<PAGE>
ZWEIG
Series Trust
Looking Beyond the Numbers
1998 ANNUAL REPORT
<PAGE>
TABLE OF CONTENTS
Shareholder Letter 1
How & Why Our Portfolio
Statistics Matter 3
Zweig Strategy Fund 4
Zweig Appreciation Fund 6
Zweig Managed Assets 8
Zweig Growth & Income Fund 10
Zweig Foreign Equity Fund 12
Zweig Government Fund 14
Zweig Government Cash Fund 14
Standardized Performance 15
Statement of Net Assets 16
Statement of Operations 45
Statement of Changes in Net Assets 46
Notes to Financial Statements 48
Financial Highlights 53
Report of Independent Accountants 56
THIS REPORT HAS BEEN PREPARED FOR THE INFORMATION OF SHAREHOLDERS OF ZWEIG
SERIES TRUST AND IS NOT AUTHORIZED FOR USE UNLESS PRECEDED OR ACCOMPANIED BY A
CURRENT PROSPECTUS. THE PROSPECTUS INCLUDES INFORMATION REGARDING THE TRUST'S
SALES CHARGES, EXPENSES, OBJECTIVES, POLICIES, MANAGEMENT, PERFORMANCE AND OTHER
INFORMATION. PLEASE READ IT CAREFULLY BEFORE YOU INVEST OR SEND MONEY. CALL YOUR
FINANCIAL ADVISOR OR ZWEIG AT 1-800-272-2700 TO OBTAIN ADDITIONAL COPIES OF THE
PROSPECTUS.
THE PERFORMANCE DATA QUOTED REPRESENT PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS. INVESTMENT RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT AN
INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR LESS THAN THEIR ORIGINAL
COST. THE SHORTER THE TIME PERIOD OF YOUR INVESTMENT, THE GREATER THE
POSSIBILITY OF LOSS. FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR INSURED
OR GUARANTEED BY, THE U.S. GOVERNMENT, ANY FINANCIAL INSTITUTION, THE FEDERAL
DEPOSIT INSURANCE CORPORATION, OR ANY OTHER AGENCY, ENTITY OR PERSON.
<PAGE>
1
Dear Fellow Shareholder:
Our asset allocation research--the system of indicators we've developed over a
quarter century that dictates our market exposure--was more severely tested in
1998 than at any other time during this decade. I'm pleased to report that our
research was right.
Moreover, we had the discipline to obey the dictates of our research--to remain
substantially invested when the stock market was crashing, because our
indicators said we weren't in a major bear market. This at a time when the whole
world (it sometimes seemed) was screaming at us, "Why isn't a so-called
risk-averse manager out of this market?"
Having our research proven right is one thing. Having the discipline not to cut
and run--to do what our shareholders needed us to do, not what they wanted us to
do--is something else again. I'm proud of our research. I'm proud of our
discipline. And I'm immensely proud of our team of professionals, for whom it
was a long, hot summer.
You'll remember from our third quarter report that, even as the market declined
savagely in late summer, our indicators continued to give very positive
readings. Largely oriented as it is toward monetary conditions, our research
interpreted declining interest rates, falling inflation and moderately slowing
but still solid corporate earnings growth--all in the absence of extreme
deflation--as the favorable trends they've usually been in the past. We also
registered soaring levels of investor pessimism as the market plummeted, which
our research regards as bullish.
In response to mounting global instability (and the concern that it might wash
up on our shores), the Federal Reserve cut interest rates three times in quick
succession between September 28th and November 17th. Triple Fed rate cuts have
only happened 17 times since the Federal Reserve was founded in 1913, and have
been bullish for stocks over subsequent months in the vast majority of cases.
Not surprisingly, the S&P 500 Index and the Dow Jones Industrial Average surged
to new highs toward the end of the year, and our funds posted solid gains for
the fourth quarter.
On the following pages, each of our portfolio managers discusses the results of
the funds he manages. I'll just summarize by saying: (1) Zweig Managed Assets
and Zweig Government Fund posted strong returns. (2) Zweig Foreign Equity Fund
[SIDEBAR]
I'M PROUD OF OUR RESEARCH. I'M PROUD OF OUR DISCIPLINE. AND I'M IMMENSELY PROUD
OF OUR TEAM OF PROFESSIONALS...
<PAGE>
2
earned a solid return consistent with its cautious cash position. (3) In a year
when small-cap was an "also-ran," Zweig Appreciation Fund declined fractionally,
but still outperformed its Russell 2000 benchmark. (4) Zweig Strategy Fund and
Zweig Growth & Income Fund got punished for the same conservative,
value-oriented stock selection methodology that has served it so well in the
long run.
The way in which we manage risk through conservative stock selection is a major
theme of this report. I hope and believe that you will find this analysis
helpful to your understanding of our discipline.
As I'm sure you are aware, a number of well-known organizations in the financial
services industry have recently combined to build stronger companies. With that
in mind, I'm pleased to report that Zweig/Glaser Advisers, the investment
advisor to the Zweig Mutual Funds, has agreed to be acquired by Phoenix
Investment Partners, Ltd., a large diversified financial services organization
listed on the New York Stock Exchange. The transaction, which is subject to
approval by shareholders, is expected to close later in the first quarter of
1999. I will remain as President and will continue to provide asset allocation
services to the funds--I have no plans to retire--and each portfolio manager
will remain in place. It is anticipated that upon closing, our fund
family's name will change to Phoenix-Zweig Trust.
Our portfolio managers comment on the performance of each of the Zweig Mutual
Funds beginning on page four. Please visit us on the Internet at WWW.ZWEIG.COM.
Everyone here at Zweig Mutual Funds joins me in wishing you a happy and
prosperous new year.
Sincerely,
/s/ Martin E. Zweig
MARTIN E. ZWEIG, Ph.D.
PRESIDENT
JANUARY 15, 1999
[SIDEBAR]
WATCH MARTY ZWEIG ON PBS'S WALL $TREET WEEK WITH LOUIS RUKEYSER.
<PAGE>
3
HOW & WHY OUR PORTFOLIO STATISTICS MATTER
We at Zweig believe that ultimately, what you make in bull markets matters less
than what you keep over the course of your investing lifetime. For this reason,
we place a priority on risk control. In addition to our asset allocation models,
we use a conservative, value-oriented stock selection methodology in order to
reduce the risk and volatility of our funds. For example, here are some
important portfolio characteristics of Zweig Strategy Fund compared to those of
the average growth fund. Portfolio characteristics for some of our other funds
are listed on the following pages.
3-YEAR EARNINGS GROWTH AVERAGES THE EARNINGS GROWTH OF A FUND'S STOCKS OVER THE
LAST THREE YEARS. THE HIGHER THE NUMBER, THE STRONGER THE INCREASES IN THE
STOCK'S EARNINGS HAVE BEEN. AT ZWEIG, WE LOOK FOR STOCKS WITH FAVORABLE EARNINGS
GROWTH SELLING AT REASONABLE PRICES.
BETA MEASURES A FUND'S VOLATILITY RELATIVE TO THE S&P 500 INDEX. A BETA OF LESS
THAN ONE MEANS A FUND IS LESS VOLATILE THAN THE INDEX. A BETA OF MORE THAN ONE
MEANS IT IS MORE VOLATILE THAN THE INDEX. GENERALLY, A FUND WITH A HIGH BETA HAS
EXPERIENCED BROADER PRICE SWINGS THAN A FUND WITH A LOWER BETA.
