<PAGE> 1
LOGO
SEMI-
ANNUAL
REPORT
--------------------------------------------
MARCH 31, 1998
<PAGE> 2
LETTER TO SHAREHOLDERS
Dear Shareholders:
The Seneca Funds produced excellent returns relative to their respective
benchmarks during the first quarter of 1998. We are pleased to begin the year on
such a strong note.
We remain optimistic about both the stock and bond markets. This year's
market strength has far surpassed even the most bullish forecasts. Despite
continuing Asian financial turmoil and many high profile earnings warnings, the
major stock indexes posted double digit gains in the year's first quarter.
The interest rate outlook remains excellent. We believe that as long as
interest rates remain at current levels, price earnings multiples will remain
high and the U.S. financial markets will continue to attract investors. We
expect the market to trend higher, in a very volatile manner. We will continue
to control risk through asset class diversification, and through fundamentally
based investment disciplines. We have achieved excellent performance results in
the Seneca Funds over the past quarter and fiscal year to date in all of our
Funds through employing such disciplines.
In March, we completed our recent proxy solicitation with positive results.
Our shareholders approved the change in control of Seneca Funds. We anticipate
that the approved change in control and other related changes will be completed
in July, 1998. We will also be changing the name of our Funds to "Phoenix Seneca
Funds".
We welcome your questions and comments. Feel free to contact us at any time
at (800) 990-9331.
Sincerely,
Gail P. Seneca
President
<PAGE> 3
SENECA FUNDS
SENECA GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- 96.8%
AUTOMOBILE PARTS & EQUIPMENT -- (3.2%)
Dana Corporation............................. 22,350 $ 1,300,491
----------
BROADCASTING -- (2.3%)
Chancellor Media Corporation Class A (1)..... 20,480 939,520
----------
BUILDING & CONSTRUCTION PRODUCTS -- (2.8%)
Masco Corporation............................ 19,630 1,167,985
----------
BUSINESS SERVICES -- (3.0%)
Cendant Corporation (1)...................... 31,300 1,240,262
----------
CHEMICALS -- (2.6%)
Monsanto Company............................. 20,240 1,052,480
----------
COMPUTERS -- (1.6%)
Intel Corporation............................ 8,690 678,363
----------
COMPUTER PROGRAMMING & SERVICES -- (4.0%)
Automated Data Processing.................... 16,740 1,139,366
Computer Horizons Corporation (1)............ 10,420 523,605
----------
1,662,971
----------
COMPUTER SOFTWARE -- (7.8%)
Documentum, Incorporated (1)................. 12,670 685,764
Microsoft Corporation (1).................... 11,100 993,450
PeopleSoft, Incorporated (1)................. 9,560 503,693
Oracle Corporation........................... 32,630 1,029,884
----------
3,212,791
----------
CONSUMER NON-DURABLE -- (6.7%)
Colgate-Palmolive Company.................... 13,600 1,178,100
Gillette Corporation......................... 8,590 1,019,526
Proctor Gamble Company....................... 6,930 584,719
----------
2,782,345
----------
</TABLE>
See notes to financial statements.
1
<PAGE> 4
SENECA FUNDS
SENECA GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
DRUGS & HEALTH CARE -- (8.3%)
Alza Corporation (1)......................... 10,200 $ 457,087
Bristol Myers Company........................ 13,010 1,357,106
Cardinal Health, Incorporated................ 4,770 420,654
McKesson Corporation......................... 20,660 1,193,115
----------
3,427,962
----------
ELECTRICAL EQUIPMENT -- (3.4%)
General Electric Company..................... 16,420 1,415,199
----------
FINANCIAL SERVICES -- (8.3%)
American Express Company..................... 12,770 1,172,446
BankAmerica Corporation...................... 16,290 1,345,961
Citicorp..................................... 6,240 886,080
----------
3,404,487
----------
FOOD & BEVERAGES -- (8.3%)
Hershey Foods Corporation.................... 19,330 1,384,511
PepsiCo, Incorporated........................ 27,530 1,175,187
Quaker Oats Company.......................... 15,360 879,360
----------
3,439,058
----------
HOME APPLIANCES -- (2.4%)
Maytag Corporation........................... 20,980 1,003,106
----------
INSURANCE -- (6.4%)
St. Paul Companies, Incorporated............. 10,990 979,484
SunAmerica, Incorporated..................... 11,790 564,446
Travelers Group, Incorporated................ 18,360 1,101,600
----------
2,645,530
----------
MANUFACTURING -- (4.0%)
Sanmina Corporation (1)...................... 6,780 474,176
Tyco International........................... 21,300 1,163,513
----------
1,637,689
----------
</TABLE>
See notes to financial statements.
2
<PAGE> 5
SENECA FUNDS
SENECA GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
OIL & GAS -- (4.4%)
Royal Dutch Petroleum Company................ 18,700 $ 1,062,394
Williams Companies, Incorporated............. 23,270 744,640
----------
1,807,034
----------
OIL EQUIPMENT & SERVICES -- (3.2%)
Camco International, Incorporated............ 8,540 516,670
Schlumberger Limited......................... 10,450 791,588
----------
1,308,258
----------
RETAIL TRADE -- (6.1%)
Abercrombie & Fitch Company (1).............. 1,630 68,922
Dayton Hudson Corporation.................... 13,840 1,217,920
TJX Companies, Incorporated.................. 27,150 1,228,538
----------
2,515,380
----------
TELECOMMUNICATIONS -- (8.0%)
AT&T Corporation............................. 12,290 806,531
Lucent Technologies, Incorporated............ 8,590 1,098,446
WorlCom, Incorporated (1).................... 32,230 1,387,904
----------
3,292,881
----------
TOTAL COMMON STOCKS (COST $32,455,661)........... $39,933,792
----------
</TABLE>
See notes to financial statements.
3
<PAGE> 6
SENECA FUNDS
SENECA GROWTH FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONCLUDED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE VALUE
------------------ -----
<S> <C> <C> <C>
SHORT TERM INVESTMENT -- 1.9%
REPURCHASE AGREEMENT (Cost $793,686)
State Street Bank and Trust Company, 4.25%,
to be repurchased at $793,780 on 04/01/98
(collateralized by $790,000 par value U.S.
Treasury Note 5.875% due 10/31/98, with a
value of $810,470)......................... $ 793,686
----------
TOTAL INVESTMENTS -- (COST $33,249,347*)......... 98.7% 40,727,478
OTHER ASSETS LESS LIABILITIES.................... 1.3% 531,100
---- ----------
NET ASSETS....................................... 100.0% $41,258,478
==== ==========
</TABLE>
(1) Non-income producing security.
* At March 31, 1998, the aggregate cost of investment in securities and short
term investments for income tax purposes was $33,249,347. Net unrealized
appreciation aggregated $7,478,131, of which $7,672,649, related to
appreciated investment securities and $194,518, related to depreciated
investment securities.
See notes to financial statements.
4
<PAGE> 7
SENECA FUNDS
SENECA MID-CAP "EDGE"(SM) FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- 95.3%
ADVERTISING SERVICES -- (4.3%)
Outdoor Systems, Incorporated (1)............. 16,110 $ 564,857
----------
AMUSEMENT PARKS -- (2.1%)
Premier Parks, Incorporated (1)............... 4,620 267,960
----------
APPAREL MANUFACTURER -- (0.2%)
The Men's Wearhouse, Incorporated(1).......... 660 23,832
----------
BROADCASTING -- (5.6%)
Central European Media Enterprises Limited
(1)......................................... 6,560 191,060
Chancellor Media Corporation Class A (1)...... 6,200 284,425
Young Broadcasting, Incorporated Class A
(1)......................................... 5,070 253,807
----------
729,292
----------
BUSINESS SERVICES -- (5.6%)
Culturalaccess Worldwide, Incorporated (1).... 8,420 133,668
Paychex, Incorporated......................... 5,670 327,088
Staff Leasing, Incorporated (1)............... 9,660 268,065
----------
728,821
----------
COMPUTER PROGRAMMING & SERVICES -- (15.1%)
America Online, Incorporated (1).............. 5,640 385,282
Computer Horizon Corporation (1).............. 8,480 426,120
Dataworks Corporation (1)..................... 3,070 80,971
HBO & Company................................. 4,420 266,857
Keane, Incorporated (1)....................... 6,080 343,520
Saville Systems Ireland plc ADR (1)........... 8,710 456,017
----------
1,958,767
----------
COMPUTER SOFTWARE -- (13.7%)
CBT Group plc ADR (1)......................... 7,140 369,495
Compuware Corporation (1)..................... 7,750 382,656
Documentum, Incorporated (1).................. 8,010 433,541
Genesys Telecommunications Laboratories,
Incorporated (1)............................ 3,780 143,640
PeopleSoft, Incorporated (1).................. 8,570 451,532
----------
1,780,864
----------
</TABLE>
See notes to financial statements.
