<PAGE>
July 31, 1998
PHOENIX
ABERDEEN
ANNUAL REPORT
- PHOENIX-ABERDEEN NEW
ASIA FUND
- PHOENIX-ABERDEEN GLOBAL
SMALL CAP FUND
[LOGO] PHOENIX
INVESTMENT PARTNERS
<PAGE>
-----------------------------------------------------
Mutual funds are not insured by the FDIC; are not
deposits or other obligations of a bank and are not
guaranteed by a bank; and are subject to investment
risks, including possible loss of the principal
invested.
-----------------------------------------------------
<PAGE>
PRESIDENT'S MESSAGE
- ------------------------------------------------------
Dear Phoenix-Aberdeen Fund Shareholder:
The last 12 months has been a particularly difficult time for
investors in developing countries around the world, but especially
in the Pacific basin. For the last 15 years or so, Asia has
enjoyed unparalleled growth. However, that growth has been slowing
over the past 18 months and fell dramatically in 1998. Recession
is evident in such countries as Hong Kong, Korea, and Thailand.
What we are seeing is a classic business cycle of expansion and
contraction. Asia's downturn is more startling because the boom
years were so meteoric.
However, the real reason for the severity of the collapse is
more a result of the political than economic situation. The good
news is that changes in leadership and political patronage reforms
are occurring across many nations in Asia. In addition, specific
measures that the IMF is insisting on are strengthening regulation
of the banking industry. In certain Asian countries there has been
little or no bankruptcy enforcement. Ironically, it might well be
a classic buy signal for the markets if the big, leveraged
conglomerates face the threat of liquidation.
We continue to believe the Pacific Basin offers investors the
potential for above-average long-term returns. Looking ahead, the
road to recovery will be slow and painful, but we believe that our
approach of buying only well-managed, fundamentally sound
companies will prevail.
In this report, your Fund managers discuss how their portfolios
have performed over the last fiscal year and give their near-term
outlook. We hope you will find their comments informative. If you
have any questions, please contact your financial advisor or call
Phoenix Investment Partners National Sales Desk at 1-800-243-4361.
Thank you for your continued participation in Phoenix-Aberdeen
Funds.
<TABLE>
<S> <C>
[SIGNATURE] [SIGNATURE]
Philip R. McLoughlin Hugh Young
PRESIDENT, PHOENIX FUNDS MANAGING DIRECTOR,
ABERDEEN ASSET MANAGEMENT ASIA
LIMITED
</TABLE>
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix-Aberdeen New Asia Fund is appropriate for investors seeking long-term
capital appreciation. Investors should note that foreign investment involves
special risks, such as currency fluctuation, less public disclosure, and
economic and political risks.
INVESTMENT ADVISER'S REPORT
It has been a truly horrendous year for investors in Asia. Currencies and
stock markets have tumbled. Economic growth has slumped, and there have been few
bright spots in the region. As a consequence, for the 12-month reporting period
ended July 31, 1998, the Fund's Class A shares had a negative 45.29% return and
Class B shares had a negative return of 45.83%. Our benchmark index, the Morgan
Stanley Capital International All Country Asia Pacific ex Japan Index,(1)
plummeted even further, falling 48.51%. All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
After last year's currency devaluations, Asia has been almost continuously on
the ropes. This wasn't necessarily foreseen, however. At the beginning of the
year the region's stock markets rallied sharply, but the bounce proved false. In
part it reflected the activities of hedge funds that believed last year's lows
were overdone from the point of view of both markets and currencies. Yet, the
liquidity injection found no basis in fundamental analysis. On the contrary,
Asia's story since then has been one of deteriorating growth.
The idea that the financial nature of the crisis--caused, very loosely, by
unhedged private sector borrowing--could be insulated from the broader economy
has been exposed as a fallacy. As debt unravels and banks' role becomes exposed,
the scope of required recapitalization has slowly dawned on investors.
Meanwhile, governments have been wrestling with a collapse in export-led
manufacturing. Inflation has jumped as import bills rise, interest rates have
been ratcheted up, and unemployment is a pressing issue. The scenario before us:
a grave shortage of credit for even solvent businesses, rising unemployment, and
fast contracting economies.
Most attention in the early part of the year was focused on the IMF, which has
been in the vanguard of restructuring activity in Korea, Thailand, and
Indonesia. Its prescriptions were initially rebuffed last year but found a
better reception following Korea's election of a new president. Similarly in
Thailand a reform-minded government is speeding its task.
However, in Korea's case, militant unions and the dominant conglomerates are
resisting change. Many of these have for years benefited from state-directed
soft loans. Their expansion into new industries, often with little regard for
demand or corporate synergy, let alone profit, now makes the task of
restructuring a massive challenge. Worse, the weakness in the Japanese yen is
eroding many of the cost advantages it held over its neighbor and chief export
market. Korea had ambitions to become a major player in many global industries,
including global semi-conductors. The price crunch here illustrates the risk
inherent in that strategy and has severely hampered the country's rebound.
Thailand remains held back by its banking sector. After some forced mergers,
it appears further work is needed to meet non-performing assets and raise new
capital. There has been a degree of liberalization, with foreign banks at last
able to buy into ailing domestic institutions. But massive provisioning is still
required. Half the country's banks lost money through the first half of this
year, notwithstanding their bad loans. Tougher reporting will further squeeze
banks through the second half. So, while the likes of
(1) The Morgan Stanley Capital International Index All Country Asia Pacific ex
Japan Index is an unmanaged, commonly used measure of stock market
performance in Asia and the Pacific Basin.
1
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
leading bank, Bangkok Bank, have managed to issue $1 billion in new capital,
further capital injections remain essential.
Further south, Malaysia's prime minister continues to blame foreigners for the
country's problems. Yet while Malaysia has avoided going "cap in hand" to the
IMF, profligate domestic borrowing has forced it to take steps to clear away the
debris within the financial system. Some measures lack transparency. The
national oil company has already bailed out a conglomerate controlled by the
prime minister's son. Fears are that a re-structuring agency intended to buy
distressed assets will be similarly directed. The prime minister has locked
horns with his finance minister. It now appears his populist agenda will win out
over orthodox economic reforms. The announcement of a huge spending package will
probably favor infrastructure--and the government-connected companies that hold
key contracts.
Another long-ruling leader, Suharto of Indonesia, appeared to be playing a
skillful hand with the IMF. However, he continually reneged on promises to
reform. All the while the currency sank lower, while international lenders
refused to honor Indonesian letters of credit. With prices of basic foodstuffs
skyrocketing along with inflation, peaceful protests turned to riots.
Heavy-handed intervention by the military then inflamed tensions. After students
were gunned down at a campus rally, Suharto's resignation became essential.
His successor, the former vice-president Habibie, has managed to consolidate
his position with the backing of the armed forces. However, he is too closely
identified with the ex-president to be considered as anything but a stopgap. The
Suharto family's wealth, accumulated through kickbacks, monopolies, and
preferential treatment, is much resented, and attacks on the minority Chinese
are symptomatic of popular frustration at income inequality. Many of the
bankrupt conglomerates that have all but collapsed the banking system are linked
to leading government members and the ex-president's family. Huge challenges
therefore remain.
Not surprisingly, even countries like Singapore have been caught by regional
events. Despite stringent financial management, the island republic will
probably see static growth this year. Hong Kong's decision to continue its
currency peg has led to a sharp downturn. As the dollar has risen, it has had to
raise local rates, pushing the property-dependent economy into recession.
Economic growth is expected to contract by as much as 2% this year. Taiwan's
economy has so far been the most resilient, growing 6% in the first quarter of
1998, but there are signs of a weakening, this time resulting from a downturn in
the global electronics cycle on which the country is dependent.
Both China and India have been insulated from the effects of regional currency
devaluations due to the non-convertibility of their currencies. China, however,
is exposed. A new reform program for its creaking state finance sector is
crucial as lending institutions carry a huge burden of non-performing loans made
to state-owned enterprises. With exports slowing down and domestic structural
problems, the economy has decelerated, and we are expecting only 5% growth this
year, well below the 8% the government believes is required to maintain
equilibrium. China's plea for Japan to sort itself out reflects anxiety that
domestic activity cannot easily substitute for falling exports.
The Indian subcontinent has undergone various political shifts. A more
nationalist minority government is now installed in Delhi. Early resumption of
nuclear tests has once more destabilized relations with neighboring Pakistan. We
expect the rupee to weaken but continue to find well-run companies with growth
potential. Political drift has stopped a rally in equities.
2
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
Australia has remained relatively strong. The natural resource sector has
suffered from the Asian downturn, but our exposure has been solely to the
industrial sector. Growth will slow too in Australia, but good fiscal management
and quality are being rewarded.
Last, Japan has created new worries. This was first expressed internationally
in terms of a sliding yen. A major fear was that Japan would prove unable to
stimulate exports in the region and thus make recovery more difficult. In
particular, president Clinton was anxious to put pressure on Tokyo ahead of his
Chinese visit. A devaluation in Beijing would have severe consequences for Hong
Kong and would probably spark further competitive devaluations elsewhere, but
intervention will have only partial success if the politicians vacillate.
Unfortunately, the story over the last several months is of missed chances.
Politicians have failed to confront structural problems in the banking sector.
Banks remain debt-encumbered, lending has collapsed, and confidence has also
dived over jobs and income. A change of leadership in the ruling LDP makes a
clean break possible, but the political culture, whatever the acknowledgment of
the need for action, is against it.
OUTLOOK
Since the crisis, we have placed even more emphasis on due diligence, visiting
our holdings more often and calling management quarterly to check on the
company's progress. The major change to our portfolio has been in the banking
sector. Not because the individual companies themselves are bad, but simply if a
bank has lent ten times its equity and economies go into recession, bad debt
will mount as we have seen and massive recapitalization and consequent dilution
will ensue. What we have found is that the traditional method of valuing an
investment, price-to-earnings ratio, is no longer relevant in this period where
earnings will be non-existent. What is more useful is franchise value or stocks
trading at a discount to assets or cash per share.
