As filed with the Securities and Exchange Commission on January 22, 1999
File No. 33-65137
File No. 811-7455
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT
Under the
SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 7 [X]
and/or
REGISTRATION STATEMENT
Under the
INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 7 [X]
(Check appropriate box or boxes)
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PHOENIX-SENECA FUNDS
(Exact Name of Registrant as Specified in Charter)
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909 Montgomery Street, San Francisco, California 94133
(Address of Principal Executive Office) (Zip Code)
(415) 677-1500
(Registrant's Telephone Number, Including Area Code)
SANDRA J. WESTHOFF
Chief Operating Officer, Seneca Capital Management LLC
909 Montgomery Street, San Francisco, California 94133
(Name and Address of Agent for Service)
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It is proposed that this filing will become effective (check appropriate box):
[ ] immediately upon filing pursuant to paragraph (b)
[X] on January 28, 1999 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on _____ or at such later date as the Commission shall order pursuant to
paragraph (a)(3)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on pursuant to paragraph (a)(2) of rule 485. If appropriate, check the
following box:
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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Copy to:
Pamela S. Sinofsky
Compliance Officer
Phoenix Investment Partners, Ltd.
59 Prospect Street
Hartford, Connecticut 06115-0479
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<PAGE>
PHOENIX-SENECA FUNDS
Cross Reference Sheet Pursuant to Rule 404
PART A
<TABLE>
<CAPTION>
Item Number Form N-1A, Part A Prospectus Caption
- ------------------------------------------------------------------ -------------------------------------------------------
<S> <C> <C>
1. Front and Back Cover Pages ............................... Cover Page, Back Cover Page
2. Risk/Return Summary: Investments, Risks, Performance...... Investment Risk and Return Summary
3. Risk Return Summary: Fee Table ........................... Fund Expenses
Investment Objectives, Principal Investment Strategies, Investment Risk and Return Summary; Investment
4. and Related Risks ........................................ Strategies; Risks Related to Investment Strategies
5. Management's Discussion of Fund Performance .............. Performance Tables
6. Management, Organization, and Capital Structure .......... Management of the Fund
Pricing of Fund Shares; Sales Charges; Your Account;
How to Buy Shares; How to Sell Shares; Things to
Know When Selling Shares; Account Policies; Investor
7. Shareholder Information .................................. Services; Tax Status of Distributions
8. Distribution Arrangements ................................ Sales Charges
9. Financial Highlights Information ......................... Financial Highlights
PART B
<CAPTION>
Item Number Form N-1A, Part B Statement of Additional Information Caption
- -------------------------------------------------------------------- -------------------------------------------------------
<S> <C> <C>
10. Cover Page and Table of Contents ......................... Cover Page, Table of Contents
11. Fund History ............................................. The Trust
Investment Objectives and Policies; Investment
12. Description of the Fund and Its Investment Risks ......... Restrictions
13. Management of the Fund ................................... Management of the Trust
14. Control Persons and Principal Holders of Securities ...... Management of the Trust
Advisory and Administrative Services; The Distributor;
15. Investment Advisory and Other Services ................... Distribution Plans; Other Information
16. Brokerage Allocation and Other Practices ................. Portfolio Brokerage; Portfolio Turnover
17. Capital Stock and Other Securities ....................... Other Information
Net Asset Value; How to Buy Shares; Investor Account
18. Purchase, Redemption, and Pricing of Shares .............. Services; How to Redeem Shares
19. Taxation of the Fund ..................................... Dividends, Distributions and Taxes
20. Underwriters ............................................. The Distributor
21. Calculation of Performance Data .......................... Calculation of the Funds' Performance
22. Financial Statements ..................................... Financial Statements
</TABLE>
<PAGE>
[FRONT COVER]
Phoenix Investment Partners
Prospectus
January 29, 1999
Seneca
Phoenix-Seneca
Bond Fund
Phoenix-Seneca
Growth Fund
Phoenix-Seneca
Mid-Cap "EDGE"(SM) Fund
Phoenix-Seneca
Real Estate Securities
Fund
Neither the Securities and Exchange
Commission nor any state securities
commission has approved or
disapproved of these securities or
determined if this prospectus is
truthful or complete. Any representation
to the contrary is a criminal offense.
This Prospectus contains important
information about the Phoenix-Seneca
Bond Fund, Phoenix-Seneca
Mid-Cap "EDGE"(SM) Fund, and
Phoenix-Seneca Real Estate Securities
Fund that you should know before
investing. Please read it carefully and
retain it for future reference.
PHOENIX
INVESTMENT PARTNERS, LTD.
<PAGE>
[arrow] Phoenix-
Seneca
Funds
Table of Contents
- ----------------------------------------
<TABLE>
<S> <C>
Phoenix-Seneca Bond Fund
Investment Risk and Return Summary .............. 2
Fund Expenses ................................... 5
Investment Strategies ........................... 6
Risks Related to Investment Strategies .......... 8
Phoenix-Seneca Growth Fund
Investment Risk and Return Summary .............. 11
Fund Expenses ................................... 14
Investment Strategies ........................... 15
Risks Related to Investment Strategies .......... 16
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
Investment Risk and Return Summary .............. 20
Fund Expenses ................................... 23
Investment Strategies ........................... 24
Risks Related to Investment Strategies .......... 25
Phoenix-Seneca Real Estate Securities Fund
Investment Risk and Return Summary .............. 29
Fund Expenses ................................... 32
Investment Strategies ........................... 33
Risks Related to Investment Strategies .......... 35
Management of the Funds .......................... 37
Pricing of Fund Shares ........................... 40
Sales Charges .................................... 41
Your Account ..................................... 43
How to Buy Shares ................................ 45
How to Sell Shares ............................... 45
Things You Should Know When Selling Shares ....... 46
Account Policies ................................. 47
Investor Services ................................ 48
Tax Status of Distributions ...................... 49
Financial Highlights ............................. 50
Additional Information ........................... 58
</TABLE>
<PAGE>
Phoenix-Seneca Bond Fund
Investment Risk and Return Summary
- -------------------------------------------------
Investment Objective
Phoenix-Seneca Bond Fund has an investment objective of high
total return from both current income and capital appreciation.
There is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
[arrow] The fund will invest in a diversified portfolio of
corporate bonds and other debt securities. Under normal
circumstances the fund will invest at least 65% of its
total assets in investment grade bonds. Investment grade
bonds are rated Baa3 or higher by Moody's Investors
Service ("Moody's") or BBB- or higher by Standard and
Poor's Corporation ("S&P").
[arrow] The adviser is responsible for managing the fund's
investment program and the general operation of the
fund. The subadviser actively manages the fund's
portfolio, adjusting the weighted average portfolio
maturity in response to expected changes in interest
rates. The fund generally seeks to maintain a
dollar-weighted average duration of between two and
eight years. The subadviser also considers bond
performance in particular industry sectors and
individual issue characteristics when selecting
investments for this fund.
[arrow] The subadviser may invest in unrated bonds that it deems
possess similar qualities as investment grade
securities.
[arrow] The fund invests in corporate bonds, securities issued
or guaranteed by the U.S. Government or its agencies and
instrumentalities, publicly traded and privately placed
corporate securities, and municipal obligations.
[arrow] The fund may invest in fixed, floating and variable rate
securities of both U.S. and foreign (non-U.S.) issuers.
[arrow] Up to 35% of the fund's assets may be invested in below
investment grade securities (so called "junk bonds").
[arrow] The fund may invest in mortgage-backed securities issued
by various federal agencies and government sponsored
enterprises and in other mortgage related or
asset-backed securities.
[arrow] The fund may lend up to one-third of the fund's net
assets at market value to increase its investment
returns.
[arrow] The fund may invest as much as 20% of its assets in
securities of foreign (non-U.S.) issuers.
2 Phoenix-Seneca Bond Fund
<PAGE>
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund seeks to outperform the Lehman Brothers Aggregate Bond
Index in total return. The total return of the index can be
negative. When this happens, the fund may outperform the Lehman
Brothers Aggregate Bond Index but still have a negative return.
In that case the value of your shares would likely decline
rather than increase. The subadviser may also fail in its
objective to outperform the index.
The fund's focus is high total return. The subadviser intends to
invest fund assets so that your shares increase in value.
However, if the subadviser misjudges the return potential, or the
ability of issuers to make scheduled principal and interest
payments, the fund's returns may be lower than prevailing
returns and the fund's income available for distribution may be
less than other funds. Neither the fund nor the subadviser can
assure you that a particular level of income will consistently
be achieved.
This fund may invest in below investment grade securities (so
called "junk bonds"). Below investment grade securities present
a greater risk that the issuer will not be able to make interest
or principal payments on time. If this happens, the fund would
lose income and could expect a decline in the market value of
the securities.
This fund may invest in unrated securities. Unrated securities
may not have as broad a market as investment grade securities or
publicly traded securities making them more difficult to sell.
This could cause the security to lose value.
This fund may invest in variable and floating rate securities.
Generally these are unsecured obligations of private issuers
which present a greater risk that the issuer will not be able to
make principal and interest payments on time. If economic
conditions change adversely to interest rates, periodic interest
payments may be less than anticipated and could cause the value
of your shares to decline.
The subadviser selects securities based on duration. Duration
calculations may not properly reflect interest rate exposure for
variable and floating rate securities. These securities may
expose the fund to greater risks than contemplated by the
subadviser.
This fund may invest in mortgage-backed and other asset-backed
securities. A portion of the cash flow from these securities may
be from early payoff of some of the underlying loans. In the
event of very high prepayments, the fund may be required to
invest the proceeds at a lower interest rate, causing the fund
to earn less than if the prepayments had not occurred.
The fund may lend portfolio securities to financial institutions
to increase investment return. If the borrower is unwilling or
unable to return the borrowed securities when due, the fund can
suffer losses.
Phoenix-Seneca Bond Fund 3
<PAGE>
This fund may invest in companies in foreign countries.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio. Some investments may be made in currencies other than
U.S. dollars that will fluctuate in value as a result of changes
in the currency exchange rate. Foreign markets and currencies
may not perform as well as U.S. markets.
Performance Tables
The bar chart below provides an indication of the risks of
investing in the Phoenix-Seneca Bond Fund by showing changes in
the fund's Class X Shares performance from year to year over the
life of the fund(1). The table below shows how the fund's
average annual returns for one year and for the life of the fund
compare to those of a broad-based securities market index. The
fund's past performance is not necessarily an indication of how
the fund will perform in the future.
[BAR GRAPH] Phoenix-Seneca Bond Fund
----------------------------------------------------------------
Tabular representation of plot points:
<TABLE>
<CAPTION>
Calendar Year
-----------------
1997 1998
---- ----
<S> <C> <C>
Annual Return (%) 12.83 7.66
</TABLE>
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(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 4.23% (quarter ending December 31,
1997) and the lowest return for a quarter was 0.67% (quarter ending March 31,
1997).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns One Year(1) Life of the Fund(2)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class X Shares 7.66% 9.76%
- --------------------------------------------------------------------------------
Lehman Aggregate Bond Index(3) 8.69% 8.10%
- --------------------------------------------------------------------------------
</TABLE>
(1) One year period ending December 31, 1998.
(2) Class X Shares from March 8, 1996 through December 31, 1998.
(3) The Lehman Aggregate Bond Index is an unmanaged index considered to be
representative of the bond market. The Index does not reflect sales charges.
Performance information for Class A, Class B and Class C Shares is not included
because these classes have not had annual returns for at least one calendar
year.
4 Phoenix-Seneca Bond Fund
<PAGE>
Fund Expenses
- ----------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) None 4.75% None None
Maximum Deferred Sales Charge (load) (as a None None 5%(b) 1% during the
percentage of the lesser of the value redeemed or first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None None
Redemption Fee None None None None
Exchange Fee None None None None
----------------------------------------------------------------
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.50% 0.50% 0.50% 0.50%
Distribution and Service (12b-1) Fees(c) None 0.25% 1.00% 1.00%
Other Expenses 1.16% 1.64% 1.98% 2.56%
---- ----- ----- ----
Total Annual Fund Operating Expenses(a) 1.66% 2.39%(d) 3.48%(d) 4.06%(d)
==== ===== ===== ====
</TABLE>
- ----------------
(a) The fund's investment adviser has agreed to reimburse through July 1, 2000
the Phoenix-Seneca Bond Fund's operating expenses to the extent that such
expenses exceed 1.85% for Class X Shares, 2.45% for Class A Shares and 3.20% for
Class B and Class C Shares.
<TABLE>
<S> <C> <C> <C> <C>
Total Annual Fund Operating Expenses after expense
reimbursement (if applicable) are: 1.66% 2.39%(d) 3.20% 3.20%
</TABLE>
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Class A, Class B and Class C Shares have been offered only since July 1,
1998. The percentages indicated are estimates before expense reimbursement;
actual expenses may be more or less than the amounts shown.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Phoenix-Seneca Bond Fund 5
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $169 $ 523 $ 902 $1,965
- --------------------------------------------------------------------------------
Class A $706 $1,185 $1,690 $3,072
- --------------------------------------------------------------------------------
Class B $751 $1,268 $1,807 $3,512
- --------------------------------------------------------------------------------
Class C $508 $1,235 $2,078 $4,256
- --------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $169 $ 523 $ 902 $1,965
- --------------------------------------------------------------------------------
Class A $706 $1,185 $1,690 $3,072
- --------------------------------------------------------------------------------
Class B $351 $1,068 $1,807 $3,512
- --------------------------------------------------------------------------------
Class C $408 $1,235 $2,078 $4,256
- --------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the reimbursement of expenses over
certain levels by the fund's investment adviser. Refer to the
section "Management of the Funds" for information about expense
reimbursement.
Investment Strategies
- -------------------------------------
Investment Objective
The fund has an investment objective of high total return from
both current income and capital appreciation. There is no
guarantee that the fund will achieve the objective.
Principal Investment Strategies
The fund invests in a diversified portfolio of corporate bonds
and other debt securities. Under normal circumstances the fund
intends to invest at least 65% of its total assets in investment
grade bonds. If the fund purchases an investment grade security
that loses its investment grade rating, the fund is not required
to sell the security. Ratings are established by nationally
recognized statistical rating agencies. Please refer to the
Statement of Additional Information for a detailed list of
rating categories.
The fund contracts with an adviser, Phoenix Investment Counsel,
Inc. to manage the fund's investment program and be responsible
for the general operation of the fund and a subadviser, Seneca
Capital Management LLC to manage the investments of the fund.
Normally the fund
6 Phoenix-Seneca Bond Fund
<PAGE>
maintains a dollar weighted average maturity of between two and
ten years, although maturities of individual securities may be
longer. Maturity measures the length of time until the issuer
repays the principal on a debt security. During periods of rising
interest rates, the subadviser may shorten the portfolio's
average maturity to reduce the effect of bond price declines on
the fund's net asset value. Conversely, when interest rates are
falling and bond prices rising, the fund may lengthen its average
maturity.
In addition, the subadviser seeks to maintain a dollar weighted
average duration of between two and eight years. Duration
measures the length of a debt security on a present value basis
using the time between now and when interest and principal
should be received weighted against the present value of the
cash to be received at each future time.
In addition to maturity and duration, the subadviser may
consider whether a bond has performed well in a particular
industry sector and whether individual characteristics of the
issue, such as the underlying financial stability and historical
payment record of the issuer, make the security appropriate for
the achievement of the fund's investment objective.
The fund may invest in fixed, floating and variable rate
securities of both U.S. and foreign issuers.
This fund may invest in below investment grade securities ("junk
bonds"). Below investment grade securities generally pay higher
current income but may present a greater risk that the issuer
will not be able to make principal and interest payments on
time.
The fund may invest in mortgage-backed and other asset-backed
securities. Mortgage pass through securities are interests in
pools of mortgage loans, assembled and issued by various
governmental, government related, and private organizations.
These securities provide a monthly payment consisting of both
principal and interest payments. In effect, these payments are a
"pass through" of the monthly payments made by individual
borrowers on their residential or commercial mortgage loans.
Mortgage-backed securities also includes collateralized mortgage
obligations (CMOs) which generally includes debt instruments
collateralized by mortgage loans or mortgage pass throughs.
Asset-backed securities are based on financial assets other than
mortgages such as automobile and credit card loan receivables.
Additional payments on mortgage- and asset-backed securities are
caused by repayment of principal resulting from the sale of the
underlying property, refinancing or foreclosure. These
prepayments are difficult to predict. This variability of
prepayments will tend to limit price gains when interest rates
drop and exaggerate price declines when interest rates rise.
The fund may lend portfolio securities to broker-dealers and
other financial institutions to increase its investment returns.
The total amount of such lending can be as much as one-third of
the fund's total assets. When the fund lends securities in this
fashion, the borrower returns the securities at a pre-arranged
time and pays some form of premium or other fee for the
transaction. The fund receives all dividends and other
distributions made with respect to the loaned securities. All
securities loans are secured by other marketable securities.
The fund may invest up to 20% of its total assets in securities
of foreign (non-U.S.) issuers.
Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques
of the fund.
Phoenix-Seneca Bond Fund 7
<PAGE>
Risks Related to Investment Strategies
- -----------------------------------------------------
General
The fund's focus is high total return. The subadviser intends to
invest fund assets so that your shares increase in value.
However, if the subadviser misjudges the return potential of a
portfolio security or the ability of the issuer to make
scheduled interest or other income payments to the fund, the
fund's income available for distribution to shareholders may
decrease. Neither the fund nor the adviser can assure you that a
particular level of income will consistently be achieved.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Below Investment Grade Securities
The fund may invest in securities that are below investment
grade. Although these securities provide greater income and
opportunity for capital appreciation than investments in higher
grade securities, they also typically entail greater price
volatility and principal and interest risk. There is a greater
risk that an issuer will not be able to make principal and
interest payments on time. In addition, analysis of the
creditworthiness of issuers of below investment grade securities
may be more complex than for higher grade securities, making it
more difficult for the subadviser to accurately predict risk.
Unrated Securities
The fund may invest in unrated securities. Unrated securities
may not be lower in quality than rated securities but due to
their perceived risk they may not have as broad a market as
rated securities. Analysis of unrated securities is more complex
than for rated securities, making it more difficult for the
subadviser to accurately predict risk.
Mortgage-Backed and Asset-Backed Securities
It is difficult to predict cash flows from mortgage-backed and
asset-backed securities. Payments of principal and interest on
the underlying assets may be allocated among classes in a
variety of ways and the inability to determine specific amounts
and timing of prepayments of the underlying loans make it
difficult to accurately predict cash flow. In the event of high
prepayments, the fund may be required to invest these proceeds
at a lower interest rate, causing the fund to earn less than if
the prepayments had not occurred.
Securities Lending
When the fund lends portfolio securities it runs the risk that
the borrower will be unable or unwilling to return the
securities and the agreed fee or premium. The value of the
collateral taken as security for the securities loaned may
decline in value or may be difficult to convert to cash in the
event that the fund must rely on the collateral to recover the
value of its securities. In these circumstances the fund will
suffer losses.
8 Phoenix-Seneca Bond Fund
<PAGE>
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial
reporting standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction
settlement systems,
o the possibility of expropriation or confiscatory
taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, interest payable on foreign securities
may be subject to foreign taxes withheld prior to receipt by the
fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities
and Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies and which pay interest in
foreign currencies. Changes in foreign exchange rates will affect
the value of those securities denominated or quoted in currencies
other than the U.S. dollar. The forces of supply and demand in
the foreign exchange markets determine exchange rates and these
forces are in turn affected by a range of economic, political,
financial, governmental and other factors. Exchange rate
fluctuations can affect the fund's net asset value (share price)
and periodic income payments either positively or negatively
depending upon whether foreign currencies are appreciating or
depreciating in value relative to the U.S. dollar. Exchange rates
fluctuate over both the long and short terms.
Phoenix-Seneca Bond Fund 9
<PAGE>
Effective January 1, 1999, eleven European countries began
converting from their sovereign currency to the European Union
common currency called the "Euro." This conversion may expose
the fund to certain risks including the reliability and timely
reporting of pricing information of the fund's portfolio
holdings. In addition, one or more of the following may
adversely affect specific securities in the fund's portfolio:
o known trends or uncertainties related to the Euro
conversion that an issuer reasonably expects will have
a material impact on revenues, expenses or income from
its operations;
o competitive implications of increased price
transparency of European Union markets (including labor
markets) resulting from adoption of a common currency
and issuers' plans for pricing their own products and
services in the Euro;
o issuers' ability to make required information
technology updates on a timely basis, and costs
associated with the conversion (including costs of dual
currency operations through January 1, 2002);
o currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o potential tax consequences.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the
year 2000. If a company whose securities are held by the fund
does not "fix" its Year 2000 issue it is possible that its
operations and financial results would be hurt. Also the cost of
modifying computer programs to become Year 2000 compliant may
hurt the financial performance and market price of companies
whose securities are held by the fund.
Management of The Fund
- -------------------------------------
The Adviser
Please refer to "Management of the Funds" on page 38 for a
description of the investment adviser, management fees and
portfolio managers.
10 Phoenix-Seneca Bond Fund
<PAGE>
Phoenix-Seneca Growth Fund
Investment Risk and Return Summary
- -------------------------------------------------
Investment Objective
Phoenix-Seneca Growth Fund has an investment objective of
capital appreciation. There is no guarantee that the fund will
achieve its objective.
Principal Investment Strategies
[arrow] Under normal circumstances the fund will invest at least
65% of its total assets in common stocks, primarily
common stocks of growth companies of any size. Common
stocks are selected based on the strength and quality of
earnings, the ability of the stock to sustain earnings,
the management of the issuer and the stock's valuation.
[arrow] The adviser is responsible for managing the fund's
investment program and the general operation of the
fund. The subadviser manages the investments of the fund
by selecting securities of companies that meet certain
fundamental standards and that the subadviser believes
will demonstrate greater long-term earnings growth than
the average company included in the Standard and Poor's
500 Composite Stock Price Index (the "S&P 500").
[arrow] The subadviser may buy securities in anticipation of
short-term price gains.
[arrow] Generally the fund focuses a portion of its portfolio on
large, well-known companies that have established a
history of profitability and/or dividend payment.
[arrow] The fund may invest in preferred stocks, warrants, and
debt instruments, including bonds convertible into
common stocks.
[arrow] The fund may invest up to 35% of its net assets in below
investment grade bonds (so called "junk bonds").
[arrow] The fund may lend up to one-third of the fund's net
assets at market value to increase its investment
returns.
[arrow] The fund may invest up to 20% of its assets in
securities of foreign (non-U.S.) issuers.
[arrow] The fund may invest up to 20% of its net assets in
options and futures contracts. The fund intends to
invest in these securities primarily for "hedging"
purposes but may invest up to 5% of its net assets in
these securities as an investment unrelated to hedging
purposes.
Phoenix-Seneca Growth Fund 11
<PAGE>
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund will seek to increase the value of your shares by
investing in securities the subadviser expects to increase in
value. Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease.
The fund may buy securities in anticipation of short-term price
gains. Gains depend on the ability of the subadviser to predict
correctly the increase to securities prices. Securities prices
may not increase as anticipated. This may increase the fund's
overall trading volume especially if prices do not rise as
expected. Frequent and active trading may increase transaction
costs for the fund and may increase capital gain distributions,
resulting in greater tax liability to you.
The fund may invest in small companies as well as large
companies. Smaller companies may be affected to a greater extent
than larger companies by changes in general economic conditions
and conditions in particular industries. Smaller companies may
also be relatively new and not have the same operating history
and "track record" as larger companies. This could make future
performance of smaller companies more difficult to predict.
The fund may invest in below investment grade securities (so
called "junk bonds"). Below investment grade securities present
a greater risk that the issuer will not be able to make interest
or principal payments on time. If this happens, the fund would
lose income and could expect a decline in the market value of
the securities.
The fund may lend portfolio securities to financial institutions
to increase investment return. If the borrower is unwilling or
unable to return the borrowed securities when due, the fund can
suffer losses.
The fund may invest in companies in foreign countries. Political
and economic uncertainty as well as less public information
about investments may negatively impact the fund's portfolio.
Some investments may be made in currencies other than U.S.
dollars that will fluctuate in value as a result of changes in
the currency exchange rate. Foreign markets and currencies may
not perform as well as U.S. markets.
12 Phoenix-Seneca Growth Fund
<PAGE>
Performance Tables
The bar chart below provides an indication of the risks of
investing in the Phoenix-Seneca Growth Fund by showing changes
in the fund's Class A Shares performance from year to year over
the life of the fund(1). The table below shows how the fund's
average annual returns for one year and for the life of the fund
compare to those of a broad-based securities market index. The
fund's past performance is not necessarily an indication of how
the fund will perform in the future.
[BAR GRAPH] Phoenix-Seneca Growth Fund
----------------------------------------------------------------
Tabular representation of plot points:
<TABLE>
<CAPTION>
Calendar Year
-----------------
1997 1998
---- ----
<S> <C> <C>
Annual Return (%) 27.87 28.80
</TABLE>
----------------------------------------------------------------
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 15.73% (quarter ending June 30,
1997) and the lowest return for a quarter was (12.03)% (quarter ending September
30, 1998).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns(1) One Year(2) Life of the Fund(3)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class X Shares 29.41% 34.41%
- --------------------------------------------------------------------------------
Class A Shares 22.69% 31.15%
- --------------------------------------------------------------------------------
S&P 500 Stock Index(4) 28.76% 28.97%
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares.
(2) One year period ending December 31, 1998.
(3) Class X and Class A Shares from March 8, 1996 through December 31, 1998.
(4) The S&P 500 Stock Index is an unmanaged but commonly used measure of common
stock total return performance. The S&P's performance does not reflect sales
charges.
Performance information for Class B and Class C Shares is not included because
these classes have not had annual returns for at least one calendar year.
Phoenix-Seneca Growth Fund 13
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if you
buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from your
investment)
Maximum Sales Charge (load) Imposed on Purchases
(as a percentage of offering price) None 4.75% None None
Maximum Deferred Sales Charge (load) (as a None None 5%(b) 1% during
percentage of the lesser of the value redeemed or the the first year
amount invested)
Maximum Sales Charge (load) Imposed on Reinvested
Dividends None None None None
Redemption Fee None None None None
Exchange Fee None None None None
----------------------------------------------
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- ------- ------- -------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.70% 0.70% 0.70% 0.70%
Distribution and Service (12b-1) Fees(c) None 0.25% 1.00% 1.00%
Other Expenses 0.44% 0.60% 0.57% 0.78%
---- ---- ----- ----
Total Annual Fund Operating Expenses(a) 1.14% 1.55% 2.27%(d) 2.48%(d)
==== ==== ===== ====
</TABLE>
- ----------------
(a) The fund's investment adviser has agreed to reimburse through July 1, 2000
the Phoenix-Seneca Growth Fund's operating expenses to the extent that such
expenses exceed 1.25% for Class X Shares, 1.85% for Class A Shares and 2.60% for
Class B and Class C Shares.
<TABLE>
<S> <C> <C> <C> <C>
Total Annual Fund Operating Expenses after expense
reimbursement (if applicable) are: 1.14% 1.55% 2.27%(d) 2.48%(d)
</TABLE>
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) Distribution and Service Fees represent an asset-based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Class B and Class C Shares have been offered only since July 1, 1998. The
percentages indicated are estimates before expense reimbursement; actual
expenses may be more or less than the amounts shown.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
14 Phoenix-Seneca Growth Fund
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $116 $362 $ 628 $1,386
- --------------------------------------------------------------------------------
Class A $625 $941 $1,280 $2,233
- --------------------------------------------------------------------------------
Class B $630 $909 $1,215 $2,425
- --------------------------------------------------------------------------------
Class C $351 $773 $1,321 $2,816
- --------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $116 $362 $ 628 $1,386
- --------------------------------------------------------------------------------
Class A $625 $941 $1,280 $2,233
- --------------------------------------------------------------------------------
Class B $230 $709 $1,215 $2,425
- --------------------------------------------------------------------------------
Class C $251 $773 $1,321 $2,816
- --------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the reimbursement of expenses over
certain levels by the fund's investment adviser. Refer to the
section "Management of the Fund" for information about expense
reimbursement.
Investment Strategies
- --------------------------------------
Investment Objective
The fund has an investment objective of capital appreciation.
There is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund invests in a diversified portfolio of securities of
primarily domestic (U.S.) companies. Under normal circumstances
the fund intends to invest at least 65% of its total assets in
common stocks.
The fund contracts with an adviser, Phoenix Investment Counsel,
Inc. to manage the fund's investment program and be responsible
for the general operation of the fund and a subadviser, Seneca
Capital Management LLC to manage the investments of the fund.
The subadviser selects securities of companies based on the
strength and quality of the security's earnings, the ability of
the security to sustain earnings, the management of the company
and the security's valuation. The subadviser will also select
securities it believes have the potential for above average
market appreciation. In evaluating companies' potential for
market appreciation, the
Phoenix-Seneca Growth Fund 15
<PAGE>
subadviser seeks companies that it believes will demonstrate
greater long-term earnings growth than the average company
included in the S&P 500. The strategy is based on the
subadviser's view that growth in a companies' earnings will
correlate with growth in the price of its stock.
The subadviser seeks to identify companies that have the most
attractive earnings prospects and favorable valuations,
regardless of the size of the company. Generally, however, a
portion of the fund's portfolio will be invested in large,
well-known companies that have established histories of
profitability and/or dividend payment.
Although the fund stresses long-term earnings growth potential,
the subadviser may buy securities in anticipation of short-term
price gains.
In addition to common stocks, the fund may invest in other
equity securities including preferred stocks and warrants.
Debt instruments, including investment grade and below
investment grade bonds ("junk bonds") and bonds convertible into
common stocks, may also be a part of the fund portfolio. Below
investment grade securities present a greater risk that the
issuer will not be able to make interest or principal payments
on time. If this happens, the fund would lose income and could
expect a decline in the market value of the securities.
The fund may lend portfolio securities to broker-dealers and
other financial institutions to increase its investment returns.
The total amount of such lending can be as much as one-third of
the fund's total assets. When the fund lends securities in this
fashion, the borrower returns the securities at a pre-arranged
time and pays some form of premium or other fee for the
transaction. The fund receives all dividends and other
distributions made with respect to the loaned securities. All
securities loans are secured by other marketable securities.
The fund may invest up to 20% of its total assets in securities
of foreign (non-U.S.) issuers. Foreign investment will primarily
be through American Depository Receipts (ADRs).
Temporary defensive strategy. If the subadviser believes that
market conditions are not favorable to the fund's principal
strategies the fund may invest without limit in cash and cash-
equivalents. In such instances, the fund may not achieve its
stated investment objective.
Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques
of the fund.
Risks Related to Investment Strategies
- ------------------------------------------------------
General
The fund's focus is long term earnings growth. The subadviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decrease as well as increase. If between
the time you purchase shares and the time you sell shares the
value of the fund's investments decreases, you will lose money.
The
16 Phoenix-Seneca Growth Fund
<PAGE>
value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market conditions for their products or
services so that companies engaged in those businesses do not
perform as well as companies in other industries. Interest rate
changes may improve prospects for certain types of businesses
and they may worsen prospects for others. To the extent that the
fund's investments are affected by general economic declines,
declines in industries, and interest rate changes that
negatively affect the companies in which the fund invests, fund
share values may decline. Share values can also decline if the
specific companies selected for fund investment fail to perform
as the adviser expects, regardless of general economic trends,
industry trends, interest rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Anticipating Short-term Price Gains
The subadviser may buy securities that it anticipates will rise
in price over a short period of time. If the securities do not
perform as expected, gains will not be as high as anticipated.
Moreover, the subadviser buys these securities with the
expectation that they will be sold after a short period of time.
Each time a security is bought or sold, the fund incurs certain
costs associated with the transaction. The more transactions,
the higher the overall cost to the fund which could lead to a
decrease in the fund's performance. Likewise, frequent sales
that result in gains to the fund could increase the amount of
capital gains distributions to you, the shareholder. Increased
capital gains distributions could result in greater tax
liability to you.
Small Market Capitalization Investing
The fund may invest in some smaller companies. Companies with
small capitalization are often companies in industries that have
recently emerged due to cultural, economic, regulatory or
technological developments. Such developments can have a
significant positive or negative effect on small capitalization
companies and their stock performance. Given the limited
operating history and rapidly changing fundamental prospects,
investment returns from smaller capitalization companies can be
highly volatile. Smaller companies may find their ability to
raise capital impaired by their size or lack of operating
history. Product lines are often less diversified and subject to
competitive threats. Smaller capitalization stocks are subject
to varying patterns of trading volume and may, at times, be
difficult to sell.
Below Investment Grade Securities
The fund may invest in securities that are below investment
grade. Although these securities provide greater income and
opportunity for capital appreciation than investments in higher
grade securities, they also typically entail greater price
volatility and principal and interest risk. There is a greater
risk that an issuer will not be able to make principal and
interest payments on time. In addition, analysis of the
creditworthiness of issuers of below investment grade securities
may be more complex than for higher grade securities, making it
more difficult for the subadviser to accurately predict risk.
Phoenix-Seneca Growth Fund 17
<PAGE>
Securities Lending
When the fund lends portfolio securities it runs the risk that
the borrower will be unable or unwilling to return the
securities and the agreed fee or premium. The value of the
collateral taken as security for the securities loaned may
decline in value or may be difficult to convert to cash in the
event that the fund must rely on the collateral to recover the
value of its securities. In these circumstances the fund will
suffer losses.
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction settlement
systems,
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld
prior to receipt by the fund.
Many of the foreign securities held by the fund will not be
registered with, nor will the issuers of those securities be
subject to the reporting requirements of, the U.S. Securities
and Exchange Commission. Accordingly, there may be less publicly
available information about the securities and about the foreign
company or government issuing them than is available about a
domestic company or government entity. Moreover, individual
foreign economies may differ favorably or unfavorably from the
U.S. economy in such respects as growth of gross national
product, rate of inflation, capital reinvestment, resource
self-sufficiency and balance of payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range
of
18 Phoenix-Seneca Growth Fund
<PAGE>
economic, political, financial, governmental and other factors.
Exchange rate fluctuations can affect the fund's net asset value
(share price) and dividends either positively or negatively
depending upon whether foreign currencies are appreciating or
depreciating in value relative to the U.S. dollar. Exchange rates
fluctuate over both the long and short terms.
Effective January 1, 1999, eleven European countries began
converting from their sovereign currency to the European Union
common currency called the "Euro." This conversion may expose
the fund to certain risks including the reliability and timely
reporting of pricing information of the fund's portfolio
holdings. In addition, one or more of the following may
adversely affect specific securities in the fund's portfolio:
o known trends or uncertainties related to the Euro
conversion that an issuer reasonably expects will have a
material impact on revenues, expenses or income from its
operations;
o competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
o issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o potential tax consequences.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the
year 2000. If a company whose securities are held by the fund
does not "fix" its Year 2000 issue it is possible that its
operations and financial results would be hurt. Also the cost of
modifying computer programs to become Year 2000 compliant may
hurt the financial performance and market price of companies
whose securities are held by the fund.
Management of the Fund
- -------------------------------------
Please refer to "Management of the Funds" on page 38 for a
description of the investment adviser, management fees and
portfolio managers.
Phoenix-Seneca Growth Fund 19
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
Investment Risk and Return Summary
- -----------------------------------------------------
Investment Objective
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund has an investment
objective of capital appreciation. There is no guarantee that the
fund will achieve its objective.
Principal Investment Strategies
[arrow] The fund will invest in equity securities, primarily
common stocks of growth companies. Under normal
circumstances the fund will invest at least 65% of its
total assets in companies with market capitalizations
between $500 million and $5 billion. The fund may at
times have significant investments in companies with
higher or lower market capitalizations.
[arrow] The adviser is responsible for managing the fund's
investment program and the general operation of the
fund. The subadviser manages the investments of the fund
by selecting securities of companies that meet certain
fundamental standards and that the subadviser believes
will demonstrate greater long-term earnings growth than
the average company included in the S&P Mid-Cap 400
Index.
[arrow] The subadviser may buy securities in anticipation of
short-term price gains.
[arrow] To enable the fund to invest effectively in companies
with small to medium sized market capitalizations, the
Trust will not offer shares to the public when the net
assets of the fund exceed $500 million dollars. This
limit is subject to change.