5
<PAGE> 8
SENECA FUNDS
SENECA MID-CAP "EDGE"(SM) FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
CONSUMER NON-DURABLE -- (2.8%)
Fort James Corporation (1).................... 8,020 $ 367,416
----------
DRUGS & HEALTH CARE -- (10.5%)
Alza Corporation (1).......................... 5,790 259,464
Barr Laboratories, Incorporated (1)........... 8,020 323,807
Ocular Sciences, Incorporated (1)............. 10,870 346,481
McKesson Corporation.......................... 7,440 429,660
----------
1,359,412
----------
ELECTRONICS -- (3.2%)
Flextronics International Limited (1)......... 9,690 418,487
----------
FINANCIAL SERVICES -- (4.3%)
Comerica, Incorporated........................ 3,650 386,216
Waddell And Reed Financial, Incoporated Class
A(1)........................................ 6,880 178,880
----------
565,096
----------
HOUSEHOLD PRODUCTS -- (1.9%)
Windmere Durable Holdings, Incorporated....... 9,660 251,160
----------
INSURANCE -- (2.5%)
SunAmerica, Incorporated...................... 6,735 322,438
----------
MEDICAL PRODUCTS -- (2.9%)
Sofamor Denek Group, Incorporated (1)......... 4,370 372,543
----------
OFFICE FURNISHINGS -- (5.8%)
Knoll, Incorporated (1)....................... 7,380 284,591
Miller Herman, Incoporated.................... 13,980 468,769
----------
753,360
----------
OIL EQUIPMENT & SERVICES -- (2.2%)
Camco International, Incorporated............. 4,670 282,535
----------
PERIODICALS -- (0.9%)
Petersen Companies, Incoporated (1)........... 4,580 114,533
----------
</TABLE>
See notes to financial statements.
6
<PAGE> 9
SENECA FUNDS
SENECA MID-CAP "EDGE"(SM) FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
RETAIL TRADE -- (11.1%)
Dollar Tree Store, Incorporated (1)........... 6,200 $ 329,375
Dominick's Supermarkets, Incorporated (1)..... 5,620 255,710
K Mart Corporation (1)........................ 25,980 433,541
TJX Companies, Incorporated................... 9,240 418,110
----------
1,436,736
----------
TELECOMMUNICATIONS -- (0.6%)
Tellabs, Incorporated (1)..................... 1,110 74,509
----------
TOTAL COMMON STOCKS (COST $9,479,298)............. 12,372,618
----------
SHORT TERM INVESTMENT -- 6.7%
REPURCHASE AGREEMENT(Cost $874,966)
State Street Bank and Trust Company, 4.25%,
to be repurchased at $875,069 on 04/01/98
(collateralized by $890,00 par value U.S.
Treasury Note 5.875% due 08/15/98, with a
value of $897,468).......................... 874,966
----------
TOTAL INVESTMENTS -- (COST $10,354,264*).......... 102.0% 13,247,584
OTHER ASSETS LESS LIABILITIES..................... (2.0)% (267,076)
---- ----------
NET ASSETS........................................ 100.0% $12,980,508
==== ==========
</TABLE>
(1) Non-income producing security.
* At March 31, 1998 the aggregate cost of investment in securities and short
term investments for income tax purposes was $10,354,264. Net unrealized
appreciation aggregated $2,893,320, of which $2,961,803, related to
appreciated investment securities and $68,483, related to depreciated
investment securities.
See notes to financial statements.
7
<PAGE> 10
SENECA FUNDS
SENECA BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
CORPORATE BONDS -- 87.7%
AIRLINES -- (5.0%)
Alaska Airlines,
Incorporated (2)....... 9.500% 04/12/2010 $117,982 $ 135,031
Delta Air Lines,
Incorporated........... 10.060% 01/02/2016 65,000 81,477
United Airlines,
Incorporated (2)....... 10.110% 02/19/2006 22,682 25,554
United Airlines,
Incorporated (2)....... 9.760% 05/27/2006 89,703 101,729
United Airlines,
Incorporated (2)....... 9.020% 04/19/2012 92,508 106,186
----------
449,977
----------
ASSET BACKED -- (2.2%)
General Electric Capital
Mortgage Services,
Incorporated, Series
1994-21, Class B1
(2).................... 6.500% 08/25/2009 33,180 32,877
Olympic Automobile
Receivable Trust,
Series 1996-B.......... 6.900% 02/15/2004 120,000 121,582
Standard Credit Card
Master Trust I, Series
1993-2, Class A........ 5.950% 10/07/2004 40,000 39,712
----------
194,171
----------
BROADCASTING -- (9.3%)
Chancellor Broadcasting
Corporation............ 9.375% 10/01/2004 75,000 79,687
Chancellor Broadcasting
Corporation............ 8.750% 06/15/2007 100,000 105,000
Commodore Media,
Incorporated........... 7.500% 05/01/2003 150,000 168,750
Jacor, Incorporated...... 10.125% 06/15/2006 100,000 110,625
SFX Broadcasting,
Incorporated........... 10.750% 05/15/2006 85,000 94,350
</TABLE>
See notes to financial statements.
8
<PAGE> 11
SENECA FUNDS
SENECA BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
BROADCASTING (CONTINUED)
Sullivan Broadcasting,
Incorporated, Senior
Notes.................. 10.250% 12/15/2005 $ 50,000 $ 54,563
Turner Broadcasting
Systems,
Incorporated........... 8.400% 02/01/2024 200,000 212,279
----------
825,254
----------
COMMUNICATION SERVICES -- (0.8%)
Orion Network Systems,
Incorporated, Senior
Notes.................. 0.000% 01/15/2007 90,000 70,650
----------
DRUGS & HEALTH CARE -- (3.1%)
Abbey Healthcare Group... 9.500% 11/01/2002 175,000 176,750
Duane Reed, Incorporated,
Senior Notes........... 9.250% 02/15/2008 100,000 102,500
----------
279,250
----------
DEFENSE -- (1.2%)
Tracor, Incorporated..... 8.500% 03/01/2007 100,000 103,750
----------
ENERGY -- (9.1%)
El Paso Tenneco.......... 9.140% 12/31/2001 300,000 320,700
SFP Pipeline Holdings.... 11.160% 08/15/2010 275,000 489,789
----------
810,489
----------
FINANCE & BANKING -- (19.1%)
BankAmerica.............. 8.070% 12/31/2026 400,000 420,310
Countrywide Capital,
Incorporated........... 8.000% 12/15/2026 200,000 204,289
Countrywide Funding...... 5.800% 04/22/1999 30,000 29,920
Dollar Financial Group... 10.875% 11/15/2006 75,000 82,125
Donaldson Lufkin &
Jenrette............... 6.875% 11/01/2005 50,000 51,091
First Republic Bancorp... 7.750% 09/15/2012 100,000 102,889
Lehman ABS Corporation
(2).................... 8.145% 11/02/2007 79,940 78,741
Lehman Brothers
Holdings............... 8.800% 03/01/2015 80,000 94,048
</TABLE>
See notes to financial statements.