Within the portfolio, it is important to point out that we have avoided the
worst of the corporates by our strict due diligence on corporate balance sheets
and our rigorous program of company visits. We have also had a long-standing
policy of avoiding companies dependent on political patronage for advancement.
Although all looks bleak now, we believe that it is the companies in which we
are invested that will benefit first from increased fiscal vigilance across the
region and secondly when the economies improve.
3
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX ABERDEEN PHOENIX ABERDEEN
NEW ASIA CLASS A NEW ASIA CLASS B MSCI AC ASIA PACIFIC EX JAPAN
<S> <C> <C> <C>
9/4/96 $9,524 $10,000 $10,000
7/31/97 $9,998 $10,437 $11,200
7/31/98 $5,471 $5,438 $5,767
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 7/31/98
<TABLE>
<CAPTION>
FROM
INCEPTION
9/4/96 TO
1 YEAR 7/31/98
<S> <C> <C>
- ----------------------------------------------------------------------------
Class A with 4.75% sales charge (47.88)% (27.15)%
- ----------------------------------------------------------------------------
Class A at net asset value (45.29)% (25.26)%
- ----------------------------------------------------------------------------
Class B with CDSC (47.91)% (27.38)%
- ----------------------------------------------------------------------------
Class B at net asset value (45.83)% (25.88)%
- ----------------------------------------------------------------------------
Morgan Stanley Capital International
All Country Asia Pacific (excluding Japan) Index* (48.51)% (25.11)%
- ----------------------------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 9/4/96
(inception of the Fund) for Class A and B shares. The total return for Class A
shares reflects the maximum sales charge of 4.75% on the initial investment and
assumes reinvestment of dividends and capital gains. The total return for Class
B shares reflects the 5% contingent deferred sales charge (CDSC), which is
applicable on all shares redeemed during the 1st year after purchase and 4% for
all shares redeemed during the 2nd year after purchase (scaled down to 3%-3rd
year, 2%-4th and 5th year and 0% thereafter). Returns indicate past performance,
which is not predictive of future performance. Investment return and net asset
value will fluctuate, so that your shares, when redeemed, may be worth more or
less than the original cost.
*Morgan Stanley Capital International All Country Asia Pacific (excluding Japan)
Index is a market-value weighted average of the performance of securities
listed on the stock exchanges of 14 countries in Asia and the Pacific Basin.
Performance is calculated on a total return basis, as reported by Frank Russell
Company.
4
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
INVESTMENTS AT JULY 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
FOREIGN COMMON STOCKS--95.4%
AUSTRALIA--16.8%
Australian Gas Light Co. Ltd.
(Utility-Gas Distribution)..... 25,000 $ 165,513
BRL Hardy Ltd. (Beverages
(Alcoholic))................... 127,500 378,621
Commonwealth Bank of Australia
(Banks (Major Regional))....... 14,000 174,713
Leighton Holdings Ltd.
(Engineering & Construction)... 40,000 136,030
Pacifica Group Ltd.
(Manufacturing
(Diversified))................. 85,000 193,569
QBE Insurance Group Ltd.
(Insurance (Multi-Line))....... 80,000 296,350
Telstra Corp. Ltd.
(Communications Equipment)..... 65,000 185,523
----------
1,530,319
----------
HONG KONG--21.2%
CDL Hotels International Ltd.
(Lodging (Hotels))............. 900,000 249,758
Citybus Group Ltd. (Services
(Commercial & Consumer))....... 700,000 89,448
Giordano International Ltd.
(Retail (General
Merchandise)).................. 599,000 103,603
HSBC Holdings PLC (Banks (Money
Center))....................... 13,600 331,772
Hongkong Electric Holdings Ltd.
(Electric Companies)........... 100,000 313,650
National Mutual Asia Ltd.
(Insurance (Multi-Line))....... 600,000 336,883
Smartone Telecommunications
(Telecommunications
(Cellular/Wireless))........... 75,000 217,328
Swire Pacific Ltd. Class B
(Diversified Miscellaneous).... 575,000 289,449
----------
1,931,891
----------
INDIA--10.6%
BSES Ltd. GDR (Diversified
Miscellaneous) (b)............. 22,000 249,150
Industrial Credit & Investment
Corporation of India Ltd.
Sponsored GDR (Financial
(Diversified))................. 20,000 225,000
Mahanagar Telephone Nigam Ltd.
Sponsored GDR (Telephone)...... 24,000 291,000
Ranbaxy Laboratories GDR (Health
Care (Drugs - Major
Pharmaceuticals)).............. 13,000 204,750
----------
969,900
----------
INDONESIA--3.2%
PT Bank Bali (Banks (Major
Regional))..................... 669,000 52,148
PT Indosat (Communications
Equipment)..................... 220,000 243,847
----------
295,995
----------
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
MALAYSIA--5.1%
Carlsberg Brewery Malaysia Berhad
(Beverages (Alcoholic))........ 60,000 $ 158,837
Malaysian Oxygen Berhad
(Chemicals).................... 95,000 168,431
Muhibbah Engineering Berhad
(Engineering & Construction)
(b)............................ 100,000 29,145
Sime UEP Properties Berhad (Real
Estate)........................ 230,000 107,810
----------
464,223
----------
NEW ZEALAND--2.5%
Telecom Corporation of New
Zealand Ltd. (Communications
Equipment)..................... 50,000 224,369
----------
PHILIPPINES--8.3%
Ayala Land, Inc. Class B
(Engineering & Construction)... 840,000 214,495
Bank of the Philippines Islands
(Banks (Major Regional))....... 60,000 128,982
La Tondena Distillers, Inc.
(Beverages (Alcoholic))........ 200,000 81,950
Philippine Long Distance
Telephone Co. Sponsored ADR
(Telephone).................... 15,000 331,875
----------
757,302
----------
SINGAPORE--12.7%
Chemical Industries (Far East)
Ltd. (Chemicals)............... 100,000 121,056
Clipsal Industries Ltd.
(Electrical Equipment)......... 150,000 93,000
Robinson & Company Ltd. (Retail
(Department Stores))........... 126,000 291,925
Rothmans Industries Ltd.
(Tobacco)...................... 60,000 278,024
Singapore Press Holdings Ltd.
(Publishing (Newspapers))...... 28,000 197,860
United Overseas Bank Ltd. Foreign
(Banks (Money Center))......... 60,000 172,375
----------
1,154,240
----------
SOUTH KOREA--2.5%
Pohang Iron & Steel Co. (Iron &
Steel)......................... 5,000 224,049
----------
SRI LANKA--3.2%
John Keells Holdings Ltd.
(Diversified Miscellaneous).... 40,000 136,523
National Development Bank Ltd.
(Banks (Major Regional))....... 75,000 158,139
----------
294,662
----------
TAIWAN--4.6%
Standard Foods Taiwan Ltd. GDR
(Retail (Food Chains))......... 35,000 417,375
----------
</TABLE>
See Notes to Financial Statements 5
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
---------- ----------
<S> <C> <C>
THAILAND--3.4%
Bangkok Bank Public Co. Ltd.
Foreign (Banks (Major
Regional))..................... 30,000 $ 35,619
Phatra Insurance Public Co. Ltd.
Foreign (Insurance
(Multi-Line)).................. 73,700 129,904
Ruam Pattana Fund II (Financial
(Diversified)) (b)............. 1,500,000 139,539
----------
305,062
----------
UNITED KINGDOM--1.3%
Rowe Evans Investments PLC
(Agricultural Products)........ 125,000 117,587
----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $13,900,981)................ 8,686,974
----------
TOTAL LONG-TERM INVESTMENTS--95.4%
(Identified cost $13,900,981)................ 8,686,974
----------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000) VALUE
---------- ----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--3.3%
Salomon Brothers, repurchase
agreement, 5.48%, dated 7/31/98
due 8/3/98, repurchase price
$300,137, collateralized by
U.S. Treasury Bill 5.60%,
1/7/99, market value
$305,989....................... $ 300 $ 300,000
----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $300,000)................... 300,000
----------
TOTAL INVESTMENTS--98.7%
(Identified cost $14,200,981)................ 8,986,974(a)
Cash and receivables, less
liabilities--1.3%.......................... 121,464
----------
NET ASSETS--100.0%............................. $9,108,438
----------
----------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $555,769 and gross
depreciation of $5,920,901 for federal income tax purposes. At July 31,
1998, the aggregate cost of securities for federal income tax purposes was
$14,352,106.
(b) Non-income producing.