[arrow] The fund may invest in preferred stocks, warrants, and
debt instruments, including bonds convertible into
common stocks.
[arrow] The fund may invest up to 35% of its net assets in below
investment grade bonds (so called "junk bonds").
[arrow] The fund may lend up to one-third of the fund's net
assets at market value to increase its investment
returns.
[arrow] The fund may invest up to 20% of its assets in
securities of foreign (non-U.S.) issuers.
Principal Risks
If you invest in this fund you risk that you may lose your
investment.
The fund will seek to increase the value of your shares by
investing in securities the subadviser expects to increase in
value. Most of the fund's investments will be in common stocks.
Conditions affecting the overall economy, specific industries or
companies in which the fund invests can be worse then expected.
As a result, the value of your shares may decrease.
20 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<PAGE>
The fund may buy securities in anticipation of short-term price
gains. Gains depend on the ability of the subadviser to predict
correctly the increase to securities prices. Securities prices
may not increase as anticipated. This may increase the fund's
overall trading volume especially if prices do not rise as
expected. Frequent and active trading may increase transaction
costs for the fund and may increase capital gain distributions,
resulting in greater tax liability to you.
The fund's investment focus is on companies with medium
capitalizations. It may also invest in small companies as well
as large companies. Investments in companies with small and
medium capitalizations make the fund more volatile than fund's
which invest in companies with larger capitalizations. The
smaller companies may be affected to a greater extent than
larger companies by changes in general economic conditions and
conditions in particular industries. Smaller companies may also
be relatively new and not have the same operating history and
"track record" as larger companies. This could make future
performance of smaller companies more difficult to predict.
The fund may invest in below investment grade securities (so
called "junk bonds"). Below investment grade securities present
a greater risk that the issuer will not be able to make interest
or principal payments on time. If this happens, the fund would
lose income and could expect a decline in the market value of
the securities.
The fund may lend portfolio securities to financial institutions
to increase investment return. If the borrower is unwilling or
unable to return the borrowed securities when due, the fund can
suffer losses.
The fund may invest in companies in foreign countries. Political
and economic uncertainty as well as less public information
about investments may negatively impact the fund's portfolio.
Some investments may be made in currencies other than U.S.
dollars that will fluctuate in value as a result of changes in
the currency exchange rate. Foreign markets and currencies may
not perform as well as U.S. markets.
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund 21
<PAGE>
Performance Tables
The bar chart below provides an indication of the risks of
investing in the Phoenix Mid-Cap "EDGE"(SM) Fund by showing
changes in the fund's Class A Shares performance from year to
year over the life of the fund(1). The table below shows how the
fund's average annual returns for one year and for the life of
the fund compare to those of a broad-based securities market
index. The fund's past performance is not necessarily an
indication of how the fund will perform in the future.
[BAR GRAPH] Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
----------------------------------------------------------------
Tabular representation of plot points:
<TABLE>
<CAPTION>
Calendar Year
-----------------
1997 1998
---- ----
<S> <C> <C>
Annual Return (%) 16.22 29.21
</TABLE>
----------------------------------------------------------------
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 32.50% (quarter ending December 31,
1998) and the lowest return for a quarter was (19.35)% (quarter ending September
30, 1998).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns(1) One Year(2) Life of the Fund(3)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class X Shares 29.80% 30.57%
- --------------------------------------------------------------------------------
Class A Shares 23.10% 27.82%
- --------------------------------------------------------------------------------
S&P MidCap 400 Index 19.11% 23.63%
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares.
(2) One year period ended December 31, 1998.
(3) Class X and Class A Shares from March 8, 1996 through December 31, 1998.
(4) The S&P Midcap 400 Index is a capitalization-weighted index that measures
the performance of the mid range sector of the U.S. stock market where the
median capitalization is approximately $700 million. The S&P Midcap 400 Index
does not reflect sales charges.
Performance information for Class B and Class C Shares is not included because
these classes have not had annual returns for at least one calendar year.
22 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) None 4.75% None None
Maximum Deferred Sales Charge (load) (as a None None 5%(b) 1% during
percentage of the lesser of the value redeemed or the first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None None
Redemption Fee None None None None
Exchange Fee None None None None
--------------------------------------------------
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- -------- ------- ---------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.80% 0.80% 0.80% 0.80%
Distribution and Service (12b-1) Fees(c) None 0.25% 1.00% 1.00%
Other Expenses 1.58% 1.69% 1.23% 1.57%
---- ---- ---- ----
Total Annual Fund Operating Expenses(a) 2.38% 2.74% 3.03%(d) 3.37%(d)
==== ==== ==== ====
</TABLE>
- ----------------
(a) The fund's investment adviser has agreed to reimburse through July 1, 2000
the Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund's operating expenses to the extent
that such expenses exceed 2.10% for Class X Shares, 2.70% for Class A Shares and
3.45% for Class B and Class C Shares.
<TABLE>
<S> <C> <C> <C> <C>
Total Annual Fund Operating Expenses after expense
reimbursement (if applicable) are: 2.10% 2.70% 3.03%(d) 3.37%(d)
</TABLE>
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) Distribution and Service Fees represent an asset based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Class B and Class C Shares have been offered only since July 1, 1998. The
percentages indicated are estimates before expense reimbursement; actual
expenses may be more or less than the amounts shown.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund 23
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Class X $241 $ 742 $1,270 $2,716
- --------------------------------------------------------------------------------
Class A $739 $1,285 $1,856 $3,400
- --------------------------------------------------------------------------------
Class B $706 $1,136 $1,591 $3,279
- --------------------------------------------------------------------------------
Class C $440 $1,036 $1,755 $3,658
- --------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $241 $ 742 $1,270 $2,716
- --------------------------------------------------------------------------------
Class A $739 $1,285 $1,856 $3,400
- --------------------------------------------------------------------------------
Class B $306 $ 936 $1,591 $3,279
- --------------------------------------------------------------------------------
Class C $340 $1,036 $1,755 $3,658
- --------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the reimbursement of expenses over
certain levels by the fund's investment adviser. Refer to the
section "Management of the Fund" for information about expense
reimbursement.
Investment Strategies
- ------------------------------------
Investment Objective
The fund has an investment objective of capital appreciation.
There is no guarantee that the fund will achieve its objective.
Principal Investment Strategies
The fund invests in a diversified portfolio of securities of
primarily domestic (U.S.) companies. Under normal circumstances
the fund intends to invest at least 65% of its total assets in
companies with market capitalizations between $500 million and
$5 billion.
The fund contracts with an adviser, Phoenix Investment Counsel,
Inc. to manage the fund's investment program and be responsible
for the general operation of the fund and a subadviser, Seneca
Capital Management LLC to manage the investments of the fund.
The subadviser selects securities of companies that meet certain
fundamental standards and that the subadviser believes have the
potential for above average market appreciation. In evaluating
companies'potential for market appreciation, the subadviser seeks
companies that it believes will
24 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<PAGE>
demonstrate greater long-term earnings growth than the average
company included in the S&P Mid-Cap 400 Index. The strategy is
based on the subadviser's view that growth in a companies'
earnings will correlate with growth in the price of its stock.
The subadviser seeks to identify companies that have the most
attractive earnings prospects and favorable valuations,
regardless of the size of the company. Generally, however, a
portion of the fund's portfolio will be invested in large,
well-known companies that have established histories of
profitability and/or dividend payment.
Although the fund stresses long-term earnings growth potential,
the subadviser may buy securities in anticipation of short-term
price gains.
Debt instruments, including investment grade and below
investment grade bonds ("junk bonds") and bonds convertible into
common stocks, may also be a part of the fund portfolio. Below
investment grade securities present a greater risk that the
issuer will not be able to make interest or principal payments
on time. If this happens, the fund would lose income and could
expect a decline in the market value of the securities.
The fund may invest up to 20% of its total assets in securities
of foreign (non-U.S.) issuers. Foreign investment will primarily
be through American Depository Receipts (ADRs).
The fund may lend portfolio securities to broker-dealers and
other financial institutions to increase its investment returns.
The total amount of such lending can be as much as one-third of
the fund's total assets. When the fund lends securities in this
fashion, the borrower returns the securities at a pre-arranged
time and pays some form of premium or other fee for the
transaction. The fund receives all dividends and other
distributions made with respect to the loaned securities. All
securities loans are secured by other marketable securities.
Temporary defensive strategy. If the subadviser believes that
market conditions are not favorable to the fund's principal
strategies the fund may invest without limit in cash and cash-
equivalents. In such instances, the fund may not achieve its
stated investment objective.
Please refer to the Statement of Additional Information for more
detailed information about these and other investment techniques
of the fund.
Risks Related to Investment Strategies
- -----------------------------------------------------
General
The fund's focus is long term earnings growth. The subadviser
intends to invest fund assets so that your shares increase in
value. However, the value of the fund's investments that support
your share value can decrease as well as increase. If between
the time you purchase shares and the time you sell shares the
value of the fund's investments decreases, you will lose money.
The value of the fund's investments can decrease for a number of
reasons. For example, changing economic conditions may cause a
decline in value of many or most investments. Particular
industries can face poor market
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund 25
<PAGE>
conditions for their products or services so that companies
engaged in those businesses do not perform as well as companies
in other industries. Interest rate changes may improve prospects
for certain types of businesses and they may worsen prospects
for others. To the extent that the fund's investments are
affected by general economic declines, declines in industries,
and interest rate changes that negatively affect the companies
in which the fund invests, fund share values may decline. Share
values can also decline if the specific companies selected for
fund investment fail to perform as the adviser expects,
regardless of general economic trends, industry trends, interest
rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Anticipating Short-term Price Gains
The adviser may buy securities that it anticipates will rise in
price over a short period of time. If the securities do not
perform as expected, gains will not be as high as anticipated.
Moreover, the adviser buys these securities with the expectation
that they will be sold after a short period of time. Each time a
security is bought or sold, the fund incurs certain costs
associated with the transaction. The more transactions, the
higher the overall cost to the fund which could lead to a
decrease in the fund's performance. Likewise, frequent sales
that result in gains to the fund could increase the amount of
capital gains distributions to you, the shareholder. Increased
capital gains distributions could result in greater tax
liability to you.
Small and Medium Market Capitalization Investing
The fund may invest in some smaller companies. Companies with
small or medium capitalization are often companies in industries
that have recently emerged due to cultural, economic, regulatory
or technological developments. Such developments can have a
significant positive or negative effect on small or medium
capitalization companies and their stock performance. Given the
limited operating history and rapidly changing fundamental
prospects, investment returns from smaller capitalization
companies can be highly volatile. Smaller companies may find
their ability to raise capital impaired by their size or lack of
operating history. Product lines are often less diversified and
subject to competitive threats. Smaller capitalization stocks
are subject to varying patterns of trading volume and may, at
times, be difficult to sell.
Below Investment Grade Securities
The fund may invest in securities that are below investment
grade. Although these securities provide greater income and
opportunity for capital appreciation than investments in higher
grade securities, they also typically entail greater price
volatility and principal and interest risk. There is a greater
risk that an issuer will not be able to make principal and
interest payments on time. Analysis of the creditworthiness of
issuers of below investment grade securities may be more complex
than for higher grade securities, making it more difficult for
the subadviser to accurately predict risk.
26 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<PAGE>
Securities Lending
When the fund lends portfolio securities it runs the risk that
the borrower will be unable or unwilling to return the
securities and the agreed fee or premium. The value of the
collateral taken as security for the securities loaned may
decline in value or may be difficult to convert to cash in the
event that the fund must rely on the collateral to recover the
value of its securities. In these circumstances the fund will
suffer losses.
Foreign Investing
The fund may invest in non-U.S. companies. Investing in the
securities of non-U.S. companies involves special risks and
considerations not typically associated with investing in U.S.
companies. These include:
o differences in accounting, auditing and financial reporting
standards,
o generally higher commission rates on foreign portfolio
transactions,
o differences and inefficiencies in transaction settlement
systems,
o the possibility of expropriation or confiscatory taxation,
o adverse changes in investment or exchange control
regulations,
o political instability, and
o potential restrictions on the flow of international
capital.
Political and economic uncertainty as well as less public
information about investments may negatively impact the fund's
portfolio.
Foreign securities often trade with less frequency and volume
than domestic securities and therefore may exhibit greater price
volatility. Additionally, dividends and interest payable on
foreign securities may be subject to foreign taxes withheld
prior to receipt by the fund. Many of the foreign securities
held by the fund will not be registered with, nor will the
issuers of those securities be subject to the reporting
requirements of, the U.S. Securities and Exchange Commission.
Accordingly, there may be less publicly available information
about the securities and about the foreign company or government
issuing them than is available about a domestic company or
government entity. Moreover, individual foreign economies may
differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation,
capital reinvestment, resource self-sufficiency and balance of
payment positions.
Foreign Currency
Portions of the fund's assets may be invested in securities
denominated in foreign currencies. Changes in foreign exchange
rates will affect the value of those securities denominated or
quoted in currencies other than the U.S. dollar. The forces of
supply and demand in the foreign exchange markets determine
exchange rates and these forces are in turn affected by a range
of economic,
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund 27
<PAGE>
political, financial, governmental and other factors. Exchange
rate fluctuations can affect the fund's net asset value (share
price) and dividends either positively or negatively depending
upon whether foreign currencies are appreciating or depreciating
in value relative to the U.S. dollar. Exchange rates fluctuate
over both the long and short terms.
Effective January 1, 1999, eleven European countries began
converting from their sovereign currency to the European Union
common currency called the "Euro." This conversion may expose
the fund to certain risks including the reliability and timely
reporting of pricing information of the fund's portfolio
holdings. In addition, one or more of the following may
adversely affect specific securities in the fund's portfolio:
o Known trends or uncertainties related to the Euro
conversion that an issuer reasonably expects will have a
material impact on revenues, expenses or income from its
operations;
o Competitive implications of increased price transparency of
European Union markets (including labor markets) resulting
from adoption of a common currency and issuers' plans for
pricing their own products and services in the Euro;
o Issuers' ability to make required information technology
updates on a timely basis, and costs associated with the
conversion (including costs of dual currency operations
through January 1, 2002);
o Currency exchange rate risk and derivatives exposure
(including the disappearance of price sources, such as
certain interest rate indices); and
o Potential tax consequences.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software
may recognize a date using "00" as the year 1900 rather than the
year 2000. If a company whose securities are held by the fund
does not "fix" its Year 2000 issue it is possible that its
operations and financial results would be hurt. Also the cost of
modifying computer programs to become Year 2000 compliant may
hurt the financial performance and market price of companies
whose securities are held by the fund.
Management of the Fund
- -------------------------------------
Please refer to "Management of the Funds" on page 38 for a
description of the investment adviser, management fees and
portfolio managers.
28 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
Investment Risk and Return Summary
- ----------------------------------------------------------
Investment Objective
Phoenix-Seneca Real Estate Securities Fund has an investment
objective of high total return in both current income and
long-term capital appreciation. There is no guarantee that the
fund will achieve the objective.
Principal Investment Strategies
[arrow] Under normal circumstances the fund will invest at least
65% of its total assets in equity and debt securities of
issuers that are principally engaged in real estate or
related industry businesses in the United States. The
fund does not make direct investments in real estate.
[arrow] The adviser is responsible for managing the fund's
investment program and the general operation of the
fund. The subadviser manages the investments of the fund
using a fundamental bottom-up selection process. In
addition, the subadviser attempts to balance stocks that
have consistent and growing dividends with those that
have growth potential above the sector median.
[arrow] Generally the fund will focus its investments in common
stocks. The fund may also invest in debt securities of
REITs and other real estate related issuers, preferred
stocks, convertible securities, warrants, and publicly
traded limited partnerships that invest in real estate.
[arrow] The fund may invest up to 35% of its assets in equity
and debt securities outside the real estate industry or
related businesses.
[arrow] The fund may invest no more than 35% of its assets in
securities rated lower than BBB by S&P or Baa by Moody's
including "junk bonds" and unrated securities that the
subadviser considers to be of comparable quality.
[arrow] The fund may lend up to one-third of the fund's net
assets at market value to increase its investment
returns.
[arrow] The fund may invest in mortgage-backed securities issued
by various federal agencies and government sponsored
enterprises and in other mortgage related or
asset-backed securities.
Principal Risks
If you invest in this fund, you risk that you may lose your
money.
The fund is a non-diversified investment company. It may invest
a larger proportion of its assets in the securities of a smaller
number of issuers, and as a result, price fluctuations in these
securities have a greater impact on the fund's share price.
Phoenix-Seneca Real Estate Securities Fund 29
<PAGE>
The fund will seek to increase the value of your shares by
investing in securities the subadviser expects to increase in
value. Conditions affecting the overall economy, the real estate
industry and specific companies in which the fund invests can be
worse than expected. As a result the value of your shares may
decrease.
The fund concentrates its investments in the real estate
industry. Securities of companies in other industries may
provide greater investment return in certain market conditions
as compared to companies in the real estate industry. Moreover,
conditions which negatively impact the real estate industry will
have a greater impact on this fund as compared to a fund which
does not concentrate in one industry.
The value of investments in issuers that hold real estate may be
affected by changes in the values of real properties owned by
the issuers. Investments in businesses related to the real
estate industry may also be affected by changes in the value of
real estate.
REIT securities may trade less frequently and in a lower volume
than securities in other larger companies and they may be
subject to abrupt and large price movements. Additionally, REIT
securities may trade at prices less than the value of the
underlying real estate and they are often not diversified. These
factors may decrease the overall marketability of the
securities.
The fund may invest in below grade securities (so called "junk
bonds") and unrated securities. Below investment grade
securities present a greater risk that the issuer will not be
able to make interest or principal payments on time. If this
happens, the fund would lose income and could expect a decline
in the market value of the securities. Unrated securities may
not have as broad a market as investment grade securities making
them more difficult to sell. This could cause the security to
lose value.
The fund may lend portfolio securities to financial institutions
to increase investment return. If the borrower is unwilling or
unable to return the borrowed securities when due, the fund can
suffer losses.
This fund may invest in mortgage-backed and other asset-backed
securities. Decreasing interest rates may negatively affect the
value of these securities. In addition, a portion of the cash
flow from these securities may be from early payoff of some of
the underlying loans. In the event of very high prepayments, the
fund may be required to invest the proceeds at a lower interest
rate, causing the fund to earn less than if the prepayments had
not occurred.
This fund may invest in unrated securities. Unrated securities
may not have as broad a market as investment grade securities or
publicly traded securities making them more difficult to sell.
This could cause the security to lose value.
30 Phoenix-Seneca Real Estate Securities Fund
<PAGE>
Performance Tables
The bar chart below provides an indication of the risks of
investing in the Phoenix-Seneca Real Estate Securities Fund by
showing changes in the fund's Class A Shares performance from
year to year over the life of the fund(1). The table below shows
how the fund's average annual returns for one year and for the
life of the fund compare to those of a broad-based securities
market index. The fund's past performance is not necessarily an
indication of how the fund will perform in the future.
[BAR GRAPH] Phoenix-Seneca Real Estate Securities Fund
----------------------------------------------------------------
Tabular representation of plot points:
<TABLE>
<CAPTION>
Calendar Year
-----------------
1997 1998
---- ----
<S> <C> <C>
Annual Return (%) 17.62 -20.63
</TABLE>
----------------------------------------------------------------
(1) The fund's average annual returns in the chart above do not reflect the
deduction of any sales charges. The returns would have been less than those
shown if sales charges were deducted. During the period shown in the chart
above, the highest return for a quarter was 11.30% (quarter ending September 30,
1997) and the lowest return for a quarter was (11.87)% (quarter ending September
30, 1998).
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Average Annual Total Returns(1) One Year(2) Life of the Fund(3)
- --------------------------------------------------------------------------------
<S> <C> <C>
Class X Shares (20.63)% 19.90%
- --------------------------------------------------------------------------------
Class A Shares (25.57)% 3.70%
- --------------------------------------------------------------------------------
The Wilshire Real Estate Securities Index(4) (16.96)% 10.79%(5)
- --------------------------------------------------------------------------------
</TABLE>
(1) The fund's average annual returns in the table above reflect the deduction
of the maximum sales charge for an investment in the fund's Class A Shares.
(2) One year period ending December 31, 1998.
(3) Class X and Class A Shares from March 12, 1996 through December 31, 1998.
(4) The Wilshire Real Estate Securities Index is a market
capitalization-weighted index comprised of publicly traded real estate
investment trusts (REITs) and real estate operating companies. The Wilshire REIT
Index does not reflect sales charges.
(5) The Wilshire Real Estate Securities Index does not compute daily index
numbers. The index rating here is for the period from March 31, 1996 to
December 31, 1998.
Performance information for Class B and Class C Shares is not included because
these classes have not had annual returns for at least one calendar year.
Phoenix-Seneca Real Estate Securities Fund 31
<PAGE>
Fund Expenses
- -------------------------------
This table illustrates all fees and expenses that you may pay if
you buy and hold shares of the fund.
<TABLE>
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- ------- ------- -------
<S> <C> <C> <C> <C>
Shareholder Fees (fees paid directly from
your investment)
Maximum Sales Charge (load) Imposed on
Purchases (as a percentage of offering price) None 4.75% None None
Maximum Deferred Sales Charge (load) (as a None None 5%(b) 1% during
percentage of the lesser of the value redeemed or the first year
the amount invested)
Maximum Sales Charge (load) Imposed on
Reinvested Dividends None None None None
Redemption Fee None None None None
Exchange Fee None None None None
------------------------------------------------
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------- ------- ------- -------
<S> <C> <C> <C> <C>
Annual Fund Operating Expenses (expenses
that are deducted from fund assets)
Management Fees 0.85% 0.85% 0.85% 0.85%
Distribution and Service (12b-1) Fees (b) None 0.25% 1.00% 1.00%
Other Expenses 0.62% 1.66% 7.38% 9.96%
---- ---- ---- ----
Total Annual Fund Operating Expenses(a) 1.47% 2.76% 9.23%(d) 11.81%(d)
==== ==== ===== =====
</TABLE>
- ----------------
(a) The fund's investment adviser has agreed to reimburse through July 1, 2000
the Phoenix-Seneca Real Estate Securities Fund's operating expenses to the
extent that such expenses exceed 2.35% for Class X Shares, 3.05% for Class A
Shares and 3.80% for Class B and Class C Shares.
<TABLE>
<S> <C> <C> <C> <C>
Total Annual Fund Operating Expenses after expense
reimbursement (if applicable) are: 1.47% 2.76% 3.80% 3.80%
</TABLE>
(b) The maximum deferred sales charge is imposed on Class B Shares redeemed
during the first year; thereafter, it decreases 1% annually to 2% during the
fourth and fifth years and to 0% after the fifth year.
(c) Distribution and Service Fees represent an asset based sales charge that,
for a long-term shareholder, may be higher than the maximum front-end sales
charge permitted by the National Association of Securities Dealers, Inc.
("NASD").
(d) Class B and Class C Shares have been offered only since July 1, 1998. The
percentages indicated are estimates before expense reimbursement; actual
expenses may be more or less than the amounts shown.
Example
This example is intended to help you compare the cost of
investing in the fund with the cost of investing in other mutual
funds.
The example assumes that you invest $10,000 in the fund for the
time periods indicated and then redeem all of your shares at the
end of those periods. The example also assumes that your
investment has a 5% return each year and that the fund's
operating expenses remain the same. In the case of Class B
Shares, it is assumed that your shares are converted to Class A
after eight years. Although your actual costs may be higher or
lower, based on these assumptions your costs would be:
32 Phoenix-Seneca Real Estate Securities Fund
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $ 150 $ 465 $ 803 $1,757
- --------------------------------------------------------------------------------
Class A $ 741 $1,291 $1,865 $3,418
- --------------------------------------------------------------------------------
Class B $1,303 $2,797 $4,151 $6,643
- --------------------------------------------------------------------------------
Class C $1,241 $3,195 $4,978 $8,477
- --------------------------------------------------------------------------------
</TABLE>
You would pay the following expenses if you did not redeem your
shares:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class 1 year 3 years 5 years 10 years
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class X $ 150 $ 465 $ 803 $1,757
- --------------------------------------------------------------------------------
Class A $ 741 $1,291 $1,865 $3,418
- --------------------------------------------------------------------------------
Class B $ 903 $2,597 $4,151 $6,643
- --------------------------------------------------------------------------------
Class C $1,141 $3,195 $4,978 $8,477
- --------------------------------------------------------------------------------
</TABLE>
Note: Your actual expenses may be lower than those shown in the
tables above since the expense levels used to calculate the
figures shown do not include the reimbursement of expenses over
certain levels by the fund's investment adviser. Refer to the
section "Management of the Fund" for information about expense
reimbursement.
Investment Strategies
- ------------------------------------
Investment Objective
The fund has an investment objective of high total return in
both current income and long-term capital appreciation. There is
no guarantee that the fund will meet its objective.
Principal Investment Strategies
Under normal circumstances the fund will invest at least 65% of
its total assets in equity or debt securities of issuers that
are principally engaged in businesses in the United States real
estate industry or related businesses. An issuer is considered
principally engaged in such a business if at least 50% of the
issuer's assets, gross income or net income come from:
o owning, constructing, managing or selling real estate
located in the United States; or
o products and services related to the real estate industry,
such as manufacturers and distributors of building supplies
and financial institutions that originate or service
mortgage loans.
Phoenix-Seneca Real Estate Securities Fund 33
<PAGE>
The fund contracts with an adviser, Phoenix Investment Counsel,
Inc. to manage the fund's investment program and be responsible
for the general operation of the fund and a subadviser, Seneca
Capital Management LLC to manage the investments of the fund.
The subadviser manages the investments of the fund using a
fundamental bottom up selection process by analyzing the
properties within a company. The subadviser seeks to identify
real estate companies with:
o focused management;
o significant ownership stakes in strong markets and
sectors;
o high quality properties;
o flexible capital structures; and
o reasonable pricing.
In addition, the subadviser attempts to balance stocks that have
consistent and growing dividends with those that have growth
potential above the sector median.
The fund will focus primarily on investments in common stocks,
although it may also invest in preferred stock, warrants,
convertible securities, debt securities of real estate related
issuers and publicly traded limited partnerships which invest in
real estate.
REITs may also be included in the fund's portfolio. Generally
REITs are publicly traded companies that manage portfolios of
real estate to earn profits for shareholders through investments
in commercial and residential real estate. Equity REITs own real
estate directly. Mortgage REITs make short-term construction or
real estate development loans or invest in long-term mortgages
or mortgage pools.
The fund may invest in below investment grade securities
(so-called "junk bonds"). Below investment grade securities
generally pay higher current income but may present a greater
risk that the issuer will not be able to make principal and
interest payments on time.
The fund may lend portfolio securities to broker-dealers and
other financial institutions to increase its investment returns.
The total amount of such lending can be as much as one-third of
the fund's total assets. When the fund lends securities in this
fashion, the borrower returns the securities at a pre-arranged
time and pays some form of premium or other fee for the
transaction. The fund receives all dividends and other
distributions made with respect to the loaned securities. All
securities loans are secured by other marketable securities.
The fund may invest in mortgage-backed and other asset-backed
securities. Mortgage pass through securities are interests in
pools of mortgage loans, assembled and issued by various
governmental, government related, and private organizations.
These securities provide a monthly payment consisting of both
principal and interest payments. In effect, these payments are a
"pass through" of the monthly payments made by individual
borrowers on their residential or commercial mortgage loans.
Mortgage-backed securities also include collateralized mortgage
obligations (CMOs) which generally includes debt instruments
collateralized by mortgage
34 Phoenix-Seneca Real Estate Securities Fund
<PAGE>
loans or mortgage pass throughs. Asset-backed securities are
based on financial assets other than mortgages such as
automobile and credit card loan receivables. Additional payments
on mortgage and asset-backed securities are caused by repayment
of principal resulting from the sale of the underlying property,
refinancing or foreclosure. These prepayments are difficult to
predict. This variability of prepayments will tend to limit
price gains when interest rates drop and exaggerate price
declines when interest rates rise.
Risks Related to Investment Strategies
- -----------------------------------------------------
General
The fund's focus is high total return in both current income and
long-term capital appreciation. The subadviser intends to invest
fund assets so that your shares increase in value. However, the
value of the fund's investments that support your share value
can decrease as well as increase. If between the time you
purchase shares and the time you sell shares the value of the
fund's investments decreases, you will lose money. The value of
the fund's investments can decrease for a number of reasons. For
example, changing economic conditions may cause a decline in
value of many or most investments. The real estate industry
could experience a decrease in sales and sale prices so that
companies engaged in those businesses do not perform as well as
companies in other industries. Interest rate changes may improve
prospects for certain types of businesses and they may worsen
prospects for others. To the extent that the fund's investments
are affected by general economic declines, declines in the real
estate industry, and interest rate changes that negatively
affect the companies in which the fund invests, fund share
values may decline. Share values can also decline if the
specific companies selected for fund investment fail to perform
as the adviser expects, regardless of general economic trends,
industry trends, interest rates and other economic factors.
In addition to these general risks of investing in the fund,
there are several specific risks of investing in the fund that
you should note.
Non-Diversification
The fund is a non-diversified investment company. Diversifying a
fund's portfolio can reduce the risks of investing. As a
non-diversified investment company the fund may be subject to
greater risk since it can invest a greater proportion of its
assets in the securities of a small number of issuers. If the
fund takes concentrated positions in a small number of issuers,
changes in the price of those securities may cause the fund's
return to fluctuate more than that of a diversified investment
company.
Phoenix-Seneca Real Estate Securities Fund 35
<PAGE>
Real Estate Related Investments
The fund primarily invests in the real estate industry. The
value of investments in issuers that hold real estate may be
affected by changes in the values of real properties owned by
the issuers. Likewise, investments in businesses related to the
real estate industry may also be affected by the value of real
estate generally or in particular geographical areas in which
the businesses operated. A decline in real estate value may have
a negative impact on the value of your shares.
Interest rates also can be a significant factor for issuers that
hold real estate and those in related businesses. Increases in
interest rates can cause or contribute to declines in real
estate prices and can cause "slowdowns" in such related
businesses as real estate sales and constructions.
REIT Securities
REIT securities often are not diversified and may only finance a
limited number of projects or properties, which may subject
REITs to abrupt and large price movements. REITs are heavily
dependent on cash flow from properties and at times, the market
price of a REIT's securities may be less than the value of
investments in real estate which may result in a lower price
when the fund sells its shares in the REIT. REITs also may trade
less frequently and in lower volume than securities of other
larger companies which may also contribute to REIT securities
losing value.
Below Investment Grade Securities
The fund may invest in securities that are below investment
grade. Although these securities provide greater income and
opportunity for capital appreciation than investments in higher
grade securities, they also typically entail greater price
volatility and principal and interest risk. There is a greater
risk that an issuer will not be able to make principal and
interest payments on time. Analysis of the creditworthiness of
issuers of below investment grade securities may be more complex
than for higher grade securities, making it more difficult for
the subadviser to accurately predict risk.
Unrated Securities
The fund may invest in unrated securities. Unrated securities
may not be lower in quality than rated securities but due to
their perceived risk they may not have as broad a market as
rated securities. Analysis of unrated securities is more complex
than for rated securities, making it more difficult for the
subadviser to accurately predict risk.
Securities Lending
When the fund lends portfolio securities it runs the risk that
the borrower will be unable or unwilling to return the
securities and the agreed fee or premium. The value of the
collateral taken as security for the securities loaned may
decline in value or may be difficult to convert to cash in the
event that the fund must rely on the collateral to recover the
value of its securities. In these circumstances the fund will
suffer losses.
36 Phoenix-Seneca Real Estate Securities Fund
<PAGE>
Mortgage-Backed and Asset-Backed Securities
It is difficult to predict cash flows from mortgage-backed and
asset-backed securities. Decreasing interest rates may
negatively affect the value of these securities. Payments of
principal and interest on the underlying assets may be allocated
among classes in a variety of ways and the inability to
determine specific amounts and timing of prepayments of the
underlying loans makes it difficult to accurately predict cash
flow. In the event of high prepayments, the fund may be required
to invest these proceeds at a lower interest rate, causing the
fund to earn less than if the prepayments had not occurred.
Impact of the Year 2000 Issue on Fund Investments
The Year 2000 issue is the result of computer programs being
written using two rather than four digits to define the
applicable year. There is the possibility that some or all of a
company's computer programs that have date-sensitive software may
recognize a date using "00" as the year 1900 rather than the year
2000. If a company whose securities are held by the fund does not
"fix" its Year 2000 issue it is possible that its operations and
financial results would be hurt. Also the cost of modifying
computer programs to become Year 2000 compliant may hurt the
financial performance and market price of companies whose
securities are held by the fund.
Management of The Funds
- --------------------------------------
The Advisers
Phoenix Investment Counsel, Inc. ("Phoenix") is the investment
adviser to each of the funds and is located at 56 Prospect
Street, Hartford, CT 06115. Phoenix also acts as the investment
adviser for 14 other mutual funds, as subadviser to three mutual
funds and as adviser to institutional clients. As of December
31, 1998, Phoenix had $23.9 billion in assets under management.
Phoenix has acted as an investment adviser for over sixty years.
Seneca Capital Management LLC ("Seneca") is the investment
subadviser to each of the funds and is located at 909 Montgomery
Street, San Francisco, California 94133. Seneca acts as a
subadviser to two other mutual funds and acts as investment
adviser to institutions and individuals. As of December 31,
1998, Seneca had $5.9 billion in assets under management. Seneca
has been (with its predecessor, GMG/Seneca Capital Management
LP) an investment adviser since 1989.
Subject to the direction of the fund's Board of Trustees,
Phoenix is responsible for managing the fund's investment
program and the general operations of the funds. Seneca, as
subadviser, is responsible for day-to-day management of the
funds' portfolios.
Seneca manages each fund's assets to conform with the investment
policies as described in this prospectus. Each fund pays Phoenix
a monthly investment management fee that is accrued daily
against the value of that fund's net assets at the following
rates.
Phoenix-Seneca Real Estate Securities Fund 37
<PAGE>
<TABLE>
<S> <C>
----------------------------------------------------------------
Bond Fund 0.50%
----------------------------------------------------------------
Growth Fund 0.70%
----------------------------------------------------------------
Mid-Cap "EDGE"(SM) Fund 0.80%
----------------------------------------------------------------
Real Estate Securities Fund 0.85%
----------------------------------------------------------------
</TABLE>
Phoenix pays Seneca a subadvisory fee at the following rates.
<TABLE>
<S> <C>
----------------------------------------------------------------
Bond Fund 0.25%
----------------------------------------------------------------
Growth Fund 0.35%
----------------------------------------------------------------
Mid-Cap "EDGE"(SM) Fund 0.40%
----------------------------------------------------------------
Real Estate Securities Fund 0.425%
----------------------------------------------------------------
</TABLE>
The adviser has voluntarily agreed to assume total operating
expenses of each fund excluding interest, taxes, brokerage fees,
commissions and extraordinary expenses, until July 1, 2000, to
the extent that such expenses exceed the following percentages
of the average annual net asset values for the fund:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Class X Class A Class B Class C
Shares Shares Shares Shares
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bond Fund 1.85% 2.45% 3.20% 3.20%
- --------------------------------------------------------------------------------
Growth Fund 1.25% 1.85% 2.60% 2.60%
- --------------------------------------------------------------------------------
Mid-Cap "EDGE"(SM) Fund 2.10% 2.70% 3.45% 3.45%
- --------------------------------------------------------------------------------
Real Estate Securities Fund 2.35% 3.05% 3.80% 3.80%
- --------------------------------------------------------------------------------
</TABLE>
During the fund's last fiscal year, the fund paid total
management fees of $719,548. The ratio of management fees to
average net assets for the fiscal year ended September 30, 1998
was 0.50% for the Bond Fund, 0.70% for the Growth Fund, 0.80%
for the Mid-Cap "EDGE"(SM) Fund and 0.85% for the Real Estate
Securities Fund. The advisory fees of the Mid-Cap "EDGE"(SM) Fund
and the Real Estate Securities Fund are greater than those for
most mutual funds; however, the Trustees have determined that
each is comparable to fees charged by other mutual funds whose
investment objectives are similar to those of the named funds.
