termination thereof directly
or indirectly divulge, furnish, use, publish or make accessible to any person or
entity any Confidential Information (as hereinafter defined) except in
connection with the performance of its duties hereunder. Any records of
Confidential Information prepared by Zweig or which come into its possession
during the term of this Agreement are and remain the property of the Company or
its Affiliates, as the case may be, and upon termination of the engagement all
such records and copies thereof shall be either left with or returned to such
entity. Confidential Information may be shared among the President and the
Associates or other employees of entities controlled by the President on a need
to know basis for purposes of providing the Services to the Company and its
Affiliates hereunder. Such Associates and any other employees shall be informed
of the confidential nature of such Confidential Information, the President shall
direct such Associates and any other employees to treat such information
confidentially and the President will be responsible for any breach of this
Section 4.1 by himself and by any persons to whom the President provides any
Confidential Information. Notwithstanding anything contained herein to the
contrary, the Company acknowledges that services overlapping or similar to the
Services provided by Zweig, the President and the Associates hereunder are also
performed on behalf of the Affiliates of Zweig and such Services are often not
exclusively performed by Zweig, the President and the Associates for the
Company. Consequently, the work product resulting from the Services is often
generated on behalf of both the Company and its Affiliates and the Affiliates of
Zweig and is shared among the employees of these entities (the "Shared Work
Product"). The Company further acknowledges that the Confidential Information
that generates such Shared Work Product may become known to the employees of
Zweig's Affiliates. The Company hereby agrees that the disclosure of
Confidential Information to the employees of the Zweig Affiliates who shall be
deemed employees covered by the fourth sentence of this Section 4.1, to the
extent such disclosure is necessary to generate any Shared Work Product, and the
use of Shared Work Product by the employees of the Zweig Affiliates, shall in no
event be deemed a breach of this Agreement.
4.2 The term "Confidential Information" includes, but is not
limited to, the following items, whether existing now or created in the future
and whether or not subject to trade secret or other statutory protection: (a)
all knowledge or information concerning the business, operations and assets of
the Company and its Affiliates which is not readily available to the public,
such as: internal operating procedures; investment strategies; sales data and
customer and client lists; financial plans, projections and reports; and
investment company programs, plans and products; (b) all property owned,
licensed and/or developed for the Company and/or its Affiliates or any of their
respective clients and not readily available to the public, such as computer
NYDOCS01/583556 3 4
<PAGE>
systems, programs and software devices, including information about the design,
methodology and documentation therefor; (c) information about or personal to the
Company's and/or its Affiliates' clients; (d) information, materials, products
or other tangible or intangible assets in the Company's and/or its Affiliates'
possession or under any of their control which is proprietary to, or
confidential to or about, any other person or entity; and (e) records and
repositories of all of the foregoing, in whatever form maintained.
The foregoing notwithstanding, the following shall not be
considered Confidential Information: (aa) general skills and experience gained
by providing service to the Company; (bb) information publicly available or
generally known within the Company's trade or industry; (cc) information
independently developed by the President or the Associates other than in the
course of the performance of their duties which are exclusive to the Company
hereunder; and (dd) information which becomes available to the President or the
Associates on a non-confidential basis from sources other than the Company or
its Affiliates, provided the President or the Associates do not know or have
reason to know that such sources are prohibited by contractual, legal or
fiduciary obligation from transmitting the information. Failure to mark any
material or information "confidential" shall not affect the confidential nature
thereof. All the terms of this Section 4 shall survive the termination of this
Agreement. The obligations hereunder shall be in addition to, and not in
limitation of, any other obligations of confidentiality the President or the
Associates may have to the Company.
4.3 At any time when so requested, and upon termination of the
engagement under this Agreement for any reason whatsoever and irrespective of
whether such termination is voluntary on Zweig's part or not, Zweig will deliver
to the Company all information in its possession (whether or not Confidential
Information) pertaining exclusively to the Company or any of its Affiliates and,
to the extent any such information is Shared Work Product, shall provide copies
to the Company with the understanding that Zweig and its Affiliates shall also
retain copies of such information.
5. Confidentiality of the Company
5.1 The Company and its Affiliates and their respective
employees shall not at any time during the period of Zweig's engagement with the
Company hereunder or after the termination thereof directly or indirectly
divulge, furnish, use, publish or make accessible to any person or entity any
Zweig Confidential Information (as hereinafter defined). It is expressly
understood that Shared Work Product may be shared among the Company and its
Affiliates and their respective employees. The Company and its Affiliates and
their respective employees shall be informed of the confidential nature of the
Zweig Confidential Information, the Company shall direct such employees to treat
such information confidentially and the Company will be responsible for any
breach of this Section 5.1 by its employees.
5.2 The term "Zweig Confidential Information" includes, but is
not limited to, the following items, whether existing now or created in the
future and whether or not subject to trade secret or other statutory protection:
(a) all knowledge or information concerning the
NYDOCS01/583556 3 5
<PAGE>
business, operations and assets of Zweig and its Affiliates which is not readily
available to the public, such as: internal operating procedures; investment
strategies; sales data and customer and client lists; financial plans,
projections and reports; and investment company programs, plans and products;
(b) all property owned, licensed and/or developed for Zweig and/or its
Affiliates or any of their respective clients and not readily available to the
public, such as computer systems, programs and software devices, including
information about the design, methodology and documentation therefor; (c)
information about or personal to Zweig's and/or its Affiliates' clients; (d)
information, materials, products or other tangible or intangible assets in
Zweig's and/or its Affiliates' possession or under any of their control which is
proprietary to, or confidential to or about, any other person or entity; and (e)
records and repositories of all of the foregoing, in whatever form maintained.
The foregoing notwithstanding, the following shall not be
considered Zweig Confidential Information: (aa) general skills and experience
gained by providing service to the Company and its Affiliates; (bb) information
publicly available or generally known within Zweig's trade or industry; (cc)
information independently developed by the Company and its Affiliates and their
respective employees; and (dd) information which becomes available to the
Company and its Affiliates and their respective employees on a non-confidential
basis from sources other than Zweig, provided the Company and its Affiliates and
their respective employees do not know or have reason to know that such sources
are prohibited by contractual, legal or fiduciary obligation from transmitting
the information. All the terms of this Section 5 shall survive the termination
of this Agreement.
6. Ownership of Documents
All memoranda, papers, letters, notes, notebooks and all
copies thereof relating exclusively to the business or affairs of the Company
that are generated by Zweig or that come into its possession, in each case in
connection with its performance of Services to the Company under this Agreement,
shall be held by Zweig as the Company property and shall be delivered by Zweig
to the Company as the Company may request. To the extent any such memoranda,
papers, letters, notes and notebooks are the product of Zweig Confidential
Information or are Shared Work Product, the Company understands and agrees that
Zweig and its Affiliates shall also retain copies of such documentation and
information.
7. Prior Negotiations and Agreements
This Agreement contains the complete agreement concerning the
servicing arrangement between the parties. This Agreement may only be altered,
amended or rescinded by a duly executed written agreement.
8. Jurisdiction
This Agreement shall be construed in accordance with and
governed by the laws of the State of New York governing contracts entered into
and to be performed entirely within
NYDOCS01/583556 3 6
<PAGE>
New York without regard to any conflict of law rules and both parties consent to
the jurisdiction of the courts of New York.
9. Performance Waivers
Waiver of performance of any obligation by either party shall
not constitute a waiver of performance of any other obligations or constitute
future waiver of the same obligation.
10. Severability
If any section, subsection, clause or sentence of this
Agreement shall be deemed illegal, invalid or unenforceable under any applicable
law, actually applied by any court of competent jurisdiction, such illegality,
invalidity or unenforceability shall not affect the legality, validity and
enforceability of this Agreement or any other section, subsection, clause or
sentence thereof. Where, however, the provisions of any applicable law may be
waived, they are hereby waived by the parties to the full extent permitted by
such law to the end that this Agreement shall be a valid and binding agreement
enforceable in accordance with its terms.
11. Assignment
This Agreement shall inure to the benefit of and be binding
upon the Company and its successors (whether direct or indirect, by purchase,
merger, consolidation or otherwise) and assigns, and upon Zweig and its
successors and assigns (whether direct or indirect, by purchase, merger,
consolidation or otherwise). Except as provided in Section 2.2, this Agreement
shall not be assignable by Zweig other than with the express written consent of
the Company which shall not be unreasonably denied. The reorganization of Zweig
and its affiliated entities, such that the Services of the President and the
Associates are provided through an affiliated entity, shall not constitute a
breach, assignment or termination of this Agreement by Zweig.