6 See Notes to Financial Statements
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF LONG-TERM INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Agricultural Products............................................ 1.3%
Banks (Major Regional)........................................... 6.3
Banks (Money Center)............................................. 5.8
Beverages (Alcoholic)............................................ 7.1
Chemicals........................................................ 3.3
Communications Equipment......................................... 7.5
Diversified Miscellaneous........................................ 7.8
Electric Companies............................................... 3.6
Electrical Equipment............................................. 1.1
Engineering & Construction....................................... 4.4
Financial (Diversified).......................................... 4.2
Health Care (Drugs-Major Pharmaceuticals)........................ 2.4
Insurance (Multi-Line)........................................... 8.8
Iron & Steel..................................................... 2.6
Lodging (Hotels)................................................. 2.9
Manufacturing (Diversified)...................................... 2.2
Publishing (Newspapers).......................................... 2.3
Real Estate...................................................... 1.2
Retail (Department Stores)....................................... 3.4
Retail (Food Chains)............................................. 4.8
Retail (General Merchandise)..................................... 1.2
Services (Commercial & Consumer)................................. 1.0
Telecommunications (Cellular/Wireless)........................... 2.5
Telephone........................................................ 7.2
Tobacco.......................................................... 3.2
Utility-Gas Distribution......................................... 1.9
------
100.0%
------
------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $14,200,981) $ 8,986,974
Cash 116,310
Foreign currency at value
(Identified cost $125,906) 124,527
Receivables
Investment securities sold 43,076
Dividends and interest 34,030
Receivable from adviser 24,378
Fund shares sold 4,858
-------------
Total assets 9,334,153
-------------
LIABILITIES
Payables
Investment securities purchased 124,527
Fund shares repurchased 17,141
Distribution fee 3,839
Trustees' fee 3,636
Transfer agent fee 4,625
Financial agent fee 2,797
Administration fee 1,233
Accrued expenses 67,917
-------------
Total liabilities 225,715
-------------
NET ASSETS $ 9,108,438
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 17,184,020
Distributions in excess of net investment income (71,526)
Accumulated net realized loss (2,789,281)
Net unrealized depreciation (5,214,775)
-------------
NET ASSETS $ 9,108,438
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $6,351,996) 1,166,559
Net asset value per share $5.45
Offering price per share
$5.45/(1-4.75%) $5.72
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $2,756,442) 510,174
Net asset value and offering price per share $5.40
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 367,585
Interest 33,158
Foreign taxes withheld (24,320)
-----------
Total investment income 376,423
-----------
EXPENSES
Investment advisory fee 106,419
Distribution fee--Class A 21,801
Distribution fee--Class B 38,678
Financial agent fee 73,890
Administration fee 18,882
Transfer agent 59,193
Custodian 55,159
Registration 31,434
Trustees 20,582
Printing 20,315
Professional 15,508
Miscellaneous 9,119
-----------
Total expenses 470,980
Less expenses borne by investment adviser (179,218)
-----------
Net expenses 291,762
-----------
NET INVESTMENT INCOME 84,661
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized loss on securities (2,529,914)
Net realized loss on foreign currency transactions (9,688)
Net change in unrealized appreciation (depreciation) on investments (5,877,623)
Net change in unrealized appreciation (depreciation) on foreign
currency and foreign currency transactions (802)
-----------
NET LOSS ON INVESTMENTS (8,418,027)
-----------
NET DECREASE IN NET ASSETS RESULTING FROM
OPERATIONS $(8,333,366)
-----------
-----------
</TABLE>
8 See Notes to Financial Statements
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FROM
INCEPTION
SEPTEMBER 4,
1996
YEAR ENDED TO JULY 31,
JULY 31, 1998 1997
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 84,661 $ 86,832
Net realized loss (2,539,602) (134)
Net change in unrealized appreciation
(depreciation) (5,878,425) 663,650
------------- -------------
INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS (8,333,366) 750,348
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class A (119,514) (52,987)
Net investment income--Class B (43,580) (15,128)
In excess of net investment income--Class A (239,479) --
In excess of net investment income--Class B (87,326) --
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (489,899) (68,115)
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (568,922 and
1,467,788 shares, respectively) 3,994,745 14,761,764
Net asset value of shares issued from
reinvestment of distributions (54,456 and
4,967 shares, respectively) 341,985 49,716
Cost of shares repurchased (735,511 and 194,063
shares, respectively) (5,284,710) (1,936,251)
------------- -------------
Total (947,980) 12,875,229
------------- -------------
CLASS B
Proceeds from sales of shares (146,419 and
673,230 shares, respectively) 1,054,677 6,773,565
Net asset value of shares issued from
reinvestment of distributions (18,909 and
1,408 shares, respectively) 118,368 14,076
Cost of shares repurchased (272,894 and 56,898
shares, respectively) (2,064,578) (573,887)
------------- -------------
Total (891,533) 6,213,754
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS (1,839,513) 19,088,983
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (10,662,778) 19,771,216
NET ASSETS
Beginning of period 19,771,216 0
------------- -------------
END OF PERIOD (INCLUDING DISTRIBUTIONS IN EXCESS
OF NET INVESTMENT INCOME
AND UNDISTRIBUTED NET INVESTMENT INCOME OF
($71,526) AND $72,144, RESPECTIVELY) $ 9,108,438 $ 19,771,216
------------- -------------
------------- -------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
NEW ASIA SERIES
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- -------------------------
FROM FROM
INCEPTION YEAR INCEPTION
YEAR ENDED 9/4/96 TO ENDED 9/4/96 TO
7/31/98 7/31/97 7/31/98 7/31/97
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $10.44 $ 10.00 $ 10.39 $ 10.00
INCOME FROM INVESTMENT OPERATIONS(7)
Net investment income (loss) 0.06(4)(5) 0.09(4)(5) 0.01(4)(6) 0.01(4)(6)
Net realized and unrealized gain (loss) (4.75) 0.41 (4.73) 0.43
----------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS (4.69) 0.50 (4.72) 0.44
----------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net investment income (0.10) (0.06) (0.09) (0.05)
In excess of net investment income (0.20) -- (0.18) --
----------- --------- --------- ---------
TOTAL DISTRIBUTIONS (0.30) (0.06) (0.27) (0.05)
----------- --------- --------- ---------
Change in net asset value (4.99) 0.44 (4.99) 0.39
----------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $ 5.45 $ 10.44 $ 5.40 $ 10.39
----------- --------- --------- ---------
----------- --------- --------- ---------
Total return(1) (45.29)% 4.98%(3) (45.83)% 4.37%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $6,352 $13,355 $ 2,756 $ 6,416
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10% 2.10%(2) 2.85% 2.85%(2)
Net investment income 0.89% 0.95%(2) 0.18% 0.06%(2)
Portfolio turnover 44% 9%(3) 44% 9%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.10
and $0.15, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of $0.10
and $0.15, respectively.
(7) Distributions are made in accordance with the prospectus; however, class
level per share income from investment operations may vary from anticipated
results depending on the timing of share purchases and redemptions.
10 See Notes to Financial Statements
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
INVESTOR PROFILE
Phoenix-Aberdeen Global Small Cap Fund is appropriate for investors seeking
long-term capital appreciation. Investors should note that small company
investing involves added risks, including greater price volatility, less
liquidity and increased competitive threat. Foreign investing involves special
risks, such as currency fluctuations, less public disclosure, and economic and
political risks.
INVESTMENT ADVISER'S REPORT
For the 12 months ended July 31, 1998, Class A shares returned 1.86% and Class
B shares returned 1.12% compared with a return of 2.08% for the
FT/S&P--Actuaries World Index.-TM-(1) All performance figures assume
reinvestment of dividends and exclude the effect of sales charges.
Western economies and stock markets continued to prosper in the year under
review despite the accelerating decline in the Far East, with much of the
region, including Japan, in recession. In general, the U.S. and Europe were seen
as benefiting from developments in the Far East as the impact on inflation and
hence interest rates more than offset the decline in demand. Once again,
however, small companies underperformed their larger counterparts throughout the
world. For example, in the United States the Russell 2000 Index(2) of smaller
companies only gained 2.31% in the year whereas the S&P 500 Index(3) of the
country's largest companies increased by 19.31%.
The domestic large-cap market has continued to perform impressively, although
we have yet to see the same performance for smaller companies. Fear of
deflation, caused by the Far Eastern collapse, has receded as investors have
latched onto the positive benefits of lower inflation and interest rates and
expected slower demand. This allowed the Federal Reserve to defer any rate rise,
while bonds staged a strong rally. The bond rally was in large measure boosted
by a 'flight to quality' in response to the Far Eastern financial implosion.
Bond yields, which are at, or near, record lows have, in turn, boosted equity
markets, which were already supported by strong liquidity in the form of high
institutional cash levels, share buy-backs, and corporate take-over activity.
European markets in particular have also benefited from the above scenario.
The advent of the Euro currency, which is set to be launched in January 1999,
has given European institutions access to a much greater pool of domestic
currency investments. Also, European markets have drawn significant levels of
foreign investment attracted by a region whose economies have much further to go
in the current economic cycle and a paucity of investment opportunities
elsewhere. This, coupled with the need for corporations to restructure in order
to be prepared for a new and more competitive pan-European market and an
emerging trend of improving shareholder returns, has combined with the global
market environment to enable the European equity market to post particularly
strong returns.
The currency-led collapse in the Pacific Basin has left the region's markets
in tatters, and investors are nursing heavy losses. Only a
(1) The FT/S&P--Actuaries World Index-TM- is an unmanaged, broad-based global
market index consisting of over 2,400 stocks, covering 28 countries in the
Pacific Basin, Europe, and the American markets. The Index is weighted by
market capitalization and returns are calculated on a total return basis.
The Medium Small component of the FT/S&P--Actuaries World Index consists of
companies in the World Index with market capitalizations between $25 million
and $13.9 billion. The Index is not available for direct investment.
(2) The Russell 2000 Index is an unmanaged, commonly used measure of small
company total return performance. The Index is not available for direct
investment.
(3) The S&P 500 Index is an unmanaged, commonly used measure of common stock
total return performance. The Index is not available for direct investment.
11
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
determined effort by the IMF and the U.S. to establish credible recovery plans
contained the crisis mostly within the region, allowing a selective market
recovery in the first quarter of this year. Even this, however, petered out as
investors' relief that the worst was over gave way to the realization that there
was still much deeper economic pain to endure. Even Hong Kong and Singapore saw
their stock markets fall heavily.
For much of the past year, Japan has been struggling to avoid a recession.
Recent data, however, show an economic contraction nearly as severe as that
experienced during the first oil crisis. Investors have been correctly cynical
of a series of fiscal packages and totally inadequate attempts to reform the
banking system. It is only with the recent rapid depreciation of the yen and
stock market that the government is being forced into more concrete action.