9
<PAGE> 12
SENECA FUNDS
SENECA BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
FINANCE & BANKING (CONTINUED)
SB Treasury Company, LLC,
Series 144A............ 9.400% 12/29/2049 $200,000 $ 207,910
Socgen Real Estate....... 7.640% 12/29/2049 150,000 149,003
Wells Fargo Capital A.... 8.125% 12/01/2026 100,000 105,443
Wells Fargo Capital B.... 7.950% 12/01/2026 125,000 128,983
Williams Scotsman,
Incorporated........... 9.875% 06/01/2007 50,000 52,250
----------
1,707,002
----------
GROCERY STORES -- (1.2%)
Smith's Food & Drug
Centers,
Incorporated........... 8.640% 07/02/2012 100,000 108,250
----------
HOSPITALS -- (2.4%)
Universal Health
Services, Incorporated,
Senior Notes........... 8.750% 08/15/2005 200,000 212,500
----------
HOTELS -- (5.7%)
Bally Park Place
Funding................ 9.250% 03/15/2004 100,000 107,000
HMH Properties........... 8.875% 07/15/2007 150,000 158,250
John Q. Hammons Hotels... 8.875% 02/15/2004 130,000 133,250
John Q. Hammons Hotels... 9.750% 10/01/2005 100,000 106,500
----------
505,000
----------
INSURANCE -- (2.9%)
Terra Nova Holdings...... 7.200% 08/15/2007 250,000 259,621
----------
MANAGEMENT SERVICES -- (1.8%)
Blount, Incorporated..... 9.000% 06/15/2003 150,000 156,375
----------
MANUFACTURING -- (0.2%)
Hawk Corporation......... 10.250% 12/01/2003 15,000 16,350
----------
MULTIMEDIA -- (0.9%)
Time Warner,
Incorporated........... 9.125% 01/15/2013 65,000 77,342
----------
NEWSPAPER -- (0.9%)
Garden State
Newspapers............. 8.750% 10/01/2009 75,000 77,625
----------
</TABLE>
See notes to financial statements.
10
<PAGE> 13
SENECA FUNDS
SENECA BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
OFFICE SUPPLIES -- (0.9%)
Corporate Express,
Incorporated........... 9.125% 03/15/2004 $ 75,000 $ 76,687
----------
OIL -- (5.9%)
Falcon Holding Group
L.P. .................. 11.000% 09/15/2003 211,000 227,880
Noble Drilling
Corporation............ 9.125% 07/01/2006 90,000 100,639
Trico Marine Services.... 8.500% 08/01/2005 200,000 202,000
----------
530,519
----------
PAPERBOARD & PACKAGING PRODUCTS -- (0.5%)
Container Corporation of
America, Guaranteed
Senior Notes, Series
A...................... 11.2500% 05/01/2004 40,000 43,600
----------
REAL ESTATE -- (9.9%)
ERP Operating Limited
Partnership............ 7.570% 08/15/2026 170,000 182,738
Evans Withycombe
Residential Properties
Trust.................. 7.500% 04/15/2004 100,000 104,307
Property Trust America... 6.875% 02/15/2008 5,000 5,036
Security Capital Pacific
Trust.................. 7.375% 10/15/2006 100,000 103,086
Security Capital Pacific
Trust.................. 7.900% 02/15/2016 200,000 213,480
Washington REIT.......... 7.125% 08/13/2003 110,000 112,775
Weingarten Realty........ 6.880% 06/25/2027 150,000 159,886
----------
881,308
----------
RECREATIONAL ACTIVITIES -- (1.1%)
Royal Caribbean Cruises
Limited................ 7.500% 10/15/2027 100,000 102,406
----------
RESTAURANTS -- (0.6%)
Foodmaker, Incorporated,
Senior Notes, Series
B...................... 9.750% 11/01/2003 50,000 53,375
----------
</TABLE>
See notes to financial statements.
11
<PAGE> 14
SENECA FUNDS
SENECA BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
CORPORATE BONDS (CONTINUED)
THEATERS -- (3.0%)
AMC Entertainment
Incorporated........... 9.500% 03/15/2009 $100,000 $ 105,500
Plitt Theaters,
Incorporated........... 10.875% 06/15/2004 150,000 163,875
----------
269,375
----------
TOTAL CORPORATE BONDS (COST $7,367,659)....................... 7,810,876
----------
U.S. GOVERNMENT AGENCIES -- 5.7%
COLLATERALIZED MORTGAGE OBLIGATIONS -- (5.5%)
Federal Home Loan
Mortgage Corporation,
REMIC, Series 151,
Class E (2)............ 9.000% 09/15/2020 14,455 14,520
Federal Home Loan
Mortgage Corporation,
REMIC, Series 1032,
Class E (2)............ 8.750% 12/15/2020 26,140 26,864
Federal Home Loan
Mortgage Corporation,
REMIC, Series 1142,
Class H................ 7.950% 12/15/2020 300,000 304,918
Federal National Mortgage
Association, REMIC,
Series 1989-80, Class E
(2).................... 9.000% 09/25/2018 52,630 53,435
Federal National Mortgage
Association, REMIC,
Series 1990-4, Class G
(2).................... 8.750% 05/25/2017 63,356 64,956
Federal National Mortgage
Association, REMIC,
Series 1993-179, Class
S, I.O. ............... 3.031% 10/25/2023 607,757 27,161
----------
491,854
----------
</TABLE>
See notes to financial statements.
12
<PAGE> 15
SENECA FUNDS
SENECA BOND FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONCLUDED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER INTEREST MATURITY PRINCIPAL
AND TITLE OF ISSUE RATE DATE AMOUNT VALUE
------------------ -------- -------- --------- -----
<S> <C> <C> <C> <C>
U.S. GOVERNMENT AGENCIES (CONTINUED)
MORTGAGE-BACKED PASS-THROUGH SECURITY -- (0.2%)
Government National
Mortgage Association,
Pool #408215 (2)....... 7.000% 02/15/2026 $ 21,269 $ 21,502
----------
TOTAL U.S. GOVERNMENT AGENCIES (COST $521,743).............. 513,356
----------
FOREIGN BONDS -- 0.2% (COST $19,940)
Republic of Brazil (2)... 6.875% 01/01/2001 21,000 20,554
----------
SHARES
PREFERRED STOCK -- 5.2% (COST $431,250)
Equity Office Properties Trust, Pfd Series
144A........................................... 2,000 97,000
Microsoft Corporation, Pfd Series A.............. 4,000 370,000
----------
467,000
----------
WARRANTS -- 0.0% (COST $0)
MVE, Incorporated................................ 30 0
----------
TOTAL INVESTMENTS IN SECURITIES (COST $8,340,592)................ 8,811,786
----------
SHORT TERM INVESTMENT -- 0.0%
REPURCHASE AGREEMENT (Cost $4,198)
State Street Bank and Trust Company, 4.25%, to be
repurchased at $4,199 on 04/01/98
(collateralized by $5,000 par value U.S.
Treasury Note 6.25% due 07/31/98, with a value
of $5,064)..................................... 4,198
----------
TOTAL INVESTMENTS -- (COST $8,344,790*)......................... 98.9% 8,815,984
OTHER ASSETS LESS LIABILITIES................................... 1.1% 102,503
----- ----------
NET ASSETS...................................................... 100.0% $8,918,487
===== ==========
</TABLE>
(2) Subject to principal paydowns as a result of prepayments or refinancings of
the underlying mortgage instruments. As a result, the average life may be
substantially less than the original maturity.
* At March 31, 1998, the aggregate cost of investment in securities and short
term investments for income tax purposes was $8,344,790. Net unrealized
appreciation aggregated $471,194, of which $485,227, related to appreciated
investment securities and $14,033, related to depreciated investment
securities.
See notes to financial statements.