Portfolio Management
Investment and trading decisions for each fund are made by a
team of managers and analysts headed by two team leaders. The
team leaders for each fund are primarily responsible for the
day-to-day decisions related to that fund. The team leader of
any one fund may be on another fund team.
38 Phoenix-Seneca Funds
<PAGE>
Gail P. Seneca is a team leader for each of the funds. Since
January 1998, Ms. Seneca has also served as Co-Manager of
Phoenix Equity Opportunities Series of Phoenix Strategic Equity
Series Fund and since June 1998, she has served as Co-Manager of
Phoenix Mid-Cap Portfolio of Phoenix Multi-Portfolio Fund. Ms.
Seneca has been the Chief Executive and Investment Officer of
Seneca or GMG/Seneca since November 1989. From October 1987
until October 1989, she was Senior Vice President of the Asset
Management Division of Wells Fargo Bank and from October 1983 to
September 1987, she was Investment Strategist and Portfolio
Manager for Chase Lincoln Bank, heading the fixed income
division.
Richard D. Little is the other team leader for the
Phoenix-Seneca Growth Fund and the Phoenix-Seneca Mid-Cap
"EDGE"(SM) Fund. Since January 1998, Mr. Little has served as
Co-Manager of Phoenix Equity Opportunities Series of Phoenix
Strategic Equity Series Fund and since June 1998, he has served
as Co-Manager of Phoenix Mid-Cap Portfolio of Phoenix
Multi-Portfolio Fund. Mr. Little has been Director of Equities
with Seneca or GMG/Seneca since December 1989. Before he joined
GMG/Seneca, Mr. Little held positions as an analyst, board
member, and regional manager with Smith Barney, NatWest
Securities, and Montgomery Securities.
Charles B. Dicke is the other team leader for the Phoenix-Seneca
Bond Fund. He has been a Fixed-Income Portfolio Manager with
Seneca or GMG/Seneca since October 1991. Before joining
GMG/Seneca, he was a Vice President with Lehman Brothers,
serving as a Product Manager for Government agency securities
and a strategist on fixed-income portfolios.
David Shapiro is the other team leader for the Phoenix-Seneca
Real Estate Securities Fund. He has been a Portfolio Manager
with Seneca or GMG/Seneca since February 1996. Before joining
GMG/Seneca, he was a Portfolio Manager with Genesis Realty since
May 1995. Prior to that, he was a managing director of The ADCO
Group from 1992 to 1995.
Impact of the Year 2000 Issue on Fund Operations
The Trustees have directed management to ensure that the systems
used by service providers (Phoenix, Seneca and their affiliates)
in support of the funds' operations be assessed and brought into
Year 2000 compliance. Based upon preliminary assessments,
Phoenix and Seneca have determined that they will be required to
modify or replace portions of their software so that their
computer systems will properly utilize dates beyond December 31,
1999. Phoenix and Seneca management believe that the majority of
these systems are already Year 2000 compliant. Phoenix and
Seneca believe that with modifications to existing software and
conversions to new software, the Year 2000 issue will be
mitigated. It is anticipated that such modifications and
conversions will be completed on a timely basis. It is not known
at this time if there could be a material impact on the
operations of Phoenix, Seneca or their affiliates or the fund if
such modifications and conversions are not completed timely.
Phoenix-Seneca Funds 39
<PAGE>
Phoenix and Seneca will utilize both internal and external
resources to reprogram, or replace, and test the software for
Year 2000 modifications. Certain systems are already in the
process of being converted due to previous initiatives and it is
expected that all core systems will be remediated by December
31, 1998 and tested by June 1999. The total cost to become Year
2000 compliant is not an expense of the fund and is not expected
to have a material impact on the operating results of Phoenix or
Seneca.
Pricing of Fund Shares
- -------------------------------------
How is the Share Price determined?
The fund calculates a share price for each class of its shares.
The share price is based on the net assets of the fund and the
number of outstanding shares. In general, the fund calculates
net asset value by:
o adding the values of all securities and other assets of the
fund,
o subtracting liabilities, and
o dividing by the total number of outstanding shares of the
fund.
Asset Value: The fund's investments are valued at market value.
If market quotations are not available, the fund determines a
"fair value" for an investment according to rules and procedures
approved by the Trustees. Foreign and domestic debt securities
(other than short-term investments) are valued on the basis of
broker quotations or valuations provided by a pricing service
approved by the Trustees when such prices are believed to
reflect the fair value of such securities. Foreign and domestic
equity securities are valued at the last sale price or, if there
has been no sale that day, at the mean between the most recent
high bid and the most recent low asked quotation. Short-term
investments having a remaining maturity of sixty days or less
are valued at amortized cost, which the Trustees have determined
approximates market value.
Liabilities: Class specific expenses, distribution fees, service
fees and other liabilities are deducted from the assets of each
class. Expenses and liabilities that are not class specific
(such as management fees) are allocated to each class in
proportion to each class's net assets, except where an
alternative allocation can be more fairly made.
Net Asset Value: The liability allocated to a class plus any
other expenses are deducted from the proportionate interest of
such class in the assets of the fund. The resulting amount for
each class is then divided by the number of shares outstanding
of that class to produce each class's net asset value per share.
The net asset value per share of each class of the fund is
determined on days when the New York Stock Exchange (the "NYSE")
is open for trading as of the close of trading (normally 4:00 PM
eastern time). The fund will not calculate its net asset values
per share on days when
40 Phoenix-Seneca Funds
<PAGE>
the NYSE is closed for trading. Trading of securities held by the
fund in foreign markets may negatively or positively impact the
value of such securities on days when the fund neither trades
securities nor calculates its net asset values (i.e., weekends
and certain holidays).
At what price are shares purchased?
All investments received by the fund's authorized agents prior
to the close of regular trading on the NYSE (normally 4:00 PM
eastern time) will be executed based on that day's net asset
value. Shares credited to your account from the reinvestment of
fund distributions will be in full and fractional shares that
are purchased at the closing net asset value on the next
business day on which the fund's net asset value is calculated
following the dividend record date.
Sales Charges
- ----------------------------
What are the classes and how do they differ?
The fund presently offers four classes of shares that have
different sales and distribution charges (see "Fund Expenses"
previously in this prospectus). For certain classes of shares,
the fund has adopted distribution and service plans allowed
under Rule 12b-1 of the Investment Company Act of 1940 that
authorize the fund to pay distribution and service fees for the
sale of its shares and for services provided to shareholders.
The distribution and service fees represent an asset-based sales
charge that, for a long-term shareholder, may be higher than the
maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. ("NASD").
What arrangement is best for you?
The different classes permit you to choose the method of
purchasing shares that is most beneficial to you. In choosing a
class, consider the amount of your investment, the length of
time you expect to hold the shares, whether you decide to
receive distributions in cash or to reinvest them in additional
shares, and any other personal circumstances. Depending upon
these considerations, the accumulated distribution and service
fees and contingent deferred sales charges of one class may be
more or less than the initial sales charge and accumulated
distribution and service fees of another class of shares bought
at the same time. Because distribution and service fees are paid
out of the fund's assets on an ongoing basis, over time these
fees will increase the cost of your investment and may cost you
more than paying other types of sales charges.
Class X Shares. Class X Shares are offered primarily to
institutional investors such as pension and profit sharing
plans, other employee benefit trusts, investment advisers,
endowments, foundations and corporations. If you are eligible to
purchase and do purchase Class X Shares, you will pay no sales
charge at any time. There are no distribution and services fees
applicable to Class X Shares. For additional information about
purchasing Class X Shares, please contact Customer Service by
calling (800) 243-1574.
Phoenix-Seneca Funds 41
<PAGE>
Class A Shares. If you purchase Class A Shares, you will pay a
sales charge at the time of purchase equal to 4.75% of the
offering price (4.99% of the amount invested). The sales charge
may be reduced or waived under certain conditions. Class A
Shares are not subject to any charges by the fund when redeemed.
Class A Shares have lower distribution and service fees (0.25%)
and pay higher dividends than Class B and C Shares.
Class B Shares. If you purchase Class B Shares, you will not pay
a sales charge at the time of purchase. If you sell your Class B
Shares within the first 5 years after they are purchased, you
will pay a sales charge of up to 5% of your shares' value. See
"Deferred Sales Charge Alternative--Class B and C Shares" below.
This charge declines to 0% over a period of 5 years and may be
waived under certain conditions. Class B shares have higher
distribution and service fees (1.00%) and pay lower dividends
than Class A Shares. Class B Shares automatically convert to
Class A Shares eight years after purchase. Purchases of Class B
Shares may be inappropriate for any investor who may qualify for
reduced sales charges of Class A Shares and anyone who is over
85 years of age. The underwriter may decline purchases in such
situations.
Class C Shares. If you purchase Class C Shares, you will not pay
a sales charge at the time of purchase. If you sell your Class C
Shares within the first year after they are purchased, you will
pay a sales charge of 1%. See "Deferred Sales Charge
Alternative--Class B and C Shares" below. Class C Shares have
the same distribution and service fees (1.00%) and pay
comparable dividends as Class B Shares. Class C Shares do not
convert to any other class of shares of the fund.
Initial Sales Charge Alternative--Class A Shares
The public offering price of Class A Shares is the net asset
value plus a sales charge that varies depending on the size of
your purchase (see "Class A Shares--Reduced Sales Charges:
Combination Purchase Privilege" in the Statement of Additional
Information). Shares purchased based on the automatic
reinvestment of income dividends or capital gains distributions
are not subject to any sales charges. The sales charge is
divided between your investment dealer and the fund's
underwriter (Phoenix Equity Planning Corporation or "PEPCO").
Sales Charge you may pay to purchase Class A Shares
<TABLE>
<CAPTION>
Sales Charge as
a percentage of
----------------------
Amount of Net
Transaction Offering Amount
at Offering Price Price Invested
--------------------------------- ---------- -----------
<S> <C> <C>
Under $50,000 4.75% 4.99%
$50,000 but under $100,000 4.50 4.71
$100,000 but under $250,000 3.50 3.63
$250,000 but under $500,000 3.00 3.09
$500,000 but under $1,000,000 2.00 2.04
$1,000,000 or more None None
</TABLE>
42 Phoenix-Seneca Funds
<PAGE>
Deferred Sales Charge Alternative--
Class B and C Shares
Class B and C Shares are purchased without an initial sales
charge; however, shares sold within a specified time period are
subject to a declining contingent deferred sales charge ("CDSC")
at the rates listed below. The sales charge will be multiplied
by the then current market value or the initial cost of the
shares being redeemed, whichever is less. No sales charge will
be imposed on increases in net asset value or on shares
purchased through the reinvestment of income dividends or
capital gains distributions. To minimize the sales charge,
shares not subject to any charge will be redeemed first,
followed by shares held the longest time. To calculate the
amount of shares owned and time period held, all Class B Shares
purchased in any month are considered purchased on the last day
of the preceding month, and all Class C Shares are considered
purchased on the trade date.
Deferred Sales charge you may pay to sell Class B Shares
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Year 1 2 3 4 5 6+
----------------------------------------------------------------
CDSC 5% 4% 3% 2% 2% 0%
</TABLE>
Deferred Sales charge you may pay to sell Class C Shares
<TABLE>
<S> <C> <C>
Year 1 2+
----------------------------------------------------------------
CDSC 1% 0%
</TABLE>
Your Account
- ---------------------------
Opening an Account
Your financial advisor can assist you with your initial purchase
as well as all phases of your investment program. If you are
opening an account by yourself, please follow the instructions
outlined below. These procedures do not apply to purchases of
Class X Shares.
Step 1.
Your first choice will be the initial amount you intend to
invest.
Minimum initial investments:
o $25 for individual retirement accounts, or accounts that
use the systematic exchange privilege, or accounts that use
the Investo-Matic program (see below for more information
on the Investo-Matic program).
Phoenix-Seneca Funds 43
<PAGE>
o There is no initial dollar requirement for defined
contribution plans, profit-sharing plans, or employee
benefit plans. There is also no minimum for reinvesting
dividends and capital gains into another account.
o $500 for all other accounts.
Minimum additional investments:
o $25 for any account.
o There is no minimum for defined contribution plans,
profit-sharing plans, or employee benefit plans. There is
also no minimum for reinvesting dividends and capital gains
into an existing account.
Step 2.
Your second choice will be what class of shares to buy. The fund
offers three classes of shares for individual investors. Each
has different sales and distribution charges. Because all future
investments in your account will be made in the share class you
choose when you open your account, you should make your decision
carefully. Your financial advisor can help you pick the share
class that makes the most sense for your situation.
Step 3.
Your next choice will be how you want to receive any dividends
and capital gain distributions. Your options are:
o Receive both dividends and capital gain distributions in
additional shares
o Receive dividends in cash and capital gain distributions in
additional shares
o Receive both dividends and capital gain distributions in
cash
No interest will be paid on uncashed distribution checks.
44 Phoenix-Seneca Funds
<PAGE>
How To Buy Shares
- --------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
To Open An Account
(Class A, Class B and Class C Shares)
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ------------------------------------------------------------------------------------------------------------
Complete a New Account Application and send it with a check payable
Through the mail to the fund. Mail them to: State Street Bank, P.O. Box 8301, Boston,
MA 02266-8301.
- ------------------------------------------------------------------------------------------------------------
By Federal Funds wire Call us at (800) 243-1574 (press 1, then 0).
- ------------------------------------------------------------------------------------------------------------
Complete the appropriate section on the application and send it with your
By Investo-Matic initial investment payable to the fund. Mail them to: State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301.
- ------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- ------------------------------------------------------------------------------------------------------------
</TABLE>
How to Sell Shares
- ---------------------------------
You have the right to have the fund buy back shares at the net
asset value next determined after receipt of a redemption order
by the fund's Transfer Agent or an authorized agent. In the case
of a Class B or C Share redemption, you will be subject to the
applicable deferred sales charge, if any, for such shares.
Subject to certain restrictions, shares may be redeemed by
telephone or in writing. In addition, shares may be sold through
securities dealers, brokers or agents who may charge customary
commissions or fees for their services. The fund does not charge
any redemption fees. Payment for shares redeemed is made within
seven days; however, redemption proceeds will not be disbursed
until each check used for purchases of shares has been cleared
for payment by your bank, which may take up to 15 days after
receipt of the check.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
To Sell Shares
(Class A, Class B and Class C Shares)
- ------------------------------------------------------------------------------------------------------------
<S> <C>
Through a financial advisor Contact your advisor. Some advisors may charge a fee.
- ------------------------------------------------------------------------------------------------------------
Send a letter of instruction and any share certificates (if you hold
certificate shares) to: State Street Bank, P.O. Box 8301, Boston, MA
Through the mail 02266-8301. Be sure to include the registered owner's name, fund and
account number, number of shares or dollar value you wish to sell.
- ------------------------------------------------------------------------------------------------------------
For sales up to $50,000, requests can be made by calling
By telephone (800) 243-1574.
- ------------------------------------------------------------------------------------------------------------
By telephone exchange Call us at (800) 243-1574 (press 1, then 0).
- ------------------------------------------------------------------------------------------------------------
</TABLE>
Phoenix-Seneca Funds 45
<PAGE>
Things You Should Know When Selling Shares
- ---------------------------------------------------------
You may realize a taxable gain or loss (for federal income tax
purposes) if you redeem shares of the fund. The fund reserves
the right to pay large redemptions "in-kind" (in securities
owned by the fund rather than in cash). Large redemptions are
those over $250,000 or 1% of the fund's net assets. Additional
documentation will be required for redemptions by organizations,
fiduciaries, or retirement plans, or if redemption is requested
by anyone but the shareholder(s) of record. Transfers between
broker-dealer "street" accounts are governed by the accepting
broker-dealer. Questions regarding this type of transfer should
be directed to your financial advisor. Redemption requests will
not be honored until all required documents in proper form have
been received. To avoid delay in redemption or transfer,
shareholders having questions about specific requirements should
contact the fund's Transfer Agent at (800) 243-1574.
Redemptions by Mail
[arrow] Send a clear letter of instructions if all of these
apply:
o Your shares are registered individually, jointly, or as
custodian under the Uniform Gifts to Minors Act or
Uniform Transfers to Minors Act.
o The proceeds do not exceed $50,000.
o The proceeds are payable to the registered owner at the
address on record.
[arrow] Send a clear letter of instructions with a signature
guarantee when any of these apply:
o You are selling more than $50,000 worth of shares.
o The name or address on the account has changed within
the last 60 days.
o You want the proceeds to go to a different name or
address than on the account.
If you are selling shares held in a corporate or fiduciary
account, please contact the fund's Transfer Agent at (800)
243-1574.
The signature on your request must be guaranteed by an eligible
guarantor institution as defined by the fund's Transfer Agent in
accordance with its signature guarantee procedures. Currently,
such procedures generally permit guarantees by banks, broker
dealers, credit unions, national securities exchanges,
registered securities associations, clearing agencies and
savings associations.
Selling Shares by Telephone
The Transfer Agent will use reasonable procedures to confirm
that telephone instructions are genuine. Address and bank
account information are verified, redemption instructions are
taped, and all redemptions are confirmed in writing.
46 Phoenix-Seneca Funds
<PAGE>
The individual investor bears the risk from instructions given
by an unauthorized third party that the Transfer Agent
reasonably believed to be genuine.
The Transfer Agent may modify or terminate the telephone
redemption privilege at any time with 60 days notice to
shareholders.
During times of drastic economic or market changes, telephone
redemptions may be difficult to make or temporarily suspended.
Account Policies
- -------------------------------
Account Reinstatement Privilege
For 180 days after you sell your Class A, B, or C Shares, you
can purchase Class A Shares of any fund at net asset value, with
no sales charge, by reinvesting all or part of your proceeds,
but not more. Send your written request to State Street Bank,
P.O. Box 8301, Boston, MA 02266-8301. You can call us at (800)
243-1574 for more information.
Please remember, a redemption and reinvestment are considered to
be a sale and purchase for tax-reporting purposes. Class B
shareholders who have had the contingent deferred sales charge
waived because they are in the Systematic Withdrawal Program are
not eligible for this reinstatement privilege.
Redemption of Small Accounts
Due to the high cost of maintaining small accounts, if your
account balance is less than $200, you may receive a notice
requesting you to bring the balance up to $200 within 60 days.
If you do not, the shares in the account will be sold at net
asset value, and a check will be mailed to the address of
record.
Exchange Privileges
You should read the prospectus carefully before deciding to make
an exchange. You can obtain a prospectus from your financial
advisor or by calling us at (800) 243-4361 or accessing our Web
site at www.phoenixinvestments.com.
o You may exchange shares for another fund in the same class
of shares; e.g., Class A for Class A.
o Exchanges may be made by phone (800) 243-1574 or by mail
(State Street Bank, P.O. Box 8301, Boston, MA 02266-8301).
o The amount of the exchange must be equal to or greater than
the minimum initial investment required.
o The exchange of shares is treated as a sale and purchase
for federal income tax purposes.
Phoenix-Seneca Funds 47
<PAGE>
o Because excessive trading can hurt fund performance and harm
other shareholders, the Fund reserves the right to
temporarily or permanently end exchange privileges or reject
an order from anyone who appears to be attempting to time
the market, including investors who request more than one
exchange in any 30-day period. The fund's underwriter has
entered into agreements with certain market timing firms
permitting them to exchange by telephone. These privileges
are limited, and the fund distributor has the right to
reject or suspend them.
Retirement Plans
Shares of the fund may be used as investments under the
following qualified prototype retirement plans: traditional IRA,
rollover IRA, SIMPLE IRA, Roth IRA, 401(k) plans,
profit-sharing, money purchase plans, and 403(b) plans. For more
information, call (800) 243-4361.
Investor Services
- --------------------------------
Investo-Matic is a systematic investment plan that allows you to
have a specified amount automatically deducted from your
checking or savings account and then deposited into your mutual
fund account. Just complete the Investo-Matic Section on the
application and include a voided check.
Systematic Exchange allows you to automatically move money from
one Phoenix Fund to another on a monthly, quarterly, semiannual
or annual basis. Shares of one Phoenix Fund will be exchanged
for shares of the same class of another fund at the interval you
select. To sign up, just complete the Systematic Exchange
Section on the application.
Telephone Exchange lets you exchange shares of one fund for the
same class of shares in another fund, using our customer service
telephone service. See the Telephone Exchange Section on the
application.
Systematic Withdrawal Program allows you to periodically redeem
a portion of your account on a predetermined monthly, quarterly,
semiannual, or annual basis. Sufficient shares will be redeemed
on the 15th of the month at the closing net asset value so that
the payment is made about the 20th of the month. The program
also provides for redemptions on or about the 10th, 15th, or
25th with proceeds directed through Automated Clearing House
(ACH) to your bank. The minimum withdrawal is $25, and minimum
account balance requirements continue. Shareholders in the
program must own fund shares worth at least $5,000.
48 Phoenix-Seneca Funds
<PAGE>
Tax Status of Distributions
- ------------------------------------------
The fund plans to make distributions from net investment income
at intervals stated on the table below, and to distribute net
realized capital gains, if any, at least annually.
<TABLE>
<CAPTION>
----------------------------------------------------------------
Fund Dividend Paid
----------------------------------------------------------------
<S> <C>
Bond Fund Monthly
----------------------------------------------------------------
Growth Fund Annually
----------------------------------------------------------------
Mid-Cap "EDGE"(SM) Fund Annually
----------------------------------------------------------------
Real Estate Securities Fund Quarterly
----------------------------------------------------------------
</TABLE>
Distributions of short-term capital gains and net investment
income are taxable to shareholders as ordinary income. Long-term
capital gains, if any, distributed to shareholders and which are
designated by the fund as capital gains distributions, are
taxable to shareholders as long-term capital gain distributions
regardless of the length of time you have owned your shares.
Unless you elect to receive distributions in cash, dividends and
capital gain distributions are paid in additional shares. All
distributions, cash or additional shares, are subject to federal
income tax and may be subject to state, local and other taxes.
Phoenix-Seneca Funds 49
<PAGE>
Financial Highlights
- -----------------------------------
These tables are intended to help you understand the funds'
financial performance since inception. Certain information
reflects financial results for a single fund share. The total
returns in the tables represent the rate that an investor would
have earned on an investment in the fund (assuming reinvestment
of all dividends and distributions). This information for the
fiscal year ended September 30, 1998 has been audited by
PricewaterhouseCoopers LLP, independent accountants; the
information for prior periods has been audited by Deloitte &
Touche LLP, independent accountants. The report of
PricewaterhouseCoopers LLP, together with the funds' financial
statements, are included in the funds' most recent Annual
Report, which is available upon request.
Phoenix-Seneca Bond Fund
<TABLE>
<CAPTION>
Class X
-----------------------------------------
Year Ended From Inception
September 30, 3/7/96 to
1998 1997 9/30/96
-------- ---- ---------
<S> <C> <C> <C>
Net asset value, beginning of period $10.47 $10.09 $10.00
Income from investment operations:
Net investment income 0.56 0.62 (1) 0.31 (1)
Net realized and unrealized gain 0.40 0.47 0.08
------ ------ -----
Total from investment operations 0.96 1.09 0.39
------ ------ -----
Less Distributions:
Dividends from net investment income (0.57) (0.69) (0.30)
Dividends from net realized gains (0.18) (0.02) --
------ ------ -----
Total distributions (0.75) (0.71) (0.30)
------ ------- -----
Change in net asset value 0.21 0.38 0.09
------ ------- -----
Net asset value, end of period $10.68 $10.47 $10.09
====== ====== ======
Total return(2) 9.44% 11.26% 4.02%(4)
Ratios/supplemental data:
Net assets, end of period (thousands) $26,455 $8,922 $3,927
Ratio to average net assets of:
Operating expenses 1.66% 1.53%(5) 0.56%(3)(5)
Net investment income 5.92% 6.31% 7.54%(3)
Portfolio turnover 112% 99.68% 52.82%(4)
</TABLE>
- ----------------
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $0.47 and $(0.05) for the year ended September 30, 1997 and the
period ended September 30, 1996, respectively.
(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 investment adviser.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.41% and
9.31% for the year ended September 30, 1997 and the period ended September 30,
1996, respectively.
50 Phoenix-Seneca Funds
<PAGE>
Financial Highlights (continued)
- ---------------------------------------------
Phoenix-Seneca Bond Fund
<TABLE>
<CAPTION>
Class A Class B Class C
-------------- -------------- --------------
From Inception From Inception From Inception
7/1/98 to 7/1/98 to 7/1/98 to
9/30/98 9/30/98 9/30/98
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of period $10.79 $10.79 $10.79
Income from investment operations:
Net investment income 0.13 (1)(10) 0.11 (2)(10) 0.10 (3)(10)
Net realized and unrealized gain (loss) (0.07) (0.08) (0.07)
------ ------ ------
Total from investment operations 0.06 0.03 0.03
------ ------ ------
Less Distributions:
Dividends from net investment income (0.17) (0.15) (0.15)
Dividends from net realized gains -- -- --
------ ------ -----
Total distributions (0.17) (0.15) (0.15)
------ ------ -----
Change in net asset value (0.11) (0.12) (0.12)
------ ------ -----
Net asset value, end of period $10.68 $10.67 $10.67
====== ====== ======
Total return(4) 0.53%(6) 0.28%(6) 0.28%(6)
Ratios/supplemental data:
Net assets, end of period (thousands) $ 348 $ 234 $ 439
Ratio to average net assets of:
Operating expenses 2.45%(5)(7) 3.20%(5)(8) 3.20%(5)(9)
Net investment income 5.17%(5) 4.42%(5) 4.27%(5)
Portfolio turnover 112% 112% 112%
</TABLE>
- ----------------
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.03) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.21) for the period ended September 30, 1998.
(3) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.08) for the period ended September 30, 1998.
(4) 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 investment adviser.
(5) Annualized.
(6) Not annualized.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 8.99% for the
period ended September 30, 1998.
(8) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 15.79% for the
period ended September 30, 1998.
(9) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 11.22% for the
period ended September 30, 1998.
(10) Computed using average shares outstanding.
Phoenix-Seneca Funds 51
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
Class X Class A
----------------------- ---------------------------------------------------------
Year Ended From Inception Year Ended From Inception
September 30, 3/8/96 to September 30, 3/8/96 to
1998 1997 9/30/96 1998 1997 9/30/96
-------- --------- --------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.43 $13.74 $10.00 $16.28 $13.63 $10.00
Income from investment
operations:
Net investment income (loss) 0.00 (8) 0.03 (1) 0.03 (1) (0.06)(8) (0.08)(2) --(2)
Net realized and unrealized gain 1.28 3.50 3.71 1.24 3.50 3.63
------ ------ ------ ------ ------ ------
Total from investment
operations 1.28 3.53 3.74 1.18 3.42 3.63
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income (0.02) (0.07) -- -- -- --
Dividends from net realized gains (1.23) (0.77) -- (1.23) (0.77) --
------ ------ ------ ------ ------ ------
Total distributions (1.25) (0.84) -- (1.23) (0.77) --
------ ------ ------ ------ ------ ------
Change in net asset value 0.03 2.69 3.74 (0.05) 2.65 3.63
------ ------ ------ ------ ------ ------
Net asset value, end of period $16.46 $16.43 $13.74 $16.23 $16.28 $13.63
====== ====== ====== ====== ====== ======
Total return(3) 8.48% 27.27% 37.40%(5) 7.93% 26.51% 36.30%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $30,713 $34,093 $12,920 $17,364 $6,013 $466
Ratio to average net assets of:
Operating expenses 1.14% 1.52%(6) 0.81%(4)(6) 1.55% 2.48%(7) 1.46%(4)(7)
Net investment income (loss) 0.02% 0.31% 0.76%(4) (0.36)% (0.62)% 0.16%(4)
Portfolio turnover 166% 145.69% 87.66%(5) 166% 145.69% 87.66%(5)
</TABLE>
- ----------------
(1) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the investment
adviser had not waived fees and reimbursed expenses, net investment income
(loss) per share would have been $0.03 and $(0.09) for the year ended September
30, 1997 and the period ended September 30, 1996, respectively.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the investment
adviser had not waived fees and reimbursed expenses, net investment income
(loss) per share would have been $(0.09) and $(0.34) for the year ended
September 30, 1997 and the period ended September 30, 1996, respectively.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the year ended September 30, 1997 and the period ended September 30,
1996, respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the year ended September 30, 1997 and the period ended September 30,
1996, respectively.
(8) Computed using average shares outstanding.
52 Phoenix-Seneca Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
Class B Class C
--------------- ---------------
From Inception From Inception
7/1/98 to 7/1/98 to
9/30/98 9/30/98
-------------- -----------
<S> <C> <C>
Net asset value, beginning of period $ 18.71 $18.71
Income from investment operations:
Net investment income (loss) (0.04)(1)(8) (0.06)(2)(8)
Net realized and unrealized gain (loss) (2.48) (2.47)
----- ------
Total from investment operations (2.52) (2.53)
----- ------
Less Distributions:
Dividends from net investment income -- --
Dividends from net realized gains -- --
----- ------
Total distributions -- --
----- ------
Change in net asset value (2.52) (2.53)
----- ------
Net asset value, end of period $16.19 $16.18
===== ======
Total return(3) (13.47)%(5) (13.52)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $519 $126
Ratio to average net assets of:
Operating expenses 2.60%(4)(6) 2.60%(4)(7)
Net investment income (loss) (1.12)%(4) (1.39)%(4)
Portfolio turnover 166% 166%
</TABLE>
- ----------------
(1) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the investment
adviser had not waived fees and reimbursed expenses, net investment income
(loss) per share would have been $(0.36) for the period ended September 30,
1998.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the investment
adviser had not waived fees and reimbursed expenses, net investment income
(loss) per share would have been $(0.79) for the period ended September 30,
1998.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 12.48% for the
period ended September 30, 1998.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 20.24% for the
period ended September 30, 1998.
(8) Computed using average shares outstanding.
Phoenix-Seneca Funds 53
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<TABLE>
<CAPTION>
Class X Class A
----------------------------------------- ----------------------------------------
Year Ended From Inception Year Ended From Inception
September 30, 3/8/96 to September 30, 3/8/96 to
1998 1997 9/30/96 1998 1997 9/30/96
------- -------- -------------- ------- ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $16.47 $14.97 $10.00 $16.49 $14.94 $10.00
Income from investment
operations:
Net investment income (loss) (0.23)(1)(8) (0.17)(1) 0.01 (1) (0.30)(2)(8) (0.25)(2) (0.01)(2)
Net realized and unrealized gain (loss) (0.58) 1.84 4.96 (0.59) 1.90 4.95
------ ------ ------ ------ ------ ---------
Total from investment
operations (0.81) 1.67 4.97 (0.89) 1.65 4.94
------ ------ ----- ------ ------ ---------
Less Distributions:
Dividends from net investment income -- (0.07) -- -- -- --
Dividends from net realized gains (1.85) (0.10) -- (1.85) (0.10) --
------ ------ ----- ------ ------ ---------
Total distributions (1.85) (0.17) -- (1.85) (0.10) --
------ ------ ----- ------ ------ ---------
Change in net asset value (2.66) 1.50 4.97 (2.74) 1.55 4.94
------- ------- ----- ------ ------ ---------
Net asset value, end of period $13.81 $16.47 $14.97 $13.75 $16.49 $14.94
======= ======= ===== ====== ====== =========
Total return(3) (4.22)% 11.39% 49.70%(5) (4.74)% 11.25% 49.30%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $8,940 $9,390 $7,428 $3,666 $2,419 $1,355
Ratio to average net assets of:
Operating expenses 2.10%(6) 1.74%(6) 0.90%(4)(6) 2.70%(7) 2.37%(7) 1.55%(4)(7)
Net investment income (loss) (1.49)% (0.97)% 0.27%(4) (1.95)% (1.60)% (0.46)%(4)
Portfolio turnover 206% 283.60% 72.34%(5) 206% 283.60% 72.34%(5)
</TABLE>
- ----------------
(1) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the investment
adviser had not waived fees and reimbursed expenses, net investment income
(loss) per share would have been $(0.27), $(0.33) and $(0.19) for the years
ended September 30, 1998 and 1997 and the period ended September 30, 1996,
respectively.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the investment
adviser had not waived fees and reimbursed expenses, net investment income
(loss) per share would have been $(0.31), $(0.55) and $(0.20) for the years
ended September 30, 1998 and 1997 and the period ended September 30, 1996,
respectively.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.38%, 2.77%
and 5.73% for the years ended September 30, 1998 and 1997 and the period ended
September 30, 1996, respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.74%, 4.32%
and 9.73% for the years ended September 30, 1998 and 1997 and the period ended
September 30, 1996, respectively.
(8) Computed using average shares outstanding.
54 Phoenix-Seneca Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<TABLE>
<CAPTION>
Class B Class C
-------------- --------------
From Inception From Inception
7/1/98 to 7/1/98 to
9/30/98 9/30/98
-------------- --------------
<S> <C> <C>
Net asset value, beginning of period $17.15 $17.15
Income from investment operations:
Net investment income (loss) (0.09)(1)(8) (0.09)(2)(8)
Net realized and unrealized gain (loss) (3.33) (3.34)
------ ------
Total from investment operations (3.42) (3.43)
------ ------
Less Distributions:
Dividends from net investment income -- --
Dividends from net realized gains -- --
------ ------
Total distributions -- --
------ ------
Change in net asset value (3.42) (3.43)
Net asset value, end of period $13.73 $13.72
====== ======
Total return(3) (19.94)%(5) (20.00)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $145 $103
Ratio to average net assets of:
Operating expenses 3.45%(4)(6) 3.45%(4)(7)
Net investment income (loss) (2.45)%(4) (2.44)%(4)
Portfolio turnover 206% 206%
</TABLE>
- ----------------
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.69) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.77) for the period ended September 30, 1998.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 20.80% for the
period ended September 30, 1998.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 21.14% for the
period ended September 30, 1998.
(8) Computed using average shares outstanding.
Phoenix-Seneca Funds 55
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Seneca Real Estate Securities Fund
<TABLE>
<CAPTION>
Class X Class A
--------------------------------------- ---------------------------------
Year Ended From Inception Year Ended From Inception
September 30, 3/12/96 to September 30, 3/12/96 to
1998 1997 9/30/96 1998 1997 9/30/96
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $14.71 $11.10 $10.00 $14.68 $11.08 $10.00
Income from investment
operations:
Net investment income (loss) 0.54 0.13 (1) 0.13 (1) 0.35 0.03 (2) 0.13 (2)
Net realized and unrealized gain (loss) (3.10) 3.77 1.10 (3.08) 3.78 1.08
------ ------ ------ ------ ------ ------
Total from investment
operations (2.56) 3.90 1.23 (2.73) 3.81 1.21
------ ------ ------ ------ ------ ------
Less Distributions:
Dividends from net investment income (0.46) (0.28) (0.13) (0.37) (0.20) (0.13)
Dividends from net realized gains (0.58) (0.01) -- (0.58) (0.01) --
------ ------ ------ ------ ------ ------
Total distributions (1.04) (0.29) (0.13) (0.95) (0.21) (0.13)
------ ------ ------ ------ ------ ------
Change in net asset value (3.60) 3.61 1.10 (3.68) 3.60 1.08
------ ------ ------ ------ ------ ------
Net asset value, end of period $11.11 $14.71 $11.10 $11.00 $14.68 $11.08
====== ====== ====== ====== ====== ======
Total return(3) (18.33)% 35.44% 12.39%(5) (19.52)% 34.54% 12.22%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $21,794 $28,193 $1,073 $1,357 $3,176 $222
Ratio to average net assets of:
Operating expenses 1.47% 1.99%(6) 1.00%(4)(6) 2.76% 2.91%(7) 1.65%(4)(7)
Net investment income (loss) 4.14% 2.38% 4.39%(4) 2.45% 1.37% 4.61%(4)
Portfolio turnover 53% 75.68% 30.70%(5) 53% 75.68% 30.70%(5)
</TABLE>
- ----------------
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $0.13 and $(1.45) for the year ended September 30, 1997 and the
period ended September 30, 1996, respectively.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.04) and $(1.96) for the year ended September 30, 1997 and
the period ended September 30, 1996, respectively.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.99% and
53.04% for the year ended September 30, 1997 and the period ended September 30,
1996, respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.79% and
73.01% for the year ended September 30, 1997 and the period ended September 30,
1996, respectively.