OUTLOOK
Western markets have recently fallen from record high levels amid growing
concerns of the long-term effect of the prolonged Asian financial crisis in
addition to recent worries over the Russian financial situation. We believe the
U.S. is relatively immune to Asia. We expect the economy to remain strong, and
interest rates and inflation to stay low, encouraging further corporate
activity. Only a tightening of monetary policy has the potential to end the bull
market, and then it must be tight enough to end the economic expansion. While
smaller companies have not participated to the same extent in the protracted
bull market they now offer much better value than their larger counterparts, and
we have seen some evidence of a switch into those smaller companies not impacted
by the external international influences, such as a strong dollar or financial
crises overseas. Similarly, in Europe and the U.K., we are continuing to find
good, quality companies trading at low multiples.
In Asia, it is essential for Japan's economy to recover, as the implications
of this for the region as a whole are immense with no upturn in the Pacific
Basin likely without Japan's assistance. Fundamental valuations for good
long-term businesses are looking increasingly compelling; however, short-selling
has been distorting the picture. Given the scale of recent declines, we could
see a bounce in Asian markets on improved sentiment in the near term.
In conclusion, while financial markets are proving to be extremely volatile,
many of the past year's trends remain in place. Even with a further
deterioration in the Far East, there is still some confidence in the ability of
Western markets to withstand these squalls. The reasons for this continued
bullishness remain low interest rates, low inflation, ample liquidity, and
merger and acquisition activity overcoming worries on valuation and earnings
issues. Smaller companies have been largely ignored by investors in the recent
past, but there are signs beginning to appear that there may be a shift in this
trend with better times ahead for these stocks.
12
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
PHOENIX ABERDEEN PHOENIX ABERDEEN
GLOBAL SMALL CAP CLASS A GLOBAL SMALL CAP CLASS B FT/S&P--ACTUARIES WORLD INDEX(TM)
<S> <C> <C> <C>
9/4/96 $9,524 $10,000
9/30/96 $10,000
7/31/97 $10,552 $11,000 $11,725
7/31/98 $10,749 $10,723 $11,969
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS FOR THE PERIODS ENDING 7/31/98
<TABLE>
<CAPTION>
FROM
INCEPTION
9/4/96 TO
1 YEAR 7/31/98
<S> <C> <C>
- ---------------------------------------------------------------------------
Class A with 4.75% sales charge (2.96)% 3.87%
- ---------------------------------------------------------------------------
Class A at net asset value 1.86% 6.56%
- ---------------------------------------------------------------------------
Class B with CDSC (2.52)% 3.73%
- ---------------------------------------------------------------------------
Class B at net asset value 1.12% 5.75%
- ---------------------------------------------------------------------------
FT/S&P--Actuaries World Index Medium/ Small
Component* 2.08% 10.30%**
- ---------------------------------------------------------------------------
</TABLE>
This chart assumes an initial gross investment of $10,000 made on 9/4/96
(inception of the Fund) for Class A and B shares. The total return for Class A
shares reflects the maximum sales charge of 4.75% on the initial investment and
assumes reinvestment of dividends and capital gains. The total return for Class
B shares reflects the 5% contingent deferred sales charge (CDSC), which is
applicable on all shares redeemed during the 1st year after purchase and 4% for
all shares redeemed during the 2nd year after purchase (scaled down to 3%-3rd
year, 2%-4th and 5th year and 0% thereafter). Returns indicate past performance,
which is not predictive of future performance. Investment return and net asset
value will fluctuate, so that your shares, when redeemed, may be worth more or
less than the original cost.
IMPORTANT NOTE: Investors should know that returns and share prices cited in
this report dated 7/31/98 may be significantly different now as a result of
recent market conditions. For current performance information, contact your
financial advisor or call us toll-free at 1-800-243-4361.
*The FT/S&P--Actuaries World Index-TM- is a broad-based global market index
consisting of over 2,400 stocks, covering 28 countries in the Pacific Basin,
Europe and the American markets. The index is weighted by market
capitalization and returns are calculated on a total return basis. The
Medium/Small component of the FT/S&P--Actuaries World Index consists of
companies in the World Index with market capitalization between $25 million
and $13.9 billion. Performance is reported by Goldman, Sachs & Co.
**Index information from 9/30/96 to 7/31/98.
13
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
INVESTMENTS AT JULY 31, 1998
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
FOREIGN COMMON STOCKS--63.4%
ARGENTINA--0.6%
Banco Frances SA Sponsored ADR
(Banks-Foreign)................ 4,000 $ 99,750
Disco SA Sponsored ADR (Retail-
Supermarkets) (b).............. 2,000 69,250
-----------
169,000
-----------
AUSTRALIA--1.5%
BRL Hardy Ltd.
(Beverages-Alcoholic).......... 75,000 222,718
Pacifica Group Ltd. (Diversified
Operations).................... 100,000 227,728
-----------
450,446
-----------
BELGIUM--0.3%
Lernout & Hauspie Speech Products
NV (Electronic-Parts
Distributors) (b).............. 1,500 77,438
-----------
BRAZIL--0.8%
Centrais Eletricas de Santa
Catarina SA Preference Class B
(Utility-Electric Power)....... 90,000 75,845
Companhia Energetica Brasilia
Preference Class A (Electric
Products-Miscellaneous) (b).... 443,292 15,248
Companhia Energetica Brasilia
Preference Class B (Electric
Products-Miscellaneous) (b).... 800,000 28,205
Companhia Paranaense de Energia
Sponsored ADR (Utility-Electric
Power)......................... 10,000 108,750
-----------
228,048
-----------
CANADA--0.5%
Imax Corp. (Leisure-Movies &
Related) (b)................... 7,000 147,000
-----------
CHILE--0.0%
Santa Isabel SA Sponsored ADR
(Retail-Supermarkets).......... 1,496 16,550
-----------
DENMARK--0.9%
Sondagsavisen A/S
(Media-Newspapers)............. 4,950 284,839
-----------
FINLAND--2.3%
Elcoteq Network Corp. A Shares
(Telecommunications-
Equipment)..................... 28,400 393,954
Sampo Insurance Co. PLC A Shares
(Insurance-Multi-Line)......... 5,250 294,217
-----------
688,171
-----------
FRANCE--5.8%
Altran Technologies SA
(Commercial
Services-Engineering/R&D)...... 1,540 361,496
Coflexip SA Sponsored ADR (Oil &
Gas-Drilling & Equipment)...... 1,000 49,500
LVL Medical
(Medical-Outpatient/Home
Care).......................... 11,550 222,867
Penauille Polyservices
(Commercial
Services-Security/Safety)...... 830 264,604
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
FRANCE--CONTINUED
Picogiga (Electric-Semiconductor
Equipment)..................... 4,710 $ 184,928
Societe Industrielle D'Aviations
Latecoere SA (Aerospace/Defense
Equipment)..................... 2,310 308,138
Union des Assurances Federales
(Insurance-Life)............... 2,370 353,919
-----------
1,745,452
-----------
GERMANY--4.9%
Apcoa Parking AG (Commercial
Services-Miscellaneous)........ 3,000 210,424
Berliner Kraft-und Licht AG
(Electronic-Parts
Distributors).................. 5,520 217,256
KM Europa Metal AG (Metal
Processing & Fabrication)...... 3,540 477,693
LOESCH Umweltschutz AG (Pollution
Control-Equipment)............. 11,568 247,809
Sauer, Inc. (Machinery-General
Industrial).................... 23,000 316,831
-----------
1,470,013
-----------
GREECE--0.9%
STET Hellas Telecommunications SA
ADR (Telecommunications-
Cellular) (b).................. 6,500 281,531
-----------
HONG KONG--1.1%
Giordano International Ltd.
(Retail-Apparel/Shoe).......... 751,000 129,892
Magician Industries Holding Ltd.
(Commercial
Services-Miscellaneous)........ 1,500,000 191,675
-----------
321,567
-----------
INDIA--1.1%
Crompton Greaves Ltd. Sponsored
GDR (Electric
Products-Miscellaneous) (b).... 155,000 100,750
Industrial Credit & Investment
Corporation of India Ltd.
Sponsored GDR
(Finance-Investment
Management).................... 20,000 225,000
-----------
325,750
-----------
INDONESIA--0.4%
PT Bank Bali (Banks-Foreign)..... 600,000 46,769
PT Tigaraksa Satria (Commercial
Services-Miscellaneous)........ 350,000 74,527
-----------
121,296
-----------
IRELAND--1.6%
IFG Group PLC (Financial
Services-Miscellaneous)........ 400,000 480,803
-----------
ISRAEL--1.9%
Tadiran Ltd. (Telecommunications-
Equipment)..................... 15,242 566,086
-----------
ITALY--2.7%
Banca di Roma (Banks-Money
Center) (b).................... 172,000 399,955
Banca Popolare di Bergamo Credito
Varesino SPA (Banks-Foreign)... 17,000 401,486
-----------
801,441
-----------
</TABLE>
14 See Notes to Financial Statements
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
JAPAN--4.2%
FCC Co. Ltd. (Auto/Truck-Original
Equipment) (b)................. 35,000 $ 303,029
Kawasumi Laboratories
(Medical/Dental-Supplies)
(b)............................ 29,000 534,301
Nishio Rent All Co.
(Commercial-Leasing Companies)
(b)............................ 31,000 251,220
Shinmei Electric
(Electric-Miscellaneous
Components) (b)................ 12,000 167,064
-----------
1,255,614
-----------
MEXICO--0.6%
Grupo Elektra SA de C.V.-CPO
(Retail-Consumer Electric)..... 90,000 71,425
Industrias CH SA Class B
(Machinery-General Industrial)
(b)............................ 21,400 76,760
Tekchem SA Class A (Chemicals-
Specialty) (b)................. 182,000 36,313
-----------
184,498
-----------
NETHERLANDS--0.9%
BE Seminconductor Industries NV
(Electric-Semiconductor Mfg.)