13
<PAGE> 16
SENECA FUNDS
SENECA REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS -- 98.3%
REAL ESTATE DEVELOPMENT -- (2.9%)
Catellus Development Corporation (1)........ 46,400 $ 861,300
-----------
REAL ESTATE INVESTMENT TRUSTS -- (95.4%)
American Property Corporation............... 27,900 673,087
American General Hospitality Corporation.... 26,400 730,950
Apartment Investment and Management Company
Class A................................... 14,970 576,345
Arden Realty Group, Incorporated............ 19,000 541,500
Avalon Properties, Incorporated............. 20,500 594,500
Bedford Property Investors, Incorporated.... 37,100 716,494
Berkshire Realty Company, Incorporated...... 43,500 522,000
Boston Properties, Incorporated............. 23,000 809,312
Burnham Pacific Properties.................. 17,000 248,625
Capital Trust Class A....................... 40,000 390,000
Chateau Communities, Incorporated........... 15,000 446,250
Cornerstone Properties, Incorporated........ 33,900 616,556
Crescent Real Estate Equities Company....... 16,000 576,000
Developers Diversified Realty Corporation... 15,200 621,300
Entertainment Properties Trust.............. 5,000 98,125
Equity Office Properties Trust.............. 35,100 1,074,937
Equity Residential Properties Trust......... 31,200 1,567,800
Essex Property Trust, Incorporated.......... 22,000 754,875
Felcor Suite Hotels, Incorporated........... 22,275 825,567
First Industrial Realty Trust,
Incorporated.............................. 24,500 882,000
Irvine Apartment Communities,
Incorporated.............................. 13,436 423,234
Liberty Property Trust...................... 15,550 417,906
Mack Cali Realty Corporation................ 37,800 1,476,562
Manufactured Home Communities............... 27,700 716,738
Merry Land & Investment Trust Company,
Incorporated.............................. 10,300 230,463
Northstar Capital Investment Corporation.... 35,000 743,750
Pacific Gulf Properties, Incorporated....... 37,050 849,834
Patriot American Hospitality,
Incorporated.............................. 54,539 1,472,553
Prentiss Properties Trust................... 30,400 794,200
</TABLE>
See notes to financial statements.
14
<PAGE> 17
SENECA FUNDS
SENECA REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
(CONCLUDED)
(UNAUDITED)
<TABLE>
<CAPTION>
NAME OF ISSUER
AND TITLE OF ISSUE SHARES VALUE
------------------ ------ -----
<S> <C> <C> <C>
COMMON STOCKS (CONTINUED)
REAL ESTATE INVESTMENT TRUSTS (CONTINUED)
Security Capital Atlantic, Incorporated..... 38,525 $ 809,025
Security Capital Pacific Trust.............. 21,471 516,646
Simon Debartolo Group, Incorporated......... 20,415 699,214
Sovran Self Storage, Incorporated........... 9,000 267,188
Speiker Properties, Incorporated............ 22,000 907,500
Starwood Lodging Trust...................... 10,000 534,375
Sunstone Hotel Investors, Incorporated...... 67,500 1,080,000
The Macerich Company........................ 26,500 788,375
TriNet Corporate Realty Trust,
Incorporated.............................. 25,500 976,969
Urban Shopping Centers, Incorporated........ 32,500 1,072,500
----------
28,043,255
----------
TOTAL COMMON STOCKS (Cost $26,083,143).......... 28,904,555
----------
PREFERRED STOCKS -- 0.9% (Cost $250,000)
Glenborough Realty Trust, Pfd Series A...... 10,000 261,250
----------
TOTAL INVESTMENTS IN SECURITIES (COST
$26,333,143).............................. 29,165,805
----------
SHORT TERM INVESTMENT -- 1.4%
REPURCHASE AGREEMENT (Cost $415,037)
State Street Bank and Trust Company, 4.25%,
to be repurchased at $415,086 on 04/01/98
(collateralized by $415,000 par value U.S.
Treasury Note 5.875% due 10/31/98, with a
value of $425,753)........................ 415,037
----------
TOTAL INVESTMENTS -- (COST $26,748,180*)........ 100.6% 29,580,842
OTHER ASSETS LESS LIABILITIES................... (0.6)% (167,054)
----- -----------
NET ASSETS...................................... 100.0% $29,413,788
===== ===========
</TABLE>
(1) Non-income producing security.
* At March 31, 1998, the aggregate cost of investment in securities and
short term investments for income tax purposes was $26,748,180. Net
unrealized appreciation aggregated $2,832,662, of which $3,046,434,
related to appreciated investment securities and $213,772, related to
depreciated investment securities.
See notes to financial statements.
15
<PAGE> 18
SENECA FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MID-CAP REAL ESTATE
GROWTH "EDGE"(SM) BOND SECURITIES
FUND FUND FUND FUND
------ ---------- ---- -----------
<S> <C> <C> <C> <C>
ASSETS
Investments in securities, at value (Note
2)..................................... $39,933,792 $12,372,618 $8,811,786 $29,165,805
Short Term Investments................... 793,686 874,966 4,198 415,037
Cash..................................... -- -- 1,718 --
Dividends and interest receivable........ 25,383 3,380 154,670 171,631
Receivable for securities sold........... 583,429 125,424 -- --
Receivable for Fund shares sold.......... -- 37,027 -- 1,000
Deferred organization costs (Note 5) .... 28,544 28,679 28,544 28,544
Other assets............................. 9,263 6,265 3,796 5,897
----------- ----------- ---------- -----------
TOTAL ASSETS........................... 41,374,097 13,448,359 9,004,712 29,787,914
----------- ----------- ---------- -----------
LIABILITIES
Due to Investment Manager (Note 3)....... 12,120 2,309 20 1,231
Due to Custodian......................... 195 15 2,857 105
Payable for securities purchased......... -- 414,659 -- 72,620
Payable for Fund shares redeemed......... 2,413 -- -- --
Trustees fees payable (Note 3)........... 3,999 3,999 3,086 3,999
Distribution fees payable (Note 3)....... 6,217 3,123 -- 3,616
Dividends payable........................ -- -- 49,111 212,515
Other accrued expenses................... 90,675 43,746 31,151 80,040
----------- ----------- ---------- -----------
TOTAL LIABILITIES...................... 115,619 467,851 86,225 374,126
----------- ----------- ---------- -----------
NET ASSETS............................. $41,258,478 $12,980,508 $8,918,487 $29,413,788
=========== =========== ========== ===========
NET ASSETS
Capital paid-in.......................... $30,198,286 $10,083,682 $8,386,860 $26,553,158
Undistributed net investment (loss)...... (11,453) (103,121) (2,720) (30,882)
Accumulated net realized gain on
investments............................ 3,593,514 106,627 63,199 58,850
Net unrealized appreciation of
investments............................ 7,478,131 2,893,320 471,148 2,832,662
----------- ----------- ---------- -----------
NET ASSETS............................. $41,258,478 $12,980,508 $8,918,487 $29,413,788
=========== =========== ========== ===========
INVESTMENTS IN SECURITIES, AT COST....... $33,249,347 $10,534,264 $8,344,790 $26,748,180
INSTITUTIONAL SHARES:
Net assets............................. $37,425,876 $ 9,866,505 $8,918,487 $26,850,022
Total shares outstanding............... 2,107,956 594,357 835,405 1,965,342
Net asset value, offering and redemption
price per Institutional share.......... $ 17.75 $ 16.60 $ 10.68 $ 13.66
=========== =========== ========== ===========
ADMINISTRATIVE SHARES:
Net assets............................. $ 3,832,602 $ 3,114,003 $ -- $ 2,563,766
Total shares outstanding............... 218,197 188,037 -- 188,445
Net asset value, offering and redemption
price per Administrative share......... $ 17.56 $ 16.56 $ -- $ 13.60
=========== =========== ========== ===========
</TABLE>
See notes to financial statements.