STANDARD DEVIATION MEASURES HOW MUCH THE MONTH BY MONTH RETURN OF AN INVESTMENT
VARIES FROM ITS NORM OVER A GIVEN PERIOD. GENERALLY, THE HIGHER AN INVESTMENT'S
STANDARD DEVIATION, THE WIDER ITS RETURNS HAVE FLUCTUATED, IMPLYING GREATER
VOLATILITY.
MORNINGSTAR RISK SCORE EVALUATES A FUND'S DOWNSIDE VOLATILITY RELATIVE TO THE
AVERAGE FUND IN ITS BROAD ASSET CLASS. THE AVERAGE RISK SCORE FOR A FUND'S BROAD
ASSET CLASS IS SET AT 1.00. A RISK SCORE ABOVE 1.00 INDICATES GREATER RISK THAN
THE AVERAGE. A SCORE BELOW 1.00 INDICATES LESS RISK THAN THE AVERAGE.
MEDIAN MARKET CAP MEDIAN MARKET CAP INDICATES THE SIZE OF THE COMPANIES IN
WHICH A FUND INVESTS. HALF OF A FUND'S EQUITY ASSETS ARE INVESTED IN COMPANIES
THAT ARE LARGER THAN ITS MEDIAN MARKET CAPITALIZATION, WHILE HALF ARE INVESTED
IN SMALLER STOCKS. MARKET CAPITALIZATION IS CALCULATED BY MULTIPLYING THE NUMBER
OF A COMPANY'S OUTSTANDING SHARES BY THE PRICE PER SHARE. THE GREATER THE
DISPARITY BETWEEN TWO FUNDS' MEDIAN MARKET CAPITALIZATIONS, THE MORE THE
PERFORMANCE OF THE FUNDS MAY DIFFER. SMALL-COMPANY STOCKS MAY PRESENT GREATER
OPPORTUNITIES FOR CAPITAL APPRECIATION, AS WELL AS GREATER RISK.
<TABLE>
<CAPTION>
PORTFOLIO STATISTICS as of 12/31/98
ZWEIG STRATEGY FUND AVERAGE GROWTH FUND
<S> <C> <C>
P/E RATIO 13.5X 32.2X
- --------------------------------------------------------------------------------
3-YEAR EARNINGS GROWTH 27.7% 21.0%
- --------------------------------------------------------------------------------
3-YEAR BETA 0.75 1.01
- --------------------------------------------------------------------------------
5-YEAR STANDARD DEVIATION 13.02% 18.57%
- --------------------------------------------------------------------------------
5-YEAR MORNINGSTAR RISK SCORE 0.79 1.04
- --------------------------------------------------------------------------------
MEDIAN MARKET CAP $ 3.6 BILLION $ 22.6 BILLION
</TABLE>
P/E RATIO IS CALCULATED BY DIVIDING A STOCK'S CURRENT MARKET PRICE BY ITS
TRAILING 12 MONTHS' EARNINGS PER SHARE. A HIGH P/E RATIO INDICATES THAT
INVESTORS ARE PAYING MORE FOR A COMPANY'S FUTURE EARNINGS. THE RISK OF BUYING
STOCKS WITH HIGH P/ES IS THAT THE COMPANY MAY FAIL TO DELIVER THE STRONG
EARNINGS GROWTH THAT INVESTORS ARE PAYING FOR.
SOURCE: MORNINGSTAR. THE RISK STATISTICS QUOTED REPRESENT PAST PERFORMANCE,
WHICH IS NO GUARANTEE OF FUTURE RESULTS. INVESTMENT RETURNS AND PRINCIPAL VALUE
WILL FLUCTUATE SO THAT AN INVESTOR'S SHARES, WHEN REDEEMED, MAY BE WORTH MORE OR
LESS THAN THEIR ORIGINAL COST.
<PAGE>
4
ZWEIG STRATEGY FUND
For 1998, the fund's Class A Shares declined 1.9% with an average market
exposure of 86%. The Lipper Growth Funds Index returned 25.7%, and the S&P 500
Index returned 28.7%. The fund's Class B and C Shares (which have no initial
sales charges but bear higher expenses) both declined 2.6%. For the fourth
quarter, the fund's Class A Shares were up 13.1%, while Class B and C Shares
both rose 12.9%, compared to the 22.8% return of the Lipper Growth Funds Index
and the 21.4% return of the S&P 500 Index.
The Zweig Strategy Fund utilizes a quantitative investment approach that
seeks to assemble a portfolio of stocks with above-average earnings growth
selling at relatively reasonable prices. From inception through 1997, this
disciplined stock selection style added value relative to the S&P 500 Index. So
why did the fund's performance lag so far behind the S&P 500 this year?
The key to successfully picking stocks in 1998 was to buy very big stocks
without regard to price. While it is true that many of these large companies had
above-average earnings growth, their lofty valuations prevented them from
screening well in our work. As you can see from the accompanying table on
portfolio statistics, the fund focuses on stocks with below-average valuations
and above-average earnings growth. Both historical evidence and our long-term
stock picking results prior to 1998 attest to the rewards of this process.
In 1998, performance was highly concentrated in a relatively small group of
stocks. These stocks had terrific earnings, both on a historical and projected
basis, but their prices were astronomical. For example, the 15 biggest
contributors to the S&P 500's return in 1998 accounted for more than 50% of the
index's total return. These stocks did have strong earnings growth (over 23%
annual three-year earnings growth), but their average P/Es were an astounding 52
times earnings. In contrast, the stocks we held in the fund had greater earnings
growth but sold at P/Es that were less than half as much. We believe that
uncertainties in economies and stock markets around the world prompted investors
to pay a significant premium for the stability of very large-company stocks.
But despite this punishing year, we would still rather rely on fundamentals
than crowd psychology. Though our methods may be unfashionable in the short
term, we will continue to seek stocks with above-average earnings and
below-average price-earnings ratios, for the simple reason that growth and value
have more lasting effects on stock performance than fear or euphoria. We believe
that maintaining this disciplined, proven approach to stock selection will
reward long-term investors with superior risk-adjusted returns over time.
Please see page 15 for additional performance information.
/s/ David Katzen
DAVID KATZEN
SENIOR VICE PRESIDENT
JANUARY 15, 1999
[SIDEBAR]
A FLEXIBLE APPROACH TO THE GROWTH POTENTIAL OF MID-SIZED AND LARGE-COMPANY
STOCKS
QUOTRON SYMBOLS: ZSTAX / ZSTBX / ZSTCX
ASSETS AS OF 12/31/98: $ 917 MILLION
PORTFOLIO MANAGER: DAVID KATZEN
[PHOTO]
THE STOCKS WE HELD IN THE FUND HAD GREATER EARNINGS GROWTH [THAN THE 15 BIGGEST
CONTRIBUTORS TO THE S&P 500'S RETURN] BUT SOLD AT P/ES THAT WERE LESS THAN HALF
AS MUCH.
<PAGE>
5
THE MARKET THIS YEAR REWARDED THE LARGEST OF THE LARGE-CAP STOCKS.