(b)............................ 31,250 258,711
-----------
NORWAY--2.3%
NetCom ASA (Telecommunications-
Cellular) (b).................. 10,450 364,014
Tomra Systems ASA (Pollution
Control-Equipment)............. 10,400 338,856
-----------
702,870
-----------
PERU--0.3%
Credicorp Ltd. (Banks-Foreign)... 6,000 79,125
-----------
SINGAPORE--1.9%
Industrial & Commercial Bank
(Banks-Foreign)................ 78,000 95,327
Robinson & Co. Ltd.
(Retail-Department Stores)..... 80,000 185,349
Rothmans Industries Ltd.
(Tobacco) (b).................. 60,000 278,024
-----------
558,700
-----------
SPAIN--4.5%
Befesa Medio Ambiente SA
(Industrial) (b)............... 26,700 440,182
Catalana Occidente SA
(Insurance-Multi-Line)......... 10,510 327,056
Corporacion Financiera Reunida SA
(Finance-Investment
Management).................... 30,485 412,763
Sotogrande SA (Real Estate
Development) (b)............... 51,000 178,627
-----------
1,358,628
-----------
SRI LANKA--0.4%
John Keells Holdings (Diversified
Operations) (b)................ 40,000 136,523
-----------
SWEDEN--1.8%
Haldex AB (Auto/Truck-Original
Equipment)..................... 18,000 313,132
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
SWEDEN--CONTINUED
Ortivus AB B Shares (Medical-
Products) (b).................. 15,500 $ 224,701
-----------
537,833
-----------
SWITZERLAND--0.9%
SEZ Holding AG Class A (Electric
Products-Miscellaneous)........ 1,000 258,310
-----------
TAIWAN--1.6%
Standard Foods Taiwan Ltd.
Sponsored GDR RegS
(Retail-Supermarkets) (b)...... 39,997 476,964
-----------
UNITED KINGDOM--16.7%
Access Plus PLC (Commercial
Services-Advertising).......... 85,000 278,119
Cedardata PLC
(Computer-Software)............ 200,000 512,065
Charles Stanley Group PLC
(Finance-Investment Bankers)... 265,000 1,315,787
Gresham Computing PLC (Computer-
Software)...................... 570,000 969,816
ILP Group PLC
(Containers-Paper/Plastic)..... 260,000 151,002
JJB Sports PLC
(Retail-Apparel/Shoe).......... 30,000 230,675
London Pacific Group Ltd. ADR
(Financial-Diversified)........ 3,000 37,875
Rolfe & Nolan PLC
(Computer-Software)............ 100,000 474,438
Shire Pharmaceuticals Group PLC
(Drugs-Major Pharmaceuticals)
(b)............................ 4,000 96,000
Virgin Express Holdings PLC
Sponsored IDR
(Transportation-Airline) (b)... 4,300 168,863
Wilmington Group PLC (Media-
Periodicals)................... 250,000 750,511
-----------
4,985,151
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $20,313,712)................ 18,968,358
-----------
U.S. COMMON STOCKS--36.2%
AGRICULTURAL OPERATIONS--0.4%
AgriBioTech, Inc. (b)............ 6,500 117,000
-----------
BANKS-WEST--1.4%
Charter One Financial, Inc....... 4,000 130,250
Washington Federal, Inc.......... 5,000 130,000
Zions Bancorporation............. 3,000 147,000
-----------
407,250
-----------
BUILDING-MOBILE/MANUFACTURING & RV--0.2%
Fleetwood Enterprises, Inc....... 1,500 53,531
-----------
BUILDING-PAINT & ALLIED PRODUCTS--0.5%
Sherwin-Williams Co. (The)....... 5,000 159,375
-----------
BUILDING-RESIDENTIAL/COMMERCIAL--0.6%
Lennar Corp...................... 4,000 110,500
Toll Brothers, Inc. (b).......... 3,000 78,562
-----------
189,062
-----------
COMMERCIAL-LEASING COMPANIES--0.2%
First Sierra Financial, Inc.
(b)............................ 2,100 64,050
-----------
</TABLE>
See Notes to Financial Statements 15
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
COMMERCIAL SERVICES-ADVERTISING--0.5%
Catalina Marketing Corp. (b)..... 2,000 $ 98,750
Omnicom Group, Inc............... 1,000 52,500
-----------
151,250
-----------
COMMERCIAL SERVICES-MISCELLANEOUS--1.4%
Professional Detailing, Inc.
(b)............................ 500 11,500
Staff Leasing, Inc. (b).......... 6,500 151,937
Staffmark, Inc. (b).............. 6,500 173,875
United Road Services, Inc. (b)... 3,000 66,750
-----------
404,062
-----------
COMMERCIAL SERVICES-PRINTING--1.0%
Valassis Communications, Inc.
(b)............................ 2,000 75,875
World Color Press, Inc. (b)...... 6,500 221,406
-----------
297,281
-----------
COMPUTER-INTEGRATED SYSTEMS--0.2%
Diebold, Inc..................... 2,500 63,125
-----------
COMPUTER-LOCAL NETWORKS--0.1%
MMC Networks, Inc. (b)........... 1,200 25,800
-----------
COMPUTER-SERVICES--0.9%
Syntel, Inc...................... 6,700 164,150
VeriSign, Inc. (b)............... 3,000 93,000
-----------
257,150
-----------
COMPUTER-SOFTWARE--3.7%
Black Box Corp. (b).............. 3,800 122,312
ISS Group, Inc. (b).............. 7,500 348,750
Manugistics Group, Inc. (b)...... 2,500 54,375
Open Market, Inc. (b)............ 5,000 79,375
Sapient Corp. ................... 3,000 137,250
Verio, Inc. (b).................. 13,000 367,250
-----------
1,109,312
-----------
DIVERSIFIED OPERATIONS--0.1%
Furon Co......................... 2,000 35,500
-----------
ELECTRIC-LASER SYSTEMS/COMPONENT--0.3%
Uniphase Corp.................... 1,500 75,000
-----------
ELECTRICAL-EQUIPMENT--0.2%
AFC Cable Systems, Inc. (b)...... 2,000 63,750
-----------
ELECTRONIC-PARTS DISTRIBUTORS--0.6%
Oak Industries, Inc. (b)......... 5,000 185,625
-----------
FINANCE-INVESTMENT BANKERS--0.9%
Donaldson, Lufkin & Jenrette,
Inc............................ 3,500 184,625
Jefferies Group, Inc............. 2,000 88,000
-----------
272,625
-----------
FINANCE-MORTGAGE & RELATED SERVICES--0.9%
AMRESCO, Inc. (b)................ 2,500 71,406
New Century Financial Corp.
(b)............................ 17,000 192,312
-----------
263,718
-----------
FINANCIAL SERVICES-MISCELLANEOUS--1.0%
Enhance Financial Services Group,
Inc............................ 4,000 125,500
HealthCare Financial Partners,
Inc. (b)....................... 2,000 100,000
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
FINANCIAL SERVICES-MISCELLANEOUS--CONTINUED
Metris Companies, Inc............ 800 $ 59,200
-----------
284,700
-----------
INSURANCE-MULTI-LINE--0.3%
Horace Mann Educators Corp. ..... 3,000 93,750
-----------
INSURANCE-PROPERTY/CASUALTY/TITLE--0.1%
Selective Insurance Group, Inc.
(b)............................ 2,000 38,750
-----------
LEISURE-SERVICES--0.1%
ResortQuest International, Inc.
(b)............................ 1,200 18,825
-----------
MEDIA-CABLE TV--1.0%
TV Filme, Inc. (b)............... 8,000 27,000
USA Networks, Inc................ 6,000 175,500
Westwood One, Inc. (b)........... 4,000 100,000
-----------
302,500
-----------
MEDICAL-BIOMED/GENETICS--1.4%
Aviron (b)....................... 5,000 149,375
Cell Genesys, Inc. (b)........... 3,000 20,250
ICOS Corp. (b)................... 1,000 23,500
Immunex Corp. (b)................ 3,000 212,250
-----------
405,375
-----------
MEDICAL-DRUG/DIVERSIFIED--0.9%
ALZA Corp........................ 4,000 155,500
Algos Pharmaceutical Corp. (b)... 2,500 83,125
PharMerica, Inc. (b)............. 4,000 26,125
-----------
264,750
-----------
MEDICAL-ETHICAL DRUGS--0.4%
Coulter Pharmaceutical, Inc.
(b)............................ 5,000 130,625
-----------
MEDICAL-GENERIC DRUGS--0.3%
Schein Pharmaceutical, Inc.
(b)............................ 3,000 91,500
-----------
MEDICAL-HOSPITALS--0.1%
Province Healthcare Co. (b)...... 1,000 27,750
-----------
MEDICAL-INSTRUMENTS--0.3%
IGEN International, Inc. (b)..... 2,500 93,750
-----------
MEDICAL-NURSING HOMES--0.1%
Sun Healthcare Group, Inc. (b)... 3,000 43,875
-----------
MEDICAL-PRODUCTS--0.8%
ALARIS Medical, Inc. (b)......... 15,000 75,937
Safeskin Corp.................... 4,000 150,250
-----------
226,187
-----------
POLLUTION CONTROL-SERVICES--0.2%
North American Scientific,
Inc............................ 4,450 58,963
-----------
REAL ESTATE OPERATIONS--0.6%
Chicago Title Corp............... 4,000 187,000
-----------
RETAIL-APPAREL/SHOE--1.8%
AnnTaylor Stores Corp. (b)....... 4,000 84,250
Buckle, Inc. (The)............... 2,250 54,281
Genesco, Inc. (b)................ 6,000 65,250
Goody's Family Clothing, Inc.