16
<PAGE> 19
SENECA FUNDS
STATEMENTS OF OPERATIONS
FOR THE SEMI-ANNUAL PERIOD ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
MID-CAP REAL ESTATE
GROWTH "EDGE"(SM) BOND SECURITIES
FUND FUND FUND FUND
------ ---------- ---- -----------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends (a).................. $ 220,526 $ 16,999 $ 4,392 $ 589,172
Interest....................... 27,214 9,871 349,133 12,499
---------- ---------- -------- -----------
TOTAL INCOME................. 247,740 26,870 353,525 601,671
---------- ---------- -------- -----------
EXPENSES
Management fee (Note 3)........ 139,362 46,609 22,826 128,288
Administrative fee (Note 3).... 25,244 25,171 22,283 25,173
Transfer agent fees............ 18,394 16,997 7,125 17,113
Custodian fees................. 30,499 24,584 21,515 24,558
Distribution fees (Note 3)..... 6,242 3,170 -- 3,634
Registration and filing fees... 10,105 5,937 4,216 9,299
Audit fees..................... 3,498 2,481 3,496 2,718
Legal fees..................... 3,005 1,644 3,006 1,646
Trustees fees.................. 5,871 5,871 4,958 5,871
Amortization of organization
expenses (Note 5)............ 5,315 5,315 5,315 5,315
Other.......................... 3,604 1,081 1,171 2,757
---------- ---------- -------- -----------
Expenses before waiver and
reimbursement................ 251,139 138,860 95,911 226,372
Fees waived and expenses
reimbursed by Investment
Manager (Note 3)............. -- (8,869) (11,476) --
---------- ---------- -------- -----------
TOTAL EXPENSES............... 251,139 129,991 84,435 226,372
---------- ---------- -------- -----------
NET INVESTMENT
INCOME(LOSS)............... (3,399) (103,121) 269,090 375,299
---------- ---------- -------- -----------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain on
investments.................. 4,323,778 259,551 64,148 131,140
Change in net unrealized
appreciation of
investments.................. 1,852,669 1,505,929 232,210 (1,053,961)
---------- ---------- -------- -----------
NET REALIZED AND UNREALIZED
GAIN ON INVESTMENTS........ 6,176,447 1,765,480 296,358 (922,821)
---------- ---------- -------- -----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS...... $6,173,048 $1,662,359 $565,448 $ (547,522)
========== ========== ======== ===========
(a) Net of foreign withholding
taxes of: ................... $ 1,690 $ -- $ -- $ 22
========== ========== ======== ===========
</TABLE>
See notes to financial statements.
17
<PAGE> 20
SENECA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
MID-CAP
GROWTH FUND "EDGE"(SM) FUND
----------- ---------------
PERIOD YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1998 1997 1998 1997
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
From operations:
Net investment
income(loss)........... $ (3,399) $ 57,732 $ (103,121) $ (122,306)
Net realized gain on
investments............ 4,323,778 2,408,148 259,551 1,355,512
Change in net unrealized
appreciation of
investments............ 1,852,669 5,006,042 1,505,929 369,616
----------- ----------- ----------- -----------
Net increase in net
assets resulting from
operations............. 6,173,048 7,471,922 1,662,359 1,602,822
Dividends and Distributions
to shareholder from
Net investment income:
Administrative
Shares............... -- (3) -- (7)
Institutional Shares... (36,288) (99,739) -- (22,426)
Net realized gains:
Administrative
Shares............... (455,512) (19,063) (289,481) (12,053)
Institutional Shares... (2,631,451) (997,531) (1,091,863) (89,792)
----------- ----------- ----------- -----------
Total Dividends and
Distributions............ (3,123,251) (1,116,336) (1,381,344) (124,278)
Net increase (decrease)
from Fund share
transactions (Note 6).... (1,897,634) 20,364,803 889,794 1,548,006
----------- ----------- ----------- -----------
TOTAL INCREASE......... 1,152,163 26,720,389 1,170,809 3,026,550
Net Assets
Beginning of period...... 40,106,315 13,385,926 11,809,699 8,783,149
----------- ----------- ----------- -----------
End of period (a)........ $41,258,478 $40,106,315 $12,980,508 $11,809,699
=========== =========== =========== ===========
(a) Including undistributed
net investment income
(loss)................. $ (11,453) $ 28,234 $ (103,121) $ --
</TABLE>
See notes to financial statements.
18
<PAGE> 21
SENECA FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
(UNAUDITED)
<TABLE>
<CAPTION>
REAL ESTATE
BOND FUND SECURITIES FUND
--------- ---------------
YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1998 1997 1998 1997
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
INCREASE IN NET ASSETS
From operations:
Net investment income..... $ 269,090 $ 429,374 $ 375,299 $ 440,450
Net realized gain(loss) on
investments............. 64,148 111,291 131,140 1,229,877
Change in net unrealized
appreciation of
investments............. 232,210 189,346 (1,053,961) 3,822,456
---------- ---------- ----------- -----------
Net increase in net assets
resulting from
operations.............. 565,448 730,011 (547,522) 5,492,783
Dividends and Distributions
to shareholder from
Net investment income:
Administrative Shares... -- (2,145) (30,940) (29,699)
Institutional Shares.... (276,263) (462,401) (398,648) (425,038)
Net realized gains:
Administrative Shares... -- (672) (128,896) (194)
Institutional Shares.... (110,456) (13,922) (1,166,178) (4,331)
---------- ---------- ----------- -----------
Total Dividends and
Distributions............. (386,719) (479,140) (1,724,662) (459,262)
Net increase (decrease) from
Fund share transactions
(Note 6).................. (182,403) 4,548,696 317,525 25,039,363
---------- ---------- ----------- -----------
TOTAL INCREASE
(DECREASE)............ (3,674) 4,799,567 (1,954,659) 30,072,884
Net Assets
Beginning of period....... 8,922,161 4,122,594 31,368,447 1,295,563
---------- ---------- ----------- -----------
End of period (a)......... $8,918,487 $8,922,161 $29,413,788 $31,368,447
========== ========== =========== ===========
(a) Including undistributed
net investment income
(loss).................. $ (2,720) $ 4,453 $ (30,882) $ 23,407
</TABLE>
See notes to financial statements.
19
<PAGE> 22
SENECA FUNDS -- INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
MID-CAP
GROWTH FUND "EDGE"(SM) FUND
---------------------------- --------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1998 1997 1998 1997
----------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD.............................. $ 16.43 $ 13.74 $ 16.47 14.97
----------- ----------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income(Loss)(1)...... -- 0.03 (0.13) (0.17)
Net Realized and Unrealized Gain on
Investments....................... 2.57 3.50 2.11 1.84
----------- ----------- ---------- ----------
TOTAL FROM INVESTMENT OPERATIONS.... 2.57 3.53 1.98 1.67
----------- ----------- ---------- ----------
Distributions to Shareholders from
Net Investment Income............... (0.02) (0.07) -- (0.07)
Net Realized Gains.................. (1.23) (0.77) (1.85) (0.10)
----------- ----------- ---------- ----------
Total Distribution.................. (1.25) (0.84) (1.85) (0.17)
----------- ----------- ---------- ----------
NET ASSET VALUE AT END OF PERIOD..... $ 17.75 $ 16.43 $ 16.60 16.47
=========== =========== ========== ==========
TOTAL RETURN(2)...................... 16.98% 27.27% 15.06% 11.39%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period......... $37,425,876 $34,092,888 $8,914,795 $9,390,224
Ratio of Operating Expenses to
Average Net Assets................ 1.19%(3) 1.52% 2.10%(3) 1.74%
Ratio of Operating Expenses to
Average Net Assets(4)............. 1.19%(3) 1.52% 2.24%(3) 2.77%
Ratio of Net Investment Income(Loss)
to Average Net Assets............. 0.06%(3) 0.31% (1.64)%(3) (0.97)%
Portfolio Turnover Rate............. 99.63% 145.69% 118.37% 283.60%
Average Commission Rate(5).......... $ 0.0597 $ 0.0595 $ 0.0597 0.0580
</TABLE>
* The Growth, Mid-Cap "EDGE"(SM), Bond, and Real Estate Securities Funds
commenced investment operations on March 8, 1996, March 8, 1996, March 7,
1996, and March 12, 1996, respectively.
(1) Net investment income(loss) is after waiver of certain fees and
reimbursement of certain expenses by the Investment Manager (see Note 3 to
the financial statements). If the Investment Manager had not waived fees and
reimbursed expenses, net investment income (loss) per share would have been
as follows for the period ended March 31, 1998 and the period ended
September 30, 1997, respectively: $0.00 and $0.03 for the Growth Fund;
$(0.14) and $(0.33) for the Mid-Cap "Edge"(SM) Fund.
(2) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the advisor.
(3) Annualized.
(4) If the Investment Manager had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been as
indicated.
(5) The average commission paid is applicable for the Funds that invest greater
than 10% of average net assets in equity securities transactions on which
commissions are charged.
See notes to financial statements.