12. Notices
All notices under this Agreement shall be in writing and shall
be deemed to have been given at the time when mailed by registered or certified
mail, addressed to the address below stated of the party to which notice is
given, or to such changed address as such party may have fixed by notice:
To the Company: Zweig/Glaser Advisers
900 Third Avenue
New York, New York 10022
Attention: Eugene Glaser
and
NYDOCS01/583556 3 7
<PAGE>
Phoenix Investment Partners, Ltd.
56 Prospect Street
Hartford, Connecticut 06115-0480
Attention: Thomas N. Steenburg, Esq.
Senior Vice President and General Counsel
To Zweig: Zweig Consulting LLC
900 Third Avenue
New York, New York 10022
Attention: Martin E. Zweig
provided, however, that any notice of change of address shall be effective only
upon receipt.
13. Miscellaneous
The President hereby represents and warrants that this
Agreement (i) is valid, binding and enforceable in accordance with its terms and
(ii) does not conflict with any other agreement to which he is a party,
including any agreement with the Affiliated Investment Partnership Management
Companies and the related investment partnerships and Watermark Securities, Inc.
NYDOCS01/583556 3 8
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Very truly yours,
ZWEIG/GLASER ADVISERS
By: /s/Eugene J. Glaser
------------------------------
Name: Eugene J. Glaser
Title: President
ZWEIG TOTAL RETURN ADVISORS, INC.
By: /s/Jeffrey Lazer
------------------------------
Name: Jeffrey Lazer
Title: Executive Vice President
ZWEIG ADVISORS INC.
By: /s/Jeffrey Lazer
------------------------------
Name: Jeffrey Lazer
Title: Executive Vice President
ACCEPTED AND AGREED TO:
ZWEIG CONSULTING LLC
By: /s/Martin E. Zweig
--------------------------------
Name: Martin E. Zweig
Title: President
ACCEPTED AND AGREED TO AS
TO SECTIONS 4.1 and 13:
/s/Martin E. Zweig
- ------------------------------------
Martin E. Zweig
NYDOCS01/583556 3 9
Exhibit e.1
Phoenix-Zweig Trust
Distribution Agreement
<PAGE>
PHOENIX-ZWEIG TRUST
DISTRIBUTION AGREEMENT
March 1, 1999
PHOENIX EQUITY PLANNING CORPORATION
100 Bright Meadow Avenue
P.O. Box 2200
Enfield, CT 06083
Gentlemen:
The undersigned, Phoenix-Zweig Trust, a Delaware business
trust (the "Trust"), is an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act"). The Trust
currently offers its shares in seven series, Phoenix-Zweig Strategy Fund,
Phoenix-Zweig Appreciation Fund, Phoenix-Zweig Growth & Income Fund,
Phoenix-Zweig Managed Assets, Phoenix-Zweig Foreign Equity Fund, Phoenix-Zweig
Government Fund and Phoenix-Zweig Government Cash Fund, and each series
currently issues four classes of shares designated as Class A, Class B, Class C
and Class I shares (the "Class A, Class B, Class C and Class I Shares").
Phoenix-Zweig Government Cash Fund also issues a class of shares designated as
Class M Shares. In the future, the Trust may authorize and issue other series
and other classes of shares. The prospectus(es) will always reflect the current
series and classes of shares within each series. The Trust may sell its shares
to and redeem its shares from the public. It may also repurchase its shares from
the public.
SECTION 1. General Duties as Distributor of the Trust's Shares.
----------------------------------------------------
You are hereby engaged, as agent of the Trust, to sell and
solicit the sale of Class A, Class B, Class C, Class I and Class M Shares of
each and any series of the Trust established now or in the future, at the
applicable Offering Price as hereinafter defined. In the performance of these
duties, you shall be guided by the requirements of this agreement (the
"Agreement"), the applicable provisions of the Trust's Amended and Restated
Agreement and Declaration of Trust and its By-Laws and applicable federal and
state law, all as amended from time to time, and the Trust's then-current
Prospectuses and Statements of Additional Information, which are from time to
time in effect under the Trust's Registration Statement filed with the
Securities and Exchange Commission (the "SEC") under the Securities Act of 1933,
as amended (the "1933 Act"), and the 1940 Act. During the term of this
Agreement, you will use your best efforts to solicit or otherwise cause sales of
the Trust's shares in jurisdictions in which such shares are registered or
qualified for sale. You shall have the right to enter into Service Agreements,
in an appropriate form and consistent with this Agreement and the 1940 Act, with
certain securities dealers, financial institutions or other industry
professionals (severally, a "Service Organization") for distribution and
promotion of, administration of, and servicing investors in, the Trust's shares.
NYDOCS01/479823 21
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2
SECTION 2. Dealers and Service Organizations.
----------------------------------
You may solicit qualified dealers for orders to purchase
shares of the Trust and may enter into dealer agreements with any such dealers,
the form thereof to be mutually agreed upon and approved by the Trust and you.
SECTION 3. Sales Literature and Advertisements.
------------------------------------
All sales literature and advertisements used by you in
connection with the sale of the Trust's shares must be submitted to the Trust
for its advance approval. In connection with the sale or arranging for the sale
of the Trust's shares, you are authorized to give only such information and to
make only such statements or representations as are contained in the Trust's
then-current Prospectuses and Statements of Additional Information or in sales
literature or advertisements approved by the Trust.
SECTION 4. Minimum Initial and Subsequent Investments in the Trust
-------------------------------------------------------
by Shareholders.
----------------
You shall not accept any initial investment in any series of
the Trust of less than $1,000, nor any subsequent investment in any of the
series of less than $100, except that in the case of fiduciary accounts or
qualifying group plans, as defined in the Trust's then-current Prospectuses and
Statements of Additional Information, the minimum initial investment is $250 and
there is no minimum subsequent investment. The Board of Trustees of the Trust
(the "Board") may modify or eliminate either or both of such investment
limitations, on written notice to you. Securities dealers who forward
investments may establish minimums in excess of these amounts.
SECTION 5. Offering Price; Net Asset Value Per Share.
------------------------------------------
All of the shares of the Trust sold under this Agreement shall
be sold only at the price in effect at the time of such sale ("Offering Price"),
as described in the Trust's then-current Prospectuses and Statements of
Additional Information, and the Trust shall receive not less than the full net
asset value thereof. The difference between (i) the Offering Price and net asset
value, if any (the front-end sales charge), and (ii) any Contingent Deferred
Sales Charge ("CDSC") payable on redemptions of shares of the Trust in
accordance with its then-current Prospectuses and Statements of Additional
Information, shall be retained by you or paid over to you by the Trust, as the
case may be, it being understood that such amounts will not exceed the maximum
sales commission or CDSC, as the case may be, as set forth in the Trust's
then-current Prospectuses or Statements of Additional Information. You may
re-allow to dealers all or any part of the discount you are allowed.
Shares of each series will be offered at their respective
Offering Prices. Any references herein to "net asset value per share" shall
refer to the net asset value per share
NYDOCS01/479823 21
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3
computed separately for each series or separate class of a series in accordance
with the Amended and Restated Agreement and Declaration of Trust, the
Prospectuses and Statements of Additional Information and the instructions of
the Board, all as revised or amended from time to time. The Trust or its
investment manager, Zweig/Glaser Advisers or any affiliated successor investment
manager (the "Manager"), will advise you as promptly as practicable of the net
asset value per share for each series or class of such series on each day that
it is determined.
SECTION 6. Duties Upon Sale of Shares of the Trust.
----------------------------------------
You shall remit to the custodian of the Trust all proceeds
from any shares of the Trust sold by you. The Trust will, as promptly as
practicable, cause the unissued certificate account of the purchaser of such
shares to be credited with the number of shares purchased or, upon request, will
cause certificates for the shares so purchased to be delivered to you or the
purchaser, or the nominee of either, in such amounts and in such names as shall
be specified by you.
You shall reimburse the Trust for any loss caused to any
series of the Trust by the failure of a shareholder to confirm in writing any
purchase accepted by you. In the event that orders for the purchase of shares of
the Trust are placed and subsequently cancelled, you shall pay to the Trust, on
at least an annual basis, an amount equal to the losses (net of any gains)
realized by any series of the Trust as a result of such cancellations.
SECTION 7. Transactional Services.
-----------------------
In addition to your duties as Distributor, we understand that
you may, in your discretion, perform additional functions in connection with
transactions of Trust shares but without any additional charge by you to the
Trust other than as specified in this Agreement or the Trust's Rule 12b-1
Distribution Plan(s).