(b)............................ 3,000 77,625
</TABLE>
16 See Notes to Financial Statements
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
RETAIL-APPAREL/SHOE--CONTINUED
Pacific Sunwear of California,
Inc............................ 3,000 $ 88,500
Ross Stores, Inc................. 2,000 84,125
Talbots, Inc. (The).............. 3,500 81,813
-----------
535,844
-----------
RETAIL-DISCOUNT & VARIETY--0.2%
Ames Department Stores, Inc.
(b)............................ 3,000 64,125
-----------
RETAIL-HOME FURNISHINGS--0.7%
Ethan Allen Interiors, Inc. ..... 2,000 82,625
Linens 'n Things, Inc............ 5,000 140,625
-----------
223,250
-----------
RETAIL-MISCELLANEOUS/DIVERSIFIED--1.7%
Best Buy Co., Inc. (b)........... 4,500 210,375
Circuit City Stores-Circuit City
Group.......................... 4,000 207,000
Trans World Entertainment Corp.
(b)............................ 2,000 78,750
-----------
496,125
-----------
RETAIL/WHOLESALE-BUILDING PRODUCTS--0.2%
HomeBase, Inc. (b)............... 8,000 62,000
-----------
RETAIL/WHOLESALE-COMPUTERS--0.3%
Ingram Micro, Inc., Class A
(b)............................ 2,000 93,250
-----------
RETAIL/WHOLESALE-JEWELRY--0.3%
Claire's Stores, Inc............. 5,000 104,375
-----------
TELECOMMUNICATIONS-CELLULAR--0.2%
Iridium World Communications Ltd.
Class A (b).................... 1,000 43,500
-----------
TELECOMMUNICATIONS-EQUIPMENT--2.9%
Antech Corp. (b)................. 10,000 222,500
General Instrument Corp. (b)..... 9,500 257,688
L-3 Communications Corp.......... 5,000 172,813
Scientific Atlanta, Inc.......... 9,000 216,563
-----------
869,564
-----------
TELECOMMUNICATIONS-SERVICES--1.7%
ITC Deltacom, Inc................ 6,000 286,500
Primus Telecommunications Group,
Inc. (b)....................... 2,000 40,250
Star Telecommunications, Inc.
(b)............................ 10,000 183,750
-----------
510,500
-----------
TEXTILE-APPAREL MANUFACTURING--0.7%
Donna Karan International, Inc.
(b)............................ 5,500 75,281
Supreme International Corp.
(b)............................ 4,000 70,500
Tandy Brand Accessories, Inc.
(b)............................ 3,000 55,125
-----------
200,906
-----------
<CAPTION>
SHARES VALUE
---------- -----------
<S> <C> <C>
TRANSPORTATION-AIRLINES--1.9%
Alaska Air Group, Inc. (b)....... 3,000 $ 125,625
America West Holding Corp. Class
B (b).......................... 5,000 120,313
COMAIR Holdings, Inc............. 1,500 47,344
Mesaba Holdings, Inc............. 4,000 94,000
SkyWest, Inc..................... 4,000 108,000
U.S. Airways Group, Inc. (b)..... 1,000 75,000
-----------
570,282
-----------
TRANSPORTATION-TRUCK--0.2%
Rent Way, Inc. (b)............... 2,500 68,438
-----------
TRUCKS & PARTS-HEAVY DUTY--0.1%
Rush Enterprises, Inc. (b)....... 4,000 38,750
-----------
UTILITY-ELECTRIC POWER--1.6%
Central Maine Power Co........... 3,500 66,281
Montana Power Co................. 2,000 70,125
Northeast Utilities, Inc. (b).... 9,000 137,250
Pinnacle West Capital Corp....... 3,000 128,250
Rochester Gas & Electric Corp.... 2,300 69,288
-----------
471,194
-----------
TOTAL U.S. COMMON STOCKS
(Identified cost $11,013,591)................ 10,814,869
-----------
TOTAL LONG-TERM INVESTMENTS--99.6%
(Identified cost $31,327,303)................ 29,783,227
-----------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000)
----------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--1.3%
Salomon Brothers, repurchase
agreement, 5.48%, dated 7/31/98
due 8/3/98, repurchase price
$400,183, collateralized by
U.S. Treasury Bill 5.60%,
1/7/99, market value $408,637.. $ 400 400,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $400,000)................... 400,000
-----------
TOTAL INVESTMENTS--100.9%
(Identified cost $31,727,303)................ 30,183,227(a)
Cash and receivables, less
liabilities--(0.9%)........................ (278,453)
-----------
NET ASSETS--100.0%............................. $29,904,774
-----------
-----------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $3,950,703 and gross
depreciation of $5,681,208 for federal income tax purposes. At July 31,
1998, the aggregate cost of securities for federal income tax purposes was
$31,913,732.
(b) Non-income producing.
See Notes to Financial Statements 17
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
INDUSTRY DIVERSIFICATION
AS A PERCENTAGE OF TOTAL VALUE OF LONG-TERM INVESTMENTS
(UNAUDITED)
<TABLE>
<S> <C>
Aerospace/Defense Equipment...................................... 1.0%
Agricultural Operations.......................................... 0.4
Auto/Truck-Original Equipment.................................... 2.1
Banks-Foreign.................................................... 2.4
Banks-Money Center............................................... 1.3
Banks-West....................................................... 1.4
Beverages-Alcoholic.............................................. 0.7
Building-Mobile/Manufacturing & RV............................... 0.2
Building-Paint & Allied Products................................. 0.5
Building-Residential/Commercial.................................. 0.6
Chemicals-Specialty.............................................. 0.1
Commercial-Leasing Companies..................................... 1.1
Commercial Services-Advertising.................................. 1.4
Commercial Services-Engineering/R&D.............................. 1.2
Commercial Services-Miscellaneous................................ 3.0
Commercial Services-Printing..................................... 1.0
Commercial Services-Security/Safety.............................. 0.9
Computer-Integrated Systems...................................... 0.2
Computer-Local Networks.......................................... 0.1
Computer-Services................................................ 0.9
Computer-Software................................................ 10.4
Containers-Paper/Plastic......................................... 0.5
Diversified Operations........................................... 1.3
Drugs-Major Pharmaceuticals...................................... 0.3
Electric Products-Miscellaneous.................................. 1.4
Electric-Laser Systems/Component................................. 0.3
Electric-Miscellaneous Components................................ 0.6
Electric-Semiconductor Equipment................................. 0.6
Electric-Semiconductor Manufacturing............................. 0.9
Electrical-Equipment............................................. 0.2
Electronic-Parts Distributors.................................... 1.6
Finance-Investment Bankers....................................... 5.4
Finance-Investment Management.................................... 2.1
Finance-Mortgage & Related Services.............................. 0.9
Financial-Diversified............................................ 0.1
Financial Services-Miscellaneous................................. 2.6
Industrial....................................................... 1.5
Insurance-Life................................................... 1.2
Insurance-Multi-Line............................................. 2.4
Insurance-Property/Casualty/Title................................ 0.1
Leisure-Movies & Related......................................... 0.5
Leisure-Services................................................. 0.1%
Machinery-General Industrial..................................... 1.3
Media-Cable TV................................................... 1.0
Media-Newspapers................................................. 1.0
Media-Periodicals................................................ 2.5
Medical-Biomed/Genetics.......................................... 1.4
Medical-Drug/Diversified......................................... 0.9
Medical-Ethical Drugs............................................ 0.4
Medical-Generic Drugs............................................ 0.3
Medical-Hospitals................................................ 0.1
Medical-Instruments.............................................. 0.3
Medical-Nursing Homes............................................ 0.1
Medical-Outpatient/Home Care..................................... 0.7
Medical-Products................................................. 1.5
Medical/Dental-Supplies.......................................... 1.8
Metal Processing & Fabrication................................... 1.6
Oil & Gas-Drilling & Equipment................................... 0.2
Pollution Control-Equipment...................................... 2.0
Pollution Control-Services....................................... 0.2
Real Estate Development.......................................... 0.6
Real Estate Operations........................................... 0.6
Retail-Apparel/Shoe.............................................. 3.0
Retail-Consumer Electric......................................... 0.2
Retail-Department Stores......................................... 0.6
Retail-Discount & Variety........................................ 0.2
Retail-Home Furnishings.......................................... 0.7
Retail-Miscellaneous/Diversified................................. 1.7
Retail-Supermarkets.............................................. 1.9
Retail/Wholesale-Building Products............................... 0.2
Retail/Wholesale Computers....................................... 0.3
Retail/Wholesale-Jewelry......................................... 0.4
Telecommunications-Cellular...................................... 2.3
Telecommunications-Equipment..................................... 6.2
Telecommunications-Services...................................... 1.7
Textile-Apparel Manufacturing.................................... 0.7
Tobacco.......................................................... 0.9
Transportation-Airline........................................... 2.5
Transportation-Truck............................................. 0.2
Trucks & Parts-Heavy Duty........................................ 0.1
Utility-Electric Power........................................... 2.2
------
100.0%
------
------
</TABLE>
18 See Notes to Financial Statements
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
JULY 31, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $31,727,303) $ 30,183,227
Cash 104,086
Foreign currency at value
(Identified cost $495,938) 502,765
Receivables
Investment securities sold 187,907
Fund shares sold 12,384
Dividends and interest 26,983
Tax reclaim 13,995
-------------
Total assets 31,031,347
-------------
LIABILITIES
Payables
Investment securities purchased 882,291
Fund shares repurchased 91,782
Advisory fee 20,653
Distribution fee 15,126
Transfer agent fee 10,971
Administration fee 4,051
Financial agent fee 1,694
Trustees' fee 3,636
Accrued expenses 96,369
-------------
Total liabilities 1,126,573
-------------
NET ASSETS $ 29,904,774
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 29,947,244
Undistributed net investment loss (163,858)
Accumulated net realized gain 1,666,152
Net unrealized depreciation (1,544,764)
-------------
NET ASSETS $ 29,904,774
-------------
-------------
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,781,425) 1,759,491