20
<PAGE> 23
SENECA FUNDS -- INSTITUTIONAL SHARES
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
REAL ESTATE
BOND FUND SECURITIES FUND
--------------------------- ---------------------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1998 1997 1998 1997
---------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT
BEGINNING OF PERIOD................. $ 10.47 $ 10.09 $ 14.71 $ 11.10
---------- ---------- ----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment Income (1)........... 0.32 0.62 0.18 0.13
Net Realized and Unrealized Gain on
Investments....................... 0.33 0.47 (0.43) 3.77
---------- ---------- ----------- -----------
TOTAL FROM INVESTMENT OPERATIONS.... 0.65 1.09 (0.25) 3.90
Distributions to Shareholders from
Net Investment Income............... (0.32) (0.69) (0.20) (0.28)
Net Realized Gains.................. (0.12) (0.02) (0.60) (0.01)
---------- ---------- ----------- -----------
Total Distribution.................. (0.44) (0.71) (0.80) (0.29)
---------- ---------- ----------- -----------
NET ASSET VALUE AT END OF PERIOD..... $ 10.68 $ 10.47 $ 13.66 $ 14.71
========== ========== =========== ===========
TOTAL RETURN (2)..................... 6.26% 11.26% (1.60)% 35.44%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period......... $8,914,795 $8,922,161 $26,850,022 $28,192,515
Ratio of Operating Expenses to
Average Net Assets................ 1.85%(3) 1.53% 1.40%(3) 1.99%
Ratio of Operating Expenses to
Average Net Assets (4)............ 2.10%(3) 3.41% 1.40%(3) 1.99%
Ratio of Net Investment Income to
Average Net Assets................ 5.90%(3) 6.31% 2.62%(3) 2.38%
Portfolio Turnover Rate............. 36.82% 99.68% 31.06% 75.68%
Average Commission Rate (5)......... N/A N/A $ 0.0559 $ 0.0559
</TABLE>
* The Growth, Mid-Cap "EDGE"(SM), Bond, and Real Estate Securities Funds
commenced investment operations on March 8, 1996, March 8, 1996, March 7,
1996, and March 12, 1996, respectively.
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the Investment Manager (see Note 3 to the financial
statements). If the Investment Manager had not waived fees and reimbursed
expenses, net investment income per share would have been as follows for the
period ended March 31, 1998 and the period ended September 30, 1997,
respectively: $0.30 and $0.47 for the Bond Fund; $0.18 and $0.13 for the
Real Estate Securities Fund.
(2) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the advisor.
(3) Annualized.
(4) If the Investment Manager had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been as
indicated.
(5) The average commission paid is applicable for the Funds that invest greater
than 10% of average net assets in equity securities transactions on which
commissions are charged.
See notes to financial statements.
21
<PAGE> 24
SENECA FUNDS -- ADMINISTRATIVE SHARES
FINANCIAL HIGHLIGHTS
(UNAUDITED)
<TABLE>
<CAPTION>
MID-CAP
GROWTH FUND "EDGE"(SM) FUND
----------- ---------------
PERIOD YEAR PERIOD YEAR
ENDED ENDED ENDED ENDED
MARCH 31, SEPTEMBER 30, MARCH 31, SEPTEMBER 30,
1998 1997 1998 1997
--------- ------------- --------- -------------
<S> <C> <C> <C> <C>
NET ASSET VALUE AT BEGINNING OF
PERIOD................................ $ 16.28 $ 13.63 $ 16.49 $ 14.94
---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net Investment (Loss) (1)............. (0.10) (0.08) (0.15) (0.25)
Net Realized and Unrealized Gain on
Investments......................... 2.61 3.50 2.07 1.90
---------- ---------- ---------- ----------
TOTAL FROM INVESTMENT
OPERATIONS.......................... 2.51 3.42 1.92 1.65
---------- ---------- ---------- ----------
Distributions to Shareholders from
Net Investment Income................. -- -- -- --
Net Realized Gains.................... (1.23) (0.77) (1.85) (0.10)
---------- ---------- ---------- ----------
Total Distribution.................... (1.23) (0.77) (1.85) (0.10)
---------- ---------- ---------- ----------
NET ASSET VALUE AT END OF PERIOD....... $ 17.56 $ 16.28 $ 16.56 $ 16.49
========== ========== ========== ==========
TOTAL RETURN (2)....................... 16.77% 26.51% 14.66% 11.25%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period........... $3,832,601 $6,013,427 $3,112,803 $2,419,475
Ratio of Operating Expenses to Average
Net Assets.......................... 1.79%(3) 2.48% 2.70%(3) 2.37%
Ratio of Operating Expenses to Average
Net Assets(4)....................... 1.79%(3) 2.63% 2.91%(3) 4.32%
Ratio of Net Investment (Loss) to
Average Net Assets.................. (0.55)%(3) (0.62)% (1.11)%(3) (1.60)%
Portfolio Turnover Rate............... 99.63% 145.69% 118.37% 283.60%
Average Commission Rate(5)............ $ 0.0597 $ 0.0595 $ 0.0597 $ 0.0580
</TABLE>
* The Growth, Mid-Cap "EDGE"(SM), Bond, and Real Estate Securities Funds
commenced investment operations on March 8, 1996, March 8, 1996, March 7,
1996, and March 12, 1996, respectively.
(1) Net investment loss is after waiver of certain fees and reimbursement of
certain expenses by the Investment Manager (see Note 3 to the financial
statements). If the Investment Manager had not waived fees and reimbursed
expenses, net investment (loss) per share would have been as follows for the
period ended March 31, 1998 and the period ended September 30, 1997,
respectively: $(0.10) and $(0.09) for the Growth Fund; $(0.16) and $(0.55)
for Mid-Cap "EDGE"(SM) Fund.
(2) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the advisor.
(3) Annualized.
(4) If the Investment Manager had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been as
indicated.
(5) The average commission paid is applicable for the Funds that invest greater
than 10% of average net assets in equity securities transactions on which
commissions are charged.
See notes to financial statements.
22
<PAGE> 25
SENECA FUNDS -- FINANCIAL HIGHLIGHTS
ADMINISTRATIVE SHARES
(UNAUDITED)
<TABLE>
<CAPTION>
REAL ESTATE
SECURITIES FUND
---------------
PERIOD YEAR
ENDED ENDED
MARCH 31, SEPTEMBER 30,
1998 1997
--------- -------------
<S> <C> <C>
NET ASSET VALUE AT BEGINNING OF PERIOD...................... $ 14.68 $ 11.08
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (1).................................. 0.08 0.03
Net Realized and Unrealized Gain on Investments............ (0.41) 3.78
---------- ----------
TOTAL FROM INVESTMENT OPERATIONS........................... (0.33) 3.81
---------- ----------
Distributions to Shareholders from Net investment income.... (0.15) (0.20)
Net realized gains......................................... (0.60) (0.01)
---------- ----------
Total distribution......................................... (0.75) (0.21)
---------- ----------
NET ASSET VALUE AT END OF PERIOD............................ $ 13.60 $ 14.68
========== ==========
TOTAL RETURN (2)............................................ (2.15)% 34.54%
RATIOS & SUPPLEMENTAL DATA
Net Assets at End of Period................................ $2,563,766 $3,175,932
Ratio of Operating Expenses to Average Net Assets.......... 2.42%(3) 2.91%
Ratio of Operating Expenses to Average Net Assets (4)...... 2.42%(3) 3.79%
Ratio of Net Investment Income to Average Net Assets....... 1.21%(3) 1.37%
Portfolio Turnover Rate.................................... 31.06% 75.68%
Average Commission Rate (5)................................ $ 0.0597 $ 0.0559
</TABLE>
* The Growth, Mid-Cap "EDGE"(SM), Bond, and Real Estate Securities Funds
commenced investment operations on March 8, 1996, March 8, 1996, March 7,
1996, and March 12, 1996, respectively.
** As of December 26, 1996, the Bond Administrative Shares merged with Bond
Institutional Shares.
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the Investment Manager (see Note 3 to the financial
statements). If the Investment Manager had not waived fees and reimbursed
expenses, net investment income (loss) per share would have been as follows
for the period ended March 31, 1998 and the period ended September 30, 1997
respectively,: $0.08 and $(0.04) for the Real Estate Securities Fund.