56 Phoenix-Seneca Funds
<PAGE>
Financial Highlights (continued)
- -----------------------------------------------
Phoenix-Seneca Real Estate Securities Fund
<TABLE>
<CAPTION>
Class B Class C
-------------- --------------
From Inception From Inception
7/1/98 to 7/1/98 to
9/30/98 9/30/98
-------------- --------------
<S> <C> <C>
Net asset value, beginning of period $ 12.58 $12.58
Income from investment operations:
Net investment income (loss) 0.07 (1) 0.07 (2)
Net realized and unrealized gain (loss) (1.58) (1.58)
------- ------
Total from investment operations (1.51) (1.51)
------- ------
Less Distributions:
Dividends from net investment income (0.06) (0.06)
Dividends from net realized gains -- --
------- ------
Total distributions (0.06) (0.06)
------- ------
Change in net asset value (1.57) (1.57)
------- ------
Net asset value, end of period $11.01 $11.01
======= ======
Total return(3) (11.97)%(5) (11.97)%(5)
Ratios/supplemental data:
Net assets, end of period (thousands) $91 $88
Ratio to average net assets of:
Operating expenses 3.80%(4)(6) 3.80%(4)(7)
Net investment income (loss) 2.50%(4) 2.44%(4)
Portfolio turnover 53% 53%
</TABLE>
- ----------------
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.46) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had not
waived fees and reimbursed expenses, net investment income (loss) per share
would have been $(0.48) for the period ended September 30, 1998.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 22.08% for the
period ended September 30, 1998.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 22.93% for the
period ended September 30, 1998.
Phoenix-Seneca Funds 57
<PAGE>
Additional Information
- ---------------------------------------
Statement of Additional Information
The fund has filed a Statement of Additional Information about the fund,
dated January 28, 1998 with the Securities and Exchange Commission. The
Statement contains more detailed information about the fund. It is
incorporated into this prospectus by reference and is legally part of the
prospectus. You may obtain a free copy of the Statement:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
You may also obtain information about the fund from the Securities and
Exchange Commission:
o through its internet site (http://www.sec.gov),
o by visiting its Public Reference Room in Washington, DC or
o by writing to its Public Reference Section, Washington, DC 20549-6009
(a fee may be charged).
Information about the operation of the Public Reference Room may be
obtained by calling (800) SEC-0330.
Shareholder Reports
The fund semiannually mails to its shareholders detailed reports
containing information about the fund's investments. The fund's Annual
Report contains a detailed discussion of the market conditions and
investment strategies that significantly affected the fund's performance
from October 1 through September 30. You may request a free copy of the
fund's Annual and Semiannual Reports:
o by writing to Phoenix Equity Planning Corporation, 100 Bright Meadow
Blvd., P.O. Box 2200, Enfield, Connecticut 06083-2200 or
o by calling (800) 243-4361.
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunication Device (TTY): (800) 243-1926
SEC File Nos. 33-65137 & 811-7455
[recycle logo] Printed on recycled paper using soybean ink
58 Phoenix-Seneca Funds
<PAGE>
[BACK COVER]
Phoenix Equity Planning Corporation
PO Box 2200
Enfield CT 06083-2200
[PHOENIX LOGO]
PXP 2069 (1/99)
<PAGE>
PHOENIX-SENECA FUNDS PART B
PHOENIX-SENECA BOND FUND
PHOENIX-SENECA GROWTH FUND
PHOENIX-SENECA MID-CAP "EDGE"(SM) FUND
PHOENIX-SENECA REAL ESTATE SECURITIES FUND
(each a "Fund" and collectively, the "Funds")
Statement of Additional Information
January 28, 1999
This Statement of Additional Information is not a prospectus, but expands
upon and supplements the information contained in the current prospectus of the
Phoenix-Seneca Funds (the "Trust"), dated January 28, 1999, and should be read
in conjunction with it. The Trust's prospectus may be obtained by calling
Phoenix Equity Planning Corporation ("Equity Planning") at (800) 243-4361 or by
writing to Equity Planning at 100 Bright Meadow Boulevard, Enfield, Connecticut
06083-2200.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE TRUST ............................................................. 1
INVESTMENT OBJECTIVES AND POLICIES .................................... 1
INVESTMENT RESTRICTIONS ............................................... 12
CALCULATION OF THE FUNDS' PERFORMANCE ................................. 15
ADVISORY SERVICES ..................................................... 17
THE DISTRIBUTOR ....................................................... 19
DISTRIBUTION PLANS .................................................... 20
NET ASSET VALUE ....................................................... 21
HOW TO BUY SHARES ..................................................... 22
ALTERNATIVE PURCHASE ARRANGEMENTS ..................................... 22
INVESTOR ACCOUNT SERVICES ............................................. 25
HOW TO REDEEM SHARES .................................................. 26
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS ............................... 27
PORTFOLIO BROKERAGE ................................................... 29
PORTFOLIO TURNOVER .................................................... 30
MANAGEMENT OF THE TRUST ............................................... 31
OTHER INFORMATION ..................................................... 37
APPENDIX .............................................................. 39
GLOSSARY .............................................................. 40
</TABLE>
Customer Service: (800) 243-1574
Marketing: (800) 243-4361
Telephone Orders: (800) 367-5877
Telecommunications Device (TTY)-(800) 243-1926
PXP 2069B (1/99)
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THE TRUST
The Trust is an open-end management company which was organized under
Delaware law in 1995 as a business trust. The Trust consists of four separate
Funds: the Phoenix-Seneca Bond Fund; the Phoenix-Seneca Growth Fund; the
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund; and the Phoenix-Seneca Real Estate
Securities Fund. Each Fund offers four Classes of Shares: Class X, Class A,
Class B and Class C. Class X Shares are offered to institutional investors,
such as pension and profit sharing plans, employee benefit trusts, endowments,
foundations, and corporations, and others who purchase in certain minimum
amounts. The three additional Classes of Shares may be purchased at a price
equal to their net asset value per share, plus a sales charge which, at the
election of the purchaser, may be imposed (i) at the time of purchase (Class A)
or (ii) on a contingent deferred basis (Class B and Class C).
The Trust (formerly called the "Seneca Funds") was renamed the
Phoenix-Seneca Funds in connection with the effectiveness of new investment
advisory agreements with Phoenix Investment Counsel, Inc. ("PIC") and Seneca
Capital Management LLC ("Seneca"). At the same time, the Seneca Bond Fund was
renamed the Phoenix-Seneca Bond Fund, the Seneca Growth Fund was renamed the
Phoenix-Seneca Growth Fund, the Seneca Mid-Cap "EDGE"(SM) Fund was renamed the
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund and the Seneca Real Estate Securities
Fund was renamed the Phoenix-Seneca Real Estate Securities Fund.
INVESTMENT OBJECTIVES AND POLICIES
The investment objective and general investment policies of each Fund are
described in the prospectus. This Statement of Additional Information should be
read in conjunction with the prospectus. Additional information concerning the
characteristics of certain securities in which the Funds may invest and certain
practices in which they may engage is set forth below. The Appendix to this
Statement of Additional Information contains a description of the quality
categories of corporate bonds in which the Funds may invest, and a Glossary
describing some of the Funds' investments.
Repurchase Agreements
Each Fund may enter into repurchase agreements with banks, broker-dealers
or other financial institutions in order to generate additional current income.
Under a repurchase agreement, a Fund acquires a security from a seller subject
to resale to the seller at an agreed upon price and date. The resale price
reflects an agreed upon interest rate effective for the time period the
security is held by the Fund. The repurchase price may be higher than the
purchase price, the difference being income to the Fund, or the purchase and
repurchase price may be the same, with interest payable to the Fund at a stated
rate together with the repurchase price on repurchase. In either case, the
income to the Fund is unrelated to the interest rate on the security.
Typically, repurchase agreements are in effect for one week or less, but may be
in effect for longer periods of time. Repurchase agreements of more than one
week's duration are subject to each Fund's limitation on investments in
illiquid securities.
Repurchase agreements are considered by the Securities and Exchange
Commission (the "SEC") to be loans by the purchaser collateralized by the
underlying securities. In an attempt to reduce the risk of incurring a loss on
a repurchase agreement, the Funds will generally enter into repurchase
agreements only with domestic banks with total assets in excess of one billion
dollars, primary dealers in U.S. Government securities reporting to the Federal
Reserve Bank of New York or broker-dealers approved by the Trustees of the
Trust. The Subadviser will monitor the value of the underlying securities
throughout the term of the agreement to attempt to ensure that their market
value always equals or exceeds the agreed-upon repurchase price to be paid to a
Fund. Each Fund will maintain a segregated account with its custodian, or a
subcustodian for the securities and other collateral, if any, acquired under a
repurchase agreement for the term of the agreement.
In addition to the risk of the seller's default or a decline in value of
the underlying security (see "Investment Practices and Risk
Considerations--Repurchase Agreements" in the prospectus), a Fund also might
incur disposition costs in connection with liquidating the underlying
securities. If the seller becomes insolvent and subject to liquidation or
reorganization under the Bankruptcy Code or other laws, a court may determine
that the underlying security is collateral for a loan by a Fund not within the
control of that Fund and therefore subject to sale by the seller's trustee in
bankruptcy. Finally, it is possible that a Fund may not be able to perfect its
interest in the underlying security and may be deemed an unsecured creditor of
the seller.
Corporate Debt Securities
A Fund's investments in debt securities of domestic or foreign corporate
issuers are limited to bonds, debentures, notes and other similar corporate
debt instruments, including convertible securities that meet the Fund's minimum
ratings criteria or if unrated are, in the Subadviser's opinion, comparable in
quality to corporate debt securities that meet those criteria. The rate of
return or return of principal on some debt obligations may be linked or indexed
to the level of exchange rates between the U.S. Dollar and a foreign currency
or currencies or to the value of commodities, such as gold.
Convertible Securities. A convertible security is a bond, debenture, note,
or other security that entitles the holder to acquire common stock or other
equity securities of the same or a different issuer. It generally entitles the
holder to receive interest paid or accrued until the security matures or is
redeemed, converted, or exchanged. Before conversion, convertible securities
have characteristics similar to nonconvertible debt securities. Convertible
securities rank senior to common stock in a corporation's
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capital structure and, therefore, generally entail less risk than the
corporation's common stock, although the extent to which this is true depends
in large measure on the degree to which the convertible security sells above
its value as a fixed-income security.
A convertible security may be subject to redemption or conversion at the
option of the issuer at a predetermined price. If a convertible security held
by a Fund is called for redemption, the Fund could be required to permit the
issuer to redeem the security and convert it to the underlying common stock.
The Phoenix-Seneca Bond Fund generally would invest in convertible securities
for their favorable price characteristics and total return potential and would
normally not exercise an option to convert. The Phoenix-Seneca Growth Fund and
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund might be more willing to convert such
securities to common stock.
Below-Investment Grade Securities. Investments in below-investment grade
securities (see Appendix for an explanation of the various ratings) generally
provide greater income (leading to the name "high-yield" securities) and
opportunity for capital appreciation than investments in higher quality
securities, but they also typically entail greater price volatility and
principal and income risk. These securities are regarded as predominantly
speculative as to the issuer's continuing ability to meet principal and
interest payment obligations. The markets for these securities are relatively
new and many of the outstanding high-yield securities have not endured a major
business recession. A long-term track record on default rates, such as that for
investment-grade corporate bonds, does not exist for these securities. Analysis
of the creditworthiness of issuers of lower-quality debt securities may be more
complex than for issuers of higher-quality debt securities.
High-yield securities may be more susceptible to real or perceived adverse
economic and competitive industry conditions than investment-grade securities.
The prices of high-yield securities have been found to be less sensitive to
interest-rate changes than higher-quality investments, but more sensitive to
adverse economic developments or individual corporate developments. A
projection of an economic downturn or of a period of rising interests rates,
for example, could cause a decline in high-yield securities prices because the
advent of a recession could lessen the ability of a highly-leveraged company to
make principal and interest payments. If an issuer of high-yield securities
defaults, in addition to risking payment of all or a portion of interest and
principal, the Funds may incur additional expenses to seek recovery. Market
prices of high-yield securities structured as zero-coupon or pay-in-kind
securities are affected to a greater extent by interest rate changes, and
therefore tend to be more volatile than securities that pay interest
periodically and in cash.
The secondary market on which high-yield securities are traded may be less
liquid than the market for higher- grade securities. Less liquidity could
adversely affect the price at which a Fund could sell a high-yield security and
could adversely affect the daily net asset value of the Fund's shares. Adverse
publicity and investor perceptions, whether or not based on fundamental
analysis, may decrease the values and liquidity of high-yield securities,
especially in a thinly-traded market. When secondary markets for these
securities are less liquid than the market for higher-grade securities, it may
be more difficult to value the high-yield securities because the valuation may
require more research and judgment may play a greater role in valuation because
of the lack of reliable, objective data.
Delayed Delivery Transactions
Each Fund may purchase securities on a when-issued or forward commitment
basis. These transactions are also know as delayed delivery transactions. (The
phrase "delayed delivery" is not intended to include purchases where a delay in
delivery involves only a brief period required by the selling party solely to
locate appropriate certificates and prepare them for submission for clearance
and settlement in the customary way.) Delayed delivery transactions involve a
commitment by a Fund to purchase or sell securities at a future date
(ordinarily up to 90 days later). The price of the underlying securities
(usually expressed in terms of yield) and the date when the securities will be
delivered and paid for (the settlement date) are fixed at the time the
transaction is negotiated. When-issued purchases and forward commitments are
negotiated directly with the selling party.
When-issued purchases and forward commitments enable a Fund to lock in
what is believed to be an attractive price or yield on a particular security
for a period of time, regardless of future changes in interest rates. For
example, in periods of rising interest rates and falling bond prices, a Fund
might sell debt securities it owns on a forward commitment basis to limit its
exposure to falling prices. In periods of falling interest rates and rising
prices, a Fund might sell securities it owns and purchase the same or similar
securities on a when-issued or forward commitment basis, thereby obtaining the
benefit of currently higher yields. A Fund will not enter into such
transactions for the purpose of leverage.
The value of securities purchased on a when-issued or forward commitment
basis and any subsequent fluctuations in their value will be reflected in the
Fund's net asset value starting on the date of the agreement to purchase the
securities, and the Fund will be subject to the rights and risks of ownership
of the securities on that date. A Fund will not earn interest on securities it
has committed to purchase until they are paid for and received.
When a Fund makes a forward commitment to sell securities it owns, the
proceeds to be received upon settlement will be included in the Fund's assets.
Fluctuations in the market value of the underlying securities will not be
reflected in the Fund's net asset value as long as the commitment to sell
remains in effect. Settlement of when-issued purchases and forward commitment
transactions generally takes place up to 90 days after the date of the
transaction, but a Fund may agree to a longer settlement period.
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A Fund will make commitments to purchase securities on a when-issued basis
or to purchase or sell securities on a forward commitment basis only with the
intention of completing the transaction and actually purchasing or selling the
securities. If deemed advisable as a matter of investment strategy, however, a
Fund may dispose of or renegotiate a commitment after it is entered into. A
Fund also may sell securities it has committed to purchase before those
securities are delivered to the Fund on the settlement date. The Fund may
realize a capital gain or loss in connection with these transactions.
When a Fund purchases securities on a when-issued or forward-commitment
basis, the Custodian will maintain in a segregated account securities having a
value (determined daily) at least equal to the amount of the Fund's purchase
commitments. These procedures are designed to ensure that each Fund will
maintain sufficient assets at all times to cover its obligations under when-
issued purchases and forward commitments.
Mortgage-Related and Other Asset-Backed Securities
Mortgage Pass-Through Securities. These are interests in pools of mortgage
loans, assembled and issued by various governmental, government-related, and
private organizations. Unlike other forms of debt securities, which normally
provide for periodic payment of interest in fixed amounts with principal
payments at maturity or specified call dates, these securities provide a
monthly payment consisting of both interest and principal payments. In effect,
these payments are a "pass-through" of the monthly payments made by the
individual borrowers on their residential or commercial mortgage loans, net of
any fees paid to the issuer or guarantor of such securities. Additional
payments are caused by repayments of principal resulting from the sale of the
underlying property, refinancing or foreclosure, net of fees or costs.
"Modified pass-through" securities (such as securities issued by the Government
National Mortgage Association ("GNMA")) entitle the holder to receive all
interest and principal payments owed on the mortgage pool, net of certain fees,
at the scheduled payment dates regardless of whether or not the mortgagor
actually makes the payment.
The principal governmental guarantor of mortgage-related securities is
GNMA. GNMA is a wholly owned United States Government corporation within the
Department of Housing and Urban Development. GNMA is authorized to guarantee,
with the full faith and credit of the United States Government, the timely
payment of principal and interest on securities issued by institutions approved
by GNMA (such as savings and loan institutions, commercial banks and mortgage
bankers) and backed by pools of Federal Housing Administration insured or
Veterans Administration guaranteed mortgages.
Government-related guarantors whose obligations are not backed by the full
faith and credit of the United States Government include the Federal National
Mortgage Association ("FNMA") and the Federal Home Loan Mortgage Corporation
("FHLMC"). FNMA is a government-sponsored corporation owned entirely by private
stockholders. It is subject to general regulation by the Secretary of Housing
and Urban Development. FNMA purchases conventional (i.e., not insured or
guaranteed by any government agency) residential mortgages from a list of
approved seller/servicers which include state and federally chartered savings
and loan associations, mutual savings banks, commercial banks and credit unions
and mortgage bankers. FHLMC is a government-sponsored corporation formerly
owned by the twelve Federal Home Loan Banks and now owned entirely by private
stockholders. FHLMC issues Participation Certificates ("Pcs") that represent
interests in conventional mortgages from FHLMC's national portfolio. FNMA and
FHLMC guarantee the timely payment of interest and ultimate collection of
principal on securities they issue, but their guarantees are not backed by the
full faith and credit of the United States Government.
Commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers and other secondary market issuers also
create pass-through pools of conventional residential mortgage loans. Such
issuers may, in addition, be the originators and/or servicers of the underlying
mortgage loans as well as the guarantors of the mortgage-related securities.
Pools created by such non-governmental issuers generally offer a higher rate of
interest than government and government-related pools because there are no
direct or indirect government or agency guarantees of payments for such
securities. However, timely payment of interest and principal of these pools
may be supported by various forms of insurance or guarantees, including
individual loan, title, pool and hazard insurance and letters of credit. The
insurance and guarantees are issued by governmental entities, private insurers
and the mortgage poolers. Such insurance and guarantees and the
creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-related security meets a Fund's investment quality
standards. There can be no assurance that the private insurers or guarantors
can meet their obligations under the insurance policies or guarantee
arrangements. Funds may buy mortgage-related securities without insurance or
guarantees if, through an examination of the loan experience and practices of
the originator/servicers and poolers, the Subadviser determines that the
securities meet the Funds' quality standards. Securities issued by certain
private organizations may not be readily marketable.
Mortgage-backed securities that are issued or guaranteed by the U.S.
Government, its agencies or instrumentalities, are not subject to the Funds'
industry concentration restrictions, set forth below under "Investment
Restrictions," by virtue of the exclusion from the test available to all U.S.
Government securities. The Funds will take the position that privately-issued
mortgage-related securities do not represent interests in any particular
"industry" or group of industries. The assets underlying such securities may be
represented by a portfolio of first lien residential mortgages (including both
whole mortgage loans and mortgage participation interests) or portfolios of
mortgage pass-through securities issued or guaranteed by GNMA, FNMA or FHLMC.
Mortgage loans underlying a mortgage-related security may in turn be insured or
guaranteed by the Federal Housing Administration or the
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Department of Veterans Affairs. In the case of private issue mortgage-related
securities whose underlying assets are neither U.S. Government securities nor
U.S. Government-insured mortgages, to the extent that real properties securing
such assets may be located in the same geographical region, the security may be
subject to a greater risk of default than other comparable securities in the
event of adverse economic, political or business developments that may affect
such region and, ultimately, the ability of residential homeowners to make
payments of principal and interest on the underlying mortgages.
Collateralized Mortgage Obligations (CMOs). A CMO is similar to a bond in
that interest and prepaid principal is paid, in most cases, semiannually. CMOs
may be collateralized by whole mortgage loans or by portfolios of mortgage
pass-through securities guaranteed by entities such as GNMA, FHLMC, or FNMA,
and their income streams.
CMOs are typically structured in multiple classes, each bearing a
different stated maturity. Actual maturity and average life will depend upon
the prepayment experience of the collateral. CMOs provide for a modified form
of call protection through a de facto breakdown of the underlying pool of
mortgages according to how quickly the loans are repaid. Monthly payment of
principal received from the pool of underlying mortgages, including
prepayments, is first returned to investors holding the shortest maturity
class. Investors holding the longer maturity classes typically receive
principal only after the first class has been retired. An investor may be
partially guarded against a sooner than desired return of principal because of
the sequential payments.
FHLMC CMOs are debt obligations of FHLMC issued in multiple classes having
different maturity dates and are secured by the pledge of a pool of
conventional mortgage loans purchased by FHLMC. Unlike FHLMC Pcs, payments of
principal and interest on the CMOs are made semiannually rather than monthly.
The amount of principal payable on each semiannual payment date is determined
in accordance with FHLMC's mandatory sinking fund schedule. Sinking fund
payments in the CMOs are allocated to the retirement of the individual classes
of bonds in the order of their stated maturities. Payments of principal on the
mortgage loans in the collateral pool in excess of the amount of FHLMC's
minimum sinking fund obligation for any payment date are paid to the holders of
the CMOs as additional sinking-fund payments. Because of the "pass-through"
nature of all principal payments received on the collateral pool in excess of
FHLMC's minimum sinking fund requirement, the rate at which principal of the
CMOs is actually repaid is likely to be such that each class of bonds will be
retired in advance of its scheduled maturity date. If collection of principal
(including prepayments) on the mortgage loans during any semiannual payment
period is not sufficient to meet FHLMC's minimum sinking fund obligation on the
next sinking fund payment date, FHLMC agrees to make up the deficiency from its
general funds.
CMO Residuals. CMO residuals are derivative mortgage securities issued by
agencies or instrumentalities of the U.S. Government or by private originators
of, or investors in, mortgage loans. As described above, the cash flow
generated by the mortgage assets underlying a series of CMOs is applied first
to make required payments of principal and interest on the CMOs and second to
pay the related administrative expenses of the issuer. The "residual" in a CMO
structure generally represents the interest in any excess cash flow remaining
after making the foregoing payments. Each payment of such excess cash flow to a
holder of the related CMO residual represents income and/or a return of
capital. The amount of residual cash flow resulting from a CMO will depend on,
among other things, the characteristics of the mortgage assets, the coupon rate
of each class of CMO, prevailing interest rates, the amount of administrative
expenses and, in particular, the prepayment experience on the mortgage assets.
In addition, if a series of a CMO includes a class that bears interest at an
adjustable rate, the yield to maturity on the related CMO residual will also be
extremely sensitive to changes in the level of the index upon which interest
rate adjustments are based. As described below with respect to stripped
mortgage-backed securities, in certain circumstances a Fund may fail to recoup
fully its initial investment in a CMO residual.
CMO residuals are generally purchased and sold by institutional investors
through several investment banking firms acting as brokers or dealers. The CMO
residual market has only very recently developed and CMO residuals currently
may not have the liquidity of other more established securities trading in
other markets. CMO residuals may be subject to certain restrictions on
transferability, may be deemed "illiquid," and may be subject to a Fund's
limitations on investment in illiquid securities.
Stripped Mortgage-Backed Securities. Stripped mortgage-backed securities
("SMBS") are derivative multi-class mortgage securities. They may be issued by
agencies or instrumentalities of the U.S. Government, or by private originators
of, or investors in, mortgage loans. SMBS are usually structured with two
classes that receive different proportions of the interest and principal
distributions on a pool of mortgage assets. A common type of SMBS will have one
class receiving some of the interest and most of the principal from the
mortgage assets, while the other class will receive most of the interest and
the remainder of the principal. In the most extreme case, one class will
receive all of the interest (the interest-only or "IO" class), while the other
class will receive all of the principal (the principal-only or "PO" class). The
yield to maturity on an IO class security is extremely sensitive to the rate of
principal payments (including prepayments) on the related underlying mortgage
assets, and a rapid rate of principal payments may have a material adverse
effect on a Fund's yield to maturity from these securities. If the underlying
mortgage assets experience greater than anticipated prepayments of principal, a
Fund may fail to recoup fully its initial investment in these securities even
if the security is in one of the highest rating categories.
Although SMBS are purchased and sold by institutional investors through
several investment banking firms acting as brokers or dealers, these securities
were only recently developed. As a result, established trading markets have not
yet developed and, accordingly, these securities may be deemed "illiquid" and
subject to a Fund's limitations on investment in illiquid securities.
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A Fund may invest in other mortgage-related securities with features
similar to those described above, to the extent consistent with the Fund's
investment objectives and policies.
Other Asset-Backed Securities. Through trusts and other special purpose
entities, various types of securities based on financial assets other than
mortgage loans are increasingly available, in both pass-through structures
similar to mortgage pass-through securities described above and in other
structures more like CMOs. As with mortgage-related securities, these
asset-backed securities are often backed by a pool of financial assets
representing the obligations of a number of different parties. They often
include credit- enhancement features similar to mortgage-related securities.
Financial assets on which these securities are based include automobile
receivables; credit card receivables; loans to finance boats, recreational
vehicles, and mobile homes; computer, copier, railcar, and medical equipment
leases; and trade, healthcare, and franchise receivables. In general, the
obligations supporting these asset-backed securities are of shorter maturities
than mortgage loans and are less likely to experience substantial prepayments.
However, obligations such as credit card receivables are generally unsecured
and the obligors are often entitled to protection under a number of state and
federal consumer credit laws granting, among other things, rights to set off
certain amounts owed on the credit cards, thus reducing the balance due. Other
obligations that are secured, such as automobile receivables, may present
issuers with difficulties in perfecting and executing on the security
interests, particularly where the issuer allows the servicers of the
receivables to retain possession of the underlying obligations, thus increasing
the risk that recoveries on defaulted obligations may not be adequate to
support payments on the securities.
The Subadviser expects additional assets will be "securitized" in the
future. A Fund may invest in any such instruments or variations on them to the
extent consistent with the Fund's investment objectives and policies.
Foreign Securities
Each of the Funds may invest in U.S. Dollar- or foreign
currency-denominated corporate debt securities of foreign issuers (including
preferred or preference stock), certain foreign bank obligations and U.S.
Dollar- or foreign currency-denominated obligations of foreign governments or
their subdivisions, agencies and instrumentalities, international agencies and
supranational entities. Phoenix-Seneca Growth Fund and Phoenix-Seneca Mid-Cap
"EDGE"(SM) Fund may each invest up to 20% of its total assets directly in common
stocks issued by foreign companies or in securities represented by ADRs. Each
Fund will limit its investment in securities denominated in foreign currencies
to no more than 20% of the Fund's total assets.
Investing in the securities of foreign issuers involves special risks and
considerations not typically associated with investing in U.S. companies. These
include differences in accounting, auditing and financial reporting standards,
generally higher commission rates on foreign portfolio transactions, the
possibility of expropriation or confiscatory taxation, adverse changes in
investment or exchange control regulations (which may include suspension of the
ability to transfer currency from a country), political instability which may
affect U.S. investments in foreign countries and potential restrictions on the
flow of international capital. In addition, foreign securities and dividends
and interest payable on those securities may be subject to foreign taxes,
including taxes withheld from payments on those securities. Foreign securities
often trade with less frequency and volume than domestic securities and
therefore may exhibit greater price volatility. Changes in foreign exchange
rates will affect the value of those securities which are denominated or quoted
in currencies other than the U.S. Dollar.
ADRs are dollar-denominated receipts issued generally by domestic banks
and representing the deposit with the bank of a security of a foreign issuer,
and are publicly traded on exchanges or over-the-counter in the United States.
ADRs may be issued as sponsored or unsponsored programs. In sponsored programs,
an issuer has made arrangements to have its securities trade in the form of
ADRs. In unsponsored programs, the issuer may not be directly involved in the
creation of the program. Although regulatory requirements with respect to
sponsored and unsponsored programs are generally similar, in some cases it may
be easier to obtain financial information from an issuer that has participated
in the creation of a sponsored program.
Each of the Funds also may purchase and sell foreign currency options and
foreign currency futures contracts and related options and enter into forward
foreign currency exchange contracts in order to protect against uncertainty in
the level of future foreign exchange rates in the purchase and sale of
securities. The Funds may also use foreign currency options and foreign
currency forward contracts to increase exposure to a foreign currency or to
shift exposure to foreign currency fluctuations from one country to another.
A forward foreign currency exchange contract involves an obligation to
purchase or sell a specific currency at a future date, which may be any fixed
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 may be bought or sold to
protect a Fund against a possible loss resulting from an adverse change in the
relationship between foreign currencies and the U.S. Dollar or to increase
exposure to a particular foreign currency. Open positions in such forward
contracts are covered by the segregation with the Trust's custodian of high
quality short-term investments and are marked to market daily. Although such
contracts are intended to minimize the risk of loss due to a decline in the
value of the currencies being hedged against, at the same time, they tend to
limit any potential gain which might result should the value of such currencies
increase.
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Options and Futures
The Funds may, as described in the Prospectus, purchase and sell (write)
both put options and call options on securities, securities indexes, and
foreign currencies, and enter into interest rate, foreign currency and index
futures contracts and purchase and sell options on such futures contracts
("futures options"). The Funds also may enter into swap agreements with respect
to foreign currencies, interest rates and securities indices. If other types of
options or futures options are traded in the future, a Fund may also use those
instruments, provided that the Trustees determine that their use is consistent
with the Fund's investment objective, and provided that their use is consistent
with restrictions applicable to options and futures contracts currently
eligible for use by the Trust.
Options
The purpose of writing covered put and call options generally is to hedge
against fluctuations in the market value of a Fund's portfolio securities. Each
Fund may purchase or sell call and put options on securities indices for a
similar purpose. Such a hedge is limited to the degree that the extent of the
price change of the underlying security is less than the difference between the
option premium received by the Fund and the option strike price. To the extent
the underlying security's price change exceeds this amount, written put and
call options will not provide an effective hedge.
Writing Call Options. Each Fund may write (sell) covered call options on
securities ("calls") when the Subadviser considers such sales appropriate. When
a Fund writes a call, it receives a premium and grants the purchaser the right
to buy the underlying security at any time during the call period (usually
between three and nine months) at a fixed exercise price regardless of market
price changes during the call period. If the call is exercised, the Fund
forgoes any gain but is not subject to any loss on any change in the market
price of the underlying security relative to the exercise price. A Fund will
write such options subject to any applicable limitations or restrictions
imposed by law.
A written call option is covered if the Fund owns the security underlying
the option. A written call option may also be covered by purchasing an
offsetting option or any other option which, by virtue of its exercise price or
otherwise, reduces the Fund's net exposure on its written option position. In
addition, the Fund may cover such options with any assets, including equity
securities and non-investment grade debt so long as the assets are liquid,
unencumbered and marked to market daily ("liquid assets"), in a segregated
account in amounts sufficient to ensure that it is able to meet its obligations
under the written call should it be exercised. This method does not reduce the
potential loss to the Fund should the value of the underlying security increase
and the option be exercised.
Purchasing Call Options. Each Fund may purchase a call option when the
Subadviser believes the value of the underlying security will rise or to effect
a "closing purchase transaction" as to a call option the Fund has written
(sold). A Fund will realize a profit (or loss) from a closing purchase
transaction if the amount paid to purchase a call is less (or more) than the
amount received from the sale thereof.
Writing Put Options. A put option written by a Fund obligates the Fund to
purchase the specified security at a specified price if the option is exercised
at any time before the expiration date. A written put option may be covered
with liquid assets in a segregated account. While this may help ensure that a
Fund will have sufficient assets to meet its obligations under the option
contract should it be exercised, it will not reduce the potential loss to the
Fund should the value of the underlying security decrease and the option be
exercised.
Purchasing Put Options. A Fund may purchase a put option when the
Subadviser believes the value of the underlying security will decline. A Fund
may purchase put options on securities in its portfolio in order to hedge
against a decline in the value of such securities ("protective puts") or to
effect closing purchase transactions as to puts it has written. A Fund will
realize a profit (or loss) from a closing purchase transaction if the amount
paid to purchase a put is less (or more) than the amount received from the sale
thereof.
Options on Securities Indices. Unlike a stock option, which gives the
holder the right to purchase or sell a specified stock at a specified price, an
option on a securities index gives the holder the right to receive a cash
"exercise settlement amount" equal to (i) the difference between the exercise
price of the option and the value of the underlying securities index on the
exercise date multiplied by (ii) a fixed "index multiplier." Like an option on
a specific security, when a Fund purchases a put or a call option on an index,
it places the entire amount of the premium paid at risk, for if, at the
expiration date, the value of the index has decreased below the exercise price
(in the case of a call) or increased above the exercise price (in the case of a
put), the option will expire worthless.
A securities index fluctuates with changes in the market values of the
stocks included in the index. For example, some securities index options are
based on a broad market index such as the S&P 500. Others are based on a
narrower market index such as the Standard & Poor's 100 Stock Index. Indices
may also be based on an industry or market segment such as the AMEX Oil and Gas
Index or the Computer and Business Equipment Index. Options on securities
indices are currently traded on the Chicago Board Options Exchange, the New
York Stock Exchange ("NYSE") and the American Stock Exchange.
Funds may purchase put options on securities indices to hedge against an
anticipated decline in stock market prices that might adversely affect the
value of a Fund's portfolio securities. If a Fund purchases such a put option,
the amount of the payment it
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would receive upon exercising the option would depend on the extent of any
decline in the level of the securities index below the exercise price. Such
payments would tend to offset a decline in the value of the Fund's portfolio
securities. However, if the level of the securities index increases and remains
above the exercise price while the put option is outstanding, a Fund will not
be able to profitably exercise the option and will lose the amount of the
premium and any transaction costs. Such loss may be partially or wholly offset
by an increase in the value of a Fund's portfolio securities.
A Fund may purchase call options on securities indices in order to
participate in an anticipated increase in stock market prices or to offset
anticipated price increases on securities that it intends to buy in the future.
If a Fund purchases a call option on a securities index, the amount of the
payment it would receive upon exercising the option would depend on the extent
of any increase in the level of the securities index above the exercise price.
Such payments would in effect allow the Fund to benefit from stock market
appreciation even though it may not have had sufficient cash to purchase the
underlying stocks. Such payments may also offset increases in the prices of
stocks that the Fund intends to purchase. If, however, the level of the
securities index declines and remains below the exercise price while the call
option is outstanding, a Fund will not be able to exercise the option
profitably and will lose the amount of the premium and transaction costs. Such
loss may be partially or wholly offset by a reduction in the price a Fund pays
to buy additional securities for its portfolio.
Each of the Funds may write (sell) covered call or put options on a
securities index. Such options may be covered by purchasing an offsetting
option which, by virtue of its exercise price or otherwise, reduces the Fund's
net exposure on its written option position or by owning securities whose price
changes are expected to be similar to those of the underlying index or by
having an absolute and immediate right to acquire such securities without
additional cash consideration or for additional cash consideration (held in a
segregated account by its custodian) upon conversion or exchange of other
securities in their respective portfolios. In addition, the Fund may cover such
options by maintaining liquid assets with a value equal to the exercise price
in a segregated account with the Custodian or by using the other methods
described above.
The extent to which options on securities indices will provide a Fund with
an effective hedge against interest rate or stock market risk will depend on
the extent to which the stocks comprising the indices correlate with the
composition of the Fund's portfolio. Moreover, the ability to hedge effectively
depends upon the ability to predict movements in interest rates or the stock
market. Some options on securities indices may not have a broad and liquid
secondary market, in which case options purchased by the Fund may not be closed
out and the Fund could lose more than its option premium when the option
expires.
The purchase and sale of option contracts is a highly specialized activity
that involves investment techniques and risks different from those ordinarily
associated with investment companies. Transaction costs relating to options
transactions may tend to be higher than the costs of transactions in
securities. In addition, if a Fund were to write a substantial number of option
contracts that are exercised, the portfolio turnover rate of that Fund could
increase.