PERFORMANCE for the year ended 12/31/98*
ZWIEG STRATEGY FUND A SHARES -1.9%
LIPPER GROWTH FUNDS INDEX 25.7%
S&P 500 INDEX 28.7%
AVERAGE MARKET EXPOSURE: 86%
PERFORMANCE annualized since inception (12/29/89)*
ZWIEG STRATEGY FUND A SHARES 10.6%
LIPPER GROWTH FUNDS INDEX++ 16.1%
S&P 500 INDEX++ 17.9%
AVERAGE MARKET EXPOSURE: 69%
PORTFOLIO STATISTICS as of 12/31/98+
<TABLE>
<CAPTION>
ZWEIG STRATEGY FUND AVERAGE GROWTH FUND
<S> <C> <C>
P/E RATIO 13.5X 32.2X
- --------------------------------------------------------------------------------
3-YEAR EARNINGS GROWTH 27.7% 21.0%
- --------------------------------------------------------------------------------
3-YEAR BETA 0.75 1.01
- --------------------------------------------------------------------------------
5-YEAR STANDARD DEVIATION 13.02% 18.57%
- --------------------------------------------------------------------------------
5-YEAR MORNINGSTAR RISK SCORE 0.79 1.04
- --------------------------------------------------------------------------------
MEDIAN MARKET CAP $ 3.6 BILLION $ 22.6 BILLION
</TABLE>
<TABLE>
<CAPTION>
TOP INDUSTRY GROUPS as of 12/31/98**
<S> <C>
CONSUMER CYCLICAL 17.5%
NON-BANK FINANCIAL 16.9%
UTILITIES 12.9%
TECHNOLOGY 12.1%
CAPITAL GOODS 10.3%
CONSUMER STAPLES 8.7%
TRANSPORTATION 7.7%
BASIC MATERIALS 4.6%
COMMUNICATION SVCS. 4.5%
HEALTH CARE 2.6%
</TABLE>
ASSET MIXES for 1998-
JANUARY 1
[CHART]
STOCKS 100%
JUNE 30
[CHART]
STOCKS 85%
CASH 15%
DECEMBER 31
[CHART]
STOCKS 88%
CASH 12%
* RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES. THE
LIPPER GROWTH FUNDS INDEX IS BASED ON THE TOTAL RETURN OF 30 FUNDS. THE S&P 500
INDEX IS UNMANAGED. INVESTORS CANNOT INVEST DIRECTLY IN INDEXES. THE ANNUALIZED
RETURN FOR THE CLASS B SHARES SINCE THEIR INCEPTION ON 4/8/96 IS 8.0%. THE
ANNUALIZED RETURN FOR THE CLASS C SHARES SINCE THEIR INCEPTION ON 2/3/92 IS
10.0%.
++ THE PERIOD MEASURED IS FROM 12/31/89 DUE TO LIPPER'S WEEKLY DATA.
- - FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING (OR INCREASING) STOCK EXPOSURE AND INCREASING (OR REDUCING)
CASH. FUTURES INVOLVE MARKET RISK IN EXCESS OF THEIR COST, AND MAY ENTAIL
CORRELATION AND LIQUIDITY RISKS. AS OF 12/31/98, FUTURES COMPRISED 12% OF THE
FUND'S STOCK POSITION. THEY ARE USED FOR HEDGING PURPOSES ONLY.
+ SOURCE: MORNINGSTAR. AVERAGE P/E RATIO OF THE FUND'S STOCKS. THREE-YEAR
EARNINGS GROWTH IS HISTORICAL, AND PERTAINS TO THE STOCKS IN A FUND, NOT THE
FUND AS A WHOLE. BETA MEASURES A FUND'S VOLATILITY RELATIVE TO THE S&P 500. A
BETA OF LESS THAN ONE MEANS A FUND IS LESS VOLATILE THAN THE S&P 500. STANDARD
DEVIATION MEASURES HOW MUCH A FUND'S MONTHLY RETURNS VARY FROM ITS AVERAGE
RETURN OVER TIME. THE MORNINGSTAR RISK SCORE EVALUATES A FUND'S DOWNSIDE
VOLATILITY RELATIVE TO THE AVERAGE FUND IN ITS BROAD ASSET CLASS. THE AVERAGE
RISK SCORE FOR A FUND'S BROAD ASSET CLASS IS SET EQUAL TO 1.00. A RISK SCORE
ABOVE 1.00 INDICATES GREATER RISK THAN THE AVERAGE. A SCORE BELOW 1.00 INDICATES
LESS RISK THAN THE AVERAGE.
**PERCENTAGE OF THE STOCK PORTION OF THE FUND ONLY; DOES NOT TAKE INTO ACCOUNT
THE FUND'S CASH OR FUTURES POSITION. SINCE THE PORTFOLIO IS ACTIVELY MANAGED,
ITS HOLDINGS ARE SUBJECT TO CHANGE.
<PAGE>
6
ZWEIG APPRECIATION FUND
For 1998, the fund's Class A Shares declined 0.97% with an average market
exposure of 86%. The Lipper Small-Cap Funds Index declined 0.85%, and the
Russell 2000 Index declined 2.6%. The fund's Class B and C Shares (which have no
initial sales charges but bear higher expenses) both declined 1.7%. For the
fourth quarter, the fund's Class A Shares rose 15%, while Class B and C Shares
rose 14.9%. The Lipper Small-Cap Funds Index returned 18.5%, and the Russell
2000 returned 16.3%.
Though the fund's return exceeded its Russell 2000 benchmark for the year,
our stock selection lagged slightly. The slowdown came after our stockpicking
outperformed the Russell 2000 Index for three consecutive years (1995-1997), by
an average of about 11% a year. Our methodology, which seeks to quantitatively
identify small-company stocks with favorable earnings trends and attractive
valuations, continued its strong performance in the first half of the year. In
the second half of 1998, however, Russia's default (and the domino effect it
caused among various leveraged financial institutions), the economic and
currency debacles in Asia, and the presidential scandal all contributed to
extreme market volatility, especially in the small-company sector.
No letter to shareholders of small-company funds would be complete without
commenting on the vast underperformance of small stocks relative to their
large-company peers. 1998 marked the fifth consecutive year in which the S&P
500, an index of primarily large-company stocks, beat the Russell 2000, an index
of primarily small-company stocks. The performance disparity over the five-year
period is an astounding 12.2% a year. We do not subscribe to the belief that a
turnaround is at hand merely because small stocks have become extremely cheap
relative to large stocks. This same argument could have been made a year ago or
more.
Our guess is that large stock momentum will continue unless there are major
earnings disappointments in that sector. We believe, however, that small-cap
stocks still warrant a place in diversified portfolios. We will continue to
focus on our disciplined stock selection style, which historically has enabled
us to post higher returns with lower market exposure and more favorable risk
characteristics.
Please see page 15 for additional performance information.
/S/ David Katzen
DAVID KATZEN
SENIOR VICE PRESIDENT
JANUARY 15, 1999
[SIDEBAR]
A FLEXIBLE APPROACH TO THE GROWTH POTENTIAL OF SMALL-COMPANY STOCKS
QUOTRON SYMBOLS: ZAPAX / ZAPBX / ZAPCX
ASSETS AS OF 12/31/98: $ 475 MILLION
PORTFOLIO MANAGER: DAVID KATZEN
[PHOTO]
WE WILL CONTINUE TO FOCUS ON OUR DISCIPLINED STOCK SELECTION STYLE, WHICH
HISTORICALLY HAS ENABLED US TO POST HIGHER RETURNS WITH LOWER MARKET EXPOSURE
AND MORE FAVORABLE RISK CHARACTERISTICS.
<PAGE>
7
SMALL-CAP STOCKS HAVE UNDERPERFORMED LARGE-CAP STOCKS FOR THE PAST FIVE YEARS.