(2) Total return represents total return for the period indicated. The total
return would have been lower if certain fees and expenses had not been
waived or reimbursed by the advisor.
(3) Annualized.
(4) If the Investment Manager had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been as
indicated.
(5) The average commission paid is applicable for the Funds that invest greater
than 10% of average net assets in equity securities transactions on which
commissions are charged.
See notes to financial statements.
23
<PAGE> 26
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(UNAUDITED)
NOTE 1 -- ORGANIZATION
Seneca Funds (the "Trust") is registered under the Investment Company Act of
1940, as amended, as an open-end management investment company. The Trust was
organized as a Delaware business trust on December 18, 1995 and was declared
effective as of March 1, 1996. The Trust consists of four series: Seneca Growth
Fund, Seneca Mid-Cap "EDGE"(SM) Fund, Seneca Bond Fund and Seneca Real Estate
Securities Fund (individually, the "Fund," and collectively, the "Funds.") The
Board of Trustees has authorized each Fund to issue two classes of common
shares: Administrative Shares and Institutional Shares. As of December 26, 1996,
the Bond Administrative Shares merged with the Bond Institutional Shares in a
tax free transaction.
NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES
VALUATION OF INVESTMENTS: Equity securities traded on a national securities
exchange are valued at their last sales price on the exchange on which they are
traded most extensively; or if no sales are reported, at the mean between the
most recent high bid and the most recent low asked quotations (the "Calculated
Mean") on such exchange. Securities traded on the National Association of
Securities Dealers Automated Quotation ("Nasdaq") system will be valued at the
most recent sales price reported on such system on the valuation date or, if
there are no sales reported, the Calculated Mean based on quotations reported on
Nasdaq. Securities not quoted on Nasdaq but traded in an over-the-counter market
will be valued at the most recent sale price if the sales price for any sales of
the security on the valuation date are reported on such market or, if there are
no such sales, the Calculated Mean based on quotations reported on such market.
In each case, if there is no Calculated Mean, the value shall be the most recent
bid quotation on the relevant market. Fixed income securities, other than those
having a maturity of 60 days or less, are valued on the basis of quotes obtained
from brokers or pricing services. Short-term investments having a maturity of 60
days or less will be valued at amortized cost. If, in the Investment Manager's
opinion, the fair market value of an
24
<PAGE> 27
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
investment cannot be determined pursuant to the foregoing procedures, the value
will be an amount that, in the opinion of the Trustees, represents the fair
market value determined based on all available information.
REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements. In a
repurchase agreement, a Fund buys a security and the seller simultaneously
agrees to repurchase the security on a specified future date at an agreed upon
price. Because the security constitutes collateral for the repurchase
obligation, a repurchase agreement can be considered a collateralized loan.
Security pledged as collateral for the repurchase agreement are held by the
Fund's Custodian until maturity date of the repurchase agreement. The Fund's
risk is the ability of the seller to pay the agreed-upon price on delivery date.
The Trustees have established criteria to evaluate the creditworthiness of
parties with whom the Funds may enter into repurchase agreements. The Funds
limit the repurchase agreements to securities issued by the United States
Government, its agencies, and its instrumentalities. The market value of the
underlying security throughout the term of the agreement will always equal or
exceed the agreed-upon repurchase price.
SECURITY TRANSACTIONS, INVESTMENT INCOME and EXPENSES: Investment security
transactions are recorded as of trade date. Realized gains and losses on
investment security sales are determined on the basis of identified cost.
Dividend income is recorded on the ex-dividend date. Interest income and
expenses are recorded daily on an accrual basis. Fund expenses not directly
attributable to a specific fund are allocated evenly among all funds. Fund
expenses that are not related to the distribution of shares of a particular
class or to services provided specifically to a particular class are allocated
between the classes on the basis of relative average daily net assets of each
class. Expenses that relate to the distribution or services provided to a
particular class are allocated to that class. Investment income and realized and
unrealized gains/losses are allocated between the classes on the basis of net
assets of each class.
25
<PAGE> 28
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income on shares of
the Seneca Bond Fund are determined at the class level and are declared and paid
monthly. Dividends from net investment income on shares of the Seneca Real
Estate Securities Fund are determined at the class level and are declared and
paid quarterly. Dividends from net investment income on shares of the Seneca
Growth Fund and Seneca Mid-Cap "EDGE"(SM) Fund are determined at the class level
and are declared and paid annually. Each Fund distributes net realized capital
gains, if any, at least annually.
FEDERAL INCOME TAXES: Each Fund intends to qualify as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended, by
distributing to shareholders substantially all of its taxable income. Therefore,
no Federal income or excise tax provision is required. Income and capital gain
distributions are determined in accordance with income tax regulations which may
differ from generally accepted accounting principles. These differences are
primarily due to differing treatments for market discount, losses deferred due
to wash sales and excise tax regulations.
Income and capital gain distribution requirements are determined in accordance
with income tax regulations which may differ from generally accepted accounting
principles. These differences, which may result in distribution
reclassifications, are primarily due to differing treatment for organizational
expenses. Permanent book and tax basis differences relating to shareholder
distributions will result in reclassifications to capital paid-in. Undistributed
net investment income and accumulated net realized gain (loss) may include
temporary book and tax basis differences which will reverse in a subsequent
period.
ESTIMATES: 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 and liabilities at the
date of the financial statements and the reported amounts of income and expenses
during the reporting period. Actual results could differ from these estimates.
26
<PAGE> 29
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
NOTE 3 -- AGREEMENTS AND TRANSACTIONS WITH AFFILIATES
The Trust has an Investment Management Agreement with GMG/Seneca Capital
Management LP ("GMG/Seneca"), under which GMG/Seneca manages the investments of
each Fund. For its services, GMG/Seneca receives a fee from each Fund at an
annual percentage of the average daily net assets of each Fund. Such investment
management fees are 0.70%, 0.80%, 0.50%, and 0.85% for the Growth Fund, Mid-Cap
"EDGE"(SM) Fund, Bond Fund, and Real Estate Securities Fund, respectively.
On July 17, 1997, GMG/Seneca Capital Management LLC transferred its rights and
obligations as investment manager of the Funds to GMG/Seneca, which was at that
time owned by the same persons as then owned Seneca Capital Management LLC.
The Trust has a Distribution and Services Agreement (the "Agreement") with
Genesis Merchant Group Securities LLC ("GMG Securities"),and Seneca Distributors
LLC ("Seneca Distributors"), affiliates of GMG/Seneca, under which GMG
Securities and Seneca Distributors serve as the distributors and principal
underwriters of each Fund's shares. Pursuant to the Agreement, GMG Securities
and Seneca Distributors receive an aggregate fee from each Fund at an annual
rate of 0.25% of the average daily net assets attributable to the Administrative
Shares of each Fund.
The Trust has an Administrative Services Agreement with GMG/Seneca pursuant to
which GMG/Seneca is responsible for the day-to-day administrative functions of
the Trust. For these services, GMG/Seneca receives a fee from each Fund at an
annual rate of 0.08% of the first $125 million, 0.06% of the next $125 million,
and 0.04% thereafter, subject to certain minimums which GMG/Seneca has agreed to
waive March 31, 1998. GMG/Seneca has entered into an agreement with State Street
Bank & Trust Company ("State Street") to provide most of the administrative
functions for the Trust.