You may process or cause to be processed requests received
from your customers in connection with their purchase, redemption or submission
for repurchase of shares of any series, in the manner prescribed from time to
time by the Board, and shall arrange for payment for such shares to or from the
Trust's account with its custodian. Shares shall be redeemed at their net asset
value per share next computed after receipt of the redemption request by you,
and a CDSC, if applicable, as described above in Section 5, shall be imposed on
such redemptions, as set forth in the Trust's then-current Prospectuses and
Statements of Additional Information (and subject to the exceptions set forth
therein). Any share certificates delivered to you in proper form for redemption
or repurchase shall be deposited with the transfer agent for cancellation.
The processing of Trust transactions may include, but is not
limited to: compilation of all share transactions from your office;
communication with your account executives in connection with the execution of
transactions; recording and reporting of these
NYDOCS01/479823 21
<PAGE>
4
transactions as executed by the Trust's transfer agent in your customer
statements; rendering of periodic customer statements; and the reporting of 1099
information at year end.
You may also provide other shareholder services, such as
communicating with Trust shareholders and other functions in administering
customer accounts for Trust shareholders. We understand that these services may
result in cost savings to the Trust or to the Manager, and the Manager may
compensate you for all or a portion of the costs incurred in performing such
functions on behalf of the Trust. Nothing herein is intended, nor shall be
construed, as requiring you to perform any of the foregoing functions and none
of these functions performed by you shall be deemed distribution services.
SECTION 8. Information Relating to the Trust.
----------------------------------
The Trust will keep you fully informed with regard to its
affairs, and will furnish you with a certified copy of all financial statements
and a signed copy of each report prepared by independent public accountants, and
will cooperate fully with you in your efforts to sell the Trust's shares, and in
the performance by you of all your duties under this Agreement.
SECTION 9. Filing of Registration Statements, etc.
---------------------------------------
The Trust will from time to time file (and furnish you with
copies of) such registration statements, amendments thereto, and reports or
other documents as may be required under the 1933 Act, the 1940 Act, or the laws
of the states in which you desire to sell Trust shares.
SECTION 10. Multiple Capacities.
--------------------
Nothing contained in this Agreement shall be deemed to
prohibit you from acting, and being separately compensated for acting, in one or
more capacities on behalf of the Trust, including, but not limited to, the
capacities of investment manager, broker and distributor. The Trust understands
that you may act in one or more such capacities on behalf of other investment
companies and customers. You shall give the Trust equitable treatment under the
circumstances in supplying services in any capacity, but the Trust recognizes
that it is not entitled to receive preferential treatment from you as compared
with the treatment given to any other investment company or customer. Whenever
you shall act in multiple capacities on behalf of the Trust, you shall maintain
the appropriate separate accounts and records for each such capacity.
SECTION 11. Payment of Fees and Expenses.
-----------------------------
(a) For your services as Distributor, you shall receive the
fees in accordance with the plans adopted by each series (or class of a series)
of the Trust pursuant to Rule 12b-1 under the 1940 Act, and the fees set forth
herein or in the Trust's Prospectuses and Statements of Additional Information.
The Trust will pay you in consideration of your services in connection
NYDOCS01/479823 21
<PAGE>
5
with the distribution of Class B Shares of any series your "Allocable Portion",
as hereinafter defined, of the distribution fee allowable under the Rules of
Conduct of NASD Regulation, Inc. (the "Rules of Conduct") in respect of such
Class B Shares of such series consisting of a distribution fee at the rate of
three quarters of one percent (0.75%) per annum of the average daily net assets
of the Class B Shares of such series of the Trust (the "Distribution Fee"). For
purposes of applying the limitation set forth in the Rules of Conduct on the
maximum amount of the Distribution Fee payable in respect of the Class B and
Class C Shares of any series, the Trust hereby elects to add to six and one
quarter percent (6.25%) of the issue price of the Class B Shares or Class C
Shares, as the case may be, interest thereon at the rate of prime plus one
percent per annum. The Distribution Fee shall be calculated and accrued daily
and shall be paid to you, or at your direction, as soon as practicable after the
end of the calendar month in which it accrues, but in any event not later than
10 days after the end of each such month.
(b) For your services as Distributor of the Trust's shares,
you shall also receive the proceeds of any front-end sales charges or CDSCs
referred to in Section 5 hereof. The Trust shall withhold and pay over to you,
or at your direction, on the date redemption proceeds are paid to a Class B or
Class C Shareholder of the Trust, your Allocable Portion of the CDSC, if any,
applicable to such redemption.
(c) Furthermore, the Trust shall assume and pay, or reimburse
you for, expenses of preparing and printing quarterly, semiannual and annual
reports for distribution to the Trust's then existing shareholders, of
maintaining current prospectuses and statements of additional information, of
qualification of the Trust's shares for sale in various jurisdictions and of
preparing and printing prospectuses and statements of additional information for
distribution to the Trust's then existing shareholders. You shall pay, directly
or by reimbursing the Trust, the expenses of preparing, printing and
distributing all sales literature of the Trust, including printing and
distributing prospectuses required for your purposes, except to the extent
payable by the Trust in accordance with the terms of an effective plan pursuant
to Rule 12b-1 under the 1940 Act.
(d) You will be deemed to have fully earned your Allocable
Portion of the Distribution Fee and CDSC, if any (as the case may be), payable
in respect of Class B Shares of any series upon the sale of each "Initial Issue
Commission Share" (as hereinafter defined) of such Class B of such series taken
into account in determining your Allocable Portion of such Distribution Fee or
CDSC, if any, as the case may be.
(e) Except as provided in (f) below and notwithstanding
anything to the contrary set forth elsewhere in this Agreement, the Trust's
obligation to pay you your Allocable Portion of the Distribution Fee payable in
respect of the Class B Shares of each series shall be (to the extent you have
assigned your rights to your Allocable Portion) absolute and unconditional and
shall not be subject to dispute, offset, counterclaim or any defense whatsoever
(it being understood that such provision is not a waiver of the Trust's right to
pursue you and enforce such
NYDOCS01/479823 21
<PAGE>
6
claims against your assets other than your right to the Distribution Fees and
CDSCs in respect of the Class B Shares of such series).
(f) The Trust's obligation to pay you your Allocable Portion
of the Distribution Fee payable in respect of the Class B Shares of each series
shall not be terminated or modified except to the extent required by a change in
the 1940 Act or the Rules of Conduct enacted or promulgated after January 31,
1996 (a "Change-in-Applicable Law"), or in connection with a "Complete
Termination" (as hereinafter defined) of the Rule 12b-1 distribution plan in
respect of the Class B Shares of such series.
(g) The Trust will not waive or change any CDSC in respect of
the Class B Shares of any series, except as provided in the Trust's Prospectuses
or Statements of Additional Information without your consent (or consent of your
assigns).
(h) Except to the extent required by a
Change-in-Applicable-Law, neither the termination of your role as principal
distributor of the Class B Shares of any series, nor the termination of this
Agreement nor the termination (other than a "Complete Termination," as
hereinafter defined) of the Rule 12b-1 distribution plan with respect to the
Class B Shares will terminate your right to your Allocable Portion of the CDSCs
in respect of the Class B Shares of such series that are sold prior to such
termination.
(i) Except as provided in the Trust's then-current
Prospectuses and Statements of Additional Information, until you have been paid
your Allocable Portion of the Distribution Fees in respect of the Class B Shares
of each series, the Trust will not adopt a plan of liquidation in respect of
such series without your consent (or the consent of your assigns), which consent
will not be unreasonably withheld.
(j) You may sell and assign your rights to your Allocable
Portion of the Distribution Fees and CDSCs (but not your obligations to the
Trust under this Distribution Agreement) in respect of the Class B Shares of any
series to raise funds to make the expenditures related to the distribution of
Class B Shares of such series and in connection therewith, upon receipt of
notice of such sale and assignment, the Trust shall pay to the purchaser or
assignee such portion of your Allocable Portion of the Distribution Fees and
CDSCs in respect of the Class B Shares of such series so sold or assigned.
(k) For purposes of this Agreement, the term "Allocable
Portion" means, in respect of Distribution Fees and CDSCs payable in respect of
the Class B Shares of any series as applied to you, the portion of such
Distribution Fees allocated to you in accordance with the Allocation Schedule
attached hereto as Exhibit A.