PERFORMANCE for the year ended 12/31/98*
ZWEIG APPRECIATION FUND A SHARES -0.97%
LIPPER SMALL-CAP FUNDS INDEX -0.85%
RUSSELL 2000 INDEX -2.55%
AVERAGE MARKET EXPOSURE: 86%
PERFORMANCE annualized since inception (10/7/91)*
ZWEIG APPRECIATION FUND A SHARES 12.2%
LIPPER SMALL-CAP FUNDS INDEX++ 13.5%
RUSSELL 2000 INDEX 14.6%
AVERAGE MARKET EXPOSURE: 69%
PORTFOLIO STATISTICS as of 12/31/98+
<TABLE>
<CAPTION>
ZWEIG APPRECIATION FUND AVERAGE SMALL-COMPANY FUND
<S> <C> <C>
P/E RATIO 15.3X 26.5X
- --------------------------------------------------------------------------------
3-YEAR EARNINGS GROWTH 26.8% 22.9%
- --------------------------------------------------------------------------------
3-YEAR BETA 0.75 1.00
- --------------------------------------------------------------------------------
5-YEAR STANDARD DEVIATION 13.21% 20.55%
- --------------------------------------------------------------------------------
5-YEAR MORNINGSTAR RISK SCORE 0.76 1.36
- --------------------------------------------------------------------------------
MEDIAN MARKET CAP $ 672 MILLION $ 810 MILLION
</TABLE>
<TABLE>
TOP INDUSTRY GROUPS as of 12/31/98**
<S> <C>
CONSUMER CYCLICAL 22.1%
CAPITAL GOODS 20.6%
NON-BANK FINANCIAL 17.6%
CONSUMER STAPLES 9.7%
TECHNOLOGY 8.1%
BASIC MATERIALS 6.5%
TRANSPORTATION 6.1%
UTILITIES 4.8%
HEALTH CARE 2.5%
BANKS 1.3%
</TABLE>
ASSET MIXES for 1998-
JANUARY 1
[CHART]
STOCKS 100%
JUNE 30
[CHART]
STOCKS 84%
CASH 16%
DECEMBER 31
[CHART]
STOCKS 88%
CASH 12%
* RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES. THE
LIPPER SMALL-CAP FUNDS INDEX IS BASED ON THE TOTAL RETURN OF 30 FUNDS. THE
RUSSELL 2000 INDEX IS UNMANAGED. INVESTORS CANNOT INVEST DIRECTLY IN INDEXES.
THE ANNUALIZED RETURN FOR THE CLASS B SHARES SINCE THEIR INCEPTION ON 4/8/96 IS
11.4%. THE ANNUALIZED RETURN FOR THE CLASS C SHARES SINCE THEIR INCEPTION ON
2/3/92 IS 10.5%.
++ THE PERIOD MEASURED IS FROM 10/10/91 DUE TO LIPPER'S WEEKLY DATA.
- - FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING (OR INCREASING) STOCK EXPOSURE AND INCREASING (OR REDUCING)
CASH. FUTURES INVOLVE MARKET RISK IN EXCESS OF THEIR COST, AND MAY ENTAIL
CORRELATION AND LIQUIDITY RISKS.
+ SOURCE: MORNINGSTAR. AVERAGE P/E RATIO OF THE FUND'S STOCKS. THREE-YEAR
EARNINGS GROWTH IS HISTORICAL, AND PERTAINS TO THE STOCKS IN A FUND, NOT THE
FUND AS A WHOLE. BETA MEASURES A FUND'S VOLATILITY RELATIVE TO THE S&P 500. A
BETA OF LESS THAN ONE MEANS A FUND IS LESS VOLATILE THAN THE S&P 500. STANDARD
DEVIATION MEASURES HOW MUCH A FUND'S MONTHLY RETURNS VARY FROM ITS AVERAGE
RETURN OVER TIME. THE MORNINGSTAR RISK SCORE EVALUATES A FUND'S DOWNSIDE
VOLATILITY RELATIVE TO THE AVERAGE FUND IN ITS BROAD ASSET CLASS. THE AVERAGE
RISK SCORE FOR A FUND'S BROAD ASSET CLASS IS SET EQUAL TO 1.00. A RISK SCORE
ABOVE 1.00 INDICATES GREATER RISK THAN THE AVERAGE. A SCORE BELOW 1.00 INDICATES
LESS RISK THAN THE AVERAGE.
**PERCENTAGE OF THE STOCK PORTION OF THE FUND ONLY; DOES NOT TAKE INTO ACCOUNT
THE FUND'S CASH OR FUTURES POSITION. SINCE THE PORTFOLIO IS ACTIVELY MANAGED,
ITS HOLDINGS ARE SUBJECT TO CHANGE.
<PAGE>
8
ZWEIG MANAGED ASSETS
We are pleased to report that the fund substantially outperformed its peer group
for the year. Class A Shares returned 14.9% in 1998, compared to 9.0% for the
Lipper Global Flexible Funds Index and 15.8% for the 50/50 blend of the Morgan
Stanley Country Index-World and the Salomon Currency Hedged World Government
Bond Index. The fund's average asset mix for the year was 51% stocks, 39% bonds
and 10% cash. The fund's Class B and C Shares (which have no initial sales
charges but bear higher expenses) returned 14.1% and 14.0%, respectively. In the
fourth quarter, the fund's Class A Shares returned 8.4%, while the Class B and C
Shares both returned 8.2%. In comparison, the Lipper Global Flexible Funds Index
returned 12.6% for the quarter, and the 50/50 blended index returned 10.9%.
ZMA's flexible, balanced approach proved its worth in 1998, a year in which
many funds with overseas holdings suffered steep declines. By gradually
adjusting the fund's asset mix throughout the year, we were able to capitalize
on trends in global stock and bond markets, and to fortify the fund against
increasing volatility. We started the year with a 51% allocation to
equities and increased our stock exposure during the first quarter to take
advantage of favorable monetary conditions in Europe, mainly declining interest
rates and falling inflation. As the year progressed, however, our research
models suggested an increased exposure to bonds, and we adjusted our holdings
accordingly.
The shift proved to be timely as several crises overseas--the slide of the
Japanese yen, political unrest in Indonesia, a Russian bond default and the near
collapse of Brazil's currency--hammered stock markets worldwide. Our substantial
allocation to bonds, specifically U.S. Treasuries and European government
issues, helped buoy the fund as growing volatility sparked a flight from stocks
to high-quality bonds.
Bonds also benefited when central banks around the world cut interest rates
toward year-end. The rate cuts helped avert a credit crisis and created positive
conditions for global equities, as well as bonds. We ended the year with 54% of
the fund's assets in equities and 37% in bonds.
We will continue to monitor risk closely (as you can see from the
accompanying portfolio statistics, the fund has a favorable risk profile
compared to its peer group). Falling commodity prices, in particular, could
prove to be a double-edged sword. Though they may spark gains in stocks and
bonds, sluggish demand for raw materials could be a sign of slowing growth. As
always, we will adjust our exposure as our research dictates.
Please see page 15 for additional performance information.
/s/ Carlton B. Neel
CARLTON B. NEEL
FIRST VICE PRESIDENT
JANUARY 15, 1999
[SIDEBAR]
A FLEXIBLE APPROACH TO DOMESTIC AND FOREIGN STOCKS AND BONDS
QUOTRON SYMBOLS: ZMAAX / ZMABX / ZMACX
ASSETS AS OF 12/31/98: $ 587 MILLION
PORTFOLIO MANAGER: CARLTON NEEL
[PHOTO]
BY GRADUALLY ADJUSTING THE FUND'S ASSET MIX THROUGHOUT THE YEAR, WE WERE ABLE TO
CAPITALIZE ON TRENDS IN GLOBAL STOCK AND BOND MARKETS...