Foreign Currency Options. A Fund may buy or sell put and call options on
foreign currencies either on exchanges or in the over-the-counter market. A
call option on a foreign currency gives the purchaser of the option the right
to buy a foreign currency at the exercise price until the option expires. A put
option gives the option-holder a similar right to sell the underlying currency.
Currency options traded on U.S. or other exchanges may be subject to position
limits which may limit the ability of a Fund to reduce foreign currency risk
using such options. Over-the-counter options differ from exchange-traded
options in that they are two-party contracts with price and other terms
negotiated between buyer and seller, and generally do not have as much market
liquidity as exchange-traded options.
Futures Transactions
Each Fund may purchase and sell futures contracts for hedging purposes and
in an attempt to increase total return. A futures contract is an agreement
between two parties to buy and sell a security for a set price at a future
time. Each Fund may also enter into index-based futures contracts and interest
rate futures contracts. Futures contracts on indices provide for a final cash
settlement on the expiration date based on changes in the relevant index. All
futures contracts are traded on designated "contract markets" licensed and
regulated by the Commodity Futures Trading Commission (the "CFTC") which,
through their clearing corporations, guarantee performance of the contracts.
Generally, while market interest rates increase, the value of outstanding
debt securities declines (and vice versa). If a Fund holds long-term debt
securities and the Subadviser anticipates a rise in long-term interest rates,
it could, in lieu of disposing of its portfolio securities, enter into futures
contracts for the sale of similar long-term securities. If rates increased and
the value of a Fund's portfolio securities declined, the value of that Fund's
futures contract would increase, thereby preventing net asset value from
declining as much as it otherwise would have. If the Subadviser expects
long-term interest rates to decline, a Fund might enter into futures contracts
for the purchase of long-term securities, so that it could offset anticipated
increases in the cost of such securities it intends to purchase while
continuing to hold higher-yielding short-term securities or waiting or the
long-term market to stabilize. Similar techniques may be used by the Funds to
hedge stock market risk.
Each Fund also may purchase and sell listed put and call options on
futures contracts. An option on a futures contract gives the purchaser the
right, in return for the premium paid, to assume a position in a futures
contract (a long position if the option
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is a call and a short position if the option is a put), at a specified exercise
price at any time during the option period. When an option on a futures
contract is exercised, settlement is effected by the payment of cash
representing the difference between the current market price of the futures
contract and the exercise price of the option. The risk of loss to a Fund
purchasing an option on a futures contract is limited to the premium paid for
the option.
A Fund may purchase put options on futures contracts in lieu of, and for
the same purpose as, its sale of a futures contract: to hedge a long position
in the underlying futures contract. The purchase of call options on futures
contracts is intended to serve the same purpose as the actual purchase of the
futures contract.
A Fund would write a call option on a futures contract in order to hedge
against a decline in the prices of the securities underlying the futures
contracts. If the price of the futures contract at expiration is below the
exercise price, the applicable Fund would retain the option premium, which
would offset, in part, any decline in the value of its portfolio securities.
The writing of a put option on a futures contract is similar to the
purchase of the futures contract, except that, if market price declines, a Fund
would pay more than the market price for the underlying securities. The net
cost to a Fund will be reduced, however, by the premium received on the sale of
the put, less any transaction costs.
Each Fund may engage in "straddle" transactions, which involve the
purchase or sale of combinations of call and put options on the same underlying
securities or futures contracts.
In purchasing and selling futures contracts and related options, each Fund
intends to comply with rules and interpretations of the CFTC and of the SEC.
Limitations on the Use of Futures Contracts and Futures Options
Each Fund will engage in futures and related options transactions only for
bona fide hedging purposes in accordance with CFTC regulations or in an attempt
to increase total return to the extent permitted by such regulations. In
hedging transactions, a Fund will seek to invest in futures contracts and
futures options the prices of which are substantially related to price
fluctuations in securities held by the Fund or which it expects to purchase.
Except as stated below, a Fund's futures transactions will be entered into for
traditional hedging purposes--that is, futures contracts will be sold to
protect against a decline in the price of securities that the Fund owns, or
futures contracts will be purchased to protect the Fund against an increase in
the price of securities it intends to purchase. As evidence of this hedging
intent, the Fund expects that on 75% or more of the occasions on which it takes
a long futures (or option) position (involving the purchase of futures
contracts), a Fund will have purchased, or will be in the process of
purchasing, equivalent amounts of related securities in the cash market at the
time when the futures (or option) position is closed out. However, in
particular cases, when it is economically advantageous for a Fund to do so, a
long futures position may be terminated (or an option may expire) without the
corresponding purchase of securities. As an alternative to compliance with the
bona fide hedging definition, a CFTC regulation permits a Fund to elect to
comply with a different test, under which the sum of the amounts of initial
margin deposits and premiums on its futures positions entered into for the
purpose of seeking to increase total return (net of the amount the positions
were "in the money" at the time of purchase) would not exceed 5% of that Fund's
net assets, after taking into account unrealized gains and losses on such
positions. A Fund will engage in transactions in futures contracts and related
options only to the extent such transactions are consistent with the
requirements of the Internal Revenue Code of 1986, as amended (the "Code"), for
maintaining its qualification as a regulated investment company for Federal
income tax purposes (see "Dividends, Distributions, and Tax Status").
A Fund will be required, in connection with transactions in futures
contracts and the writing of options on futures contracts, to make margin
deposits, which will be held by the Fund's custodian (or a subcustodian) for
the benefit of the merchant through whom a Fund engages in such futures and
options transactions. In the case of futures contracts or options thereon
requiring the Fund to purchase securities, the Fund must segregate liquid
assets in an account maintained by the Custodian to cover such contracts and
options that is marked to market daily.
Special Considerations and Risks Related to Options and Futures Transactions
Exchange markets in options on certain securities are a relatively new and
untested concept. It is impossible to predict the amount of trading interest
that may exist in such options, and there can be no assurance that viable
exchange markets will develop or continue.
The exchanges will not continue indefinitely to introduce new expirations
to replace expiring options on particular issues because trading interest in
many issues of longer duration tends to center on the most recently auctioned
issues. The expirations introduced at the commencement of options trading on a
particular issue will be allowed to run out, with the possible addition of a
limited number of new expirations as the original expirations expire. Options
trading on each issue of securities with longer durations will thus be phased
out as new options are listed on more recent issues, and a full range of
expirations will not ordinarily be available for every issue on which options
are traded.
In the event of a shortage of the underlying securities deliverable on
exercise of an option, the Options Clearing Corporation ("OCC") has the
authority to permit other, generally comparable, securities to be delivered in
fulfillment of option exercise
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obligations. It may also adjust the exercise prices of the affected options by
setting different prices at which otherwise ineligible securities may be
delivered. As an alternative to permitting such substitute deliveries, the OCC
may impose special exercise settlement procedures.
The hours of trading for options on securities may not conform to the
hours during which the underlying securities are traded. To the extent the
markets for underlying securities close before the options markets, significant
price and rate movements can take place in the options markets that cannot be
reflected in the underlying markets. In addition, to the extent that the
options markets close before the markets for the underlying securities, price
and rate movements can take place in the underlying markets that cannot be
reflected in the options markets.
Prior to exercise or expiration, an option position can be terminated only
by entering into a closing purchase or sale transaction. This requires a
secondary market on an exchange for call or put options of the same series.
Similarly, positions in futures may be closed out only on an exchange which
provides a secondary market for such futures. There can be no assurance that a
liquid secondary market will exist for any particular call or put option or
futures contract at any specific time. Thus, it may not be possible to close an
option or futures position. In the event of adverse price movements, a Fund
would continue to be required to make daily payments of maintenance margin for
futures contracts or options on futures contracts position written by that
Fund. A Fund may have to sell portfolio securities at a time when it may be
disadvantageous to do so if it has insufficient cash to meet the daily
maintenance margin requirements. In addition, a Fund may be required to take or
make delivery of the instruments underlying futures contracts it holds. The
inability to close options and futures positions also could have an adverse
impact on a Fund's ability to effectively hedge its portfolios.
Each of the exchanges has established limitations governing the maximum
number of call or put options on the same underlying security (whether or not
covered) that may be written by a single investor, whether acting alone or in
concert with others (regardless of whether such options are written on the same
or different exchanges or are held or written on one or more accounts or
through one or more brokers). An exchange may order the liquidation of
positions found to be in violation of applicable trading limits and it may
impose other sanctions or restrictions. The Trust and other clients advised by
the Subadviser and its affiliates may be deemed to constitute a group for these
purposes. In light of these limits, the Trustees may determine at any time to
restrict or terminate the Funds' transactions in options. The Subadviser does
not believe that these trading and position limits will have any adverse
investment techniques for hedging the Trust's portfolios.
Over-the-counter ("OTC") options are purchased from or sold to securities
dealers, financial institutions or other parties ("Counterparties") through
direct agreement with the counterparty. In contrast to exchange-listed options,
which generally have standardized terms and performance mechanics, all the
terms of an OTC option, including such terms as method of settlement, term,
exercise price, premium, guarantees and security, are set by negotiation of the
parties.
Unless the parties provide for it, there is no central clearing or
guaranty function in the OTC option market. As a result, if the counterparty
fails to make delivery of the security or other instrument underlying an OTC
option it has entered into with a Fund or fails to make a cash settlement
payment due in accordance with the terms of that option, the Fund will lose any
premium it paid for the option as well as any anticipated benefit of the
transaction. Accordingly, the Subadviser must assess the creditworthiness of
each such counterparty or any guarantor or credit enhancement of the
counterparty's credit to determine the likelihood that the terms of the OTC
option will be satisfied. The staff of the SEC currently takes the position
that OTC options purchased by a Fund, and portfolio securities "covering" the
amount of a Fund's obligation pursuant to an OTC option sold by it (the cost of
the sell-back plus the in-the-money amount, if any) are illiquid, and are
subject to each Fund's limitation on investing no more than 15% of its assets
in illiquid securities. However, for options written with "primary dealers" in
U.S. Government securities pursuant to an agreement requiring a closing
transaction at a formula price, the amount considered to be illiquid may be
calculated by reference to a formula price.
The loss from investing in futures transactions is potentially unlimited.
Gains and losses on investments in options and futures depend on the
Subadviser's ability to predict correctly the direction of stock prices,
interest rates and other economic factors. In addition, utilization of futures
in hedging transactions may fail where there is an imperfect correlation in
movements in the price of futures contracts and movements in the price of the
securities which are the subject of the hedge. If the price of the futures
contract moves more or less than the price of the security, a Fund will
experience a gain or loss that will not be completely offset by movements in
the price of the securities which are the subject of the hedge. There is also a
risk of imperfect correlation where the securities underlying futures contracts
have different maturities than the portfolio securities being hedged.
Transactions in options on futures contracts involve similar risks.
Swap Agreements
The Funds may enter into interest rate, index and currency exchange rate
swap agreements in attempts to obtain a particular desired return at a lower
cost to the Fund than if the Fund had invested directly in an instrument that
yielded that desired return. Swap agreements are two-party contracts entered
into primarily by institutional investors for periods ranging from a few weeks
to more than one year. In a standard "swap" transaction, two parties agree to
exchange the returns (or differentials in rates of return) earned or realized
on particular predetermined investments or instruments. The gross returns to be
exchanged or "swapped"
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between the parties are calculated with respect to a "notional amount," i.e.,
the return on or increase in value of a particular dollar amount invested at a
particular interest rate, in a particular foreign currency, or in a "basket" of
securities representing a particular index. The "notional amount" of the swap
agreement is only a fictive basis on which to calculate the obligations the
parties to a swap agreement have agreed to exchange. A Fund's obligations (or
rights) under a swap agreement will generally be equal only to the amount to be
paid or received under the agreement based on the relative values of the
positions held by each party to the agreement (the "net amount"). A Fund's
obligations under a swap agreement will be accrued daily (offset against any
amounts owing to the Fund) and any accrued but unpaid net amounts owed to a
swap counterparty will be covered by the maintenance of a segregated account
consisting of liquid assets to avoid leveraging of the Fund's portfolio. A Fund
will not enter into a swap agreement with any single party if the net amount
owed or to be received under existing contracts with that party would exceed 5%
of the Fund's assets.
Whether a Fund's use of swap agreements enhance the Fund's total return
will depend on the Subadviser's ability correctly to predict whether certain
types of investments are likely to produce greater returns than other
investments. Because they are two-party contracts and may have terms of greater
than seven days, swap agreements may be considered to be illiquid. Moreover, a
Fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The Subadviser will cause a Fund to enter into swap agreements
only with counterparties that would be eligible for consideration as repurchase
agreement counterparties under the Funds' repurchase agreement guidelines.
Certain restrictions imposed on the Funds by the Internal Revenue Code may
limit the Funds' ability to use swap agreements. The swaps market is a
relatively new market and is largely unregulated. It is possible that
developments in the swaps market, including potential government regulation,
could adversely affect a Fund's ability to terminate existing swap agreements
or to realize amounts to be received under such agreements.
Certain swap agreements are exempt from most provisions of the Commodity
Exchange Act ("CEA") and, therefore, are not regulated as futures or commodity
option transactions under the CEA, pursuant to regulations of the CFTC. To
qualify for this exemption, a swap agreement must be entered into by "eligible
participants," which include the following, provided the participants' total
assets exceed established levels: a bank or trust company, savings association
or credit union, insurance company, investment company subject to regulation
under the Investment Company Act of 1940 (the "1940 Act"), commodity pool,
corporation, partnership, proprietorship, organization, trust or other entity,
employee benefit plan, governmental entity, broker-dealer, futures commission
merchant, natural person, or regulated foreign person. To be eligible, natural
persons and most other entities must have total assets exceeding $10 million;
commodity pools and employees benefit plans must have assets exceeding $5
million. In addition, an eligible swap transaction must meet three conditions.
First, the swap agreement may not be part of a fungible class of agreements
that are standardized as to their material economic terms. Second, the
creditworthiness of parties with actual or potential obligations under the swap
agreement must be a material consideration in entering into or determining the
terms of the swap agreement, including pricing, cost or credit enhancement
terms. Third, swap agreements may not be entered into and traded on or through
a multilateral transaction execution facility.
Foreign Currency Exchange-Related Securities
Foreign currency warrants. Foreign currency warrants such as Currency
Exchange Warrants ("CEWs") are warrants that entitle the holder to receive from
the issuer an amount of cash (generally, for warrants issued in the United
States, in U.S. Dollars) that is calculated pursuant to a predetermined formula
and based on the exchange rate between a specified foreign currency and the
U.S. Dollar as of the exercise date of the warrant. Foreign currency warrants
generally are exercisable upon their issuance and expire as of a specified date
and time. Foreign currency warrants have been issued in connection with U.S.
Dollar-denominated debt offerings by major corporate issuers in an attempt to
reduce the foreign currency exchange risk that, from the point of view of
prospective purchasers of the securities, is inherent in the international
fixed-income marketplace. Foreign currency warrants may be used to reduce the
foreign exchange risk assumed by purchasers of a security by, for example,
providing for a supplemental payment in the event the U.S. Dollar depreciates
against the value of a major foreign currency such as the Japanese Yen or
German Deutschemark. The formula used to determine the amount payable upon
exercise of a foreign currency warrant may make the warrant worthless unless
the applicable foreign currency exchange rate moves in a particular direction
(e.g., unless the U.S. Dollar appreciates or depreciates against the particular
foreign currency to which the warrant is linked or indexed). Foreign currency
warrants are severable from the debt obligations with which they may be
offered, and may be listed on exchanges. Foreign currency warrants may be
exercisable only in certain minimum amounts, and an investor wishing to
exercise warrants who possesses less than the minimum number required for
exercise may be required either to sell the warrants or to purchase additional
warrants, thereby incurring additional transaction costs. Upon exercise of
warrants, there may be a delay between the time the holder gives instructions
to exercise and the time the exchange rate relating to exercise is determined,
thereby affecting both the market and cash settlement values of the warrants
being exercised. The expiration date of the warrants may be accelerated if the
warrants should be delisted from an exchange or if their trading should be
suspended permanently, which would result in the loss of any remaining "time
value" of the warrants (i.e., the difference between the current market value
and the exercise value of the warrants), and, if the warrants were
"out-of-the-money," in a total loss of the purchase price of the warrants.
Warrants are generally unsecured obligations of their issuers and are not
standardized foreign currency options issued by the OCC. Unlike foreign
currency options issued by OCC, the terms of foreign exchange warrants
generally will not be amended in the event of governmental or regulatory
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actions affecting exchange rates or in the event of the imposition of other
regulatory controls affecting the international currency markets. The initial
public offering price of foreign currency warrants is generally considerably in
excess of the price that a commercial user of foreign currencies might pay in
the interbank market for a comparable option involving significantly larger
amounts of foreign currencies. Foreign currency warrants are subject to
significant foreign exchange risk, including risks arising from complex
political or economic factors.
Principal exchange rate linked securities. Principal exchange rate linked
securities (or "PERLS") are debt obligations the principal on which is payable
at maturity in an amount that may vary based on the exchange rate between the
U.S. Dollar and a particular foreign currency at or about that time. The return
on "standard" principal exchange rate linked securities is enhanced if the
foreign currency to which the security is linked appreciates against the U.S.
Dollar, and is adversely affected by increases in the foreign exchange value of
the U.S. Dollar; "reverse" PERLS are like the "standard" securities, except
that their return is enhanced by increases in the value of the U.S. Dollar and
adversely impacted by increases in the value of foreign currency. Interest
payments on the securities are generally made in U.S. Dollars at rates that
reflect the degree of foreign currency risk assumed or given up by the
purchaser of the notes (i.e., at relatively higher interest rates if the
purchaser has assumed some of the foreign exchange risk, or relatively lower
interest rates if the issuer has assumed some of the foreign exchange risk,
based on the expectations of the current market). PERLS may in limited cases be
subject to acceleration of maturity (generally, not without the consent of the
holders of the securities), which may have an adverse impact on the value of
the principal payment to be made at maturity.
Performance indexed paper. Performance indexed paper (or "PIPs") is U.S.
Dollar-denominated commercial paper the yield of which is linked to certain
foreign exchange rate movements. The yield to the investor on performance
indexed paper is established at maturity as a function of spot exchange rates
between the U.S. Dollar and a designated currency as of or about that time
(generally, the index maturity two days prior to maturity). The yield to the
investor will be within a range stipulated at the time of purchase of the
obligation, generally with a guaranteed minimum rate of return that is below,
and a potential maximum rate of return that is above, market yields on U.S.
Dollar-denominated commercial paper, with both the minimum and maximum rates of
return on the investment corresponding to the minimum and maximum values of the
spot exchange rate two business days prior to maturity.
Warrants to Purchase Securities
The Funds may invest in or acquire warrants to purchase equity or fixed
income securities. Bonds with warrants attached to purchase equity securities
have many characteristics of convertible bonds and their prices may, to some
degree, reflect the performance of the underlying stock. Bonds also may be
issued with warrants attached to purchase additional fixed income securities at
the same coupon rate. A decline in interest rates would permit a Fund to buy
additional bonds at the favorable rate or to sell the warrants at a profit. If
interest rates rise, the warrants would generally expire with no value.
A Fund will not invest more than 5% of its net assets, valued at the lower
of cost or market, in warrants to purchase securities. Included within that
amount, but not to exceed 2% of the Fund's net assets, may be warrants that are
not listed on the New York Stock Exchange or American Stock Exchange. Warrants
acquired in units or attached to securities will be deemed to be without value
for purposes of this restriction.
Participation Interests
The Phoenix-Seneca Bond Fund may purchase from banks participation
interests in all or part of specific holdings of debt obligations. Each
participation interest is backed by an irrevocable letter of credit or
guarantee of the selling bank that the Subadviser has determined meets the
prescribed quality standards of each Fund. Thus, even if the credit of the
issuer of the debt obligation does not meet the quality standards of the Fund,
the credit of the selling bank will.
Restricted and Illiquid Securities
Each Fund may invest up to 15% of its total assets in "illiquid
investments," including "restricted securities" (i.e., securities that would be
required to be registered prior to distribution to the public), securities that
are not readily marketable, repurchase agreements maturing in more than seven
days and privately issued stripped mortgage-backed securities.
Certain "restricted" securities may be resold to qualified institutional
buyers without restriction pursuant to Rule 144A under the Securities Act of
1933. If a sufficient dealer or institutional trading market exists for such a
security, it may not be considered "illiquid." The Trustees have adopted
guidelines and delegated to the Subadviser the daily function of determining
and monitoring the liquidity of restricted securities and determining whether a
Rule 144A security restricted security should be considered "illiquid." The
Trustees, however, retain oversight and are ultimately responsible for the
determinations. Please see the non-fundamental investment restrictions for
further limitations regarding the Funds' investments in restricted and illiquid
securities.
Short Sales
The Funds may sell securities short as part of their overall portfolio
management strategies involving the use of derivative instruments and to offset
potential declines in long positions in similar securities. A short sale is a
transaction in which a Fund sells a security it does not own or have the right
to acquire (or that it owns but does not wish to deliver) in anticipation that
the market price of that security will decline.
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When a Fund makes a short sale, the broker-dealer through which the short
sale is made must borrow the security sold short and deliver it to the party
purchasing the security. The Fund is required to make a margin deposit in
connection with such short sales; the Fund may have to pay a fee to borrow
particular securities and will often be obligated to pay over any dividends and
accrued interest on borrowed securities.
If the price of the security sold short increases between the time of the
short sale and the time the Fund covers its short position, the Fund will incur
a loss; conversely, if the price declines, the Fund will realize a capital
gain. Any gain will be decreased, and any loss increased, by the transaction
costs described above. The successful use of short selling may be adversely
affected by imperfect correlation between movements in the price of the
security sold short and the securities being hedged.
To the extent a Fund sells securities short, it will provide collateral to
the broker-dealer and (except in the case of short sales "against the box")
will maintain additional asset coverage in the form of liquid assets with its
custodian in a segregated account in an amount at least equal to the difference
between the current market value of the securities sold short and any amounts
required to be deposited as collateral with the selling broker (not including
the proceeds of the short sale). The Funds do not intend to enter into short
sales (other than short sales "against the box") if immediately after such
sales the aggregate of the value of all collateral plus the amount in such
segregated account exceeds one- third of the value of the Fund's net assets.
This percentage may be varied by action of the Trustees. A short sale is
"against the box" to the extent the Fund contemporaneously owns, or has the
right to obtain at no added cost, securities identical to those sold short.
Loans of Portfolio Securities
Each Fund may seek to increase its income by lending portfolio securities.
Under present regulatory policies, such loans may be made to financial
institutions, such as broker-dealers, and must be collateralized continuously
with cash, cash equivalents, irrevocable letters of credit, or U.S. Government
securities maintained on a current basis at an amount at least equal to the
market value of the securities lent. For the duration of a loan, the Fund would
receive the equivalent of the interest or dividends paid by the issuer on the
securities lent and would also receive compensation from the investment of the
collateral. The Fund would not have the right to vote any securities having
voting rights during the existence of the loan, but the Fund could call the
loan in anticipation of an important vote to be taken among holders of the
securities or of the giving or withholding of their consent on a material
matter affecting the investment. As with other extensions of credit, there are
risks of delay in recovery or even loss of rights in the collateral should the
borrower of the securities fail financially. However, the loans would be made
only to firms considered by the Subadviser to be qualified, and when, in the
judgment of the Subadviser, the consideration that can be earned currently from
securities loans of this type justifies the attendant risk. The value of the
securities lent may not exceed one-third of the value of the total assets of
the Fund.
A Fund may pay reasonable negotiated fees to the Custodian in connection
with loaned securities as long as such fees are pursuant to a contract approved
by the Trustees.
INVESTMENT RESTRICTIONS
Each Fund has adopted the following fundamental investment restrictions
which may not be changed without approval of a majority of the applicable
Fund's outstanding voting securities. Under the 1940 Act, and as used in the
prospectus and this Statement of Additional Information, a "majority of the
outstanding voting securities" requires the approval of the lesser of (1) the
holders of 67% or more of the shares of a Fund represented at a meeting of the
holders if more than 50% of the outstanding shares of the Fund are present in
person or by proxy or (2) the holders of more than 50% of the outstanding
shares of the Fund.
A Fund may not:
(1) Issue senior securities, except as permitted by paragraphs 3, 6, and 7
below. For purposes of this restriction, the issuance of shares of beneficial
interest in multiple classes or series, the purchase or sale of options,
futures contracts, forward commitments and reverse repurchase agreements
entered into in accordance with the Fund's investment policies or within the
meaning of paragraph 3 below, are not deemed to be senior securities.
(2) Purchase securities on margin (but the Funds may obtain such
short-term credits as may be necessary for the clearance of transactions);
provided that the deposit or payment of initial or variation margin in
connection with options or futures contracts is not considered the purchase of
securities on margin.
(3) Borrow money, except that a Fund may borrow from banks or enter into
reverse repurchase agreements or dollar rolls up to one-third of the value of
its total assets (calculated when the loan is made) to take advantage of
investment opportunities and may pledge up to one-third of the value of its
total assets to secure such borrowings. Each Fund is also authorized to borrow
an additional 5% of its total assets without regard to the foregoing
limitations for temporary purposes such as the clearance of transactions and
share redemptions. For purposes of this investment restriction, short sales,
the purchase or sale of securities on a "when-issued," delayed delivery or
forward commitment basis, the purchase or sale of options, futures contracts,
and options on futures contracts, securities or indices and collateral
arrangements with respect thereto shall not constitute borrowing.
12
<PAGE>
(4) Act as an underwriter with respect to the securities of other issuers,
except to the extent that in connection with the disposition of portfolio
securities, the Fund may be deemed to be an underwriter for purposes of the
1933 Act; provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with substantially the same
investment objectives, policies and restrictions as the Fund.
(5) Purchase or sell real estate except that the Fund may (i) acquire or
lease office space for its own use, (ii) invest in securities of issuers that
invest in real estate or interests therein, (iii) invest in securities that are
secured by real estate or interests therein, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real estate acquired by the
Fund as a result of the ownership of securities.
(6) Invest in commodities, except that the Fund may purchase and sell
options on securities, securities indices and currency, futures contracts on
securities, securities indices and currency and options on such futures,
forward foreign currency exchange contracts (including, foreign currency
warrants, principal exchange rated linked securities, and performance indexed
paper), forward commitments, securities index put or call warrants and
repurchase agreements entered into in accordance with the Fund's investment
policies, subject to restrictions as may be set forth elsewhere in the
prospectus or this Statement of Additional Information.
(7) Make loans, except that the Fund may (1) lend portfolio securities in
accordance with the Fund's investment policies up to one-third of the Fund's
total assets taken at market value, (2) enter into repurchase agreements, and
(3) purchase all or a portion of an issue of debt securities, bank loan
participation interests, bank certificates of deposit, bankers' acceptances,
debentures or other securities, whether or not the purchase is made upon the
original issuance of the securities.
(8) For each Fund other than the Phoenix-Seneca Real Estate Securities
Fund, purchase the securities of issuers conducting their principal activity in
a single industry if, immediately after such purchase, the value of its
investments in such industry would exceed 25% of its total assets taken at
market value at the time of such investment (except investments in obligations
of the U.S. Government or any of its agencies, instrumentalities or
authorities); provided, however, that the Fund may invest all or part of its
investable assets in an open-end investment company with substantially the same
investment objectives, policies and restrictions as the Fund.
(9) For each Fund other than the Phoenix-Seneca Real Estate Securities
Fund, as to 75% of its total assets, purchase securities of an issuer (other
than the U.S. Government, its agencies, instrumentalities or authorities or
repurchase agreements collateralized by U.S. Government securities and other
investment companies), if:
(1) such purchase would cause more than 5% of the Fund's total assets taken
at market value to be invested in the securities of such issuer; or
(2) such purchase would at the time result in more than 10% of the
outstanding voting securities of such issuer being held by the Fund;
provided, however, that a Fund may, subject to restrictions imposed by the
1940 Act and applicable state laws, invest all or part of its investable
assets in an open-end investment company with substantially the same
investment objectives, policies and restrictions as the Fund. Because it
is a "non-diversified" fund within the meaning of the 1940 Act,
Phoenix-Seneca Real Estate Securities Fund will not be limited in the
proportion of its assets it may invest in the securities of any single
issuer.
For purposes of the above fundamental investment restrictions, the
Subadviser generally classifies issuers by industry in accordance with
classifications set forth in the Standard & Poor's Bond Guide. In the absence
of such classification or if the Subadviser determines in good faith based on
its own information that the economic characteristics affecting a particular
issuer make it more appropriate to be engaged in a different industry, the
Subadviser may classify an issuer according to its own sources.
The Trust has undertaken with a state securities commission that it will
interpret the provisions of investment restriction number (5) to prohibit
investment by the Funds in real estate limited partnerships that are not
publicly traded. To the extent that undertaking is no longer required by the
state securities commission, the Trust may interpret that restriction
differently.
The following restrictions are designated as non-fundamental and may be
changed by the Trustees without the approval of shareholders.
A Fund may not:
(1) Pledge, mortgage or hypothecate its assets, except to secure permitted
borrowings and then only if such pledging, mortgaging or hypothecating does not
exceed one-third of the Fund's total assets taken at market value. Collateral
arrangements with respect to margin, option and other risk management and
when-issued and forward commitment transactions are not deemed to be pledges or
other encumbrances for purposes of this restriction.
(2) Participate on a joint or joint-and-several basis in any securities
trading account. The "bunching" of orders for the sale or purchase of
marketable portfolio securities with other accounts under the management of the
investment adviser or any subadviser to save commissions or to average prices
among them is not deemed to result in a joint securities trading account.
13
<PAGE>
(3) Purchase or retain securities of an issuer if one or more of the
Trustees or officers of the Trust or principals or officers of the investment
adviser, any subadviser or any investment management subsidiary of the
investment adviser individually owns beneficially more than 0.5% and together
own beneficially more than 5% of the securities of such issuer.
(4) Purchase a security of other investment companies, except when the
purchase is part of a plan of merger, consolidation, reorganization or
acquisition or except where such purchase would not result in (i) more than 10%
of the Fund's assets being invested in securities of other investment
companies, (ii) more than 3% of the total outstanding voting securities of any
one such investment company being held by the Fund or (iii) more than 5% of the
Fund's assets being invested in any one such investment company; provided,
however, that the Fund may invest all of its investable assets in an open-end
investment company with substantially the same investment objectives, policies
and restrictions as the Fund.
(5) Invest in securities that are illiquid if, as a result, more than 15%
of its net assets would consist of such securities, including repurchase
agreements maturing in more than seven days, securities that are not readily
marketable, and restricted securities not eligible for resale pursuant to Rule
144A under the 1933 Act; provided, however, that the Fund may invest all or
part of its investable assets in an open-end investment company with
substantially the same investment objectives, policies and restrictions as the
Fund.
(6) Purchase warrants of any issuer, if, as a result of such purchase,
more than 2% of the value of the Fund's total assets would be invested in
warrants that are not listed on the NYSE or American Stock Exchange or more
than 5% of the total assets of the Fund, valued at the lower of cost or current
market value, would be invested in warrants generally, whether or not so
listed. Warrants acquired by the Fund in units with or attached to debt
securities shall be deemed to be without value.
(7) Purchase interests in oil, gas, or other mineral exploration programs
or mineral leases; however, this policy will not prohibit the acquisition of
securities of companies engaged in the production or transmission of oil, gas
or other minerals.
(8) Invest for the purpose of exercising control over or management of any
company; provided that the Fund may do so where it is deemed advisable to
protect or enhance the value of an existing investment; and provided further,
that the Fund may invest all or part of its investable assets in an open-end
investment company with substantially the same investment objectives, policies
and restrictions as the Fund.
(9) Write (sell) options that are not "covered" as described elsewhere in
this Statement of Additional Information or write puts on securities if the
aggregate value of the obligations underlying the puts exceeds 50% of the
Fund's net assets.
(10) Buy and sell puts and calls on securities, stock index futures or
options on stock index futures or financial futures or options on financial
futures if (i) the aggregate premiums paid on all such options which are held
at any time exceed 20% of the Fund's aggregate net assets and (ii) the
aggregate margin deposits required on all such futures or options thereon held
at any time exceed 5% of the Fund's total assets.
(11) Purchase puts, calls, straddles, spreads, or any combination thereof
if by reason thereof, the value of its aggregate investment in such classes of
securities (other than protective puts) will exceed 5% of its net assets.
(12) Make short sales of securities or maintain a short position, unless
at all times when a short position is open, the Fund owns an equal amount of
the securities or securities convertible into or exchangeable for, without
payment of any further consideration, securities of the same issue as, and
equal in amount to, the securities sold short.
Each Fund may, notwithstanding any other fundamental or non-fundamental
investment restriction or policy, invest all of its assets in the securities of
a single open-end investment company with substantially the same fundamental
investment objectives, restrictions and policies as the Fund.
Except as to the 300% asset coverage required by fundamental restriction
number (3), if a percentage restriction on investment or utilization of assets
as set forth above is adhered to at the time an investment is made, a later
change in percentage resulting from changes in the values of a Fund's assets
will not be considered a violation of the restriction. Notwithstanding the
foregoing, if a Fund's investment in illiquid securities exceeds 15% of its net
assets, whether through a change in values, net assets, or otherwise, the Fund
will take appropriate steps to protect liquidity, including the orderly
liquidation of illiquid securities in a manner consistent with the realization
of the maximum value of those assets.
Pursuant to a restriction imposed by a state securities commission, the
investment adviser waives its fee on all assets of any Fund invested in shares
of other open-end investment management companies pursuant to investment
restriction (4), above.
In order to permit the sale of shares of the Funds in certain states, the
Trustees may, in their sole discretion, adopt restrictions on investment policy
more restrictive than those described above. Should the Trustees determine that
any such more restrictive policy is no longer in the best interest of a Fund
and its shareholders, the Fund may cease offering shares in the state involved
and the Trustees may revoke such restrictive policy. Moreover, if the states
involved shall no longer require any such restrictive policy, the Trustees may,
in their sole discretion, revoke such policy.
14
<PAGE>
CALCULATION OF THE FUNDS' PERFORMANCE
Total Return
The average annual total return on Shares of each Class of each Fund is
determined for a particular period by calculating the actual dollar amount of
the investment return on a $1,000 investment in Shares of that Class of the
Fund made at the net asset value of such Shares at the beginning of the period,
and then calculating the annual compounded rate of return that would produce
that amount. Total return for a period of one year is equal to the actual
return of Shares of that Class of the Fund during that period. The following
formula describes the calculation:
ERV = P(1+T)(n)
Where:
P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 investment made
at the beginning of the indicated period.
This calculation assumes that (i) all dividends and distributions are
reinvested at net asset value on the reinvestment dates during the period and
(ii) all recurring fees are included for applicable periods.
Each Fund may illustrate in advertisements and sales literature the
average annual total return and cumulative total return for several time
periods throughout the Fund's life based on an assumed initial investment of
$1,000. Any such cumulative total return for a Fund will assume the
reinvestment of all income dividends and capital gains distributions for the
indicated periods and will include all recurring fees.
The average annual total returns for the one year period ended September
30, 1998 were as follows:
<TABLE>
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
------------ ------------ --------- --------
<S> <C> <C> <C> <C>
Phoenix-Seneca Bond Fund 9.44% N/A NA NA
Phoenix-Seneca Growth Fund 8.48% 2.81% NA NA
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund (4.22)% (9.25)% NA NA
Phoenix-Seneca Real Estate Securities Fund (18.33)% (23.33)% NA NA
</TABLE>
The average annual total returns for the period from commencement of
investment operations through September 30, 1998 were as follows:
<TABLE>
<CAPTION>
Class X Class A Class B Class C
Shares Shares Shares Shares
--------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Phoenix-Seneca Bond Fund 9.69% (4.26)% (4.66)% (0.71)%
Phoenix-Seneca Growth Fund 28.36% 25.00% (17.80)% (14.39)%
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund 20.03% 17.34% (23.94)% (20.80)%
Phoenix-Seneca Real Estate Securities Fund 8.98% 5.81% (16.35)% (12.85)%
</TABLE>
Yield
The 30-day yield quotation as to a Class of Shares of the Phoenix-Seneca
Bond Fund and the Phoenix-Seneca Real Estate Securities Fund may be computed by
dividing the net investment income for the period as to shares of that class by
the net asset value of each share of that Class on the last day of the period,
according to the following formula:
YIELD = 2[(a-b + 1)(6)-1]
----
cd
Where:
a = dividends and interest earned during the period.
b = net expenses accrued for the period.
c = the average daily number of shares of the Class outstanding during
the period that were entitled to receive dividends.
d = the maximum offering price per share of the Class (net asset value
per share) on the last day of the period.