(l) For purposes of this Agreement, the term "Complete
Termination" means, in respect of the Rule 12b-1 distribution plan in respect of
the Class B Shares of any series, a
NYDOCS01/479823 21
<PAGE>
7
termination of such plan involving the cessation of payments of Distribution
Fees thereunder in respect of Class B Shares of such series and the cessation in
payments of distribution fees pursuant to every other Rule 12b-1 plan of the
Trust in respect of such series for every future class of shares of such series
which, in the good faith determination of the Board of Trustees, has
substantially similar economic characteristics to the Class B Shares taking into
account the total sales charge, contingent deferred sales charge and other
similar charges, it being understood that the existing Class A, existing Class
C, existing Class I and existing Class M Shares do not have substantially
similar economic characteristics to the Class B Shares.
(m) For purposes of paragraph (d) above, the term "Initial
Issue Commission Share" shall mean, in respect of any series, a Class B Share
which is a Commission Share issued by such series under circumstances other than
in connection with a permitted free exchange with another fund. For purposes of
the foregoing definition a "Commission Share" shall mean, in respect of any
series, each Class B Share of such series which is issued under circumstances
which would normally give rise to an obligation of the holder of such Class B
Share to pay a CDSC upon redemption of such Share, including, without
limitation, any Class B Share of such series issued in connection with a
permitted free exchange as set forth in the Trust's then current Prospectuses
and Statements of Additional Information ("Permitted Free Exchange"), and any
such Class B Share shall not cease to be a Commission Share prior to the
redemption (including a redemption in connection with a Permitted Free Exchange)
or conversion even though the obligation to pay the CDSC shall have expired or
conditions for waivers thereof shall exist.
SECTION 12. Liability of the Distributor, etc.
----------------------------------
You shall be liable for your own acts and omissions caused by
your willful misfeasance, bad faith or gross negligence in the performance of
your duties or by your reckless disregard of your obligations under this
Agreement, and nothing herein shall protect you against any such liability to
the Trust or its shareholders. Subject to the first sentence of this Section,
you shall not be liable for any action taken or omitted on advice, obtained in
good faith, of counsel, provided such counsel is satisfactory to the Trust.
SECTION 13. Use of Word "Phoenix" or "Zweig" in Name of Trust.
--------------------------------------------------
(a) The Trust and you each acknowledge that the name "Zweig"
has become distinctive in connection with investment advisory and related
services provided by Dr. Martin E. Zweig ("MEZ"), the word "Zweig" is a property
right of MEZ and the word "Zweig" (the "Name") in the name of the Trust is
understood to be used by the Trust with MEZ's consent, and MEZ had previously
granted to the Trust a non-exclusive license to use the name "Zweig Series
Trust" upon the conditions hereinafter set forth; provided that, except as
otherwise provided in Section 13(b), the Trust may use the Name only so long as
(i) the Manager shall continue to be retained by the Trust as its investment
manager pursuant to an investment management
NYDOCS01/479823 21
<PAGE>
8
agreement between the Trust and the Manager, as from time to time amended or
supplemented, and (ii) MEZ shall continue to be affiliated in a managerial
capacity with the Manager.
(b) In the event that MEZ ceases to be affiliated in a
managerial capacity with the Manager other than by reason of his death (the
"Resignation"), and if at the time of such Resignation, the Manager and/or the
Distributor shall be party to the Purchase and Sale Agreement dated as of March
15, 1996 among the Distributor, Citibank, N.A. and Citicorp North America, Inc.
(the "1996 Agreement"), as amended or otherwise modified from time to time, or
any other agreement entered into by the Manager and/or the Distributor in
connection with any financing with respect to any shares of the Trust or any
successor agreement containing provisions relating to the use of the Name
substantially similar to the provisions in the 1996 Agreement regarding the Name
(the 1996 Agreement, as amended, and each such other agreement and successor
agreement, as amended or otherwise modified from time to time, being called a
"Share Financing Agreement"), then in such event until (i) the expiration of ten
years following the Resignation, (ii) 180 days after the death of MEZ, or (iii)
all obligations of the Manager and/or the Distributor under any Share Financing
Agreement are extinguished, whichever date first occurs, MEZ granted the Trust a
royalty-free, paid up non-exclusive license to use the Name in connection with
the activities of the Trust in the manner used immediately prior to the
Resignation, provided and on condition that:
(i) The quality and manner of the services rendered by the
Trust to its investors shall be substantially consistent with such services
immediately prior to the Resignation;
(ii) The Trust shall not use the Name in a manner
substantially different from the use of the Name immediately prior to the
Resignation; and
(iii) Upon written request from MEZ, each use of the Name on
any document created thereafter shall be accompanied by the service mark of
Zweig.
(c) Phoenix Investment Partners, Ltd. ("Phoenix") has entered
into an Acquisition Agreement date December 15, 1998 to acquire Zweig/Glaser
Advisers (the Trust's Manager), Zweig Securities Corp. (the Trust's prior
principal underwriter and distributor), Euclid Advisors LLC, Zweig Advisors
Inc., and Zweig Total Return Advisors, Inc. In connection with the Acquisition
Agreement, MEZ will enter into a License Agreement to permit Phoenix to use the
Name. Phoenix also desires that the Trust use the "Phoenix" name and has
requested that the Trust change its name to "Phoenix-Zweig Series Trust" and the
Trust has agreed to such name change.
(d) Any such use by the Trust pursuant to Section 13(a), (b)
or (c) shall in no way prevent you, MEZ or Phoenix or any successor or assign of
you, MEZ or Phoenix from using or permitting the use of the Name or the name
"Phoenix-Zweig" alone or with any other
NYDOCS01/479823 21
<PAGE>
9
word or words, for, by or in connection with any other entity or business, other
than the Trust or its business, whether or not the same directly or indirectly
competes or conflicts with the Trust or its business in any manner. The Trust
and you each acknowledge that the Trust shall use the name "Phoenix-Zweig", for
the period set forth in this Section 13, in a manner not inconsistent with the
interests of MEZ or Phoenix and that the Trust's rights in the name
"Phoenix-Zweig" are limited to the use of the name "Phoenix-Zweig" as a
component of its corporate name and in connection with accurately describing the
services supplied by the Trust. The Trust acknowledges that the name "Phoenix "
and "Zweig" are not the property of the Trust and the Trust shall not contest
the rights of MEZ or Phoenix in the right, title or interest in the names
"Phoenix" or "Zweig". To the extent permitted by the 1940 Act and rules and
regulations thereunder, and more particularly Investment Company Act Release No.
5510, in the event that the Manager shall cease to be the investment manager of
the Trust, the Trust, at its own expense, upon Phoenix's or your written
request, (i) shall submit to the Board for their vote a proposal to amend its
Declaration of Trust to delete from its name the name "Phoenix-Zweig" and shall
thereafter cease to use the name "Phoenix-Zweig" or any combination thereof as
part of its name or for any other commercial purpose, provided that such
submission and cessation shall not be required to the extent and for the period
of time that the terms and conditions of Section 13(b) shall be applicable, (ii)
shall make it clear for such period and in such manner as may reasonably be
required by Phoenix or you, on all letterheads and other material containing the
name "Phoenix-Zweig" designed to be read or used by salesmen, distributors or
investors, that the Manager has ceased to be the investment manager of the
Trust, and (iii) shall use its best efforts to cause the Trust's officers,
trustees and shareholders to take any and all actions which may be necessary or
desirable to effect the foregoing and to reconvey to Phoenix all rights which
the Trust may have to the name "Phoenix-Zweig". The Distributor and Trust agree
that they shall take any and all actions as may be necessary or desirable to
effect the foregoing.
SECTION 14. Termination of Agreement, Assignment, etc.
------------------------------------------
This Agreement may be terminated with respect to the Trust at
any time, without the payment of any penalty, on sixty days' written notice (i)
by you; (ii) by the Trust, acting pursuant to a resolution adopted by the Board;
or (iii) by a vote of the holders of the lesser of (1) 67% of the Trust's
outstanding voting securities present at a meeting if the holders of more than
50% of the outstanding shares of the Trust are present or represented by proxy,
or (2) more than 50% of the outstanding shares of the Trust. This Agreement
shall automatically terminate in the event of its assignment; provided, however,
that this Agreement has been approved by the Board and the Disinterested
Trustees of the Board in anticipation of your transfer of the Allocable Portion
in order for you to raise funds to cover distribution expenses associated with
Class B Shares and therefore such transfer will not cause this Agreement to
terminate. Termination shall not affect the rights of the parties which have
accrued prior thereto, including, without limitation, your right to be paid your
Allocable Portion as provided in Section 11 hereof (subject to the limitations
therein set forth).