<PAGE>
9
THE BALANCED APPROACH HELPED INSULATE THE FUND FROM OVERSEAS VOLATILITY.
PERFORMANCE for the year ended 12/31/98*
ZWEIG MANAGED ASSETS A SHARES 14.9%
LIPPER GLOBAL FLEXIBLE FUNDS INDEX 9.0%
50/50 BLEND OF MORGAN STANLEY COUNTRY INDEX-WORLD AND THE SALOMON CURRENCY
HEDGED WORLD GOVERNMENT BOND INDEX 15.8%
AVG. EXPOSURE: 51% Stocks, 39% Bonds
PERFORMANCE annualized since inception (2/8/93)*
ZWEIG MANAGED ASSETS A SHARES 10.9%
LIPPER GLOBAL FLEXIBLE FUNDS INDEX*** 11.4%
50/50 BLEND OF MORGAN STANLEY COUNTRY INDEX-WORLD AND THE SALOMON CURRENCY
HEDGED WORLD GOVERNMENT BOND INDEX+ 11.6%
AVG. EXPOSURE: 38% Stocks, 33% Bonds
<TABLE>
<CAPTION>
PORTFOLIO STATISTICS as of 12/31/97+
AVERAGE MULTI-ASSET
ZWEIG MANAGED ASSETS GLOBAL FUND
<S> <C> <C>
P/E RATIO 26.9X 27.3X
- --------------------------------------------------------------------------------
3-YEAR EARNINGS GROWTH 17.7% 15.3%
- --------------------------------------------------------------------------------
3-YEAR BETA 0.47 0.57
- --------------------------------------------------------------------------------
5-YEAR STANDARD DEVIATION 7.52% 10.65%
- --------------------------------------------------------------------------------
5-YEAR MORNINGSTAR RISK SCORE 0.30 0.64
- --------------------------------------------------------------------------------
MEDIAN MARKET CAP $ 18.9 BILLION $ 14.2 BILLION
</TABLE>
<TABLE>
<CAPTION>
COUNTRY ALLOCATIONS as of 12/31/98**
STOCKS BONDS
<S> <C> <C>
UNITED STATES 27.8% 20.6%
- -------------------------------------------
AUSTRALIA 0.0 2.4
- -------------------------------------------
CANADA 1.6 1.7
- -------------------------------------------
FRANCE 3.4 1.9
- -------------------------------------------
GERMANY 3.7 1.8
- -------------------------------------------
ITALY 2.2 0.9
STOCKS BONDS
<S> <C> <C>
JAPAN 1.5% 0.0%
- -------------------------------------------
NEW ZEALAND 1.0 1.0
- -------------------------------------------
SPAIN 4.5 1.7
- -------------------------------------------
UNITED KINGDOM 3.3 2.7
- -------------------------------------------
OTHER 4.8 2.2
- -------------------------------------------
TOTALS 53.8% 36.9%
</TABLE>
ASSET MIXES for 1998-
JANUARY 1
[CHART]
STOCKS 51%
CASH 12%
BONDS 37%
JUNE 30
[CHART]
STOCKS 50%
CASH 13%
BONDS 37%
DECEMBER 31
[CHART]
STOCKS 54%
CASH 9%
BONDS 37%
* RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES. THE
LIPPER GLOBAL FLEXIBLE FUNDS INDEX IS BASED ON THE TOTAL RETURN OF 10 FUNDS. THE
MORGAN STANLEY AND SALOMON INDEXES ARE UNMANAGED. INVESTORS CANNOT INVEST
DIRECTLY IN INDEXES. THE ANNUALIZED RETURN FOR THE CLASS B SHARES SINCE THEIR
INCEPTION ON 4/8/96 IS 13.9%. THE ANNUALIZED RETURN FOR THE CLASS C SHARES SINCE
THEIR INCEPTION ON 2/8/93 IS 10.1%. FOREIGN INVESTING INVOLVES SPECIAL RISKS,
INCLUDING CURRENCY FLUCTUATIONS AND POLITICAL UNCERTAINTY.
++ THE PERIOD MEASURED IS FROM 2/11/93 DUE TO LIPPER'S WEEKLY DATA.
*** THE PERIOD MEASURED IS FROM 3/1/93 DUE TO MICROPAL'S MONTHLY DATA.
- - FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING (OR INCREASING) STOCK EXPOSURE AND INCREASING (OR REDUCING)
CASH. FUTURES INVOLVE MARKET RISK IN EXCESS OF THEIR COST, AND MAY ENTAIL
CORRELATION AND LIQUIDITY RISKS.
+ SOURCE: MORNINGSTAR. AVERAGE P/E RATIO OF THE FUND'S EQUITY COMPONENT.
THREE-YEAR EARNINGS GROWTH IS HISTORICAL, AND PERTAINS TO THE STOCKS IN A
FUND, NOT THE FUND AS A WHOLE. BETA MEASURES A FUND'S VOLATILITY RELATIVE TO
THE S&P 500. A BETA OF LESS THAN ONE MEANS A FUND IS LESS VOLATILE THAN THE
S&P 500. STANDARD DEVIATION IS A MEASURE OF HOW MUCH A FUND'S MONTHLY RETURNS
VARY FROM ITS AVERAGE RETURN OVER TIME. THE MORNINGSTAR RISK SCORE EVALUATES
A FUND'S DOWNSIDE VOLATILITY RELATIVE TO THE AVERAGE FUND IN ITS BROAD ASSET
CLASS. THE AVERAGE RISK SCORE FOR A FUND'S BROAD ASSET CLASS IS SET EQUAL TO
1.00. A RISK SCORE ABOVE 1.00 INDICATES GREATER RISK THAN THE AVERAGE. A
SCORE BELOW 1.00 INDICATES LESS RISK THAN THE AVERAGE.
** SINCE THE PORTFOLIO IS ACTIVELY MANAGED, ITS HOLDINGS ARE SUBJECT TO CHANGE.
<PAGE>
10
ZWEIG GROWTH & INCOME FUND
For 1998, the fund's Class A Shares declined 1.6% with an average market
exposure of 85%. The Lipper Growth & Income Funds Index returned 13.6%, while
the S&P 500 Index rose 28.7% for the year. The fund's Class B and C Shares
(which have no initial sales charges but bear higher expenses) both declined
2.3%. For the fourth quarter, the fund's Class A Shares returned 13.5%, while
the Class B and C Shares returned 13.3% and 13.2%, respectively. The Lipper
Growth & Income Funds Index returned 16.3% for the fourth quarter, and the S&P
500 Index returned 21.4%.
1998 was a very tough year for our stock selection approach. Our
methodology in this fund is to buy two types of stocks: those with
above-average dividend yields or dividend growth selling at relatively
attractive prices for the fund's income component, and those with
above-average earnings growth selling at relatively attractive prices for the
fund's growth component. Our research has found that a balance of these types
of stocks has provided attractive risk-adjusted returns over the long run. In
contrast, the key in 1998 was to buy a relatively concentrated group of very
big, very low-yielding and very high P/E stocks. This pattern runs counter to
long-term experience. Generally, low P/E stocks with strong fundamentals
outperform high P/E stocks with average fundamentals.
Our commitment to pay attention to valuations prevented us from buying
many of the largest companies because they were selling at unusually high
prices relative to their earnings. Unfortunately, it was in this segment that
most of the market leadership was concentrated.
Had we simply bought the very largest stocks without regard to price, we
would have fared well in the growth segment of our portfolio in 1998. But
history shows that price ultimately matters. Thus, as the table at the right
shows, we focused our attention on stocks with above-average earnings growth
that also had much more compelling valuations. We remain confident in our
approach and believe that it will produce attractive returns for our
long-term shareholders.