15
<PAGE>
The yields for the 30-day period ended September 30, 1998 were as follows:
<TABLE>
<CAPTION>
Class B Shares Class C Shares Class X Shares Class A Shares
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Phoenix-Seneca Bond Fund 4.42% 4.30% 6.27% 4.72%
Phoenix-Seneca Real Estate Securities Fund 3.40% 3.41% 5.45% 3.13%
</TABLE>
Return for a Fund is not fixed or guaranteed and will fluctuate from time
to time, unlike bank deposits or other investments which pay a fixed yield or
return for a stated period of time, and do not provide a basis for determining
future returns. Return is a function of portfolio quality, composition,
maturity and market conditions as well as the expenses allocated to each Class
of each Fund. The return of a Class may not be comparable to other investment
alternatives because of differences in the foregoing variables and differences
in the methods used to value portfolio securities, compute expenses and
calculate return.
Other Quotations, Comparisons, and General Information
From time to time, in advertisements, in sales literature, or in reports
to shareholders, the past performance of a Fund may be illustrated and/or
compared with that of other mutual funds with similar investment objectives,
and to stock or other relevant indices. For example, total return of a Fund's
Classes may be compared to averages or rankings prepared by Lipper Analytical
Services, Inc., a widely recognized independent service that monitors mutual
fund performance; the Lehman Brothers Government/ Corporate Index, an
unmanaged index of consisting of a mixture of government and corporate bonds
rated within "investment grade" categories by S&P or Moody's; the Morgan
Stanley Europe, Australia, Far East Index ("EAFE"), an unmanaged index of
international stock markets, the S&P Mid-Cap Index, an unmanaged index of
common stocks; the S&P 500 Index, an unmanaged index of common stocks; the
Russell 2000 Index (the "Russell 2000"), an unmanaged index of common stocks;
the Russell 3000 Index (the "Russell 3000"), an unmanaged index of common
stocks; or the Dow Jones Industrial Average, an unmanaged index of common
stocks of 30 industrial companies listed on the NYSE. The performance of the
Phoenix-Seneca Real Estate Securities Fund may be compared to the Wilshire Real
Estate Securities Index, an unmanaged index consisting of publicly-traded REITs
and real estate operating companies.
The S&P 500 Index is an unmanaged index of 500 common stocks traded on the
NYSE, American Stock Exchange and the Nasdaq National Market. The S&P 500
represents approximately 70% of the total domestic U.S. equity market
capitalization. The S&P Mid-Cap Index is an unmanaged index of common stocks of
400 companies with mid-size market capitalizations--$300 million to $5 billion.
The S&P 500 and the S&P Mid-Cap Indices are market value-weighted indices
(shares outstanding times stock price) in which each company's influence on the
respective index is directly proportional to its market value. The companies in
the S&P 500 Index and the S&P Mid-Cap Index are selected from four major
industry sectors: industrials, utilities, financials and transportation. The
500 companies chosen for the S&P 500 Index are not the 500 largest companies in
terms of market value. Rather, the companies chosen by S&P for inclusion in the
S&P 500 tend to be leaders in important industries within the U.S. economy. The
Russell 2000 is an unmanaged index of 2000 common stocks of small
capitalization companies. The Russell 2000 is composed of the 2000 smallest
companies with respect to capitalization in the Russell 3000 and represents
approximately 70% of the Russell 3000 total market capitalization. The Russell
3000 is an unmanaged index of 3000 common stocks of large United States
companies with market capitalizations ranging from approximately $60 million to
$80 billion. The Russell 3000 represents approximately 98% of the United States
equity market. The Wilshire Real Estate Securities Index is an unmanaged,
market-capitalization-weighted index consisting of publicly-traded REITs and
real estate operating companies. It excludes healthcare and other
"special-purpose" REITs. It is rebalanced monthly and reconstituted quarterly.
In addition, the performance of the Classes of a Fund may be compared to
alternative investment or savings vehicles and/or to indexes or indicators of
economic activity, e.g., inflation or interest rates. Performance rankings and
listings reported in newspapers or national business and financial
publications, such as Changing Times, Forbes, Fortune, Money, Barrons, Business
Week, Investor's Daily, Stanger's Mutual Fund Monitor, The Stanger Register,
Stanger's Investment Adviser, The Wall Street Journal, The New York Times,
Consumer Reports, Registered Representative, Financial Planning, Financial
Services Weekly, Financial World, U.S. News and World Report, Standard & Poor's
The Outlook, and Personal Investor may also be cited (if a Fund is listed in
such a publication) or used for comparison, as well as performance listings and
rankings from various other sources, including Bloomberg Financial Systems,
CDA/Wiesenberger Investment Companies Service, Donoghue's Mutual Fund Almanac,
Investment Company Data, Inc., Johnson's Charts, Kanon Bloch Carre & Co.,
Micropal, Inc., Morningstar, Inc., Schabacker Investment Management and Towers
Data Systems.
In addition, from time to time, quotations from articles from financial
publications, such as those listed above, may be used in advertisements, in
sales literature or in reports to shareholders of the Funds. The Trust may also
present, from time to time, historical information depicting the value of a
hypothetical account in one or more Classes of a Fund since the Fund's
inception.
In presenting investment results, the Trust may also include references to
certain financial planning concepts, including (a) an investor's need to
evaluate his financial assets and obligations to determine how much to invest;
(b) his need to analyze the objectives of various investments to determine
where and when to invest; and (c) his need to analyze his time frame for future
capital needs to determine how to invest. The investor controls these three
factors, all of which affect the use of investments in building assets. The
Adviser's and Administrator's agreement to limit each Fund's operating expenses
will increase investment performance.
16
<PAGE>
ADVISORY SERVICES
Investment Adviser
Overall responsibility for the management and supervision of the Trust and
the Funds rests with the Trustees of Phoenix-Seneca Funds (the "Trustees").
Phoenix Investment Counsel, Inc. ("PIC") is the investment adviser for the
Phoenix-Seneca Funds pursuant to an Investment Advisory Agreement. PIC's
services under its Investment Advisory Agreement and PEPCO's services under its
Administration Agreement with the Trust are subject to the direction of the
Trustees. The Funds' Subadviser is Seneca Capital Management, LLC ("Seneca").
Its principal offices are located at 909 Montgomery Street, San Francisco,
California 94133. Seneca's services under the Subadvisory Agreement are subject
to the direction of both the Trustees and PIC.
PIC is located at 56 Prospect Street, Hartford, Connecticut 06115-0480. PIC
was originally organized in 1932 as John P. Chase, Inc. As of December 31, 1998,
PIC had approximately $23.9 billion in assets under management. All of the
outstanding stock of PIC is owned by Phoenix Equity Planning Corporation
("PEPCO"), a subsidiary of Phoenix Investment Partners, Ltd. (previously Phoenix
Duff & Phelps Corporation). Phoenix Home Life is a majority shareholder of
Phoenix Investment Partners, Ltd. Phoenix Home Life is in the business of
writing ordinary and group life and health insurance and annuities. Its
principal offices are located at One American Row, Hartford, Connecticut 06115.
Phoenix Investment Partners, Ltd. is a New York Stock Exchange traded company
that provides various financial advisory services to institutional investors,
corporations and individuals through operating subsidiaries.
Phoenix Investment Partners, Ltd. is the 10th largest publicly traded
investment company in the nation, and has served investors for over 70 years.
It manages approximately $50 billion in assets through its investment partners:
Aberdeen Fund Managers, Inc. (Aberdeen) in Aberdeen, London, Singapore and Fort
Lauderdale; Duff & Phelps Investment Management Co. (Duff & Phelps) in Chicago
and Cleveland; Roger Engemann & Associates, Inc. (Engemann) in Pasadena; Seneca
Capital Management LLC (Seneca) in San Francisco; and Phoenix Investment
Counsel, Inc. (Goodwin, Hollister and Oakhurst divisions) in Hartford,
Sarasota, and Scotts Valley, CA, respectively.
Pursuant to the Investment Advisory Agreement, the Adviser: (a) supervises
and assists in the management of the assets of each Fund, furnishes each Fund
with research, statistical and advisory services and provides regular reports
to the Trustees; (b) provides advice and assistance with the operations of the
Trust, compliance support, preparation of the Trust's registration statements,
proxy materials and other documents and advice and assistance of the Adviser's
General Counsel; and (c) furnishes office facilities, personnel necessary to
provide advisory services to the Funds, personnel to serve without salaries as
officers or agents of the Trust and compensation and expenses of any Trustees
who are also full-time employees of the Adviser or any of its affiliates.
Pursuant to the Subadvisory Agreement, PIC has delegated to Seneca the
responsibility for making investment decisions for the Funds and selecting
brokers and dealers to execute transactions for each Fund.
Under a Subadvisory Agreement with PIC and the Trust, Seneca's duties to
each Fund include: (1) supervising and managing the investments of that Fund and
directing the purchase and sale of its investments; and (2) ensuring that
investments follow the investment objective, strategies, and policies of that
Fund and comply with government regulations. Seneca has approximately 40
full-time employees and acts as investment adviser or manager for approximately
$5.9 billion of institutional and private investment accounts as of December 31,
1998.
In managing the assets of the Funds, the Subadviser furnishes continuously
an investment program for each Fund consistent with the investment objectives
and policies of that Fund. More specifically, the Subadviser determines from
time to time what securities shall be purchased for the Fund, what securities
shall be held or sold by the Fund and what portion of the Fund's assets shall
be held uninvested as cash, subject always to the provisions of the Trust's
Agreement and Declaration of Trust, By-Laws and its registration statement
under the 1940 Act and under the 1933 Act covering the Trust's shares, as filed
with the SEC, and to the investment objectives, policies and restrictions of
the Fund, as each of the same shall be from time to time in effect, and
subject, further, to such policies and instructions as the Trustees of the
Trust may from time to time establish. To carry out such determinations, the
Subadviser places orders for the investment and reinvestment of each Fund's
assets (see "Portfolio Brokerage").
For its investment advisory services under the Investment Advisory
Agreement, the Adviser receives a fee, payable monthly, from Phoenix-Seneca
Growth Fund equal to 0.70% per annum of such Fund's average daily net assets,
from Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund equal to 0.80% per annum of such
Fund's average daily net assets, from Phoenix-Seneca Bond Fund equal to 0.50%
per annum of such Fund's average daily net assets, and from Phoenix-Seneca Real
Estate Securities Fund equal to 0.85% per annum of such Fund's average daily net
assets. The Adviser pays the Subadviser a fee of 0.35% for the Phoenix-Seneca
Growth Fund, 0.40% for the Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund, 0.25% for the
Phoenix-Seneca Bond Fund, and 0.425% for the Phoenix-Seneca Real Estate
Securities Fund, respectively, of such Fund's average daily net assets.
For the fiscal year ended September 30, 1998, PIC and Seneca earned
investment management fees of $69,747, $307,240, $100,384 and $242,177 for
services to Phoenix-Seneca Bond Fund, Phoenix-Seneca Growth Fund,
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund and Phoenix-Seneca Real Estate Securities
Fund, respectively. For the fiscal year ended September 30, 1998, PIC, and
Seneca in its former capacity of investment adviser, reimbursed $12,142,
$8,845, $36,648 and $8,695 for the Phoenix-Seneca Bond Fund, Phoenix-Seneca
Growth Fund, Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund and Phoenix-Seneca Real
Estate Securities Fund, respectively.
17
<PAGE>
For the fiscal year ended September 30, 1997, Seneca and the former
investment manager, GMG/Seneca Capital Management, L.P. ("GMG/Seneca"), earned
investment management fees of $200,056, $89,157, $34,294 and $164,147 for
services rendered to Phoenix-Seneca Growth Fund, Phoenix-Seneca Mid-Cap
"EDGE"(SM) Fund, Phoenix-Seneca Bond Fund and Phoenix-Seneca Real Estate
Securities Fund, respectively. For the fiscal year ended September 30, 1997,
Seneca and GMG/Seneca reimbursed $5,174 for the Phoenix-Seneca Growth Fund,
$135,798 for the Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund, $126,387 for the
Phoenix-Seneca Bond Fund and $16,628 for the Phoenix-Seneca Real Estate
Securities Fund.
For the period ended September 30, 1996, Seneca and GMG/Seneca earned
investment management fees of $30,334, $18,471, $6,283, and $1,630 for services
rendered to Phoenix-Seneca Growth Fund, Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund,
Phoenix-Seneca Bond Fund and Phoenix-Seneca Real Estate Securities Fund,
respectively. Each of these fees was waived in its entirety by Seneca and
GMG/Seneca.
The management fees are accrued daily and will be prorated with respect to
any Fund if the Adviser shall not have acted as that Fund's investment adviser
during any entire monthly period. The Investment Advisory Agreement provides
that if the operating expenses of a Fund in any year, excluding taxes,
brokerage commissions, interest, and extraordinary expenses, exceed the expense
limits set by state securities law administrators in states in which that
Fund's shares are sold, the Adviser will reimburse the amount of such excess.
Recent federal legislation preempts states' abilities in most circumstances to
impose such expense limits.
The Adviser and the Administrator have voluntarily agreed to reimburse the
Funds' operating expenses through July 1, 2000 to prevent total operating
expenses from exceeding, on an annualized basis, the following:
<TABLE>
<CAPTION>
Fund Class X Class A Class B Class C
- ------------------------------------ --------- --------- --------- ----------
<S> <C> <C> <C> <C>
Bond Fund 1.85% 2.45% 3.20% 3.20%
Growth Fund 1.25% 1.85% 2.60% 2.60%
Mid-Cap "EDGE"(SM) Fund 2.10% 2.70% 3.45% 3.45%
Real Estate Securities Fund 2.35% 3.05% 3.80% 3.80%
</TABLE>
The Adviser and the Administrator may discontinue or modify any such waivers or
reimbursements it may provide in the future at its discretion.
Under the Investment Advisory Agreement, PIC is not liable to the Trust or
any shareholder for any error of judgment or mistake of law or any loss
suffered by the Trust or any shareholder in connection with the Investment
Advisory Agreement, except a loss resulting from PIC's willful misfeasance, bad
faith, gross negligence or reckless disregard of duty. Under the Subadvisory
Agreement, Seneca is not liable for actions taken in its best professional
judgment, in good faith and believed by it to be authorized, provided such
actions are not in breach of the Funds' investment objectives, policies and
restrictions or the result of willful misfeasance, bad faith, gross negligence
or breach of duty or obligations.
The Investment Advisory Agreement may be modified or amended only with the
approval of the holders of a majority of the applicable Fund's outstanding
shares and by a vote of the majority of the Trustees who are not "interested
persons" (as defined in the 1940 Act) (the "Independent Trustees"). The
Subadvisory Agreement may be amended at any time by written agreement among the
Subadviser, the Adviser and the Trust, except that any changes to the duties of
and fees payable to the Subadviser will also be subject to the approval of the
Trustees and a majority of the applicable Fund's outstanding shares. Unless
terminated, the Investment Advisory Agreement and the Subadvisory Agreement
continue in full force and effect until June 30, 2000, and for successive
periods of one year thereafter, but only as long as each such continuance is
approved annually by a majority vote of the Trustees or by a vote of the
holders of a majority of the outstanding shares of the applicable Fund, but in
either event it also must be approved by a vote of a majority of the
Independent Trustees, cast in person at a meeting called for the purpose of
voting on such approval. The Investment Advisory Agreement and the Subadvisory
Agreement may be terminated without penalty by any party upon 60 days' written
notice and automatically terminates in the event of its assignment. In the
event of termination, or at the request of PIC, the Trust and the Funds will
eliminate all reference to "Phoenix" from their names. Upon such request, PIC
has agreed to submit the question of continuing the Investment Advisory
Agreement to a vote of the shareholders of the Trust. In the event of
termination, or at the request of Seneca, the Trust and the Funds will
eliminate all references to "Seneca" from their names. Upon such request,
Seneca has agreed to submit the question of continuing the Subadvisory
Agreement to a vote of the shareholders of the Trust.
Gail P. Seneca, President and Trustee of the Trust, Sandra J. Westhoff,
Treasurer of the Trust, and Thomas N. Steenburg, Secretary of the Trust, are
each an "affiliated person" of the Trust (as defined in the 1940 Act). Gail P.
Seneca, as Chief Executive and Investment Officer and owner of more than 5% of
the equity of Seneca, and Sandra J. Westhoff, as Chief Operating Officer of
Seneca, are each an "affiliated person" of Seneca. Thomas N. Steenburg, as Vice
President, Secretary and Counsel of PIC and Secretary, General Counsel and
Compliance Officer of Seneca, is an "affiliated person" of PIC and Seneca.
In the management of the Trust and their other accounts, the Subadviser
allocates investment opportunities to all accounts for which they are, in the
Subadviser's judgment, appropriate, subject to the availability of cash in any
particular account and the
18
<PAGE>
final decision of the individual or individuals in charge of such accounts.
Where market supply is inadequate for a distribution to all such accounts,
securities are generally allocated in proportion to net assets. In some cases
this procedure may have an adverse effect on the price or volume of the
security as far as the Funds are concerned. See also "Portfolio Brokerage."
In an attempt to avoid any potential conflict with portfolio transactions
for the Funds, the Adviser, Subadviser and the Trust, on behalf of each Fund,
have adopted restrictions on personal securities trading by personnel of the
Adviser, Subadviser and their affiliates. These restrictions include:
pre-clearance of all personal securities transactions and a prohibition on
purchasing initial public offerings of securities.
Each Fund bears all expenses of its own operation (subject to the expense
limitations described above), which expenses include: (i) fees and expenses of
any investment adviser or administrator of the Fund; (ii) organization expenses
of the Trust; (iii) fees and expenses incurred by the Fund in connection with
membership in investment company organizations; (iv) brokers' commissions; (v)
payment for portfolio pricing services to a pricing agent, if any; (vi) legal,
accounting or auditing expenses; (vii) interest, insurance premiums, taxes or
governmental fees; (viii) fees and expenses of the transfer agent of the Funds;
(ix) the cost of preparing stock certificates or any other expenses, including,
without limitation, clerical expenses of issue, redemption or repurchase of
shares of the Fund; (x) the expenses of and fees for registering or qualifying
shares of the Funds for sale and of maintaining the registration of the Funds;
(xi) a portion of the fees and expenses of Trustees who are not affiliated with
the Adviser or Subadviser; (xii) the cost of preparing and distributing reports
and notices to existing shareholders, the SEC and other regulatory authorities;
(xiii) fees or disbursements of custodians of the Funds' assets, including
expenses incurred in the performance of any obligations enumerated by the
Agreement and Declaration of Trust or By-Laws of the Trust insofar as they
govern agreements with any such custodian; (xiv) costs in connection with
annual or special meetings of shareholders, including proxy material
preparation, printing and mailing; (xv) litigation and indemnification expenses
and other extraordinary expenses not incurred in the ordinary course of the
Funds' business; and (xvi) distribution fees and service fees applicable to
each class of shares.
The Funds' Investment Advisory and Subadvisory Agreements each provide
that the Adviser and Subadviser may render similar services to others so long
as the services provided thereunder are not impaired thereby.
THE DISTRIBUTOR
PEPCO also acts as the Distributor for the Funds and as such will conduct
a continuous offering pursuant to a "best efforts" arrangement requiring it to
take and pay for only such securities as may be sold to the public. PEPCO is an
indirect wholly-owned subsidiary of Phoenix Home Life and an affiliate of the
Adviser and Subadviser. Shares of the Funds may be purchased through investment
dealers who have sales agreements with the Distributor.
For the fiscal year ended September 30, 1998, purchasers of shares of the
Funds paid aggregate sales charges of $14,891, of which the distributor received
net commissions of $1,566 for its services, the balance being paid to dealers.
The Underwriting Agreement may be terminated at any time on not more than
60 days written notice, without payment of a penalty, by the Distributor, by
vote of a majority of the appropriate Class of outstanding voting securities of
the Funds, or by vote of a majority of the Funds' Trustees who are not parties
to the Underwriting Agreement or "interested persons" of any party and who have
no direct or indirect financial interest in the operation of the distribution
plans or in any related agreements. The Underwriting Agreement will terminate
automatically in the event of its assignment.
Dealers with whom the Distributor has entered into sales agreements
receive a discount or commission as set forth below.
<TABLE>
<CAPTION>
Dealer Discount
Sales Charge Sales Charge or Agency Fee
Amount of Transaction as Percentage as Percentage as Percentage of
at Offering Price of Offering Price of Amount Invested Offering Price
- ---------------------------------- ------------------- -------------------- -----------------
<S> <C> <C> <C>
Less than $50,000 4.75% 4.99% 4.25%
$50,000 but under $100,000 4.50% 4.71% 4.00%
$100,000 but under $250,000 3.50% 3.63% 3.00%
$250,000 but under $500,000 3.00% 3.09% 2.75%
$500,000 but under $1,000,000 2.00% 2.04% 1.75%
$1,000,000 or more None None None
</TABLE>
In addition to the dealer discount on purchases of Class A Shares, the
Distributor intends to pay investment dealers a sales commission of 4% of the
sale price of Class B Shares and a sales commission of 1% of the sale price of
Class C Shares sold by such dealers. Your broker, dealer or investment adviser
may also charge you additional commissions or fees for their services in
selling shares to you provided they notify the Distributor of their intention
to do so.
Dealers and other entities who enter into special arrangements with the
Distributor may receive compensation for the sale and promotion of shares of
the Funds and/or for providing other shareholder services. Depending on the
nature of the services, these fees may be paid either from the Funds through
distribution fees, service fees or transfer agent fees or in some cases, the
Distributor may
19
<PAGE>
pay certain fees from its own profits and resources. From its own profits and
resources, the Distributor does intend to: (a) sponsor training and educational
meetings and provide additional compensation to qualifying dealers in the form
of trips, merchandise or expense reimbursements; (b) from time to time pay
special incentive and retention fees to qualified wholesalers, registered
financial institutions and third party marketers; (c) pay broker/dealers an
amount equal to 1% of the first $3 million of Class A Share purchases by an
account held in the name of a qualified employee benefit plan with at least 100
eligible employees, 0.50% on the next $3 million, plus 0.25% on the amount in
excess of $6 million; and (d) excluding purchases as described in (c) above,
pay broker/dealers an amount equal to 1% of the amount of Class A Shares sold
above $1 million but under $3 million, 0.50% on the next $3 million, plus 0.25%
on the amount in excess of $6 million. If part or all of such investment,
including investments by qualified employee benefit plans, is subsequently
redeemed within one year of the investment date, the broker-dealer will refund
to the Distributor such amounts paid with respect to the investment. In
addition, the Distributor may pay the entire applicable sales charge on
purchases of Class A Shares to selected dealers and agents. Any dealer who
receives more than 90% of a sales charge may be deemed to be an "underwriter"
under the Securities Act of 1933.
Administrative Services
Equity Planning also acts as administrative agent of the Trust and as such
performs administrative, bookkeeping and pricing functions for the Funds. For
its services, Equity Planning will be paid a fee equal to the sum of (1) the
documented cost of fund accounting and related services provided by PFPC Inc.,
as subagent, plus (2) the documented cost to Equity Planning to provide
financial reporting and tax services and to oversee the subagent's performance.
The current fee schedule of PFPC Inc. is based upon the average of the
aggregate daily net asset values of each Fund, at the following incremental
annual rates.
<TABLE>
<S> <C>
First $200 million .085%
$200 million to $400 million .05%
$400 million to $600 million .03%
$600 million to $800 million .02%
$800 million to $1 billion .015%
Greater than $1 billion .0125%
</TABLE>
Percentage rates are applied to the aggregate daily net asset values of
the Funds. PFPC Inc. also charges minimum fees and additional fees for each
additional class of fund shares. Equity Planning retains PFPC Inc. as subagent
for each of the funds for which Equity Panning serves as administrative agent.
PFPC Inc. agreed to a modified fee structure and waived certain charges.
Because PFPC Inc.'s arrangement would have favored smaller funds over larger
funds, Equity Planning reallocates PFPC Inc.'s overall asset-based charges
among all funds for which it serves as administrative agent on the basis of the
relative net assets of each fund. As a result, the PFPC Inc. charges to the
Funds are expected to be slightly less than the amount that would be found
through direct application of the table illustrated above.
Under a prior administration agreement in effect through December 31,
1998, PEPCO received a fee for administrative services based on the sum of (i)
.08% of the first $125 million average net assets, plus (ii) .06% of the next
$125 million average net assets, plus (iii) .04% of the average net assets
above $250 million, subject to a minimum fee of $55,000. Additionally, PEPCO
was entitled to $5,000 annually for each class of shares of each Fund for
performing Blue Sky and certain other administrative services. For
administrative services during the fiscal year ended September 30, 1998, PEPCO
and Seneca received $216,843.
DISTRIBUTION PLANS
The Funds have adopted separate distribution plans under Rule 12b-1 of the
1940 Act for each Class of Shares of the Funds other than Class X (the "Class A
Plan," the "Class B Plan," the "Class C Plan" and collectively the "Plans").
The Plans require the Funds to pay the Distributor for furnishing shareholder
services and to permit the Funds to reimburse the Distributor for expenses
incurred in connection with activities intended to promote the sale of shares
of each Class of Shares of the Funds.
Pursuant to the Plans, the Funds pay the Distributor 0.25% annually of the
average daily net assets of the Funds' Class A, Class B and Class C Shares for
furnishing shareholder services and reimburse the Distributor monthly for
actual distribution related expenses of the Distributor up to 0.75% annually of
the average daily net assets of the Funds' Class B and Class C Shares.
Expenditures under the Plans for sale and promotion consist of: (i) commissions
to sales personnel for selling shares of the Funds (including underwriting
commissions and finance charges related to the payment of commissions); (ii)
compensation, sales incentives and payments to sales, marketing and service
personnel; (iii) payments to broker-dealers and other financial institutions
which have entered into agreements with the Distributor in the form of the
Dealer Agreement for Phoenix Funds for services rendered in connection with the
sale and distribution of shares of the Funds; (iv) payment of expenses incurred
in sales and promotional activities, including advertising expenditures related
to the Funds; (v) the costs of preparing and distributing promotional
materials; (vi) the cost of printing the Funds' Prospectus and Statement of
Additional Information for distribution to potential investors; and (vii) such
other similar services that the Trustees of the Trust determine are reasonably
calculated to result in the sale of shares of the Funds.
From the Service Fee the Distributor expects to pay a quarterly fee to
qualifying broker/dealer firms, as compensation for providing personal services
and/or the maintenance of shareholder accounts, with respect to shares sold by
such firms. This fee
20
<PAGE>
will not exceed on an annual basis 0.25% of the average annual net asset value
of such shares, and will be in addition to sales charges on Fund shares which
are re-allowed to such firms. To the extent that the entire amount of the
Service Fee is not paid to such firms, the balance will serve as compensation
for personal and account maintenance services furnished by the Distributor.
From its own resources or pursuant to the Plan, and subject to the
dealers' prior approval, the Distributor may provide additional compensation to
registered representatives of dealers in the form of travel expenses, meals,
and lodging associated with training and educational meetings sponsored by the
Distributor. The Distributor may also provide gifts amounting in value to less
than $100, and occasional meals or entertainment, to registered representatives
of dealers. Any such travel expenses, meals, lodging, gifts or entertainment
paid will not be preconditioned upon the registered representatives' or
dealers' achievement of a sales target. The Distributor may, from time to time,
reallow the entire portion of the sales charge on Class A shares which it
normally retains to individual selling dealers. However, such additional
reallowance generally will be made only when the selling dealer commits to
substantial marketing support such as internal wholesaling through dedicated
personnel, internal communications and mass mailings.
Expenses not reimbursed during any year, because of the limitations on
reimbursements, may be carried over and paid in future years when actual
expenses are less than the respective limits under each Plan. In order to
receive payments under the Plans, participants must meet such qualifications to
be established in the sole discretion of the Distributor, such as services to
the Funds' shareholders; or services providing the Funds with more efficient
methods of offering shares to coherent groups of clients, members or prospects
of a participant; or services permitting bulking of purchases or sales, or
transmission of such purchases or sales by computerized tape or other electronic
equipment; or other processing.
On a quarterly basis, the Funds' Trustees review a report on expenditures
under the Plans and the purposes for which expenditures were made. The Trustees
conduct an additional, more extensive review annually in determining whether
the Plans will be continued. By its terms, continuation of the Plans from year
to year is contingent on annual approval by a majority of the Funds' Trustees
and by a majority of the Trustees who are not "interested persons" (as defined
in the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plans or any related agreements (the "Plan Trustees"). The
Plans provide that they may not be amended to increase materially the costs
which the Funds may bear pursuant to the Plans without approval of the
shareholders of that Class of the Funds and that other material amendments to
the Plans must be approved by a majority of the Plan Trustees by vote cast in
person at a meeting called for the purpose of considering such amendments. The
Plans further provide that while they are in effect, the selection and
nomination of Trustees who are not "interested persons" shall be committed to
the discretion of the Trustees who are not "interested persons." The Plans may
be terminated at any time by vote of the Plan Trustees or a majority of the
outstanding shares of the relevant Class of the Funds.
The National Association of Securities Dealers, Inc. ("NASD"), regard
certain distribution fees as asset-based sales charges subject to NASD sales
load limits. The NASD's maximum sales charge rule may require the Trustees to
suspend distribution fees or amend the Plans.
For the fiscal year ended September 30, 1998 the Funds paid Rule 12b-1 Fees
in the amount of $36,892, of which the Distributor received $22,816, W.S.
Griffith & Co., an affiliate, received $80 and unaffiliated broker-dealers
received $13,996. The Rule 12b-1 payments were used for (1) compensation to
dealers, $26,173; (2) printing and mailing of prospectuses to other than current
shareholders, $38,266; and (3) other, $100,358. The Distributor's expenses from
selling and servicing Class B Shares may be more than the payments received from
contingent deferred sales charges collected on redeemed shares and from the Fund
under the Class B Plan. Those expenses may be carried over and paid in future
years. At September 30, 1998, the end of the last Plan year, the Distributor had
incurred unreimbursed expenses under the Class B Plan of $12,383 (equal to 0.01%
of the Fund's net assets) which have been carried over into the present Class B
Plan year.
NET ASSET VALUE
Under the 1940 Act, the Trustees are responsible for determining in good
faith the fair value of securities of the Funds. The net asset value per share
of each class of each Fund is determined once daily, Monday through Friday as
of the close of trading on the NYSE (normally 4:00 P.M. New York City time) on
each day the Trust is "open for business" (as defined in the Prospectus). A
Fund need not determine its net asset value on any day during which its shares
were not tendered for redemption and the Trust did not receive any order to
purchase or sell shares of that Fund. In accordance with procedures approved by
the Trustees, the net asset value per share of each class of each Fund is
calculated by determining the value of the net assets attributable to each
class of that Fund and dividing by the number of outstanding shares of that
class. The NYSE is not open for trading on weekends or on the following
observed national holidays: New Year's Day, Martin Luther King, Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day.
The public offering price per share of a class of a Fund is the net asset
value per share of that class of that Fund next determined after receipt of an
order. Orders for shares that have been received by the Trust or the Transfer
Agent before the close of regular trading of the NYSE are confirmed at the
offering price effective at the close of regular trading of the NYSE on that
day, while orders received subsequent to the close of regular trading of the
NYSE will be confirmed at the offering price effective at the close of regular
trading of the NYSE on the next day on which the net asset value is calculated.
21
<PAGE>
Bonds and other fixed-income securities (other than short-term obligations
but including listed issues) in a Fund's portfolio are valued on the basis of
valuations furnished by a pricing service that uses both dealer-supplied
valuations and electronic data processing techniques that take into account
appropriate factors such as institutional-size trading in similar groups of
securities, yield, quality, coupon rate, maturity, type of issue, trading
characteristics and other market data, without exclusive reliance upon quoted
prices or exchange or over-the-counter prices, when such valuations are
believed to reflect the fair value of such securities.
In determining the net asset value, unlisted securities for which market
quotations are available are valued at the last reported sales price or, if no
sales are reported or such pricing is not provided, the mean between the most
recent bid and asked prices. Securities, options on securities, futures
contracts and options thereon that are listed or admitted to trading on a
national exchange, are valued at their last sale on such exchange prior to the
time of determining net asset value; or if no sales are reported on such
exchange on that day, at the mean between the most recent bid and asked price.
Securities listed on more than one exchange shall be valued on the exchange the
security is most extensively traded. Quotations of foreign securities in
foreign currency will be converted to U.S. Dollar equivalents using foreign
exchange quotations received from independent dealers. Short-term investments
having a maturity of 60 days or less will be valued at amortized cost, when the
Trustees determine that amortized cost is their fair market value. Certain debt
securities for which daily market quotations are not available may be valued,
pursuant to guidelines established by the Trustees, with reference to fixed
income securities whose prices are more readily obtainable and whose durations
are comparable to the securities being valued. Subject to the foregoing, other
securities for which market quotations are not readily available will be valued
at fair value as determined in good faith by the Trustees.
For purposes of determining the net asset value of the Funds' shares,
options transactions will be treated as follows: When a Fund sells an option,
an amount equal to the premium received by that Fund will be included in that
Fund's accounts as an asset and a deferred liability will be created in the
amount of the option. The amount of the liability will be marked to the market
to reflect the current market value of the option. If the option expires or if
that Fund enters into a closing purchase transaction, that Fund will realize a
gain (or a loss if the cost of the closing purchase exceeds the premium
received), and the related liability will be extinguished. If a call option
contract sold by a Fund is exercised, that Fund will realize the gain or loss
from the sale of the underlying security and the sale proceeds will be
increased by the premium originally received.
HOW TO BUY SHARES
The minimum initial investment is $500 and the minimum subsequent
investment is $25 for Class A, Class B and Class C Shares. However, both the
minimum initial and subsequent investment amounts are $25 for investments
pursuant to the "Investo-Matic" plan, a bank draft investing program
administered by Distributor, or pursuant to the Systematic Exchange privilege
or for an individual retirement account (IRA). In addition, there are no
subsequent investment minimum amounts in connection with the reinvestment of
dividend or capital gain distributions. The minimum initial investment for
Class X Shares is $250,000, and the minimum subsequent investment for Class X
Shares is $10,000. Completed applications for the purchase of shares should be
mailed to: Phoenix-Seneca Funds, c/o State Street Bank and Trust Company, P.O.
Box 8301, Boston, MA 02266-8301.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when
an authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
ALTERNATIVE PURCHASE ARRANGEMENTS
Shares may be purchased from investment dealers at a price equal to their
net asset value per share, plus a sales charge which, at the election of the
purchaser, may be imposed either (i) at the time of the purchase (the "initial
sales charge alternative") or (ii) on a contingent deferred basis (the
"deferred sales charge alternative"). Each Fund also offers one Class of Shares
(Class X Shares) that may be purchased by certain institutional investors at a
price equal to their net asset value per share. Orders received by dealers
prior to the close of trading on the New York Stock Exchange are confirmed at
the offering price effective at that time, provided the order is received by
the Distributor prior to its close of business.
The alternative purchase arrangements permit an investor to choose the
method of purchasing shares that is more beneficial given the amount of the
purchase, the length of time the investor expects to hold the shares, whether
the investor wishes to receive distributions in cash or to reinvest them in
additional shares of the Funds, and other circumstances. Investors should
consider whether, during the anticipated life of their investment in the Trust,
the accumulated continuing distribution and services fees and contingent
deferred sales charges on Class B or C Shares would be less than the initial
sales charge and accumulated distribution and services fees on Class A Shares
purchased at the same time.
Dividends paid by the Funds, if any, with respect to each Class of Shares
will be calculated in the same manner at the same time on the same day, except
that fees such as higher distribution and service fees relating to each Class
of Shares will be borne exclusively by that class. See "Dividends,
Distributions and Tax Status."