NYDOCS01/479823 21
<PAGE>
10
SECTION 15. Duration of Agreement.
----------------------
Unless sooner terminated, this Agreement shall continue in
effect for two years from the date of the consummation of the acquisition of
Zweig Securities Corp. by Phoenix Investment Partners, Ltd., and thereafter
until terminated, provided that such continuation of this Agreement and the
terms thereof are specifically approved annually in accordance with the
requirements of the 1940 Act by a majority of the Trustees, including a majority
of the Trustees who are not interested persons of you or of the Trust, cast in
person at a meeting called for the purpose of voting on such approval.
SECTION 16. Definitions.
------------
The terms "assignment" and "interested person" when used in
this Agreement shall have the meanings given such terms in the 1940 Act and the
rules and regulations promulgated thereunder.
SECTION 17. Obligation of the Trust,etc
---------------------------
The Trust's Amended and Restated Agreement and Declaration of
Trust is on file with the Secretary of the State of Delaware and notice is
hereby given that this Agreement is made and executed on behalf of the Trust,
and not by the Trustees or officers of the Trust individually, and the
obligations of or arising out of this Agreement are not binding upon the
Trustees, officers or shareholders of the Trust individually but are binding
only upon the assets and property of the Trust. Notice is hereby given that the
debts, liabilities, obligations and expenses incurred, contracted for or
otherwise existing with respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and not against the assets
of the Trust generally.
SECTION 18. Counterparts.
-------------
This Agreement may be executed by any one or more of the
parties in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
SECTION 19. Concerning Applicable Provisions of Law, etc.
---------------------------------------------
This Agreement is executed and delivered in New York, New
York, and the laws of the State of New York shall, except to the extent that any
applicable provisions of Federal law shall be controlling, govern the
construction, validity and effect of this Agreement.
NYDOCS01/479823 21
<PAGE>
11
If the Agreement set forth herein is acceptable to you, please
so indicate by executing the enclosed copy of this Agreement and returning the
same to the undersigned, whereupon this contract shall constitute a binding
contract between the parties hereto effective upon the closing of the
acquisition of Zweig/Glaser Advisers by Phoenix Investment Partners, Ltd., and
after its initial approval by the Board of Trustees and shareholders in
accordance with the 1940 Act.
Very truly yours,
PHOENIX-ZWEIG TRUST
By: /s/Eugene J. Glaser
------------------------------
Name: Eugene J. Glaser
Title: Chairman
Accepted and agreed by
PHOENIX EQUITY PLANNING CORPORATION
By: /s/William R. Moyer
------------------------------------
Name: William R. Moyer
Title: Senior Vice President & CFO
The undersigned hereby agrees and consents to the use of the name
"Phoenix-Zweig" upon the terms and conditions set forth in Section 13 of the
foregoing Distribution Agreement.
PHOENIX INVESTMENT PARTNERS, LTD.
By: /s/William R. Moyer
------------------------------------
Name: William R. Moyer
Title: Senior Vice President & CFO
ZWEIG/GLASER ADVISERS
By: /s/Charles I. Leone
------------------------------------
Name: Charles I. Leone
Title: First Vice President & CFO
NYDOCS01/479823 21
Exhibit j.1
Consent of Independent Accountants
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Post-Effective
Amendment No. 48 to the registration statement on Form N-1A (Securities Act File
No. 2-93538 and Investment Company Act File No. 811-04116) of our report dated
January 25, 1999, relating to the financial statements and financial highlights
appearing in the December 31, 1998 annual report to shareholders of Zweig Series
Trust (constituting 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), which is also incorporated by reference
into the registration statement.
We also consent to the reference to our firm under the captions "Financial
Highlights" in the prospectus and "Independent Accountants" in the statement of
additional information.
/s/PricewaterhouseCoopers LLP
Pricewaterhouse Coopers LLP
New York, New York
April 29, 1999
Exhibit 15
Distribution Plan
Pursuant to Rule 12b-1
<PAGE>
PHOENIX-ZWEIG TRUST
Class A Shares and Class C Shares
RULE 12b-1 DISTRIBUTION PLAN
----------------------------
As amended and restated
As of March 1, 1999
This distribution plan (the "Rule 12b-1 Distribution Plan" or
the "Plan") has been adopted by the Class A Shares and Class C Shares of
Phoenix-Zweig Strategy Fund, Phoenix-Zweig Appreciation Fund, Phoenix-Zweig
Growth & Income Fund, Phoenix-Zweig Managed Assets, Phoenix-Zweig Foreign Equity
Fund, Phoenix-Zweig Government Fund and Phoenix-Zweig Government Cash Fund, each
of which is a series of Phoenix-Zweig Trust (the "Trust"), a Delaware business
trust, and is restated effective March 1, 1999, pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act").
W H E R E A S:
The Trust is an open-end management investment company and is
registered as such under the Act. The Trust has the above listed series which
are currently being offered, and the Board of Trustees may establish and offer
additional series in the future. Each series has a multi-class distribution
system that allows each series to offer investors the option of purchasing
shares either subject to a front-end sales charge coupled with a Rule 12b-1 Plan
fee (except for the Phoenix-Zweig Government Cash Fund, which is offered without
the imposition of a front-end sales charge) (the "Class A Shares"), or subject
to a contingent deferred sales charge, a Rule 12b-1 Plan fee and a service fee
(the "Class C Shares"). This Plan governs only the Class A Shares and Class C
Shares of each series of the Trust. The Trust currently distributes its shares
of capital stock through a contractual arrangement (the "Distribution
Agreement") with a principal distributor (the "Principal Distributor") duly
qualified to act on behalf of the Trust in such capacity.
The Board of Trustees, including a majority of the Qualified
Trustees (as defined in paragraph 6 herein), has determined to amend such Plan
to make certain clarifying changes therein. In voting to continue such Plan, the
Trustees have determined, in the exercise of their reasonable business judgment
and in light of their fiduciary duty, that there is a reasonable likelihood that
this Plan will benefit the Class A Shares and Class C Shares of each respective
series of the Trust with respect to which this Plan will be effective and its
shareholders.
NOW, THEREFORE, in consideration of the foregoing, the Trust
hereby adopts this Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
NYDOCS01/324376 3
<PAGE>
1. The Trust shall pay to the Principal Distributor as the
distributor of Class A Shares of each series of shares of beneficial interest of
the Trust a fee at the rate of .30 of 1% per annum of the average daily net
asset value of the Class A Shares of each series of the Trust. If at any time
this Plan shall not be in effect with respect to the Class A Shares of all
series, the above fee shall be calculated on the basis of the net assets of
Class A Shares of those series for which the Plan is in effect. The fee shall be
calculated and accrued daily and paid monthly or at such other intervals as the
Board of Trustees shall determine.
2. The Trust shall pay to the Principal Distributor as the
distributor of Class C Shares of Phoenix-Zweig Strategy Fund, Phoenix-Zweig
Appreciation Fund, Phoenix-Zweig Growth & Income Fund, Phoenix-Zweig Managed
Assets and Phoenix-Zweig Foreign Equity Fund a distribution fee at the rate of
1% per annum of the average daily net assets of the Class C Shares of each such
series of the Trust. Class C Shares of Phoenix-Zweig Government Fund and
Phoenix-Zweig Government Cash Fund will pay a distribution fee to the
Distributor at the rate of .75 of 1% per annum and .30 of 1% per annum,
respectively, of the average daily net assets of each such series. The fee for
all such payments made to the Distributor under this paragraph includes a
service fee of .25 of 1% per annum of the average daily net assets of the Class
C Shares of each series. The fee is paid to financial services firms including
National Association of Securities Dealers, Inc. ("NASD") member firms
(commencing one year after purchase with respect to Class C Shares) for
continuous personal service by such firms to investors in such Class C Shares.
If at any time this Plan shall not be in effect with respect to the Class C
Shares of all series, the above fees shall be calculated on the basis of the net
assets of Class C Shares of those series for which the Plan is in effect. The
fees shall be calculated and accrued daily and paid monthly or at such other
intervals as the Board of Trustees shall determine.