Please see page 15 for additional performance information.
/S/ David Katzen
DAVID KATZEN
SENIOR VICE PRESIDENT
JANUARY 15, 1999
[SIDEBAR]
A FLEXIBLE APPROACH TO GROWTH STOCKS AND HIGH DIVIDEND STOCKS
QUOTRON SYMBOLS: ZGIAX / ZGIBX / ZGICX
ASSETS AS OF 12/31/98: $ 40.5 MILLION
PORTFOLIO MANAGER: DAVID KATZEN
[PHOTO]
THE KEY IN 1998 WAS TO BUY A RELATIVELY CONCENTRATED GROUP OF VERY BIG, VERY
LOW-YIELDING AND VERY HIGH P/E STOCKS.
<PAGE>
11
VALUE TOOK A BACK SEAT TO MARKET CAPITALIZATION AND MOMENTUM.
PERFORMANCE for the year ended 12/31/98*
ZWEIG GROWTH & INCOME FUND A SHARES -1.6%
LIPPER GROWTH & INCOME FUNDS INDEX 13.6%
S&P 500 INDEX 28.7%
AVERAGE MARKET EXPOSURE: 85%
PERFORMANCE annualized since inception (11/26/96)*
ZWEIG GROWTH & INCOME FUND A SHARES 9.8%
LIPPER GROWTH & INCOME FUNDS INDEX++ 18.7%
S&P 500 INDEX++ 28.4%
AVERAGE MARKET EXPOSURE: 78%
<TABLE>
<CAPTION>
PORTFOLIO STATISTICS as of 12/31/98+
ZWEIG GROWTH & AVERAGE GROWTH &
INCOME FUND INCOME FUND
<S> <C> <C>
P/E RATIO 16.1X 29.3X
- --------------------------------------------------------------------------------
3-YEAR EARNINGS GROWTH 24.3% 17.2%
- --------------------------------------------------------------------------------
3-YEAR BETA N/A 0.91
- --------------------------------------------------------------------------------
5-YEAR STANDARD DEVIATION N/A 15.73%
- --------------------------------------------------------------------------------
5-YEAR MORNINGSTAR RISK SCORE N/A 0.84
- --------------------------------------------------------------------------------
MEDIAN MARKET CAP $ 1.9 BILLION $ 32.9 BILLION
</TABLE>
<TABLE>
TOP INDUSTRY GROUPS as of 12/31/98**
<S> <C>
CONSUMER CYCLICAL 20.6%
UTILITIES 15.3%
CAPITAL GOODS 14.5%
NON-BANK FINANCIAL 12.4%
TECHNOLOGY 11.7%
CONSUMER STAPLES 8.4%
BASIC MATERIALS 8.0%
TRANSPORTATION 3.9%
HEALTH CARE 2.6%
COMMUNICATION SVCS. 1.3%
</TABLE>
ASSET MIXES for 1998-
JANUARY 1
[CHART]
STOCKS 99%
CASH 1%
JUNE 30
[CHART]
STOCKS 83%
CASH 17%
DECEMBER 31
[CHART]
STOCKS 86%
CASH 14%
* RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES. THE
LIPPER GROWTH & INCOME FUNDS INDEX IS BASED ON THE TOTAL RETURN OF 30 FUNDS. THE
S&P 500 INDEX IS UNMANAGED. INVESTORS CANNOT INVEST DIRECTLY IN INDEXES. THE
ANNUALIZED RETURN FOR BOTH THE CLASS B SHARES AND THE CLASS C SHARES SINCE THEIR
INCEPTION ON 11/26/96 IS 9.0%.
++ THE PERIOD MEASURED IS FROM 11/27/96 DUE TO LIPPER'S WEEKLY DATA.
- - FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING (OR INCREASING) STOCK EXPOSURE AND INCREASING (OR REDUCING)
CASH. FUTURES INVOLVE MARKET RISK IN EXCESS OF THEIR COST, AND MAY ENTAIL
CORRELATION AND LIQUIDITY RISKS.
+ SOURCE: MORNINGSTAR. AVERAGE P/E RATIO OF THE FUND'S STOCKS. THREE-YEAR
EARNINGS GROWTH IS HISTORICAL, AND PERTAINS TO THE STOCKS IN A FUND, NOT THE
FUND AS A WHOLE. BETA MEASURES A FUND'S VOLATILITY RELATIVE TO THE S&P 500. A
BETA OF LESS THAN ONE MEANS A FUND IS LESS VOLATILE THAN THE S&P 500. STANDARD
DEVIATION MEASURES HOW MUCH A FUND'S MONTHLY RETURNS VARY FROM ITS AVERAGE
RETURN OVER TIME. THE MORNINGSTAR RISK SCORE EVALUATES A FUND'S DOWNSIDE
VOLATILITY RELATIVE TO THE AVERAGE FUND IN ITS BROAD ASSET CLASS. THE AVERAGE
RISK SCORE FOR A FUND'S BROAD ASSET CLASS IS SET EQUAL TO 1.00. A RISK SCORE
ABOVE 1.00 INDICATES GREATER RISK THAN THE AVERAGE. A SCORE BELOW 1.00 INDICATES
LESS RISK THAN THE AVERAGE.
** PERCENTAGE OF THE STOCK PORTION OF THE FUND ONLY; DOES NOT TAKE INTO ACCOUNT
THE FUND'S CASH OR FUTURES POSITION. SINCE THE PORTFOLIO IS ACTIVELY MANAGED,
ITS HOLDINGS ARE SUBJECT TO CHANGE.
<PAGE>
12
ZWEIG FOREIGN EQUITY FUND
For 1998, the fund's Class A Shares returned 9.1% with an average market
exposure of 73%. The Morgan Stanley World (excluding U.S.) Index rose 19.1%,
while the Lipper International Funds Index returned 12.7%. The fund's Class B
and C Shares (which have no initial sales charges but bear higher expenses)
returned 8.4% and 8.3% for the year, respectively. For the fourth quarter, the
fund's Class A Shares returned 11.1%, while the Class B and C Shares both
returned 11.0%. The MS World (ex-U.S.) Index rose 20.6%, and the Lipper
International Funds Index rose 15.5%
We began the year with an equity exposure of 66%, and gradually increased
to 85% by the end of the first quarter. The fund was overweighted in developed
European countries, which enjoyed falling interest rates and declining
inflation. Also, Europe's stock markets surged as several countries exercised
stronger economic discipline in anticipation of European monetary union. Our
exposure in the region accounted for much of the fund's performance during the
first half of the year.
In the third quarter, conditions overseas deteriorated. The recession in
Japan deepened, while the economic collapse in Russia ignited sudden and violent
declines worldwide. In response, we gradually reduced our exposure and ended the
quarter with nearly half the fund's assets in cash. This helped us limit losses
better than most of our peers, as we finished the third quarter among the top
half of all foreign equity funds.
Overseas markets rebounded in the fourth quarter, as interest rate cuts by
central banks in more than 30 countries sparked a rally. We gradually increased
our exposure and finished the year with an overall equity position of 77%. While
the fund participated in 1998's bullish conditions in most foreign stock
markets, our high cash position during the fourth quarter caused the fund to
underperform its fully invested peers. In addition, our active currency
management, while it often reduces exchange rate risk, did not help the fund's
returns this year. For the most part, our research had us hedged against the
U.S. dollar, which prevented us from capturing the spread between strengthening
foreign currencies and the weakening U.S. dollar (a weakening dollar favors
investors who stay unhedged.)