27
<PAGE> 30
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
GMG/Seneca has agreed to voluntarily waive its Management and Administrative
fees and reimburse other operating expenses of each Fund to the extent necessary
to prevent the expenses for each Fund and class from exceeding the following
percentages of average daily net assets:
<TABLE>
<CAPTION>
ADMINISTRATIVE INSTITUTIONAL
FUND CLASS CLASS
---- -------------- -------------
<S> <C> <C>
Seneca Growth Fund......................... 2.55% 1.95%
Seneca Mid-Cap "EDGE"(SM) Fund............. 2.70% 2.10%
Seneca Bond Fund........................... -- 1.85%
Seneca Real Estate Fund.................... 3.05% 2.35%
</TABLE>
For the period ended March 31, 1998 GMG/Seneca waived and reimbursed expenses as
follows:
<TABLE>
<CAPTION>
MANAGEMENT ADMINISTRATIVE EXPENSES
FEES WAIVED FEES WAIVED REIMBURSED TOTAL
----------- -------------- ---------- -----
<S> <C> <C> <C> <C>
Seneca Growth Fund..... $-- $-- $ -- $ --
Seneca Mid-Cap
"EDGE"(SM) Fund...... -- -- 8,869 8,869
Seneca Bond Fund....... -- -- 11,476 11,476
Seneca Real Estate
Fund................. -- -- -- --
</TABLE>
Each Trustee of the Trust who is not an interested person receives a fee of
$2,500 for each regular, quarterly meeting attended and is reimbursed for
expenses incurred in connection with such attendance. Effective July 1, 1997,
the Independent Trustees receive an additional $2,500 quarterly retainer.
On October 15, 1997, the Trustees approved the appointment of Phoenix Equity
Planning Corporation as transfer agent of the Seneca Funds.
28
<PAGE> 31
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
NOTE 4 -- INVESTMENT TRANSACTIONS
Purchases and proceeds from sales and maturities of investments, excluding
short term securities, for the Trust, for the year ended March 31, 1998 were as
follows:
<TABLE>
<CAPTION>
NON- NON-
GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT
PURCHASES PURCHASES SALES SALES
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Seneca Growth Fund... $38,589,690 $ -- $43,585,395 $604,785
Seneca Mid-Cap
"EDGE"(SM) Fund.... 13,544,642 -- 14,434,641 --
Seneca Bond Fund..... 2,228,112 1,038,288 2,655,729 668,326
Seneca Real Estate
Securities Fund.... 10,241,000 -- 9,197,792 --
</TABLE>
NOTE 5 -- ORGANIZATION COSTS
The Trust bears all costs in connection with its organization. The
organization costs are amortized on a straight-line basis over a period of sixty
months from the commencement of investment operations. The costs associated with
state registration of shares will be amortized on a straight-line basis over a
period of twelve months. If any of the initial shares are redeemed before the
end of the amortization period, the proceeds of the redemption will be reduced
by the pro rata share of unamortized organization and state registration costs.
29
<PAGE> 32
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
NOTE 6 -- CAPITAL STOCK TRANSACTIONS
Capital stock transactions for the period from commencement of investment
operations through March 31, 1998 are as follows:
GROWTH FUND (1)
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1997
MARCH 31, 1998 ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Shares sold.......... 118,627 $ 1,911,475 1,193,698 $ 16,740,404
Shares issued upon
reinvestment of
dividends.......... 175,598 2,655,713 83,095 1,095,100
Shares redeemed...... (260,866) (4,189,539) (142,301) (2,144,300)
-------- ----------- --------- ------------
Net increase......... 33,359 $ 377,649 1,134,492 $ 15,691,204
======== =========== ========= ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1997
MARCH 31, 1998 ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
ADMINISTRATIVE SHARES
Shares sold.......... 34,376 $ 551,718 410,550 $ 5,770,465
Shares issued upon
reinvestment of
dividends.......... 30,397 454,435 1,364 17,844
Shares redeemed...... (215,994) (3,281,436) (76,718) (1,114,710)
-------- ----------- --------- ------------
Net increase
(decrease)......... (151,221) $(2,275,283) 335,196 $ 4,673,599
======== =========== ========= ============
</TABLE>
- ---------------
(1) Fund commenced investment operations on March 8, 1996.
30
<PAGE> 33
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
NOTE 6 -- CAPITAL STOCK TRANSACTIONS (CONTINUED)
MID-CAP "EDGE"(SM) FUND (1)
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1997
MARCH 31, 1998 ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Shares sold.......... 52,697 $ 782,788 403,926 $ 5,517,592
Shares issued upon
reinvestment of
dividends.......... 84,042 1,090,132 7,844 109,284
Shares redeemed...... (112,483) (1,577,860) (337,764) (4,917,052)
-------- ----------- --------- ------------
Net increase......... 24,256 $ 295,060 74,006 $ 709,824
======== =========== ========= ============
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1997
MARCH 31, 1998 ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
ADMINISTRATIVE SHARES
Shares sold.......... 45,435 $ 691,630 291,421 $ 4,064,517
Shares issued upon
reinvestment of
dividends.......... 22,073 286,061 851 11,875
Shares redeemed...... (26,210) (382,957) (236,289) (3,238,210)
-------- ----------- --------- ------------
Net increase......... 41,298 $ 594,734 55,983 $ 838,182
======== =========== ========= ============
</TABLE>
- ---------------
(1) Fund commenced investment operations on March 8, 1996.
31
<PAGE> 34
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
NOTE 6 -- CAPITAL STOCK TRANSACTIONS (CONTINUED)
BOND FUND (2)
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1997
MARCH 31, 1998 ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Shares sold.......... 97,386 $ 1,036,796 496,127 $ 5,079,683
Shares issued upon
reinvestment of
dividends.......... 30,776 327,973 45,088 460,532
Shares redeemed...... (145,324) (1,547,172) (101,560) (1,048,447)
-------- ----------- --------- ------------
Net increase
(decrease)......... (17,160) $ (182,403) 463,359 $ 4,742,193
======== =========== ========= ============
</TABLE>
REAL ESTATE SECURITIES FUND (4)
<TABLE>
<CAPTION>
YEAR ENDED
PERIOD ENDED SEPTEMBER 30, 1997
MARCH 31, 1998 ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
INSTITUTIONAL SHARES
Shares sold.......... 71,091 $ 1,001,456 2,618,177 $ 32,751,944
Shares issued upon
reinvestment of
dividends.......... 98,940 1,343,241 31,702 424,162
Shares redeemed...... (120,623) (1,657,072) (830,654) (10,635,920)
-------- ----------- --------- ------------
Net increase......... 49,408 $ 687,625 1,819,225 $ 22,540,186
======== =========== ========= ============
</TABLE>
- ---------------
(2) Fund commenced investment operations on March 7, 1996.
(4) Fund commenced investment operations on March 12, 1996.
32
<PAGE> 35
SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD ENDED YEAR ENDED
MARCH 31, 1998 SEPTEMBER 30, 1997
---------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- ------------
<S> <C> <C> <C> <C>
ADMINISTRATIVE SHARES
Shares sold.......... 22,536 $ 320,304 262,586 $ 3,366,423
Shares issued upon
reinvestment of
dividends.......... 10,321 139,490 2,082 27,973
Shares redeemed...... (60,821) (829,896) (68,344) (895,219)
-------- ----------- --------- ------------
Net increase
(decrease)......... (27,964) $ (370,100) 196,324 $ 2,499,177
======== =========== ========= ============
</TABLE>
NOTE 7 -- SHARES OF BENEFICIAL INTEREST
At March 31, 1998, certain shareholders were record owners of more than 10%
of total outstanding shares of the following Funds:
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME OF PORTFOLIO SHAREHOLDERS SHARES OWNED
----------------- ------------ -------------
<S> <C> <C>
Real Estate Securities Fund....... 2 27%
</TABLE>
NOTE 8 -- SUBSEQUENT EVENTS
On June 18, 1997, the owners of GMG/Seneca entered into an agreement with
Phoenix Duff & Phelps Corporation ("Phoenix") for the sale of a majority of the
equity interests in GMG/Seneca to Phoenix. Closing of the purchase is
conditioned upon approval by the shareholders of the Seneca Funds of the "change
of control" that would result, and upon execution of new investment management,
investment sub-advisory and underwriting agreements. Proxy materials for the
shareholder meeting were prepared and distributed in January, 1998, and in March
shareholders of each of the series of the Seneca Funds voted to approve the
change of control. Closing of the purchase will occur shortly after the
effectiveness of a post-effective amendment containing definitive disclosure of
these and other, related changes. At that time, which is expected to be July,
1998 the name of the funds would change to "Phoenix Seneca Funds".
33
<PAGE> 36
LOGO
Seneca Funds
c/o State Street Bank & Trust Company
P.O. Box 8301
Boston, MA 02266-8301
Telephone: 1-800-990-9331
Facsimile: 1-617-774-3245
http://www.senecafunds.com