3. The amounts set forth in paragraphs 1 and 2 of this Plan
shall be paid for the Principal Distributor's services and expenses as
distributor of the Class A Shares and Class C Shares of the Trust and may be
spent by the Principal Distributor, in its discretion, on, among other things,
compensation to and expenses (including overhead and telephone expenses) of
account executives or other employees of the Principal Distributor or of other
broker-dealers who engage in or support distribution of shares; printing of
prospectuses and reports for other than existing shareholders; advertising;
preparation, printing and distribution of sales literature; and allowances to
other broker-dealers. In addition, whether or not required to be provided for in
a Rule 12b-1 plan, to the extent approved by the shareholders of a particular
class or series and the Board of Trustees of the Trust, a class or series may
pay or reimburse the Principal Distributor and others for all of its
organizational and initial offering expenses. Such amounts are in addition to
and not limited by the amounts as set forth in paragraphs 1 and 2 herein.
4. This Plan shall not take effect with respect to the Class A
Shares of a series until it has been approved by a vote of at least a majority
(as defined in the Act) of the outstanding voting securities of Class A Shares
of the series. With respect to the submission of this Plan for such a vote, it
shall have been effectively approved with respect to Class A Shares of any
series if a majority of the outstanding voting securities of Class A Shares of
that series votes for the approval of this Plan, notwithstanding that: (1) this
Plan has not been approved by
NYDOCS01/324376 3 2
<PAGE>
a majority of the outstanding voting securities of Class A Shares of any other
series, or (2) the matter has not been approved by a majority of the outstanding
voting securities of Class A Shares of the Trust.
5. This Plan shall not take effect with respect to the Class C
Shares of a series until it has been approved by a vote of at least a majority
(as defined in the Act) of the outstanding voting securities of Class C Shares
of the series. With respect to the submission of this Plan for such a vote, it
shall have been effectively approved with respect to Class C Shares of any
series if a majority of the outstanding voting securities of Class C Shares of
that series votes for the approval of this Plan, notwithstanding that: (1) this
Plan has not been approved by a majority of the outstanding voting securities of
Class C Shares of any other series, or (2) the matter has not been approved by a
majority of the outstanding voting securities of Class C Shares of the Trust.
6. This Plan shall not become effective with respect to the
Class A Shares or Class C Shares of a series without the approval, together with
the approval of any related agreements, of a majority vote of both (i) the Board
of Trustees and (ii) those Trustees who are not "interested persons" of the
Trust (as defined in the Act) and have no direct or indirect financial interest
in the operation of this Plan or any agreements related to it (the "Qualified
Trustees"), cast in person at a meeting called for the purpose of voting on this
Plan and such related agreements.
7. This Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 6 herein.
8. In each year that this Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Trust
pursuant to this Plan or any related agreement shall prepare and furnish to the
Board and the Board shall review, at least quarterly, written reports, complying
with the requirements of Rule 12b-1 under the Act, of the amounts expended under
this Plan and purposes for which such expenditures were made.
9. This Plan may be terminated at any time with respect to the
Class A Shares of any series by a majority vote of the Qualified Trustees or by
vote of a majority of the outstanding voting securities of Class A Shares of
that series. This Plan may remain in effect with respect to the Class A Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
10. This Plan may be terminated at any time with respect to
the Class C Shares of any series by a majority vote of the Qualified Trustees or
by vote of a majority of the outstanding voting securities of Class C Shares of
that series. This Plan may remain in effect with respect to the Class C Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
NYDOCS01/324376 3 3
<PAGE>
11. This Plan may not be amended in order to increase
materially the amount of distribution expenses provided for in paragraphs 1 and
2 herein unless such amendment is approved in the manner provided in paragraphs
4 and 5 herein, and no material amendment to this Plan shall be made unless
approved in the manner provided in paragraph 6 herein.
12. While this Plan shall be in effect, the selection and
nomination of Trustees who are not interested persons of the Trust (as defined
in the Act) shall be committed to the discretion of the Trustees then in office
who are not interested persons of the Trust.
The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 8 herein, for a period of
not less than six years from the date of this Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
The Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Delaware and notice is hereby given that this
Plan is adopted on behalf of the Trust, and not by the Trustees or officers of
the Trust individually, and the obligations of or arising out of this Plan are
not binding upon the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
Notice is hereby given that the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series of the Trust shall be enforceable against the assets of such series only,
and not against the assets of the Trust generally.
Date: March 1, 1999
NYDOCS01/324376 3 4
<PAGE>
PHOENIX-ZWEIG TRUST
Class B Shares
RULE 12b-1 DISTRIBUTION PLAN
----------------------------
As amended and restated
As of March 1, 1999
This distribution plan (the "Rule 12b-1 Distribution Plan" or
the "Plan") has been adopted by the Class B Shares of Phoenix-Zweig Strategy
Fund, Phoenix-Zweig Appreciation Fund, Phoenix-Zweig Growth & Income Fund,
Phoenix-Zweig Managed Assets, Phoenix-Zweig Foreign Equity Fund, Phoenix-Zweig
Government Fund and Phoenix-Zweig Government Cash Fund, each of which is a
series of Phoenix-Zweig Trust (the "Trust"), a Delaware business trust, and is
restated effective March 1, 1999, pursuant to Rule 12b-1 under the Investment
Company Act of 1940, as amended (the "Act").
W H E R E A S:
The Trust is an open-end management investment company and is
registered as such under the Act. The Trust has the above listed series which
are currently being offered, and the Board of Trustees may establish and offer
additional series in the future. Each series has a multi-class distribution
system that allows each series to offer investors the option of purchasing
shares either subject to a front-end sales charge (which may be reduced or
waived under certain circumstances as described in the Trust's Prospectus)
coupled with a Rule 12b-1 Plan distribution fee (except for the Phoenix-Zweig
Government Cash Fund, which is offered without the imposition of a front-end
sales charge) (the "Class A Shares"), subject to a declining contingent deferred
sales charge (if sold within six years after purchase), a Rule 12b-1 Plan
distribution fee and a service fee (the "Class B Shares") or subject to a
contingent deferred sales charge (if sold within one year after purchase), a
Rule 12b-1 Plan distribution fee and a service fee (the "Class C Shares").
Phoenix-Zweig Government Cash Fund offers investors the option of purchasing a
fourth class of shares. This Plan, however, governs only the Class B Shares of
each series of the Trust. The Trust may, from time to time, distribute shares of
any class of any series through a contractual arrangement (the "Distribution
Agreement") with a principal distributor for such class of shares of such series
duly qualified to act on behalf of the Trust in such capacity (any such
principal distributor, the "Principal Distributor"), it being understood that
the Trust may change the Principal Distributor for any class of shares of any
series from time to time. The Board of Trustees, including a majority of the
Qualified Trustees (as defined in paragraph 5 herein), has determined to adopt
the Plan. In voting to approve the Plan, the Trustees have determined, in the
exercise of their reasonable business judgment and in light of their fiduciary
duty, that there is a reasonable likelihood that this Plan will benefit the
Class B Shares of each respective series of the Trust with respect to which this
Plan will be effective and its shareholders.
NYDOCS01/403871 2
<PAGE>
2
NOW, THEREFORE, in consideration of the foregoing, the Trust
hereby adopts this Plan in accordance with Rule 12b-1 under the Act on the
following terms and conditions:
1. The Trust shall pay to each Principal Distributor of Class
B Shares of any series its "Allocable Portion," as hereinafter defined, of the
distribution fee allowable under the Rules of Conduct of NASD Regulation, Inc.
(the "Rules of Conduct") in respect of such Class of Shares of such series,
consisting of a distribution fee at the rate of three quarters of one percent
(0.75%) per annum of the average daily net assets of such Class of Shares (the
"Distribution Fee") and a service fee at the rate of one quarter of one percent
(0.25%) of the average daily net assets of such Class of Shares of such series
of the Trust (as described in the Prospectus). For purposes of applying the
limitation set forth in the Rules of Conduct on the maximum amount of the
Distribution Fee payable in respect of the Class B Shares of any series, the
Trust hereby elects to add to six and one quarter percent (6.25%) of the issue
price of the Class B Shares interest thereon at the rate of prime plus one
percent per annum. A contingent deferred sales charge ("CDSC") also shall be
payable by the holders of Class B Shares in the case of early redemption of such
Class B Shares (as described in the Prospectus).
2. The amounts set forth in paragraph 1 of this Plan shall be
paid for the Principal Distributor's services and expenses as distributor of the
Class B Shares of the Trust and may be spent by the Principal Distributor, in
its discretion, on, among other things, compensation to and expenses (including
overhead and telephone expenses) of account executives or other employees of the
Principal Distributor or of other broker-dealers who engage in or support
distribution of shares; printing of prospectuses and reports for other than
existing shareholders; advertising; preparation, printing and distribution of
sales literature; and allowances to other broker-dealers. In addition, whether
or not required to be provided for in this Rule 12b-1 Distribution Plan, to the
extent approved by the shareholders of a particular series and the Board of
Trustees of the Trust, the Class B Shares or a series may pay or reimburse the
Principal Distributor and others for all of its organizational and initial
offering expenses. Such amounts are in addition to and not limited by the
amounts as set forth in paragraph 1 herein.