Please see page 15 for additional performance information.
/S/ Carlton B. Neel
CARLTON B. NEEL
FIRST VICE PRESIDENT
JANUARY 15, 1999
[SIDEBAR]
A FLEXIBLE APPROACH TO INTERNATIONAL (NON-U.S.) EQUITY MARKETS
QUOTRON SYMBOLS: ZFEAX / ZFEBX / ZFECX
ASSETS AS OF 12/31/98: $ 8.5 MILLION
PORTFOLIO MANAGER: CARLTON NEEL
[PHOTO]
THE FUND PARTICIPATED IN 1998'S BULLISH CONDITIONS IN MOST FOREIGN STOCK
MARKETS...
<PAGE>
13
FOREIGN MARKETS ENDED POSITIVELY AFTER A VOLATILE YEAR.
PERFORMANCE for the year ended 12/31/98*
ZWEIG FOREIGN EQUITY FUND A SHARES 9.1%
LIPPER INTERNATIONAL FUNDS INDEX 12.7%
MORGAN STANLEY WORLD (EXCLUDING U.S.) INDEX 19.1%
AVERAGE MARKET EXPOSURE: 73%
PERFORMANCE annualized since inception (11/21/97)*
ZWEIG FOREIGN EQUITY FUND A SHARES 9.3%
LIPPER INTERNATIONAL FUNDS INDEX 10.4%
MORGAN STANLEY WORLD (EXCLUDING U.S.) INDEX 15.8%
AVERAGE MARKET EXPOSURE: 68%
<TABLE>
COUNTRY ALLOCATIONS as of 12/31/98**
STOCKS
<S> <C>
FRANCE 7.6%
- --------------------------
GERMANY 7.3
- --------------------------
ITALY 6.9
- --------------------------
UNITED KINGDOM 6.6
- --------------------------
SPAIN 5.8
- --------------------------
AUSTRALIA 5.5
- --------------------------
NETHERLANDS 5.1
STOCKS
JAPAN 5.0%
- --------------------------
SWEDEN 4.4
- --------------------------
SWITZERLAND 3.5
- --------------------------
NEW ZEALAND 3.2
- --------------------------
CANADA 3.1
- --------------------------
BELGIUM 3.0
- --------------------------
FINLAND 2.2
STOCKS
HONG KONG 1.9%
- --------------------------
AUSTRIA 1.7
- --------------------------
SINGAPORE 1.5
- --------------------------
MEXICO 1.4
- --------------------------
DENMARK 1.2
- --------------------------
MALAYSIA 0.4
- --------------------------
TOTAL 77.3%
</TABLE>
ASSET MIXES for 1998-
JANUARY 1
[CHART]
STOCKS 66%
CASH 34%
JUNE 30
[CHART]
STOCKS 68%
CASH 32%
DECEMBER 31
[CHART]
STOCKS 77%
CASH 23%
* RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES. THE
LIPPER INTERNATIONAL FUNDS INDEX IS BASED ON THE TOTAL RETURN OF 30 FUNDS
WITHOUT CONSIDERING ANY SALES CHARGES. THE MORGAN STANLEY WORLD (EXCLUDING U.S.)
INDEX IS UNMANAGED. INVESTORS CANNOT INVEST DIRECTLY IN INDEXES. THE ANNUALIZED
RETURN FOR THE CLASS B SHARES AND THE CLASS C SHARES SINCE THEIR INCEPTION ON
11/21/97 IS 8.6% AND 8.5%, RESPECTIVELY. FOREIGN INVESTING INVOLVES SPECIAL
RISKS, INCLUDING CURRENCY FLUCTUATIONS AND POLITICAL UNCERTAINTY.
- - FOR PURPOSES OF DETERMINING ASSET MIX, THE FUND'S STOCK FUTURES POSITION IS
TREATED AS REDUCING (OR INCREASING) STOCK EXPOSURE AND INCREASING (OR REDUCING)
CASH. FUTURES INVOLVE MARKET RISK IN EXCESS OF THEIR COST,
AND MAY ENTAIL CORRELATION AND LIQUIDITY RISKS.
**SINCE THE PORTFOLIO IS ACTIVELY MANAGED, ITS HOLDINGS ARE SUBJECT TO CHANGE.
<PAGE>
14
ZWEIG GOVERNMENT FUND
The fund's Class A Shares returned 8.9% for the year, compared to 7.9% for the
Lipper U.S. Government Funds Index and 9.9% for the Lehman Government Bond
Index. The fund's Class B and C Shares (which have no initial sales charges but
bear higher expenses) returned 8.2% and 8.5%, respectively. For the fourth
quarter, the fund's Class A Shares declined 1.1%, compared to the 0.25% decline
of the Lipper U.S. Government Funds Index and the 0.08% decline of the Lehman
index. The fund's Class B and C Shares declined 1.3% and 1.2%, respectively.
After a sluggish first quarter, government bonds rallied sharply as
volatile equity markets prompted a flight to quality. The turbulence was caused
by a series of financial crises in Asia, Russia and Latin America.
Bond prices continued to rise after the Federal Reserve cut the Fed funds
rate three consecutive times (bond prices rise when interest rates fall). But
the cuts were a mixed blessing. They helped avert a credit crisis and created
strong conditions for equities, yet they encouraged many investors to sell
government bonds in favor of riskier investments such as stocks and
higher-yielding corporate bonds. As a result, the fund declined slightly in the
fourth quarter.
Despite the difficulties of the fourth quarter, we believe that conditions
are still positive for bonds to offer meaningful gains. Central banks around the
world have adopted easy monetary policies, inflation is low and commodity prices
have fallen to extreme lows. As a result, we ended the year with a long duration
(sensitivity to interest rates) of just over six years.
Please see page 15 for additional performance information.
/s/ Carlton B. Neel
CARLTON B. NEEL
FIRST VICE PRESIDENT
JANUARY 15, 1999
PERFORMANCE
for the year ended 12/31/98
ZWEIG GOVERNMENT FUND A SHARES 8.9%
LIPPER U.S. GOVERNMENT FUNDS INDEX++ 7.9%
LEHMAN GOVERNMENT BOND INDEX 9.9%
annualized since inception (3/25/85)**
ZWEIG GOVERNMENT FUND A SHARES 7.4%
LIPPER U.S. GOVERNMENT FUNDS INDEX++ 8.3%
LEHMAN GOVERNMENT BOND INDEX++ 9.7%
AVG. DURATION: 6.1 YEARS
[SIDEBAR]
MONTHLY INCOME FROM U.S. GOVERNMENT SECURITIES
QUOTRON SYMBOLS: ZGVAX / ZGVBX / ZGVCX
ASSETS AS OF 12/31/98: $ 47 MILLION
PORTFOLIO MANAGER: CARLTON NEEL
[PHOTO]
* RETURNS DO NOT INCLUDE ANY INITIAL OR CONTINGENT DEFERRED SALES CHARGES. THE
LIPPER U.S. GOVERNMENT BOND FUNDS INDEX IS BASED ON THE TOTAL RETURN OF 30
FUNDS. THE ANNUALIZED RETURN FOR THE CLASS B SHARES SINCE THEIR INCEPTION ON
4/8/96 IS 7.3%. THE ANNUALIZED RETURN FOR THE CLASS C SHARES SINCE THEIR
INCEPTION ON 2/3/92 IS 5.8%.
++ THE PERIOD MEASURED IS FROM 3/31/85 DUE TO LIPPER'S WEEKLY DATA.