22
<PAGE>
Class A Shares
Class A Shares incur a sales charge when they are purchased and enjoy the
benefit of not being subject to any sales charge when they are redeemed. Class
A Shares are subject to ongoing service fees at an annual rate of 0.25% of the
Trust's aggregate average daily net assets attributable to the Class A Shares.
In addition, certain purchases of Class A Shares qualify for reduced initial
sales charges.
Class B Shares
Class B Shares do not incur a sales charge when they are purchased, but
they are subject to a sales charge if they are redeemed within five years of
purchase. The deferred sales charge may be waived in connection with certain
qualifying redemptions.
Class B Shares are subject to ongoing distribution and service fees at an
annual rate of up to 1.00% of the Fund's aggregate average daily net assets
attributable to the Class B Shares. Class B Shares enjoy the benefit of
permitting all of the investor's dollars to work from the time the investment
is made. The higher ongoing distribution and service fees paid by Class B
Shares will cause such shares to have a higher expense ratio and to pay lower
dividends, to the extent any dividends are paid, than those related to Class A
Shares. Class B Shares will automatically convert to Class A Shares eight years
after the end of the calendar month in which the shareholder's order to
purchase was accepted, in the circumstances and subject to the qualifications
described in the Funds' Prospectus. The purpose of the conversion feature is to
relieve the holders of the Class B Shares that have been outstanding for a
period of time sufficient for the Distributor to have been compensated for
distribution expenses related to the Class B Shares from most of the burden of
such distribution related expenses.
Class B Shares include all shares purchased pursuant to the deferred sales
charge alternative which have been outstanding for less than the period ending
eight years after the end of the month in which the shares were issued. At the
end of this period, Class B Shares will automatically convert to Class A Shares
and will no longer be subject to the higher distribution and service fees. Such
conversion will be on the basis of the relative net asset value of the two
classes without the imposition of any sales load, fee or other charge.
For purposes of conversion, Class B Shares purchased through the
reinvestment of dividends and distributions paid in respect of Class B Shares
in a shareholder's account will be considered to be held in a separate
sub-account. Each time any Class B Shares in the shareholder's Trust account
(other than those in the sub-account) convert to Class A, a pro rata portion of
the Class B Shares in the sub-account will also convert to Class A Shares.
Class C Shares
Class C Shares are purchased without an initial sales charge but are
subject to a deferred sales charge if redeemed within one year of purchase. The
deferred sales charge may be waived in connection with certain qualifying
redemptions. Shares issued in conjunction with the automatic reinvestment of
income distributions and capital gain distributions are not subject to any
sales charges. Class C Shares are subject to ongoing distribution and services
fees of up to 1.00% of the Funds' aggregate average daily net assets
attributable to Class C Shares. See the Funds' current Prospectus for more
information.
Class X Shares
Class X Shares are offered without any sales charges to institutional
investors, such as pension and profit sharing plans, other employee benefit
trusts, investment advisers, endowments, foundations and corporations, and
others who purchase the minimum amounts.
Class A Shares--Reduced Sales Charges
Investors choosing Class A Shares may be entitled to reduced sales
charges. The five ways in which sales charges may be avoided or reduced are
described below.
Qualified Purchasers. If you fall within any one of the following
categories, you will not have to pay a sales charge on your purchase of Class A
Shares: (1) any trustee, director or officer of the Phoenix Funds,
Phoenix-Engemann Funds, Phoenix-Seneca Funds or any other mutual fund advised,
subadvised or distributed by the Adviser, Distributor or any corporate affiliate
of either or both the Adviser and Distributor (an "Affiliated Phoenix Fund");
(2) any director or officer, or any full-time employee or sales representative
(for at least 90 days), of the Adviser or Distributor; (3) registered
representatives and employees of securities dealers with whom Distributor has
sales agreements; (4) any qualified retirement plan exclusively for persons
described above; (5) any officer, director or employee of a corporate affiliate
of the Adviser or Distributor; (6) any spouse, child, parent, grandparent,
brother or sister of any person named in (1), (2), (3) or (5) above; (7)
employee benefit plans for employees of the Adviser, Distributor and/or their
corporate affiliates; (8) any employee or agent who retires from Phoenix Home
Life, Distributor and/or their corporate affiliates; (9) any account held in the
name of a qualified employee benefit plan, endowment fund or foundation if, on
the date of the initial investment, the plan, fund or foundation has assets of
$10,000,000 or more or at least 100 eligible employees; (10) any person with a
direct rollover transfer of shares from an established Phoenix Fund,
Phoenix-Engemann Fund, or Phoenix-Seneca Fund qualified plan; (11) any Phoenix
Home Life separate account which funds group annuity contracts offered to
qualified employee benefit plans; (12) any state, county, city, department,
authority or similar agency prohibited by law from paying a sales charge; (13)
any fully matriculated student in any U.S. service academy; (14) any unallocated
account held by a third party administrator,
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registered investment adviser, trust company, or bank trust department which
exercises discretionary authority and holds the account in a fiduciary, agency,
custodial or similar capacity, if in the aggregate such accounts held by such
entity equal or exceed $1,000,000; (15) any person who is investing redemption
proceeds from investment companies other than the Phoenix Funds,
Phoenix-Engemann Funds, or Phoenix-Seneca Funds if, in connection with the
purchase or redemption of the redeemed shares, the investor paid a prior sales
charge provided such investor supplies verification that the redemption
occurred within 90 days of the Phoenix Funds, Phoenix-Engemann Funds, or
Phoenix-Seneca Funds purchase and that a sales charge was paid; (16) any
deferred compensation plan established for the benefit of any Phoenix Fund,
Phoenix-Engemann Funds, or Phoenix-Seneca Funds trustee or director; provided
that sales to persons listed in (1) through (15) above are made upon the
written assurance of the purchaser that the purchase is made for investment
purposes and that the shares so acquired will not be resold except to the Fund;
(17) purchasers of Class A Shares bought through investment advisors and
financial planners who charge an advisory, consulting or other fee for their
services and buy shares for their own accounts or the accounts of their
clients; (18) retirement plans and deferred compensation plans and trusts used
to fund those plans (including, for example, plans qualified or created under
sections 401(a), 403(b) or 457 of the Internal Revenue Code), and "rabbi
trusts" that buy shares for their own accounts, in each case if those purchases
are made through a broker or agent or other financial intermediary that has
made special arrangements with the Distributor for such purchases; (19) clients
of investment advisors or financial planners who buy shares for their own
accounts but only if their accounts are linked to a master account of their
investment advisor or financial planner on the books and records of the broker,
agent or financial intermediary with which the Distributor has made such
special arrangements (each of the investors described in (17) through (19) may
be charged a fee by the broker, agent or financial intermediary for purchasing
shares); or (20) investors who purchase shares through mutual fund supermarkets
and other sponsors or similar strategic arrangements provided that such
investors owned shares purchased through such supermarkets or strategic
arrangements on July 1, 1998, and continue to own such shares.
Combination Purchase Privilege. Your purchase of any class of shares of
the Phoenix-Seneca Funds or any other Affiliated Phoenix Fund, (other than
Phoenix Money Market Fund Series Class A Shares), if made at the same time by
the same "person," will be added together to determine whether the combined sum
entitles you to an immediate reduction in sales charges. A "person" is defined
in this and the following sections as (a) any individual, their spouse and
minor children purchasing shares for his or their own account (including an IRA
account) including his or their own trust; (b) a trustee or other fiduciary
purchasing for a single trust, estate or single fiduciary account (even though
more than one beneficiary may exist); (c) multiple employer trusts or Section
403(b) plans for the same employer; (d) multiple accounts (up to 200) under a
qualified employee benefit plan or administered by a third party administrator;
or (e) trust companies, bank trust departments, registered investment advisers,
and similar entities placing orders or providing administrative services with
respect to funds over which they exercise discretionary investment authority
and which are held in a fiduciary, agency, custodial or similar capacity,
provided all shares are held of record in the name, or nominee name, of the
entity placing the order.
Letter of Intent. If you sign a Letter of Intent, your purchase of any
class of shares of the Phoenix-Seneca Funds or any other Affiliated Phoenix
Fund (other than Phoenix Money Market Fund Series Class A Shares), if made by
the same person within a thirteen month period, will be added together to
determine whether you are entitled to an immediate reduction in sales charges.
Sales charges are reduced based on the overall amount you indicate that you
will buy under the Letter of Intent. The Letter of Intent is a mutually
non-binding arrangement between you and the Distributor. Since the Distributor
doesn't know whether you will ultimately fulfill the Letter of Intent, shares
worth 5% of the amount of each purchase will be set aside until you fulfill the
Letter of Intent. When you buy enough shares to fulfill the Letter of Intent,
these shares will no longer be restricted. If, on the other hand, you do not
satisfy the Letter of Intent, or otherwise wish to sell any restricted shares,
you will be given the choice of either buying enough shares to fulfill the
Letter of Intent or paying the difference between any sales charge you
previously paid and the otherwise applicable sales charge based on the intended
aggregate purchases described in the Letter of Intent. You will be given 20
days to make this decision. If you do not exercise either election, the
Distributor will automatically redeem the number of your restricted shares
needed to make up the deficiency in sales charges received. The Distributor
will redeem restricted Class A Shares before Class C or B Shares, respectively.
Oldest shares will be redeemed before selling newer shares. Any remaining
shares will then be deposited to your account.
Right of Accumulation. Your purchase of any class of shares of the
Phoenix-Seneca Funds or any other Affiliated Phoenix Fund, if made over time by
the same person may be added together to determine whether the combined sum
entitles you to a prospective reduction in sales charges. You must provide
certain account information to the Distributor to exercise this right.
Associations. Certain groups or associations may be treated as a "person"
and qualify for reduced Class A Share sales charges. The group or association
must: (1) have been in existence for at least six months; (2) have a legitimate
purpose other than to purchase mutual fund shares at a reduced sales charge;
(3) work through an investment dealer; or (4) not be a group whose sole reason
for existing is to consist of members who are credit card holders of a
particular company, policyholders of an insurance company, customers of a bank
or a broker-dealer or clients of an investment adviser.
Class B and C Shares--How To Obtain Reduced Deferred Sales Charges
The CDSC is waived on the redemption (sale) of Class B and C Shares if the
redemption is made (a) within one year of death (i) of the sole shareholder on
an individual account, (ii) of a joint tenant where the surviving joint tenant
is the deceased's spouse,
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or (iii) of the beneficiary of a Uniform Gifts to Minors Act (UGMA), Uniform
Transfers to Minors Act (UTMA) or other custodial account; (b) within one year
of disability, as defined in Code Section 72(m)(7); (c) as a mandatory
distribution upon reaching age 70-1/2 under any retirement plan qualified under
Code Sections 401, 408 or 403(b) or resulting from the tax-free return of an
excess contribution to an IRA; (d) by 401(k) plans using an approved participant
tracking system for participant hardships, death, disability or normal
retirement, and loans which are subsequently repaid; (e) based on the exercise
of exchange privileges among Class B and C Shares of the Phoenix-Seneca Funds or
any other Affiliated Phoenix Fund; (f) based on any direct rollover transfer of
shares from an established Phoenix-Seneca Fund or any other Affiliated Phoenix
Fund qualified plan into a Phoenix-Seneca Fund or any other Affiliated Phoenix
Fund IRA by participants terminating from the qualified plan; and (g) based on
the systematic withdrawal program (Class B Shares only). If, as described in
condition (a) above, an account is transferred to an account registered in the
name of a deceased's estate, the CDSC will be waived on any redemption from the
estate account occurring within one year of the death. If the Class B or C
Shares are not redeemed within one year of the death, they will remain subject
to the applicable CDSC.
Conversion Feature--Class B Shares
Class B Shares will automatically convert to Class A Shares of the same
Fund eight years after they are purchased. Conversion will be on the basis of
the then prevailing net asset value of Class A and B Shares. There is no sales
load, fee or other charge for this feature. Class B Shares acquired through
dividend or distribution reinvestments will be converted into Class A Shares at
the same time that other Class B Shares are converted based on the proportion
that the reinvested shares bear to purchased Class B Shares. The conversion
feature is subject to the continuing availability of an opinion of counsel or a
ruling of the Internal Revenue Service that the assessment of the higher
distribution and service fees and associated costs with respect to Class B
Shares does not result in any dividends or distributions constituting
"preferential dividends" under the Code, and that the conversion of shares does
not constitute a taxable event under federal income tax law. If the conversion
feature is suspended, Class B Shares would continue to be subject to the higher
distribution and service fees for an indefinite period. Even if the Funds were
unable to obtain such assurances, it might continue to make distributions if
doing so would assist in complying with its general practice of distributing
sufficient income to reduce or eliminate federal taxes otherwise payable by the
Funds.
INVESTOR ACCOUNT SERVICES
The Funds offer accumulation plans, withdrawal plans and reinvestment and
exchange privileges as described in the Funds' current Prospectus. Certain
privileges may not be available in connection with all classes. In most cases,
changes to account services may be accomplished over the phone. Inquiries
regarding policies and procedures relating to shareholder account services
should be directed to Shareholder Services at (800) 243-1574.
Exchanges. Under certain circumstances, shares of any Phoenix-Seneca Fund
may be exchanged for shares of the same Class of another Phoenix-Seneca Fund or
any other Affiliated Phoenix Fund on the basis of the relative net asset values
per share at the time of the exchange. Exchanges are subject to the minimum
initial investment requirement of the designated Fund, Series, or Portfolio,
except if made in connection with the systematic exchange privilege described
below. Shareholders may exchange shares held in book-entry form for an
equivalent number (value) of the same class of shares of any other Affiliated
Phoenix Fund, if currently offered. On exchanges with share classes that carry
a contingent deferred sales charge, the CDSC schedule of the original shares
purchased continues to apply. The exchange of shares is treated as a sale and
purchase for federal income tax purposes (see "Dividends, Distributions and Tax
Status").
Systematic Exchanges. If the conditions above have been met, you or your
broker may, by telephone or written notice, elect to have shares exchanged for
the same class of shares of another Affiliated Phoenix Fund automatically on a
monthly, quarterly, semi-annual or annual basis or may cancel this privilege at
any time. If you maintain an account balance of at least $5,000, or $2,000 for
tax qualified retirement benefit plans (calculated on the basis of the net
asset value of the shares held in a single account), you may direct that shares
be automatically exchanged at predetermined intervals for shares of the same
class of another Affiliated Phoenix Fund. This requirement does not apply to
Phoenix "Self Security" program participants. Systematic exchanges will be
executed upon the close of business on the 10th day of each month or the next
succeeding business day. Systematic exchange forms are available from the
Distributor. Exchanges will be based upon each Fund's net asset value per share
next computed after the close of business on the 10th day of each month (or
next succeeding business day), without sales charge.
Dividend Reinvestment Across Accounts. If you maintain an account balance
of at least $5,000, or $2,000 for tax qualified retirement benefit plans
(calculated on the basis of the net asset value of the shares held in a single
account), you may direct that any dividends and distributions paid with respect
to shares in that account be automatically reinvested in a single account
of one of the other Affiliated Phoenix Funds at net asset value. You should
obtain a current prospectus and consider the objectives and policies of each
fund carefully before directing dividends and distributions to another fund.
Reinvestment election forms and prospectuses are available from the Transfer
Agent. Distributions may also be mailed to a second payee and/or address.
Requests for directing distributions to an alternate payee must be made in
writing with a signature guarantee of the registered owner(s). To be effective
with respect to a particular dividend or distribution, notification of the new
distribution option must be received by the Transfer Agent at least three days
prior to the record date of such dividend or distribution. If all shares in
your account
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are repurchased or redeemed or transferred between the record date and the
payment date of a dividend or distribution, you will receive cash for the
dividend or distribution regardless of the distribution option selected.
Systematic Withdrawal Program. The Systematic Withdrawal Program allows
you to periodically redeem a portion of your account on a predetermined
monthly, quarterly, semiannual or annual basis. A sufficient number of full and
fractional shares will be redeemed so that the designated payment is made on or
about the 20th day of the month. Shares are tendered for redemption by the
Transfer Agent, as agent for the shareowner, on or about the 15th of the month
at the closing net asset value on the date of redemption. The Systematic
Withdrawal Program also provides for redemptions to be tendered on or about the
10th, 15th or 25th of the month with proceeds to be directed through Automated
Clearing House (ACH) to your bank account. In addition to the limitations
stated below, withdrawals may not be less than $25 and minimum account balance
requirements shall continue to apply.
Shareholders participating in the Systematic Withdrawal Program must own
shares of a Series worth $5,000 or more, as determined by the then current net
asset value per share, and elect to have all dividends reinvested. Participants
in the Program redeeming Class C Shares will be subject to any applicable
contingent deferred sales charge. The purchase of shares while participating in
the withdrawal program will ordinarily be disadvantageous to the Class A Shares
investor since a sales charge will be paid by the investor on the purchase of
Class A Shares at the same time as other shares are being redeemed. For this
reason, investors in Class A Shares may not participate in an automatic
investment program while participating in the Systematic Withdrawal Program.
Through the Program, Class B shareholders may withdraw up to 1% of their
aggregate net investments (purchases, at initial value, to date net of
non-Program redemptions) each month or up to 3% of their aggregate net
investments each quarter without incurring otherwise applicable contingent
deferred sales charges. Class B shareholders redeeming more shares than the
percentage permitted by the withdrawal program will be subject to any
applicable contingent deferred sales charge on all shares redeemed.
Accordingly, the purchase of Class B Shares will generally not be suitable for
an investor who anticipates withdrawing sums in excess of the above limits
shortly after purchase.
HOW TO REDEEM SHARES
Under the 1940 Act, payment for shares redeemed must ordinarily be made
within seven days after tender. The right to redeem shares may be suspended and
payment therefor postponed during periods when the New York Stock Exchange is
closed, other than customary weekend and holiday closings, or if permitted by
rules of the Securities and Exchange Commission, during periods when trading on
the Exchange is restricted or during any emergency which makes it impracticable
for a Fund to dispose of its securities or to determine fairly the value of its
net assets or during any other period permitted by order of the Securities and
Exchange Commission for the protection of investors. Furthermore, the Transfer
Agent will not mail redemption proceeds until checks received for shares
purchased have cleared, which may take up to 15 days or more. Redemptions by
Class B and C shareholders will be subject to the applicable deferred sales
charge, if any.
The Trust has authorized one or more brokers to accept on its behalf
purchase and redemption orders. Such brokers are authorized to designate other
intermediaries to accept purchase and redemption orders on the Trust's behalf.
The Trust will be deemed to have received a purchase or redemption order when
an authorized broker or, if applicable, a broker's authorized designee, accepts
the order. Customer orders will be priced at the Funds' net asset values next
computed after they are accepted by an authorized broker or the broker's
authorized designee.
Redemption of Small Accounts
Each shareholder account in the Funds which has been in existence for at
least one year and has a value of less than $200 may be redeemed upon the
giving of not less than 30 days written notice to the shareholder mailed to the
address of record. During the 30 day period the shareholder has the right to
add to the account to bring its value to $200 or more. See the Funds' current
Prospectus for more information.
Telephone Redemptions
Shareholders may redeem up to $50,000 worth of their shares by telephone.
See the Funds' current Prospectus for additional information.
By Check (Phoenix-Seneca Bond Fund Only)
Any shareholder of this Fund may elect to redeem shares held in his account
by check. Checks will be sent to an investor upon receipt by the Transfer Agent
of a completed application and signature card (attached to the application). If
the signature card accompanies an individual's initial account application, the
signature guarantee section of the form may be disregarded. However, the Trust
reserves the right to require that all signatures be guaranteed prior to the
establishment of a check writing service account. When an authorization form is
submitted after receipt of the initial account application, all signatures must
be guaranteed regardless of account value.
Checks may be drawn payable to any person in an amount of not less than
$500, provided that immediately after the payment of the redemption proceeds
the balance in the shareholder's account is $500 or more.
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When a check is presented to the Transfer Agent for payment, a sufficient
number of full and fractional shares in the shareholder's account will be
redeemed to cover the amount of the check. The number of shares to be redeemed
will be determined on the date the check is received by the Transfer Agent.
Presently there is no charge to the shareholder for the check writing service,
but this may be changed or modified in the future upon two weeks written notice
to shareholders. Checks drawn from Class B and Class C accounts are subject to
the applicable deferred sales charge, if any.
The checkwriting procedure for redemption enables a shareholder to receive
income accruing on the shares to be redeemed until such time as the check is
presented to the Transfer Agent for payment. Inasmuch as canceled checks are
returned to shareholders monthly, no confirmation statement is issued at the
time of redemption.
Shareholders utilizing withdrawal checks will be subject to the Transfer
Agent's rules governing checking accounts. A shareholder should make sure that
there are sufficient shares in his account to cover the amount of any check
drawn. If insufficient shares are in the account and the check is presented to
the Transfer Agent on a banking day on which the Trust does not redeem shares
(for example, a day on which the New York Stock Exchange is closed), or if the
check is presented against redemption proceeds of an investment made by check
which has not been in the account for at least fifteen calendar days, the check
may be returned marked "Non-sufficient Funds" and no shares will be redeemed. A
shareholder may not close his account by a withdrawal check because the exact
value of the account will not be known until after the check is received by the
Transfer Agent.
Redemption in Kind
To the extent consistent with state and federal law, the Funds may make
payment of the redemption price either in cash or in kind. However, the Funds
have elected to pay in cash all requests for redemption by any shareholder of
record, limited in respect to each shareholder during any 90-day period to the
lesser of $250,000 or 1% of the net asset value of the Fund at the beginning of
such period. This election has been made pursuant to Rule 18f-1 under the
Investment Company Act of 1940 and is irrevocable while the Rule is in effect
unless the Securities and Exchange Commission, by order, permits the withdrawal
thereof. In case of a redemption in kind, securities delivered in payment for
shares would be readily marketable and valued at the same value assigned to
them in computing the net asset value per share of the Fund. A shareholder
receiving such securities would incur brokerage costs when selling the
securities.
Account Reinstatement Privilege
Shareholders who may have overlooked features of their investment at the
time they redeemed have a privilege of reinvestment of their investment at net
asset value. See the Funds' current prospectus for more information.
DIVIDENDS, DISTRIBUTIONS AND TAX STATUS
Each Fund within the Trust is separate for investment and accounting
purposes and is treated as a separate entity for federal income tax purposes.
A regulated investment company qualifying under Subchapter M of the Code
is not subject to federal income tax on distributed amounts to the extent that
it distributes annually its taxable and, if any, tax-exempt net investment
income and net realized capital gains in accordance with the timing
requirements of the Code. For each taxable year, each Fund intends to qualify
as a regulated investment company under Subchapter M of the Code. If in any
taxable year a Fund does not qualify as a regulated investment company, all of
its taxable income will be taxed at corporate rates.
Qualification of a Fund for treatment as a regulated investment company
under the Code requires, among other things, that (a) at least 90% of a Fund's
annual gross income, without offset for losses from the sale or other
disposition of stock or securities or other transactions, be derived from
interest, payments with respect to securities loans, dividends and gains from
the sale or other disposition of stock or securities or foreign currencies, or
other income (including but not limited to gains from options, futures, or
forward contracts) derived with respect to its business of investing in such
stock, securities or currencies; (b) the Fund distribute at least annually to
its shareholders as dividends at least 90% of its taxable and tax-exempt net
investment income, the excess of net short-term capital gain over net long-term
capital loss earned in each year and any other net income (except for the
excess, if any, of net long-term capital gain over net short-term capital loss,
which need not be distributed in order for the Fund to be treated as a regulated
investment company but such amount is taxed to the Fund if it is not
distributed); and (c) the Fund diversify its assets so that, at the close of
each quarter of its taxable year, (i) at least 50% of the fair market value of
its total (gross) assets is comprised of cash, cash items, U.S. Government
securities, securities of other regulated investment companies and other
securities limited in respect of any one issuer to no more than 5% of the fair
market value of the Fund's total assets and 10% of the outstanding voting
securities of such issuer and (ii) no more than 25% of the fair market value of
its total assets is invested in the securities of any one issuer (other than
U.S. Government securities and securities of other regulated investment
companies) or of two or more issuers controlled by the Fund and engaged in the
same, similar, or related trades or businesses.
Each Fund is subject to a 4% nondeductible federal excise tax on amounts
required to be but not distributed, as determined under a prescribed formula.
The formula requires that a Fund distribute (or be deemed to have distributed)
to shareholders during a calendar year at least 98%
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of the Fund's ordinary income (not including tax-exempt interest) for the
calendar year, at least 98% of the excess of its capital gains over the capital
losses realized during the one-year period ending October 31 during such year,
as well as any income or gain (as so computed) from the prior calendar year that
was not distributed for such year and on which the Fund paid no federal income
tax. Each Fund has distribution policies that should generally enable it to
avoid liability for this tax.
Net investment income for each Fund is the Fund's investment income less
its expenses. Dividends from taxable net investment income and the excess, if
any, of net short-term capital gain over net long-term capital loss of a Fund
are treated under the Code as ordinary income, and dividends from net long-term
capital gain in excess of net short- term capital loss ("capital gain
dividends") are treated under the Code as long-term capital gain, for federal
income tax purposes. These dividends are paid after taking into account, and
reducing the distribution to the extent of, any available capital loss
carryforwards. Distributions from a Fund's current or accumulated earnings and
profits, as computed for Federal income tax purposes, will be treated as
described above whether taken in shares or in cash. Certain distributions
received in January may be treated as if paid by a Fund and received by a
shareholder on December 31 of the prior year.
Dividends, including capital gain dividends, paid by a Fund shortly after
a shareholder's purchase of shares have the effect of reducing the net asset
value per share of his shares by the amount per share of the dividend
distribution. Although such dividends are, in effect, a partial return of the
shareholder's purchase price to the shareholder, they may be characterized as
ordinary income or capital gain as described above.
Equity options (including options on stock and options on narrow-based
stock indices) and over-the-counter options on debt securities written or
purchased by a Fund are subject to tax the character of which will be
determined under Section 1234 of the Code. In general, no loss is recognized by
a Fund upon payment of a premium in connection with the purchase of a put or
call option. The character of any gain or loss recognized (i.e., long-term or
short-term) will generally depend, in the case of a lapse or sale of such
option, on the Fund's holding period for such option, and in the case of an
exercise of a put option, on the Fund's holding period for the underlying
security. The purchase of a put option may constitute a short sale for federal
income tax purposes, causing an adjustment in the holding period of the
underlying stock or security or a substantially identical stock or security in
the Fund's portfolio. The exercise of a call option purchased by a Fund is not
a taxable transaction for the Fund. If a Fund writes a put or call option, no
gain is recognized upon its receipt of a premium. If such option lapses or is
closed out, any gain or loss is treated as a short-term capital gain or loss.
If a call option is exercised, whether the gain or loss is long-term or
short-term depends on the holding period of the underlying stock or security.
The exercise of a put option written by a Fund is not a taxable transaction for
the Fund.
All futures contracts and foreign currency contracts entered into by a
Fund and all listed nonequity options written or purchased by a Fund (including
options on debt securities, options on futures contracts, options on securities
indices and options on broad-based stock indices) are governed by Section 1256
of the Code. Absent a tax election to the contrary, gain or loss attributable
to the lapse, exercise or closing out of any such position are treated as 60%
long-term and 40% short-term capital gain or loss, and on the last trading day
of a Fund's taxable year, all outstanding Section 1256 positions are marked to
market (i.e., treated as if such positions were closed out at their closing
price on such day), and any resulting gain or loss recognized as 60% is
long-term and 40% short-term capital gain or loss. Under certain circumstances,
entry into a futures contract to sell a security may constitute a short sale
for federal income tax purposes, causing an adjustment in the holding period of
the underlying security or a substantially identical security in a Fund's
portfolio.
Because options, futures and currency activities of a Fund may increase
the amount of gains from the sale of securities or investments held or treated
as held for less than three months, the Funds may limit these transactions in
order to comply with the 30% limitation described above.
Positions of a Fund which consist of at least one stock and at least one
stock option or other position with respect to a related security which
substantially diminishes the Fund's risk of loss with respect to such stock
could be treated as a "straddle" which is governed by Section 1092 of the Code,
the operation of which may cause deferral of losses, adjustments in the holding
periods of stock or securities and conversion of short- term capital losses
into long-term capital losses. An exception to these straddle rules exists for
any "qualified covered call options" on stock written by a Fund.
Positions of a Fund which consist of at least one debt security not
governed by Section 1256 and at least one futures or currency contract or listed
nonequity option governed by Section 1256 which substantially diminishes the
Fund's risk of loss with respect to such debt security are treated as a "mixed
straddle." Although mixed straddles are subject to the straddle rules of Section
1092 of the Code, certain tax elections exist for them which reduce or eliminate
the operation of these rules. Each Fund will monitor these transactions and may
make certain tax elections in order to mitigate the operation of these rules and
prevent disqualification of the Fund as a regulated investment company for
federal income tax purposes.
These special tax rules applicable to options, futures and currency
transactions could affect the amount, timing and character of a Fund's income
or loss and hence of its distributions to shareholders by causing holding
period adjustments, converting short- term capital losses into long-term
capital losses, and accelerating a Fund's income or deferring its losses.
A Fund's investment in zero coupon securities or other securities having
original issue discount (or market discount, if the Fund elects to include
market discount in income currently) will generally cause it to realize income
prior to the receipt of cash payments
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with respect to these securities. The mark to market rules described above may
also require a Fund to recognize gains without a concurrent receipt of cash. In
such case, a Fund will not be able to purchase additional income producing
securities with the cash generated by the sale of such securities but will be
required to use such cash to make such required distributions, and its current
portfolio income may ultimately be reduced accordingly. In order to distribute
this income or gains, maintain its qualification as a regulated investment
company, and avoid federal income or excise taxes, the Fund may be required to
liquidate portfolio securities that it might otherwise have continued to hold.
The Funds may be subject to foreign withholding or other foreign taxes
with respect to income (possibly including, in some cases, capital gains)
derived from foreign securities. These taxes may be reduced or eliminated under
the terms of applicable tax treaties. However, the Funds will not be eligible
to pass through to shareholders any foreign tax credits or deductions for
foreign taxes paid by the Funds that are not thus reduced or eliminated.
Certain foreign exchange gains and losses realized by the Funds with respect to
such securities or related currency transactions will generally be treated as
ordinary income and losses. Certain uses of foreign currency and investments by
the Funds in certain "passive foreign investment companies" may be limited in
order to avoid adverse tax consequences for the Funds (or an election, if
available, may be made with respect to such investments).
Different tax treatment, including a penalty on certain distributions,
excess contributions or other transactions is accorded to accounts maintained
as IRAs or other retirement plans. Investors should consult their tax advisers
for more information.
Redemptions, including exchanges, of shares may give rise to recognized
gains or losses, except as to those investors subject to tax provisions that do
not require them to recognize such gains or losses. All or a portion of a loss
realized upon the redemption of shares may be disallowed under "wash sale"
rules to the extent shares are purchased (including shares acquired by means of
reinvested dividends) within a 61-day period beginning 30 days before and
ending 30 days after such redemption. Any loss realized upon a shareholder's
sale, redemption or other disposition of shares with a tax holding period of
six months or less will be treated as a long-term capital loss to the extent of
any distribution of long-term capital gains with respect to such shares.
The Trust is organized as a Delaware business trust, and neither the Trust
nor the Funds are subject to any corporate excise or franchise tax in the State
of Delaware, nor are they liable for Delaware income taxes provided that each
Fund qualifies as a regulated investment company for federal income tax
purposes and satisfies certain income source requirements of Delaware law.
The foregoing discussion of U.S. federal income tax law does not address
the special tax rules applicable to certain classes of investors, such as
insurance companies. Each shareholder who is not a U.S. person should consider
the U.S. and foreign tax consequences of ownership of shares of the Funds,
including the possibility that such a shareholder may be subject to a U.S.
withholding tax at a rate of 30% (or at a lower rate under an applicable income
tax treaty) on Fund distributions treated as ordinary dividends.
This discussion of the federal income tax treatment of the Funds and their
distributions is based on the federal income tax law in effect as of the date
of this Statement of Additional Information. Shareholders should consult their
tax advisers about the application of the provisions of tax law described in
this statement of additional information and about the possible application of
state, local and foreign taxes in light of their particular tax situations.
PORTFOLIO BROKERAGE
It is the general policy of the Trust not to employ any broker in the
purchase or sale of securities for a Fund's portfolio unless the Trust believes
that the broker will obtain the best results for the Fund, taking into
consideration such relevant factors as price, the ability of the broker to
effect the transaction and the broker's facilities, reliability and financial
responsibility. Commission rates, being a component of price, are considered
together with such factors. The Trust is not obligated to deal with any broker
or group of brokers in the execution of transactions in portfolio securities.
In selecting brokers to effect transactions on securities exchanges, the
Trust considers the factors set forth in the first paragraph under this heading
and any investment products or services provided by such brokers, subject to the
criteria of Section 28(e) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Section 28(e) specifies that a person with investment
discretion shall not be "deemed to have acted unlawfully or to have breached a
fiduciary duty" solely because such person has caused the account to pay a
higher commission than the lowest rate available. To obtain the benefit of
Section 28(e), the person so exercising investment discretion must make a good
faith determination that the commissions paid are "reasonable in relation to the
value of the brokerage and research services provided viewed in terms of either
that particular transaction or his overall responsibilities with respect to the
accounts as to which he exercises investment discretion." Accordingly, if the
Trust determines in good faith that the amount of commissions charged by a
broker is reasonable in relation to the value of the brokerage and research
products and services provided by such broker, the Trust may pay commissions to
such broker in an amount greater than the amount another firm might charge.
Research products and services provided to the Trust include research reports on
particular industries and companies, economic surveys and analyses,
recommendations as to specific securities and other products or services (e.g.,
quotation equipment and computer related costs and expenses) providing lawful
and appropriate assistance to the Subadviser and its affiliates in the
performance their decision-making responsibilities.
Each year, the Subadviser will consider the amount and nature of the
research products and services provided by other brokers as well as the extent
to which such products and services are relied upon, and attempt to allocate a
portion of the brokerage business of
29
<PAGE>
their clients, such as the Trust, on the basis of such considerations. In
addition, brokers sometimes suggest a level of business they would like to
receive in return for the various services they provide. Actual brokerage
business received by any broker may be less than the suggested allocations, but
can (and often does) exceed the suggestions, because total brokerage is
allocated on the basis of all the considerations described above. In no instance
is a broker excluded from receiving business because it has not been identified
as providing research services. As permitted by Section 28(e), the investment
information received from other brokers may be used by the Investment Adviser
(and its affiliates) in servicing all its accounts and not all such information
may be used by the Subadviser, in its capacity as the Subadviser, in connection
with the Trust. Nonetheless, the Trust believes that such investment information
provides the Trust with benefits by supplementing the research otherwise
available to the Trust.
In certain instances there may be securities that are suitable for a
Fund's portfolio as well as for that of another Fund or one or more of the
other clients of the Subadviser. Investment decisions for a Fund and for the
Subadviser's other clients are made with a view to achieving their respective
investment objectives. It may develop that a particular security is bought or
sold for only one client even though it might be held by, or bought or sold
for, other clients. Likewise, a particular security may be bought for one or
more clients when one or more other clients are selling that same security.
Some simultaneous transactions are inevitable when several clients receive
investment advice from the same investment adviser, particularly when the same
security is suitable for the investment objectives of more than one client.
When two or more clients are simultaneously engaged in the purchase or sale of
the same security, the securities are allocated among clients in a manner
believed to be equitable to each. It is recognized that in some cases this
system could have a detrimental effect on the price or volume of the security
in a particular transaction as far as a Fund is concerned. The Trust believes
that over time its ability to participate in volume transactions will produce
better executions for the Funds. When appropriate, orders for the account of
the Funds are combined with orders for other investment companies or other
clients advised by the Subadviser, including accounts (such as investment
limited partnerships) in which the Investment Adviser or affiliated or
associated persons of the Subadviser are investors or have a financial
interest, in order to obtain a more favorable commission rate. When the same
security is purchased for a Fund and one or more other funds or other clients
on the same day, each party pays the average price and commissions paid are
allocated in direct proportion to the number of shares purchased.