3. Any Distribution Agreement in respect of Class B Shares of
any series may provide that: (I) the Principal Distributor in respect of such
Distribution Agreement will be deemed to have fully earned its Allocable Portion
of the Distribution Fee payable in respect of Class B Shares of such series upon
the sale of each "Initial Issue Commission Share" (as hereinafter defined) of
such series taken into account in determining such Principal Distributor's
Allocable Portion of such Distribution Fee; (II) except as provided in (III)
below, the Trust's obligation to pay such Principal Distributor its Allocable
Portion of the Distribution Fee payable in respect of the Class B Shares of such
series shall be absolute and unconditional and shall not be subject to dispute,
offset, counterclaim or any defense whatsoever (it being understood that such
provision is not a waiver of the Trust's right to pursue such Principal
Distributor and enforce such claims against the assets of such Principal
Distributor other than its right to the Distribution
NYDOCS01/403871 2
<PAGE>
3
Fees and CDSCs in respect of the Class B Shares of such series); (III) the
Trust's obligation to pay such Principal Distributor its Allocable Portion of
the Distribution Fee payable in respect of the Class B Shares of such series
shall not be terminated or modified except to the extent required by a change in
the Act or the Rules of Conduct enacted or promulgated after September 15, 1995
(a "Change-in-Applicable-Law"), or in connection with a "Complete Termination"
(as hereinafter defined) of this Plan in respect of the Class B Shares of such
series; (IV) the Trust will not waive or change any CDSC in respect of the Class
B Shares of such series, except as provided in the Trust's Prospectus or
statement of additional information without the consent of the Principal
Distributor (or its assigns); (V) except to the extent required by a
Change-in-Applicable-Law, neither the termination of such Principal
Distributor's role as principal distributor of the Class B Shares of such
series, nor the termination of such Distribution Agreement nor the termination
of this Plan will terminate such Principal Distributor's right to its Allocable
Portion of the CDSCs in respect of Class B Shares of such series sold prior to
such termination; (VI) except as provided in the Trust's Prospectus and
statement of additional information, until such Principal Distributor has been
paid its Allocable Portion of the Distribution Fees in respect of the Class B
Shares of such series, the Trust will not adopt a plan of liquidation in respect
of such series without the consent of such Principal Distributor (or its
assigns); and (VII) such Principal Distributor may sell and
assign its rights to its Allocable Portion of the Distribution Fees and CDSCs
(but not such Principal Distributor's obligations to the Trust under the
Distribution Agreement) to raise funds to make the expenditures related to the
distribution of Class B Shares of such series and in connection therewith, upon
receipt of notice of such sale and assignment, the Trust shall pay to the
purchaser or assignee such portion of the Principal Distributor's Allocable
Portion of the Distribution Fees in respect of the Class B Shares of such series
so sold or assigned. For purposes of this Plan, the term "Allocable Portion"
means, in respect of Distribution Fees payable in respect of the Class B Shares
of any series as applied to any Principal Distributor, the portion of such
Distribution Fees and CDSCs allocated to such Principal Distributor in
accordance with the Allocation Schedule (as hereinafter defined). For purposes
of this Plan, the term "Complete Termination" of this Plan means, in respect of
any series, a termination of this Plan involving the cessation of payments of
Distribution Fees hereunder in respect of Class B Shares of such series and the
cessation of payments of distribution fees pursuant to every other rule 12b-1
plan of the Trust in respect of such series for every future class of shares
which, in the good faith determination of the Board of Trustees of the Trust,
has substantially similar economic characteristics to the Class B Shares taking
into account the total sales charge, contingent deferred sales charge and other
similar charges, it being understood that the existing Class A Shares and the
existing Class C Shares do not have substantially similar economic
characteristics to the Class B Shares. For purposes of this Plan, the term
"Allocation Schedule" means, in respect of the Class B Shares of any series, a
schedule which shall be approved in the same manner as this Plan as contemplated
by Section 5 hereof for assigning to each Principal Distributor of Class B
Shares of such series the portion of the total Distribution Fees payable by the
Trust in respect of the Class B Shares of such series which has been earned by
such Principal Distributor, which shall be attached to and become a part of any
Distribution Agreement in respect of Class B Shares. For purposes of clause (I)
of the first
NYDOCS01/403871 2
<PAGE>
4
sentence of this Section 3, the term "Initial Issue Commission Share" shall
mean, in respect of any series, a Class B Share which is a Commission Share
issued by such series under circumstances other than in connection with a
permitted free exchange with another fund. For purposes of the foregoing
definition a "Commission Share" shall mean, in respect of any series, each Class
B Share of such series which is issued under circumstances which would normally
give rise to an obligation of the holder of such Class B Share to pay a CDSC
upon redemption of such Share, including, without limitation, any Class B Share
of such Fund issued in connection with a permitted free exchange, and any such
Class B Share shall not cease to be a Commission Share prior to the redemption
(including a redemption in connection with a permitted free exchange) or
conversion even though the obligation to pay the CDSC shall have expired or
conditions for thereof still exist.
4. This Plan shall not take effect until it has been approved
by a vote of at least a majority (as defined in the Act) of the outstanding
voting securities of Class B Shares of the Series. With respect to the
submission of this Plan for such a vote, it shall have been effectively approved
with respect to Class B Shares of any series if a majority of the outstanding
voting securities of Class B Shares of that series votes for the approval of
this Plan, notwithstanding that: (1) this Plan has not been approved by a
majority of the outstanding voting securities of Class B Shares of any other
series, or (2) the matter has not been approved by a majority of the outstanding
voting securities of Class B Shares of the Trust.
5. This Plan shall become effective with respect to the Class
B Shares of a series upon approval, together with any related agreements, by a
majority vote of both (i) the Board of Trustees and (ii) those Trustees who are
not "interested persons" of the Trust (as defined in the Act) and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Qualified Trustees"), cast in person at a meeting called for
the purpose of voting on this Plan and such related agreements.
6. This Plan shall continue in effect for so long as such
continuance is specifically approved at least annually in the manner provided
for approval of this Plan in paragraph 5 herein.
7. In each year that this Plan remains in effect, any person
authorized to direct the disposition of monies paid or payable by the Trust
pursuant to this Plan or any related agreement shall prepare and furnish to the
Board and the Board shall review, at least quarterly, written reports, complying
with the requirements of Rule 12b-1 under the Act, of the amounts expended under
this Plan and purposes for which such expenditures were made.
8. This Plan may be terminated at any time with respect to the
Class B Shares of any series by a majority vote of the Qualified Trustees or by
vote of a majority of the outstanding voting securities of Class B Shares of
that series. This Plan may remain in effect with respect to the Class B Shares
of a series even if it has been terminated in accordance with this paragraph
with respect to one or more other series of the Trust.
NYDOCS01/403871 2
<PAGE>
5
9. This Plan may not be amended in order to increase
materially the amount of distribution expenses provided for in paragraph 1
herein unless such amendment is approved by a majority (as defined in the Act)
of the outstanding voting securities of Class B Shares and no material amendment
to this Plan shall be made unless approved in the manner provided in paragraph 5
herein.
10. While this Plan shall be in effect, the selection and
nomination of Trustees who are not interested persons of the Trust (as defined
in the Act) shall be committed to the discretion of the Trustees then in office
who are not interested persons of the Trust.
The Trust shall preserve copies of this Plan and any related
agreements and all reports made pursuant to paragraph 7 herein, for a period of
not less than six years from the date of this Plan, or the agreements or such
report, as the case may be, the first two years in an easily accessible place.
The Agreement and Declaration of Trust of the Trust is on file
with the Secretary of the State of Delaware and notice is hereby given that this
Plan is adopted on behalf of the Trust, and not by the Trustees or officers of
the Trust individually, and the obligations of or arising out of this Plan are
not binding upon the Trustees, officers or shareholders of the Trust
individually but are binding only upon the assets and property of the Trust.
Notice is hereby given that the debts, liabilities, obligations and expenses
incurred, contracted for or otherwise existing with respect to a particular
series of the Trust shall be enforceable against the assets of such series only,
and not against the assets of the Trust generally.