** ZWEIG/GLASER ADVISERS ASSUMED RESPONSIBILITY FOR MANAGING THE FUND ON
SEPTEMBER 1, 1989.
ZWEIG GOVERNMENT CASH FUND
The net yield of Zweig Government Cash Fund for the 12 months ended December 31,
1998, was: 4.81% for Class A and C Shares, 4.11% for Class B Shares, and 5.04%
for Class M Shares.
<PAGE>
15
ZWEIG SERIES TRUST
AVERAGE ANNUAL RETURNS THROUGH 12/31/98
<TABLE>
<CAPTION>
ZWEIG STRATEGY FUND Class A Shares (ZSTAX) Class B Shares (ZSTBX) Class C Shares (ZSTCX)
- ------------------------------ ------------------------------------- -------------------------- --------------------------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(12/29/89) FIVE YEAR ONE YEAR (4/8/96) ONE YEAR (2/3/92) FIVE YEAR ONE YEAR
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BEFORE SALES CHARGES 10.6% 10.6% -1.9% 8.0% -2.6% 10.0% 9.8% -2.6%
AFTER ALL CHARGES AND EXPENSES 9.9% 9.4% -7.3% 6.8% -7.5% 10.0% 9.8% -3.9%
ZWEIG APPRECIATION FUND Class A Shares (ZAPAX) Class B Shares (ZAPBX) Class C Shares (ZAPCX)
- ------------------------------ ------------------------------------- -------------------------- --------------------------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(10/7/91) FIVE YEAR ONE YEAR (4/8/96) ONE YEAR (2/3/92) FIVE YEAR ONE YEAR
BEFORE SALES CHARGES 12.2% 11.5% -1.0% 11.4% -1.7% 10.5% 10.7% -1.7%
AFTER ALL CHARGES AND EXPENSES 11.3% 10.2% -6.4% 10.2% -6.6% 10.5% 10.7% -2.9%
ZWEIG MANAGED ASSETS Class A Shares (ZMAAX) Class B Shares (ZMABX) Class C Shares (ZMACX)
- ------------------------------ ------------------------------------- -------------------------- --------------------------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(2/8/93) FIVE YEAR ONE YEAR (4/8/96) ONE YEAR (2/8/93) FIVE YEAR ONE YEAR
BEFORE SALES CHARGES 10.9% 10.4% 14.9% 13.9% 14.1% 10.1% 9.7% 14.0%
AFTER ALL CHARGES AND EXPENSES 9.8% 9.2% 8.6% 12.6% 8.4% 10.1% 9.7% 12.6%
ZWEIG GROWTH & INCOME FUND Class A Shares (ZGIAX) Class B Shares (ZGIBX) Class C Shares (ZGICX)
- ------------------------------ ------------------------------------- -------------------------- --------------------------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(11/26/96) ONE YEAR (11/26/96) ONE YEAR (11/26/96) ONE YEAR
BEFORE SALES CHARGES 9.8% -1.6% 9.0% -2.3% 9.0% -2.3%
AFTER ALL CHARGES AND EXPENSES 6.9% -7.0% 6.9% -7.2% 9.0% -3.6%
ZWEIG FOREIGN EQUITY FUND Class A Shares (ZFEAX) Class B Shares (ZFEBX) Class C Shares (ZFECX)
- ------------------------------ ------------------------------------- -------------------------- --------------------------------
FROM INCEPTION FROM INCEPTION FROM INCEPTION
(11/21/97) ONE YEAR (11/21/97) ONE YEAR (11/21/97) ONE YEAR
BEFORE SALES CHARGES 9.3% 9.1% 8.6% 8.4% 8.5% 8.3%
AFTER ALL CHARGES AND EXPENSES 3.8% 3.1% 3.6% 2.9% 8.5% 6.9%
ZWEIG GOVERNMENT FUND Class A Shares (ZGVAX) Class B Shares (ZGVBX) Class C Shares (ZGVCX)
- ------------------------------ ------------------------------------- -------------------------- --------------------------------
FROM INCEPTION FROM INCEPTION
TEN YEAR FIVE YEAR ONE YEAR (4/8/96) ONE YEAR (2/3/92) FIVE YEAR ONE YEAR
BEFORE SALES CHARGES 7.4% 5.4% 8.9% 7.3% 8.2% 5.8% 4.9% 8.5%
AFTER ALL CHARGES AND EXPENSES 6.9% 4.4% 3.7% 6.1% 2.8% 5.8% 4.9% 7.1%
</TABLE>
Returns assume that all dividends and capital gains are reinvested. Class A
Share returns after all charges and expenses include the effect of the 5.5%
maximum initial sales charge (4.75% for Zweig Government Fund). Class B Share
returns include the maximum contingent deferred sales charge (CDSC) of 5.0%
for redemptions made one year or less from date of purchase. Class C Shares,
sold with no initial sales charge, are subject to a 1.25% CDSC if sold within
12 months of purchase. Class C Share one-year returns reported above assume
that a 1.25% CDSC was paid. Aggregate annual service and distribution fees
are 0.30% for Class A Shares, 1.0% for Class B Shares, and 1.0% for Class C
Shares (0.75% for Zweig Government Fund).
<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>
TRUSTEES
James Balog
Claire B. Benenson
S. Leland Dill
Eugene J. Glaser
Donald B. Romans
OFFICERS
Eugene J. Glaser
CHAIRMAN, CHIEF EXECUTIVE OFFICER
& TRUSTEE
Martin E. Zweig
PRESIDENT
David Katzen
SENIOR VICE PRESIDENT
Annemarie Gilly
FIRST VICE PRESIDENT
Charles I. Leone
FIRST VICE PRESIDENT
& ASSISTANT SECRETARY
Barry M. Mandinach
FIRST VICE PRESIDENT
Carlton B. Neel
FIRST VICE PRESIDENT
Alfred J. Ratcliffe
FIRST VICE PRESIDENT
& TREASURER
Jeffrey Lazar
VICE PRESIDENT
Marc Baltuch
SECRETARY
Thomas Disbrow
ASSISTANT VICE PRESIDENT
& ASSISTANT TREASURER
Beth Abraham
ASSISTANT VICE PRESIDENT
Rhonda Lee Berzner
ASSISTANT VICE PRESIDENT
INVESTMENT MANAGER
Zweig/Glaser Advisers
900 Third Avenue--31st Floor
New York, NY 10022-4728
PRINCIPAL DISTRIBUTOR
Zweig Securities Corp.
900 Third Avenue--31st Floor
New York, NY 10022-4728
CUSTODIAN
The Bank of New York
One Wall Street
New York, New York 10286
TRANSFER AGENT
State Street Bank & Trust Co.
225 Franklin Street
Boston, Massachusetts 02110
SERVICING AGENT
Boston Financial Data Services, Inc.
2 Heritage Drive
North Quincy, Massachusetts 02171
COUNSEL
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
DESIGN: THE BLANK PAGE, INC. NEW YORK, NY
<PAGE>
ZWEIG
Mutual Funds
900 Third Avenue
New York, NY 10022-4728
BULK RATE
U.S. POSTAGE PAID
METRO SELIGER INDUSTRIES
VISIT OUR WEBSITE AT WWW.ZWEIG.COM
ROTH IRA KIT NOW AVAILABLE. PLEASE CALL 1-800-272-2700.
[LOGO] THIS ANNUAL REPORT IS PRINTED ON RECYCLED PAPER. -C- ZWEIG SECURITIES
CORP. MEMBER NASD. T984