Net asset value per share $10.11
Offering price per share
$10.11/(1-4.75%) $10.61
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $12,123,349) 1,212,849
Net asset value and offering price per share $10.00
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 417,961
Interest 135,085
Foreign taxes withheld (38,868)
-----------
Total investment income 514,178
-----------
EXPENSES
Investment advisory fee 301,367
Distribution fee--Class A 50,272
Distribution fee--Class B 153,367
Financial agent fee 76,730
Administration fee 53,182
Transfer agent 95,186
Custodian 80,821
Registration 40,650
Printing 31,574
Professional 29,621
Trustees 24,171
Miscellaneous 19,900
-----------
Total expenses 956,841
Less expenses borne by investment adviser (97,206)
-----------
Net expenses 859,635
-----------
NET INVESTMENT LOSS (345,457)
-----------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Net realized gain on securities 6,457,288
Net realized loss on foreign currency transactions (5,200)
Net change in unrealized appreciation (depreciation) on investments (5,763,402)
Net change in unrealized appreciation (depreciation) on foreign
currency and foreign currency transactions (993)
-----------
NET GAIN ON INVESTMENTS 687,693
-----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 342,236
-----------
-----------
</TABLE>
See Notes to Financial Statements 19
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FROM
INCEPTION
SEPTEMBER 4,
1996
YEAR ENDED TO JULY 31,
JULY 31, 1998 1997
------------- -------------
<S> <C> <C>
FROM OPERATIONS
Net investment loss $ (345,457) $ (172,876)
Net realized gain (loss) 6,452,088 (1,105,748)
Net change in unrealized appreciation
(depreciation) (5,764,395) 4,219,631
------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 342,236 2,941,007
------------- -------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net realized gains--Class A (1,634,436) --
Net realized gains--Class B (1,345,539) --
In excess of net investment income--Class A (267,897) --
In excess of net investment income--Class B (154,696) --
------------- -------------
DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO
SHAREHOLDERS (3,402,568) --
------------- -------------
FROM SHARE TRANSACTIONS
CLASS A
Proceeds from sales of shares (303,616 and
2,544,464 shares, respectively) 3,167,670 26,115,134
Net asset value of shares issued from
reinvestment of distributions (202,252 and
0 shares, respectively) 1,806,110 --
Cost of shares repurchased (900,403 and 390,438
shares, respectively) (9,370,519) (4,060,236)
------------- -------------
Total (4,396,739) 22,054,898
------------- -------------
CLASS B
Proceeds from sales of shares (162,943 and
1,768,033 shares, respectively) 1,661,922 18,246,161
Net asset value of shares issued from
reinvestment of distributions (138,880 and
0 shares, respectively) 1,231,865 --
Cost of shares repurchased (693,656 and 163,351
shares, respectively) (7,063,874) (1,710,134)
------------- -------------
Total (4,170,087) 16,536,027
------------- -------------
INCREASE (DECREASE) IN NET ASSETS FROM SHARE
TRANSACTIONS (8,566,826) 38,590,925
------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS (11,627,158) 41,531,932
NET ASSETS
Beginning of period 41,531,932 0
------------- -------------
END OF PERIOD (INCLUDING UNDISTRIBUTED NET
INVESTMENT LOSS OF ($163,858) AND ($162,808),
RESPECTIVELY) $ 29,904,774 $ 41,531,932
------------- -------------
------------- -------------
</TABLE>
20 See Notes to Financial Statements
<PAGE>
GLOBAL SMALL CAP SERIES
- ------------------------------------------------------
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS A CLASS B
--------------------------- -------------------------
FROM FROM
INCEPTION YEAR INCEPTION
YEAR ENDED 9/4/96 TO ENDED 9/4/96 TO
7/31/98 7/31/97 7/31/98 7/31/97
----------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $11.08 $ 10.00 $ 11.00 $ 10.00
INCOME FROM INVESTMENT OPERATIONS
Net investment income (loss) (0.07)(4)(5) (0.03)(4)(5) (0.14)(4)(6) (0.10)(4)(6)
Net realized and unrealized gain (loss) 0.14 1.11 0.14 1.10
----------- --------- --------- ---------
TOTAL FROM INVESTMENT OPERATIONS 0.07 1.08 -- 1.00
----------- --------- --------- ---------
LESS DISTRIBUTIONS
Dividends from net realized gains (0.89) -- (0.89) --
In excess of net investment income (0.15) -- (0.11) --
----------- --------- --------- ---------
TOTAL DISTRIBUTIONS (1.04) -- (1.00) --
----------- --------- --------- ---------
Change in net asset value (0.97) 1.08 (1.00) 1.00
----------- --------- --------- ---------
NET ASSET VALUE, END OF PERIOD $10.11 $ 11.08 $ 10.00 $11.00
----------- --------- --------- ---------
----------- --------- --------- ---------
Total return(1) 1.86% 10.80%(3) 1.12% 10.00%(3)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (thousands) $17,781 $23,874 $12,123 $17,658
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10% 2.10%(2) 2.85% 2.85%(2)
Net investment income (loss) (0.65)% (0.32)%(2) (1.40)% (1.07)%(2)
Portfolio turnover 212% 162%(3) 212% 162%(3)
</TABLE>
(1) Maximum sales charges are not reflected in the total return calculation.
(2) Annualized
(3) Not annualized
(4) Computed using average shares outstanding.
(5) Includes reimbursement of operating expenses by investment adviser of $0.03
and $0.05, respectively.
(6) Includes reimbursement of operating expenses by investment adviser of $0.03
and $0.05, respectively.
See Notes to Financial Statements 21
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Aberdeen Series Fund (the "Trust") is organized as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company whose shares
are offered in two separate Series. Each Series has distinct investment
objectives.
The New Asia Series seeks as its investment objective long-term capital
appreciation through investing in equity securities of issuers located in at
least three different countries throughout Asia other than Japan. The Global
Small Cap Series seeks as its investment objective long-term capital
appreciation through investing in a globally diversified portfolio of equity
securities of small and medium sized companies.
Each Series offers both Class A and Class B shares. Class A shares are sold
with a front-end sales charge of up to 4.75%. Class B shares are sold with a
contingent deferred sales charge which declines from 5% to zero depending on the
period of time the shares are held. Both classes of shares have identical
voting, dividend, liquidation and other rights and the same terms and
conditions, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. Income and
expenses of each Series are borne pro rata by the holders of both classes of
shares, except that each class bears distribution expenses unique to that class.
The following is a summary of significant accounting policies consistently
followed by the Trust in the preparation of its financial statements. The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
A. SECURITY VALUATION:
Equity securities are valued at the last sale price, or if there had been no
sale that day, at the last bid price. Debt securities are valued on the basis of
broker quotations or valuations provided by a pricing service which utilizes
information with respect to recent sales, market transactions in comparable
securities, quotations from dealers, and various relationships between
securities in determining value. Short-term investments having a remaining
maturity of 60 days or less are valued at amortized cost which approximates
market. All other securities and assets are valued at fair value as determined
in good faith by or under the direction of the Trustees.
B. SECURITY TRANSACTIONS AND RELATED INCOME:
Security transactions are recorded on the trade date. Dividend income is
recorded on the ex-dividend date or, in the case of certain foreign securities,
as soon as the Trust is notified. Interest income is recorded on the accrual
basis. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each of the Series is treated as a separate taxable entity. It is the policy
of each Series in the Trust to comply with the requirements of the Internal
Revenue Code (the "Code") applicable to regulated investment companies, and to
distribute all of its taxable and tax-exempt income to its shareholders. In
addition, each Series intends to distribute an amount sufficient to avoid
imposition of any excise tax under Section 4982 of the Code. Therefore, no
provision for federal income taxes or excise taxes has been made.
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Series on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
These differences include the treatment of non-taxable dividends, foreign
currency gain/loss, Passive Foreign Investment Companies, partnerships,
operating losses and losses deferred due to wash sales and excise tax
regulations. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to paid in capital.
E. FOREIGN CURRENCY TRANSLATION:
Foreign securities and other assets and liabilities are valued using the
foreign currency exchange rate effective at the end of the reporting period.
Cost of investments is translated at the currency exchange rate effective at the
trade date. The gain or loss resulting from a change in currency exchange rates
between the trade and settlement dates of a portfolio transaction is treated as
a gain or loss on foreign currency. Likewise, the gain or loss resulting from a
change in currency exchange rates between the date income is accrued and paid is
treated as a gain or loss on foreign currency. The Trust does not separate that
portion of the results of operations arising from changes in exchange rates and
that portion arising from changes in the market prices of securities.
F. FORWARD CURRENCY CONTRACTS:
Each Series may enter into forward currency contracts in conjunction with the
planned purchase or sale of foreign denominated securities in order to hedge the
U.S. dollar cost or proceeds. Forward currency contracts involve, to varying
degrees, elements of market risk in excess of the amount recognized in the
statement of assets and liabilities. Risks arise from the possible movements in
foreign exchange rates or if the counterparty does not perform under the
contract.
A forward currency contract involves an obligation to purchase or sell a
specific currency at a future date, which may be any number of days from the
date of the contract agreed upon by the parties, at a price set at the time of
the contract. These contracts are traded directly between currency traders and
their customers. The contract is marked-to-market daily and the change in market
22
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998 (CONTINUED)
value is recorded by each Series as an unrealized gain (or loss). When the
contract is closed or offset with the same counterparty, the Series records a
realized gain (or loss) equal to the change in the value of the contract when it
was opened and the value at the time it was closed or offset.
G. EXPENSES:
Expenses incurred by the Trust with respect to more than one Series are
allocated in proportion to the net assets of each Series, except where
allocation of direct expense to each Series or an alternative allocation method
can be more fairly made.
H. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Series acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. The Series, through its custodian,
takes possession of securities collateralizing the repurchase agreement. The
collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Series in the event of
default by the seller. If the seller defaults and the value of the collateral
declines, or, if the seller enters insolvency proceedings, realization of
collateral may be delayed or limited.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Phoenix-Aberdeen International Advisors, LLC ("PAIA" or the "Adviser") serves
as the investment adviser to the Trust. PAIA is a joint venture between PM
Holdings, Inc., a direct subsidiary of Phoenix Home Life Mutual Insurance
Company ("PHL"), and Aberdeen Fund Managers, Inc. ("Aberdeen"), a wholly-owned
subsidiary of Aberdeen Asset Management PLC (previously known as Aberdeen Trust
PLC).
PAIA is entitled to a fee at an annual rate of 0.85% of the average daily net
assets of each Series. Pursuant to sub-advisory agreements, the Adviser
delegates certain investment decisions and functions to other entities. Phoenix
Investment Counsel, Inc. ("PIC"), an indirect, majority-owned subsidiary of PHL,
receives a fee at an annual rate of 0.15% of the average aggregate daily net
assets of each Series from PAIA for providing cash management and other
services, as needed. In addition, PAIA allocates certain assets of the Global
Small Cap Series for management by PIC. PAIA pays a sub-advisory fee to PIC at
an annual rate of 0.40% of the average daily net assets of the Global Small Cap
Series so allocated. PAIA also pays a sub-advisory fee to Aberdeen at an annual
rate of 0.40% of the average net assets of the New Asia Series and 0.40% of the
average net assets of the Global Small Cap Series allocated to Aberdeen by the
Adviser for management.
The Adviser has agreed to reimburse the New Asia Series and the Global Small
Cap Series to the extent that other operating expenses (excluding advisory fees,
distribution fees, interest, taxes, brokerage fees and commissions and
extraordinary expenses) exceed 1.00% of the average daily net assets for Class A
and Class B shares for each Series.
Phoenix Equity Planning Corporation ("PEPCO" or the "Distributor"), an
indirect majority-owned subsidiary of PHL, which serves as the national
distributor of the Trust's shares, has advised the Trust that it retained net
selling commissions of $6,512 for Class A shares and deferred sales charges of
$203,517 for Class B shares for the year ended July 31, 1998. In addition, each
Series pays PEPCO a distribution fee at an annual rate of 0.25% for Class A
shares and 1.00% for Class B shares applied to the average daily net assets of
each Series. The Distributor has advised the Trust that of the total amount
expensed for the year ended July 31, 1998, $190,472 was retained by the
Distributor, $62,527 was paid out to unaffiliated participants and $11,119 was
paid to W.S. Griffith, an indirect subsidiary of PHL.
As Financial Agent to the Trust, PEPCO received a fee for bookkeeping and
pricing services through May 31, 1998, at an annual rate of 0.05% of average
daily net assets up to $100 million, 0.04% of average daily net assets of $100
million to $300 million, 0.03% of average daily net assets of $300 million
through $500 million, and 0.015% of average daily net assets greater than $500
million; a minimum fee applied. Effective June 1, 1998, PEPCO receives a
financial agent fee equal to the sum of (1) the documented cost of fund
accounting and related services provided by PFPC Inc. (subagent to PEPCO), plus
(2) the documented cost to PEPCO to provide financial reporting, tax services
and oversight of subagent's performance. The current fee schedule of PFPC Inc.
ranges from 0.085% to 0.0125% of the average daily net asset values of the
Trust. Certain minimums and waivers may apply. As Administrator for the Trust,
Phoenix Investment Partners Ltd., an indirect, majority-owned subsidiary of PHL,
receives a fee at an annual rate of 0.15% of the average daily net assets of
each Series for administrative services.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended July 31, 1998, transfer agent
fees were $154,379 of which PEPCO retained $19,675 which is net of fees paid to
State Street.
23
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1998 (CONTINUED)
At July 31, 1998, PHL and its affiliates held Trust shares which aggregated
the following:
<TABLE>
<CAPTION>
AGGREGATE
NET ASSET
SHARES VALUE
--------- --------------
<S> <C> <C>
New Asia Series Class A........................... 305,646 $1,665,771
New Asia Series Class B........................... 10,470 56,538
Global Small Cap Series Class A................... 547,011 5,530,281
Global Small Cap Series Class B................... 11,123 111,230
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended July 31, 1998
(excluding U.S. Government and agency securities, short-term securities, and
forward currency contracts) aggregated the following:
<TABLE>
<CAPTION>
PURCHASES SALES
------------- -------------
<S> <C> <C>
New Asia Series................................... $ 5,195,927 $ 6,382,710
Global Small Cap Series........................... 71,020,327 80,850,263
</TABLE>
There were no purchases or sales of long-term U.S. Government and agency
securities during the year ended July 31, 1998.
4. MARKET RISK
In countries with limited or developing markets, investments may present
greater risks than in more developed markets and the prices of such investments
may be volatile. The consequences of political, social or economic changes in
these markets may have disruptive effects on the market prices of these
investments and the income they generate, as well as a Series' ability to
repatriate such amounts.
5. CAPITAL LOSS CARRYOVERS
At July 31, 1998, the New Asia Series had a capital loss carryover of
$100,079, expiring in 2006, which may be used to offset future capital gains.
The Global Small Cap Series was able to utilize losses deferred in the prior
year against current year capital gains in the amount of $166,196.
Under current tax law, foreign currency and capital losses realized after
October 31, 1997 may be deferred and treated as occurring on the first day of
the following fiscal year. For the year ended July 31, 1998, the following
foreign currency and capital losses were deferred:
<TABLE>
<CAPTION>
FOREIGN
CURRENCY CAPITAL
----------- ---------
<S> <C> <C>
New Asia Series......................... $ 13,207 $2,689,202
Global Small Cap Series................. -- 27,411
</TABLE>
For the year ended July 31, 1998, prior year losses deferred were utilized as
follows: New Asia Series $934 and Global Small Cap Series $777,042.
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Series of the Trust have
recorded several reclassifications in the capital accounts. These
reclassifications have no impact on the net asset value of the Series and are
designed generally to present undistributed income and realized gains on a tax
basis which is considered to be more informative to the shareholder. As of July
31, 1998, the Series recorded the following reclassifications to increase
(decrease) the accounts listed below:
<TABLE>
<CAPTION>
UNDISTRIBUTED CAPITAL PAID
NET ACCUMULATED IN ON SHARES
INVESTMENT NET REALIZED OF BENEFICIAL
INCOME (LOSS) GAIN (LOSS) INTEREST
------------- ------------ -------------
<S> <C> <C> <C>
New Asia Series......................... $ 261,568 $ (255,968) $ (5,600)
Global Small Cap Series................. 767,000 (761,170) (5,830)
</TABLE>
This report is not authorized for distribution to prospective investors in the
Phoenix-Aberdeen Series Fund unless preceded or accompanied by an effective
prospectus which includes information concerning the sales charge, the Fund's
record and other pertinent information.
24
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix-Aberdeen Series Fund
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments, 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 the New Asia Series and the Global
Small Cap Series (constituting the Phoenix-Aberdeen Series, hereinafter referred
to as the "Trust") at July 31, 1998, and the results of each of their
operations, the changes in each of their net assets and the financial highlights
for the periods indicated, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust'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 July 31, 1998 by correspondence with the custodian
and brokers provide a reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
September 16, 1998
<PAGE>
PHOENIX-ABERDEEN SERIES FUND
101 Munson Street
Greenfield, Massachusetts 01301
TRUSTEES
Robert Chesek
E. Virgil Conway
Harry Dalzell-Payne
Francis F. Jeffries
Leroy Keith, Jr.
Philip R. McLoughlin
Everett L. Morris
James M. Oates
Calvin J. Pedersen
Herbert Roth, Jr.
Richard E. Segerson
Lowell P. Weicker, Jr.
OFFICERS
Philip R. McLoughlin, President
Michael E. Haylon, Executive Vice President
John F. Sharry, Executive Vice President
Chong Yoon Chou, Senior Vice President
Christopher D. Fishwick, Senior Vice President
Vivek Gandhi, Senior Vice President
Peter Hames, Senior Vice President
Gawaine Lewis, Senior Vice President
Hugh Young, Senior Vice President
Shahreza Yusof, Senior Vice President
John D. Kattar, Vice President
William E. Keen, III, Vice President
William R. Moyer, Vice President
Leonard J. Saltiel, Vice President
Julie L. Sapia, Vice President
Nancy G. Curtiss, Treasurer
C. Jeffrey Bohne, Clerk and Secretary
INVESTMENT ADVISER
Phoenix-Aberdeen International Advisors, LLC
56 Prospect Street
Hartford, Connecticut 06115-0480
PRINCIPAL UNDERWRITER
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
CUSTODIAN
Brown Brothers Harriman & Co.
40 Water Street
Boston, Massachusetts 02109
TRANSFER AGENT
Phoenix Equity Planning Corporation
100 Bright Meadow Boulevard
P.O. Box 2200
Enfield, Connecticut 06083-2200
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
160 Federal Street
Boston, Massachusetts 02110
HOW TO CONTACT US
Customer Service 1-800-243-1574 (option 0)
Automated Voice Response Unit 1-800-243-1574 (option 1)
Investment Strategy Hotline 1-800-243-4361 (option 2)
Marketing Department 1-800-243-4361 (option 3)
Text Telephone 1-800-243-1926
WORLD WIDE WEB ADDRESS:
www.phoenixinvestments.com
<PAGE>
PHOENIX FUNDS BULK RATE MAIL
PO Box 2200 U.S. POSTAGE
Enfield CT 06083-2200 PAID
SPRINGFIELD, MA
PERMIT NO. 444
[LOGO] PHOENIX
INVESTMENT PARTNERS
PXP 190 (9/98)
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</TABLE>