Date: March 1, 1999
NYDOCS01/403871 2
<PAGE>
PHOENIX-ZWEIG GOVERNMENT CASH FUND
CLASS M SHARES
RULE 12b-1 DISTRIBUTION PLAN
----------------------------
As amended and restated
As of March 1, 1999
This distribution plan (the "Rule 12b-1 Distribution Plan" or
the "Plan") has been adopted by the Class M Shares of Phoenix-Zweig Government
Cash Fund (the "Fund") , a series of Phoenix-Zweig Trust (the "Trust"), a
Delaware business trust, and is restated effective March 1, 1999, pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended (the "Act").
W H E R E A S:
The Fund presently distributes its shares of capital stock
through a contractual arrangement with a principal distributor (the "Principal
Distributor") duly qualified to act on behalf of the Fund in such capacity,
which contract has been approved by the Fund's Board of Trustees in accordance
with requirements of the Act (the "Distribution Agreement"). Pursuant to the
Distribution Agreement, the Principal Distributor may enter into service
agreements ("Service Agreements") with certain securities dealers, financial
institutions or other industry professionals, such as investment advisers,
accountants and estate planning firms (severally, a "Service Organization") for
distribution and promotion of, administration of, and servicing investors in,
the Fund's shares. Under this proposal, the Fund and its investment manager (the
"Manager") may from time to time and from their own funds or from such other
resources as may be permitted by rules of the Securities and Exchange
Commission, make payments as defined in Section 2 hereof ("Service Payments") to
Service Organizations for distribution and service assistance as defined in
Section 3 hereof ("Distribution and Service Assistance").
In voting to approve the continuation of the Plan and related
Service Agreements, the Board requested and evaluated such information as it
deemed necessary to an informed determination and has concluded, in the exercise
of their reasonable business judgment and in light of their respective fiduciary
duties, that there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders.
THEREFORE, in consideration of the foregoing, the Fund adopted
this Plan in accordance with Rule 12b-1 under the Act on the following terms and
conditions:
1. The Principal Distributor shall act as distributor of the
Fund's shares pursuant to the Distribution Agreement. The Principal Distributor
may enter into Service Agreements with Service Organizations for Distribution
and Service Assistance.
NYDOCS01/599635 3
<PAGE>
2. The Fund shall pay all costs and expenses in connection
with the preparation, printing and distribution of the Fund's prospectuses,
shareholder reports and any promotional material. If the cost of printing and
distribution of prospectuses and shareholder reports to other than current Fund
shareholders, and any promotional material, shall exceed, in the aggregate,
$100,000, the Principal Distributor and/or the Service Organizations shall pay
the excess cost thereof. The foregoing limitation shall not apply to the costs
of printing and distribution of prospectuses and shareholder reports required by
the Fund for its then current shareholders, which costs shall be separately
borne by the Fund.
3. (a) There shall be paid periodically to one or more Service
Organizations a Service Payment in respect of the Fund's shares owned by
shareholders for whom the Service Organization is the dealer of record or holder
of record, or owned by shareholders for whom the Service Organization provides
Distribution and Service Assistance ("Clients"). Service Payments shall be paid
in equal amounts by the Fund and the Manager, or the Fund and the Manager shall
reimburse the Principal Distributor equally, in full, for Service Payments made
to a Service Organization, in an amount not exceeding .30 of 1% of the average
daily net asset value of the Fund's shares owned by Clients during the period
Service Payments are being made to the Service Organization. The Service
Payments are subject to compliance by the Service Organization and the Principal
Distributor with the terms of the Service Agreement between the Service
Organization and the Principal Distributor.
(b) For the purposes of determining the Service Payment
payable to a Service Organization, the value of the Fund's net assets shall be
computed in accordance with the Fund's Charter, prospectus and instructions of
the Board of Trustees, all as changed or amended from time to time.
(c) Distribution and Service Assistance, as defined in this
Plan, shall include, inter alia, (i) formulating and implementing marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
(ii) arranging and contracting for the preparation and printing of sales
literature and the mailing and distribution thereof; (iii) procuring, evaluating
and providing to the Fund such information, analyses and opinions with respect
to marketing and promotional activities as the Fund may, from time to time,
reasonably request; (iv) providing office space and equipment, telephone
facilities and dedicated personnel as is necessary to provide the services
hereunder; (v) answering Client inquiries regarding the Fund and assisting
Clients in changing dividend options, account designations and addresses; (vi)
performing subaccounting; (vii) establishing and maintaining Client accounts and
records; (viii) processing purchase and redemption transactions; (ix) providing
automatic investment in Fund shares of Client cash account balances; (x)
providing periodic statements showing a Client's account balance and integrating
such statements with those of other transactions and balances in the Client's
other accounts serviced by the Service Organization; and (xi) arranging for bank
wires and such other services as the Fund may request, to the extent that the
Service Organization is permitted by applicable statute, rule or regulation.
Anything stated herein to the contrary notwithstanding and subject to the rules
and regulations of the Act, any Service Payments made pursuant to this Plan
NYDOCS01/599635 3 2
<PAGE>
shall cover any series or class of shares of capital stock of the Fund as to
which the Plan is effective.
(d) In each year that this Plan remains in effect, the
Treasurers or Controllers of the Fund and the Manager shall prepare and furnish
to the Board of Trustees of the Fund and the Trustees shall review, at least
quarterly, written reports, complying with the requirements of Rule 12b-1 under
the Act, of the amounts expended under the Plan and purposes for which such
expenditures were made.
4. The Fund will allocate the amounts expended by it under the
Plan to each class of securities of the Fund as to which the Plan is effective
in the proportion that the average daily net asset values of such series or
class of securities bears to the average daily net assets of all such series or
classes of securities as to which the Plan is effective.
5. The Plan shall become effective upon approval by (a) a vote
of (i) the Fund's Board of Trustees and (ii) the Qualified Trustees (as defined
in Section 8 hereof), cast in person at a meeting called for the purpose of
voting thereon, and (b) with respect to any class of a series of securities of
the Fund, at least a majority vote of the outstanding voting securities of such
class of the Fund, as defined in Section 2(a)(42) of the Act.
6. This Plan shall remain in effect for one year from its
adoption date and may be continued thereafter if this Plan is approved at least
annually by a vote of the Board of Trustees of the Fund, and of the Qualified
Trustees, cast in person at a meeting called for the purpose of voting on such
Plan. This Plan may not be amended in order to increase materially the amounts
to be expended in accordance with Sections 2 and 3(a) hereof without approval of
each class of securities affected in accordance with Section 5 hereof. All
material amendments to this Plan must be approved by a vote of the Board of
Trustees of the Fund, and of the Qualified Trustees, cast in person at a meeting
called for the purpose of voting thereon.
7. This Plan may be terminated at any time by a majority vote
of the Trustees who are not interested persons (as defined in Section 2(a)(19)
of the Act) of the Fund ("Independent Trustees") and have no direct or indirect
financial interest in the operation of the Plan or in any agreements related to
the Plan ("Qualified Trustees") or with respect to any class of securities of
the Fund, by vote of a majority of the outstanding voting securities of such
class of the Fund, as defined in Section 2(a)(42) of the Act.
8. While this Plan shall be in effect, the selection and
nomination of the Independent Trustees of the Fund shall be committed to the
discretion of the Independent Trustees then in office.
9. Any termination or noncontinuance of a Service Agreement by
the Principal Distributor with a particular Service Organization shall have no
effect on similar agreements between the Principal Distributor and other Service
Organizations.
NYDOCS01/599635 3 3
<PAGE>
10. The Principal Distributor is not obligated by this Plan to
execute a Service Agreement with a qualifying Service organization.
11. The Fund shall preserve copies of this Plan and any
related agreements and all reports made pursuant to Paragraph 3(d) hereof, for a
period of not less than six years from the date of this Plan, or the agreements
or such report, as the case may be, the first two years in an easily accessible
place.
The Agreement and Declaration of Trust of the Trust is on file with the
Secretary of the State of Delaware and notice is hereby given that this Plan is
adopted on behalf of the Trust, and not by the Trustees or officers of the Trust
individually, and the obligations of or arising out of this Plan are not binding
upon the Trustees, officers or shareholders of the Trust individually but are
binding only upon the assets and property of the Trust. Notice is hereby given
that the debts, liabilities, obligations and expenses incurred, contracted for
or otherwise existing with respect to a particular series of the Trust shall be
enforceable against the assets of such series only, and not against the assets
of the Trust generally.
Dated: March 1, 1999
NYDOCS01/599635 3 4
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