For the fiscal years ended September 30, 1996, 1997 and 1998, the Funds
paid brokerage commissions of $31,875, $212,930 and $214,000, respectively. The
increase in brokerage commissions paid by the Funds from 1996 to 1997 was due
to the significant growth in assets during the 1997 fiscal year.
PORTFOLIO TURNOVER
The annual portfolio turnover rate of a Fund is calculated by dividing the
lesser of the purchase or sales of a Fund's portfolio securities for the year
by the monthly average of the value of the portfolio securities owned by that
Fund during the year. The monthly average is calculated by totalling the values
of the portfolio securities as of the beginning and end of the first month of
the year and as of the end of the succeeding 11 months and dividing the sum by
13. In determining portfolio turnover, securities (including options) that have
maturities at the time of acquisition of one year or less ("short-term
securities"), are excluded. A turnover rate of 100% would occur if all of a
Fund's portfolio securities (other than short-term securities) were replaced
once in a period of one year. It should be noted that if a Fund were to write a
substantial number of options which are exercised, the portfolio turnover rate
of that Fund would increase. Increased portfolio turnover results in increased
brokerage costs that the Trust must pay.
To the extent their portfolios are traded for short-term market
considerations and turnover exceeds 100%, the Funds' annual turnover rate could
be higher than most mutual funds. The portfolio turnover during the Funds'
first fiscal year (1996) was somewhat lower than what may be considered normal
as the Funds were accumulating assets and experienced few investor redemptions.
During the 1997 fiscal year, the Funds experienced rapid growth in assets which
increased the Funds' portfolio turnover ratios. In addition, market volatility
in the equity markets produced increased trading opportunities for the
Phoenix-Seneca Growth and Phoenix-Seneca Mid-Cap "EDGE"(SM) Funds.
30
<PAGE>
MANAGEMENT OF THE TRUST
The Trustees have responsibility for management of the business of the
Trust. The officers of the Trust are responsible for its day to day operation.
Set forth below is certain information concerning the Trustees and officers.
TRUSTEES AND OFFICERS
<TABLE>
<CAPTION>
Name and Title Address Age Principal Occupations During Past Five Years
- ------------------------ ------------------------- ----- -----------------------------------------------------------
<S> <C> <C> <C>
Gail P. Seneca,* 909 Montgomery Street 45 Ms. Seneca has been President and a Trustee of the Trust
President and Trustee San Francisco, CA 94133 since February 1996. Since January 1998, she has
served as Vice President of National Securities &
Research Corporation, an affiliate of PIC and PEPCO.
Since July 1, 1996, she has been President and Chief
Executive and Investment Officer of Seneca. Since
November 1989, she has been Chief Executive and
Investment Officer and a managing general partner of
GMG/Seneca.
Sandra J. Westhoff,* 909 Montgomery Street 39 Ms. Westhoff has been Treasurer of the Trust since
Treasurer San Francisco, CA 94133 February 1996. She also served as a Trustee of the Trust
from February 1996 to February 1998. From September
1994 to present, she has been Chief Administrative
Officer of GMG/Seneca, and, since July 1, 1996, Chief
Operating Officer of Seneca. From 1989 to 1994, she was
Director of Finance for the San Francisco Newspaper
Agency.
Thomas N. Steenburg,* 56 Prospect Street 49 Mr. Steenburg has been Secretary of the Trust since March,
Secretary Hartford, CT 06115 1998. He has also held the following positions: Secretary,
General Counsel and Compliance Officer of Seneca since
June 1997; Vice President, Secretary and Counsel of PIC,
National Securities & Research Corporation, Phoenix
Investment Partners, Ltd. and PEPCO since November
1995, Duff & Phelps Investment Management Co. since
January 1996 and Roger Engemann & Associates, Inc.
since March 1998; Vice President--Compliance of
Phoenix-Aberdeen International Advisers, LLC since May
1996; Assistant Secretary, Phoenix Funds since November
1995, Phoenix Duff & Phelps Institutional Mutual Funds
since February 1996 and Phoenix-Aberdeen Series Fund
since August 1996; and Counsel, Phoenix Home Life
Mutual Insurance Company from October 1991 through
November 1995.
Mary Ann Cusenza,** 909 Montgomery Street 41 Ms. Cusenza has been a Trustee of the Trust since
Trustee San Francisco, CA 94133 February 1996. She is currently a private investor. From
October 1996 to May 1998, she was Vice President and
Chief Financial Officer of Tularik Inc., a biotechnology
company. She joined Apple Computer, Inc. in 1985 and
was a Vice President and Treasurer of Apple Computer,
Inc. from 1992 until February 1996.
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
Name and Title Address Age Principal Occupations During Past Five Years
- -------------------- -------------------------- ----- -------------------------------------------------------
<S> <C> <C> <C>
Harry Dalzell-Payne 330 East 39th Street 69 Mr. Dalzell-Payne has been a Trustee of the Trust since
Trustee Apartment 29G 1998. He has served as a Trustee/Director of the Phoenix
New York, NY 10016 Funds since 1983 and of Phoenix-Aberdeen Series Fund and
Phoenix Duff & Phelps Institutional Mutual Funds since
1996. He has also served as a Director of Duff & Phelps
Utilities Tax Free Income Inc. and Duff & Phelps Utility and
Corporate Bond Trust Inc. since 1995. Previously, he served
as Director of Farragut Mortgage Co., Inc. from 1991 to
1994. Formerly, he was a Major General of the British Army.
Melinda Ellis Evers,** 909 Montgomery Street 37 Ms. Evers has been a Trustee of the Trust since February
Trustee San Francisco, CA 94133 1996. She is a founder and Vice President of Ellis
Partners, Inc., a real estate investment firm, established
in 1993.
Paul E. Erdman,** 909 Montgomery Street 65 Mr. Erdman has been a Trustee of the Trust since
Trustee San Francisco, CA 94133 February 1996. He is an economist and novelist, and,
since 1979, has served on the Board of Advisors of The
University of Georgetown School of Foreign Service.
Norman W. Douglass 72 Spring Lane 65 Mr. Douglass has been a Trustee of the Trust since 1998.
Trustee West Hartford, CT 06107 He is a seasoned investment manager with over 38 years of
investment experience. Most recently he was Investment
Advisor at Crossroads Investment Advisors, L.P., from
1994 to 1998. From 1967 to 1993, he was an investment
manager with Phoenix Home Life Mutual Insurance Company,
where he was head of fixed income operations for fifteen
years.
</TABLE>
---------------
* "Interested persons" within the meaning of the 1940 Act.
** Member of the Trust's Audit Committee.
Compensation of Trustees and Officers
The Funds pay no compensation to its officers or Trustees affiliated with
the Adviser or Subadviser. Each Trustee of the Trust who is not an "interested
person" of the Trust ("Independent Trustee") receives a quarterly retainer of
$2,500 and a fee of $2,500 for each regular, quarterly meeting of the Board of
Trustees attended and is reimbursed for expenses incurred in connection with
such attendance.
The following table sets forth the compensation paid to the Trustees
during the fiscal year ended September 30, 1998.
<TABLE>
<CAPTION>
Total
Pension or Compensation
Aggregate Retirement Benefits from Trust and
Compensation Accrued as Part Fund Complex
Name of Trustee from the Trust of Trust's Expenses (14 Funds)
- --------------------- ---------------- --------------------- ---------------
<S> <C> <C> <C>
Gail P. Seneca $ 0 -- $ 0
Mary Ann Cusenza $20,000 -- $20,000
Melinda Ellis Evers $20,000 -- $20,000
Paul E. Erdman $20,000 -- $20,000
</TABLE>
For services to the Funds and expenses during the last fiscal year, the
Trustees received an aggregate of $60,000.
Officers and Trustees of the Trust who are also principals in and
employees of PIC or Seneca may receive indirect compensation by reason of
investment advisory fees paid by the Trust to PIC in its capacity as the
Adviser.
Principal Shareholders
The following table sets forth information as of December 31, 1998 with
respect to each person who owns of record or is known by the Trust to own of
record or beneficially 5% or more of any class of the Trust's outstanding
equity securities:
32
<PAGE>
<TABLE>
<CAPTION>
Name of Name of Number of Percent
Shareholder Fund and Class Shares of Class
- ---------------------------------------- --------------------------------------- ---------------- ---------
<S> <C> <C> <C>
Amalg Bank of NY Cust Growth Fund Class A Shares 89,360.4430 5.90
UFCW Lcl 50 Pension Plan
Amivest Corp. Disc Invt Mngr
11-15 Union Sq.
New York, NY 10459-2792
Bank of New York Cust FBO Growth Fund Class A Shares 449,538.9530 29.67
Amer Fed of Mus & Employer Pen Fund -
Amivest Corp Dis Inv Mngr
52 Williams St.
New York, NY 10005-2802
Bank of New York Cust. For Equity League Growth Fund Class A Shares 266,691.7940 17.60
Pension Trust Fund
Investment Advisor
1 Wall St., 9th Flr.
New York, NY 10005-2501
Bank of New York Cust Annuity FU of Growth Fund Class A Shares 92,016.6980 6.07
Local One IATSE
Amivest Corp.
Master Tr/Cust Dept, Disc Invt Mgr 717
ATTN: W. Biempi
1 Wall St., 7th Flr.
New York, NY 10005-2501
BT Alex Brown, Inc. Mid-Cap "EDGE"(SM) Class X Shares 73,600,3300 10.82
FBO 761-00796-21 Real Estate Securities Class X Shares 177,386.5200 8.85
P.O. Box 1346
Baltimore, MD 21203-1346
BT Alex Brown, Inc. Mid-Cap "EDGE"(SM) Class X Shares 66,813.0220 9.82
FBO 761-80065-19
P.O. Box 1346
Baltimore, MD 21203-1346
BT Alex Brown, Inc. Real Estate Securities Class X Shares 177,386.5200 8.85
FBO 761-00660-16
P.O. Box 1346
Baltimore, MD 21203-1346
Leonard R. Cowan, TTEE Bond Fund Class A Shares 3,392.2730 5.12
L.R. Cowan Co., Inc. PSP
2222 W. Williams
Phoenix, AZ 85027-1208
Frank X. Desanto TTEE Growth Fund Class B Shares 6,317.9310 6.83
Frank X. Desanto, DMD
Mario V. Greco, DDS, PC
Profit Sharing Plan
1278 72nd St.
Brooklyn, NY 11228-1505
Donaldson Lufkin Jenrette Securities Bond Fund Class C Shares 7,659.6280 15.90
Corp., Inc. Growth Fund Class C Shares 3,474.3220 16.18
P.O. Box 2052 Mid-Cap "EDGE"(SM) Class C Shares 5,415.3480 29.11
Jersey City, NJ 07303-2052 Real Estate Securities Class A Shares 5,824.2450 5.00
Real Estate Securities Class C Shares 1,357.4190 13.95
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
Name of Name of Number of Percent
Shareholder Fund and Class Shares of Class
- ------------------------------------ --------------------------------------- ------------------ ---------
<S> <C> <C> <C>
First Trust Corp TTEE Mid-Cap "EDGE"(SM) Class C Shares 1,997.7420 10.74
FBO Penne Goldstein (IRA)
P.O. Box 173301
Denver, CO 80217-3301
First Trust Corp TTEE Mid-Cap "EDGE"(SM) Class C Shares 954.5030 5.13
FBO Michael M. Turner (IRA)
P.O. Box 173301
Denver, CO 80217-3301
First Union National Bank Growth Fund Class B Shares 6,142.5060 6.64
FBO Robert Young (IRA)
Mutual Funds Div Procssg PA490
530 Walnut St.
Philadelphia, PA 19106-3620
Illinois Central Hospital Assoc. Growth Fund Class X Shares 113,025.5210 6.38
Ken Novander, Luke LaRocca
2024 Hickory Rd., Ste. 3
Homewood, IL 60430-2125
MLPF&S for the sole benefit of its Bond Fund Class A Shares 12,426.7830 18.76
customers Bond Fund Class B Shares 18,947.7750 47.76
ATTN: Fund Administration Bond Fund Class C Shares 21,324.8580 44.28
4800 Deer Lake Dr., E., 3rd Flr. Growth Fund Class B Shares 9,735.5920 10.52
Jacksonville, FL 32246-6484
Susan R. Mintz Real Estate Securities Class A Shares 18,322.3640 15.74
3000 Saint Charles Ave., Apt. 415
New Orleans, LA 70115-4473
Pacific Bank Cust Real Estate Securities Class X Shares 338,019.2380 16.86
Blair Walker Stratford, TTEE
Blair Walker Stratford 1994 Family
Trust
ATTN: Ginger Bradley
100 Montgomery St.
San Francisco, CA 94104-4397
Pacific Bank Cust Real Estate Securities Class X Shares 301,139.1210 15.02
Walker Security Investments, LLC
ATTN: Ginger Bradley
100 Montgomery St.
San Francisco, CA 94104-4397
Phoenix Equity Planning Corp. Bond Fund Class A Shares 9,634.6880 14.55
ATTN: Corporate Accounting Dept. Bond Fund Class B Shares 9,600.5990 24.20
c/o Gene Charon, Controller Bond Fund Class C Shares 9,599.7380 19.93
100 Bright Meadow Blvd. Growth Fund Class B Shares 5,930.9790 6.41
Enfield, CT 06082-1957 Growth Fund Class C Shares 5,931.2790 27.63
Mid-Cap "EDGE"(SM) Class B Shares 6,061.5730 26.25
Mid-Cap "EDGE"(SM) Class C Shares 6,061.5730 32.58
Real Estate Securities Class B Shares 8,309.0790 46.89
Real Estate Securities Class C Shares 8,309.4340 85.37
Phoenix Home Life Bond Fund Class X Shares 1,454,463.6610 54.46
ATTN: Pam Levesque
56 Prospect St.
Hartford, CT 06103-2818
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
Name of Name of Number of Percent
Shareholder Fund and Class Shares of Class
- ------------------------------------------ --------------------------------------- --------------- ---------
<S> <C> <C> <C>
Phoenix Savings & Investment Plan Mid-Cap "EDGE"(SM) Class A Shares 36,596.2230 11.63
TTEEs
c/o Howard Beardsley, HR 3E103
100 Bright Meadow Blvd.
P.O. Box 1900
Enfield, CT 06083-1900
Resources Trust Company TTEE Growth Fund Class C Shares 1,917.6170 8.93
FBO Patrick L. Chavez (IRA)
P.O. Box 5900
Denver, CO 80217-5900
Resources Trust Company TTEE Mid-Cap "EDGE"(SM) Class B Shares 1,499.2360 6.49
FBO Denise McMurphy-Austin (IRA)
P.O. Box 5900
Denver, CO 80217-5900
Resources Trust Company TTEE Mid-Cap "EDGE"(SM) Class B Shares 1,421.8530 6.16
FBO Jean E. Johnson-Williams (IRA)
P.O. Box 5900
Denver, CO 80217-5900
Resources Trust Company TTEE Mid-Cap "EDGE"(SM) Class B Shares 1,178.8050 5.10
FBO Carla White (IRA)
P.O. Box 5900
Denver, CO 80217-5900
Richard E. Ritchie Bond Fund Class B Shares 3,903.6690 9.84
Helen A Ritchie, JT WROS
502 Berkley Rd.
Narberth, PA 19072-1707
Eunice B. Robinson, TTEE Real Estate Securities Class B Shares 8,830.5060 49.84
Eunice B. Robinson Trust
FBO Eunice B. Robinson
585 Rosecarns
San Diego, CA 92106-3456
Charles Schwab & Co., Inc. Bond Fund Class X Shares 330,028.3130 12.36
Reinvest Account Growth Fund Class X Shares 174,572.3800 9.85
ATTN: Mutual Fund Dept. Mid-Cap "EDGE"(SM) Class X Shares 70,777.7480 10.41
101 Montgomery St.
San Francisco, CA 94104-4122
Charles Schwab & Co., Inc. Growth Fund Class A Shares 144,358.5960 9.53
Special Custody Acct. for the Exclusive Mid-Cap "EDGE"(SM) Class A Shares 56,147.3430 17.84
Benefit of our Customers Real Estate Securities Class A Shares 42,070.3200 36.14
ATTN: Mutual Fund Operations
101 Montgomery St.
San Francisco, CA 94104-4122
State Street Bank & Trust Co. Bond Fund Class A Shares 14,403.2770 21.75
Custodian for the IRA Rollover of
William Palmer
RR 1 Box 1050
Carmel, ME 04419-9704
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
Name of Name of Number of Percent
Shareholder Fund and Class Shares of Class
- ---------------------------------- --------------------------------------- --------------- ---------
<S> <C> <C> <C>
State Street Bank & Trust Co. Bond Fund Class A Shares 4,086.2240 6.17
Custodian for the IRA rollover of
Sarah C. McCombs
1727 Northfield Dr.
Overland, MO 63114-2512
State Street Bank & Trust Co. Bond Fund Class B Shares 2,231.4390 5.63
Custodian for the IRA of
Frank R. Altieri, Sr.
38 Wheeler Rd.
Wayne, N.J. 07470-8206
State Street Bank & Trust Co. Growth Fund Class C Shares 1,769.7900 8.25
C/F Roman Catholic Diocese of
Des Moines TSA
FBO Joanne G. Dalhoff
2103 Fillmore Ave.
Ames, IA 50010-4501
State Street Bank & Trust Co. Mid-Cap "EDGE"(SM) Class B Shares 1,992.4570 8.63
Custodian for the IRA rollover of
Richard W. Thivierge
1410 Mapleton Ave.
Suffield, CT 06078-1341
State Street Bank & Trust Co. Real Estate Securities Class A Shares 6,716.9840 5.77
Custodian for the IRA of
Nancy W. Silberman
270 Euclid Ave.
Winnetka, IL 60093-3605
Sterling Trust Co., TTEE Growth Fund Class C Shares 1,695.4270 7.90
FBO Kevin H. Mogard (IRA)
P.O. Box 2526
Waco, TX 76702-2526
Robert A. Swanson, TTEE Growth Fund Class X Shares 168,431.1450 9.50
Robert A. Swanson Charitable
Remainder Trust
c/o K & E Management Ltd.
400 S. El Camino Real, Ste. 1289
San Mateo, CA 94402-1704
Wheat First Securities, Inc. Bond Fund Class C Shares 3,037.2600 6.31
Joseph A. Decapua (IRA)
3700 Ranee St.
Easton, PA 18045-3037
</TABLE>
As of December 31, 1998, the Trustees and officers of the Trust as a group
owned less than 1% of the Funds outstanding shares.
36
<PAGE>
OTHER INFORMATION
Capital Stock and Organization
As a Delaware business trust, the Trust's operations are governed by its
Agreement and Declaration of Trust dated December 18, 1995 (the "Declaration of
Trust"). A copy of the Trust's Certificate of Trust, also dated December 18,
1995, is on file with the Office of the Secretary of State of the State of
Delaware. Upon the initial purchase of shares, the shareholder agrees to be
bound by the Trust's Declaration of Trust, as amended from time to time.
Generally, Delaware business trust shareholders are not personally liable for
obligations of the Delaware business trust under Delaware law. The Delaware
Business Trust Act (the "Delaware Act") provides that a shareholder of a
Delaware business trust shall be entitled to the same limitation of liability
extended to shareholders of private for-profit corporations. The Trust's
Declaration of Trust expressly provides that the Trust has been organized under
the Delaware Act and that the Declaration of Trust is to be governed by
Delaware law. It is nevertheless possible that a Delaware business trust, such
as the Trust, might become a party to an action in another state whose courts
refused to apply Delaware law, in which case the Trust's shareholders could be
subject to personal liability.
To guard against this risk, the Declaration of Trust (i) contains an
express disclaimer of shareholder liability for acts or obligations of the
Trust and provides that notice of such disclaimer may be given in each
agreement, obligation and instrument entered into or executed by the Trust or
its Trustees, (ii) provides for the indemnification out of Trust property of
any shareholders held personally liable for any obligations of the Trust or any
series of the Trust and (iii) provides that the Trust shall, upon request,
assume the defense of any claim made against any shareholder for any act or
obligation of the Trust and satisfy any judgment thereon. Thus, the risk of a
Trust shareholder incurring financial loss beyond his or her investment because
of shareholder liability is limited to circumstances in which all of the
following factors are present: (1) a court refused to apply Delaware law; (2)
the liability arose under tort law or, if not, no contractual limitation of
liability was in effect; and (3) the Trust itself would be unable to meet its
obligations. In the light of Delaware law, the nature of the Trust's business
and the nature of its assets, the risk of personal liability to a Fund
shareholder is remote.
The Declaration of Trust further provides that the Trust shall indemnify
each of its Trustees and officers against liabilities and expenses reasonably
incurred by them, in connection with, or arising out of, any action, suit or
proceeding, threatened against or otherwise involving such Trustee or officer,
directly or indirectly, by reason of being or having been a Trustee or officer
of the Trust. The Declaration of Trust does not authorize the Trust to
indemnify any Trustee or officer against any liability to which he or she would
otherwise be subject by reason of or for willful misfeasance, bad faith, gross
negligence or reckless disregard of such person's duties.
Under the Declaration of Trust, the Trust is not required to hold annual
meetings to elect Trustees or for other purposes. It is not anticipated that
the Trust will hold shareholders' meetings unless required by law or the
Declaration of Trust. The Trust will be required to hold a meeting to elect
Trustees to fill any existing vacancies on the Board if, at any time, fewer
than a majority of the Trustees have been elected by the shareholders of the
Trust. The Board is required to call a meeting for the purpose of considering
the removal of persons serving as Trustee if requested in writing to do so by
the holders of not less than 10% of the outstanding shares of the Trust.
Shares of the Trust do not entitle their holders to cumulative voting
rights, so that the holders of more than 50% of the outstanding shares of the
Trust may elect all of the Trustees, in which case the holders of the remaining
shares would not be able to elect any Trustees. As determined by the Trustees,
shareholders are entitled to one vote for each dollar of net asset value
(number of shares held times the net asset value of the applicable class of the
applicable Fund).
Pursuant to the Declaration of Trust, the Trustees may create additional
funds by establishing additional series of shares in the Trust. The
establishment of additional series would not affect the interests of current
shareholders in the existing four Funds. As of the date of this Statement of
Additional Information, the Trustees have not determined to establish another
series of shares in the Trust.
Pursuant to the Declaration of Trust, the Trustees may establish and issue
multiple Classes of Shares for each Fund. As of the date of this Statement of
Additional Information, the Trustees have authorized the issuance of four
Classes of Shares for each series, designated Class X, Class A, Class B and
Class C Shares.
Each share of each class of a Fund is entitled to such dividends and
distributions out of the income earned on the assets belonging to that Fund
which are attributable to such class as are declared in the discretion of the
Trustees. In the event of the liquidation or dissolution of the Trust, shares
of each class of each Fund are entitled to receive their proportionate share of
the assets which are attributable to such class of such Fund and which are
available for distribution as the Trustees in their sole discretion may
determine. Shareholders are not entitled to any preemptive, conversion or
subscription rights. All shares, when issued, will be fully paid and
non-assessable by the Trust.
Subject to shareholder approval (if then required), the Trustees may
authorize each Fund to invest all or part of its investable assets in a single
open-end investment company that has substantially the same investment
objectives, policies and restrictions as the Fund. As of the date of this
Statement of Additional Information, the Trustees do not have any plan to
authorize any Fund to so invest its assets.
37
<PAGE>
"Phoenix-Seneca Funds" is the designation of the Trust for the time being
under the Declaration of Trust, and all persons dealing with a Fund must look
solely to the property of that Fund for the enforcement of any claims against
that Fund as neither the Trustees, officers, agents nor shareholders assume any
personal liability for obligations entered into on behalf of a Fund or the
Trust. No Fund is liable for the obligations of any other Fund. Since the Funds
use combined prospectuses, however, it is possible that one Fund might become
liable for a misstatement or omission in its prospectus regarding the other
Fund with which its disclosure is combined. The Trustees have considered this
factor in approving the use of the combined prospectuses.
Custodian
The Custodian for the Trust is Investors Fiduciary Trust Company at 801
Pennsylvania Street, Kansas City, Missouri, 64105. In this capacity, the
Custodian holds the assets of the Trust.
Transfer Agent
Phoenix Equity Planning Corporation acts as transfer agent for the Trust
and may enter into agreements with subagents to perform certain functions
including: processing purchases, transfers and redemptions of shares; dividend
disbursing agent; maintaining records and handling correspondence with respect
to shareholder accounts. PEPCO has retained State Street as subagent and PEPCO
will pay State Street's fee.
Independent Accountants
PricewaterhouseCoopers LLP, 160 Federal Street, Boston, Massachusetts
02110, are the independent accountants for the Trust. Professional services
performed by PricewaterhouseCoopers LLP include audits of the financial
statements of the Trust, consultation on financial, accounting and reporting
matters, review and consultation regarding various filings with the SEC and
attendance at the meetings of the Audit Committee and Trustees. Deloitte &
Touche LLP were the independent accountants for the Trust prior to 1998.
Financial Statements
The Funds' financial statements for the fiscal years ended September 30,
1998 and 1997 are included in the Funds' 1998 Annual Report and 1997 Annual
Report, respectively, and are incorporated herein by reference.
38
<PAGE>
APPENDIX
DESCRIPTION OF CERTAIN BOND RATINGS
Moody's Investors Service, Inc.
Aaa--Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective elements
are likely to change, such changes as can be visualized are most unlikely to
impair the fundamentally strong position of such issues.
Aa--Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group the comprise what are generally known as
high grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuations of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat larger than in Aaa
securities.
A--Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving security
to principal and interest are considered adequate, but elements may be present
which suggest a susceptibility to impairment sometime in the future.
Baa--Bonds that are rated Baa are considered as medium grade obligations,
i.e., they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Moody's also provides credit ratings for preferred stocks. Preferred stock
occupies a junior position to bonds within a particular capital structure and
that these securities are rated within the universe of preferred stocks.
aaa--An issue that is rated "aaa" is considered to be a top-quality
preferred stock. This rating indicates good asset protection and the least risk
of dividend impairment within the universe of preferred stocks.
aa--An issue that is rated "aa" is considered a high-grade preferred
stock. This rating indicates that there is a reasonable assurance that earnings
and asset protection will remain relatively well maintained in the foreseeable
future.
a--An issue that is rated "a" is considered to be an upper-medium grade
preferred stock. While risks are judged to be somewhat greater than in the
"aaa" and "aa" classifications, earnings and asset protections are,
nevertheless, expected to be maintained at adequate levels.
baa--An issue that is rated "baa" is considered to be a medium grade
preferred stock, neither highly protected nor poorly secured. Earnings and
asset protection appear adequate at present but may be questionable over any
great length of time.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition
of the differences between short-term and long-term credit risk. Loans bearing
the designation MIG 1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and
broad-based access to the market for refinancing, or both. Loans bearing the
designation MIG 2 are of high quality, with margins of protection ample
although not so large as in the preceding group. A short term issue having a
demand feature (i.e. payment relying on external liquidity and usually payable
on demand rather than fixed maturity dates) is differentiated by Moody's with
the use of the Symbol VMIG, instead of MIG.
Moody's also provides credit ratings for tax-exempt commercial paper.
These are promissory obligations (1) not having an original maturity in excess
of nine months, and (2) backed by commercial banks. Notes bearing the
designation P-1 have a superior capacity for repayment. Notes bearing the
designation P-2 have a strong capacity for repayment.
Standard & Poor's Corporation
AAA--Bonds rated AAA have the higher rating assigned by Standard & Poor's
Corporation. Capacity to pay interest and repay principal is extremely strong.
AA--Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.
A--Bonds rated A have a very strong capacity to pay interest and repay
principal, although they are somewhat more susceptible to the adverse effects
of changes in circumstances and economic conditions than bonds in higher rated
categories.
BBB--Bonds rated BBB are regarded as having an adequate capacity to pay
interest and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
bonds in this category than in higher rated categories.
39
<PAGE>
S&P's top ratings for municipal notes issued after July 29, 1984 are SP-1
and SP-2. The designation SP-1 indicates a very strong capacity to pay
principal and interest. A "+" is added for those issues determined to possess
overwhelming safety characteristics. An "SP-2" designation indicates a
satisfactory capacity to pay principal and interest.
Commercial paper rated A-2 or better by S&P is described as having a very
strong degree of safety regarding timeliness and capacity to repay.
Additionally, as a precondition for receiving an S&P commercial paper rating, a
bank credit line and/or liquid assets must be present to cover the amount of
commercial paper outstanding at all times.
The Moody's Prime-2 rating and above indicates a strong capacity for
repayment of short-term promissory obligations.
GLOSSARY
Commercial Paper: Short-term promissory notes of large corporations with
excellent credit ratings issued to finance their current operations.
Certificates of Deposit: Negotiable certificates representing a commercial
bank's obligations to repay funds deposited with it, earning specified rates of
interest over given periods.
Bankers' Acceptances: Negotiable obligations of a bank to pay a draft
which has been drawn on it by a customer. These obligations are backed by large
banks and usually are backed by goods in international trade.
Time Deposits: Non-negotiable deposits in a banking institution earning a
specified interest rate over a given period of time.
Corporate Obligations: Bonds and notes issued by corporations and other
business organizations in order to finance their long-term credit needs.
40
<PAGE>
Phoenix-Seneca Growth Fund
INVESTMENTS AT SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
------- ---------
<S> <C> <C>
COMMON STOCKS--91.0%
AUTO PARTS & EQUIPMENT--2.0%
Dana Corp............................................ 26,510 $ 989,154
---------
BANKS (MONEY CENTER)--1.6%
NationsBank Corp..................................... 14,700 786,450
---------
BEVERAGES (ALCOHOLIC)--3.0%
Anheuser-Busch Companies, Inc........................ 26,840 1,449,360
---------
BROADCASTING (TELEVISION, RADIO & CABLE)--2.0%
Chancellor Media Corp. (b)........................... 29,560 986,565
---------
CHEMICALS (DIVERSIFIED)--2.9%
Monsanto Co.......................................... 25,480 1,436,435
---------
COMMUNICATIONS EQUIPMENT--1.1%
Lucent Technologies, Inc............................. 7,860 542,831
---------
COMPUTERS (HARDWARE)--7.0%
Compaq Computer Corp................................. 29,880 944,955
Dell Computer Corp. (b).............................. 22,920 1,506,990
International Business Machines Corp................. 7,580 970,240
---------
3,422,185
---------
COMPUTERS (NETWORKING)--1.4%
Cisco Systems, Inc. (b).............................. 11,380 703,426
---------
COMPUTERS (PERIPHERALS)--1.9%
EMC Corp. (b)........................................ 16,500 943,594
---------
<CAPTION>
SHARES VALUE
------- ---------
<S> <C> <C>
COMPUTERS (SOFTWARE & SERVICES)--3.1%
Microsoft Corp. (b).................................. 13,690 $1,506,756
---------
CONSUMER FINANCE--2.3%
Household International, Inc......................... 29,350 1,100,625
---------
DISTRIBUTORS (FOOD & HEALTH)--3.0%
Cardinal Health, Inc................................. 14,110 1,456,857
---------
ELECTRICAL EQUIPMENT--3.3%
General Electric Co.................................. 20,480 1,629,440
---------
ELECTRONICS (SEMICONDUCTORS)--4.5%
Intel Corp........................................... 13,800 1,183,350
Texas Instruments, Inc............................... 19,550 1,031,262
---------
2,214,612
---------
FINANCIAL (DIVERSIFIED)--3.2%
American Express Co.................................. 8,770 680,771
SunAmerica, Inc...................................... 14,320 873,520
---------
1,554,291
---------
FOODS--4.9%
General Mills, Inc................................... 14,340 1,003,800
Hershey Foods Corp................................... 20,210 1,383,122
---------
2,386,922
---------
</TABLE>
See Notes to Financial Statements 7
<PAGE>
Phoenix-Seneca Growth Fund
<TABLE>
<CAPTION>
SHARES VALUE
------- ----------
HEALTH CARE (DIVERSIFIED)--7.1%
<S> <C> <C>
Bristol-Myers Squibb Co.............................. 14,900 $1,547,737
McKesson Corp........................................ 21,080 1,931,455
---------
3,479,192
---------
HEALTH CARE (HOSPITAL MANAGEMENT)--2.3%
Columbia/HCA Healthcare Corp......................... 55,220 1,107,851
---------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--1.5%
Bausch & Lomb, Inc................................... 17,940 706,388
---------
HOUSEHOLD PRODUCTS (NON-DURABLES)--4.2%
Colgate-Palmolive Co................................. 19,360 1,326,160
Procter & Gamble Co.................................. 10,380 736,331
---------
2,062,491
---------
INSURANCE (MULTI-LINE)--2.3%
Travelers Group, Inc................................. 30,310 1,136,625
---------
INSURANCE (PROPERTY-CASUALTY)--1.5%
Allstate Corp........................................ 17,280 720,360
---------
MANUFACTURING (DIVERSIFIED)--2.8%
Tyco International Ltd............................... 24,400 1,348,100
---------
OIL & GAS (DRILLING & EQUIPMENT)--1.7%
Schlumberger Ltd..................................... 16,000 805,000
---------
OIL (INTERNATIONAL INTEGRATED)--2.0%
Exxon Corp........................................... 14,180 995,259
---------
RESTAURANTS--2.9%
McDonald's Corp...................................... 23,450 1,399,672
---------
RETAIL (BUILDING SUPPLIES)--1.9%
Masco Corp........................................... 38,340 944,123
---------
RETAIL (FOOD CHAINS)--1.5%
Safeway, Inc. (b).................................... 15,550 721,131
---------
RETAIL (GENERAL MERCHANDISE)--1.4%
Dayton Hudson Corp................................... 18,590 664,593
---------
RETAIL (SPECIALTY-APPAREL)--1.6%
TJX Companies, Inc................................... 42,420 755,606
---------
<CAPTION>
SHARES VALUE
------- ---------
<S> <C> <C>
SERVICES (DATA PROCESSING)--2.1%
Automatic Data Processing, Inc....................... 13,450 $1,005,388
---------
TELECOMMUNICATIONS (LONG DISTANCE)--5.1%
AT&T Corp............................................ 13,040 762,025
MCI WorldCom, Inc.................................... 34,880 1,704,760
---------
2,466,785
---------
WASTE MANAGEMENT--1.9%
Waste Management, Inc................................ 18,880 907,420
---------
TOTAL COMMON STOCKS
(Identified cost $42,393,415)..................................... 44,335,487
---------
FOREIGN COMMON STOCKS--2.5%
OIL (INTERNATIONAL INTEGRATED)--2.5%
Royal Dutch Petroleum Co. NY Registered Shares
(Netherlands)....................................... 25,750 1,226,344
---------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $1,259,367)...................................... 1,226,344
---------
TOTAL LONG-TERM INVESTMENTS--93.5%
(Identified cost $43,652,782)..................................... 45,561,831
---------
<CAPTION>
PAR
VALUE
(000)
-------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--5.6%
REPURCHASE AGREEMENT--5.6%
State Street Bank & Trust Co. repurchase agreement,
4.75%, dated 9/30/98 due 10/1/98, repurchase price
$2,732,360 collateralized by U.S. Treasury Note 7%,
7/15/06, market value $2,791,197.................... $2,732 2,732,000
---------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $2,732,000)...................................... 2,732,000
---------
TOTAL INVESTMENTS--99.1%
(Identified cost $46,384,782)..................................... 48,293,831(a)
Cash and receivables, less liabilities--0.9%...................... 427,589
----------
NET ASSETS--100.0%.................................................. $48,721,420
----------
----------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $5,240,041 and gross
depreciation of $3,398,173 for federal income tax purposes. At September
30, 1998, the aggregate cost of securities for federal income tax purposes
was $46,451,963.
(b) Non-income producing.
8 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $46,384,782) $ 48,293,831
Cash 258
Receivables
Investment securities sold 1,105,814
Dividends and interest 40,309
Fund shares sold 207,928
Deferred organization expenses 24,185
Prepaid expenses 6,441
Other assets 2,898
-------------
Total assets 49,681,664
-------------
LIABILITIES
Payables
Investment securities purchased 841,506
Fund shares repurchased 29,807
Investment advisory fee 24,586
Transfer agent fee 17,000
Distribution fee 12,241
Administration fee 5,753
Trustees' fee 2,500
Accrued expenses 26,851
-------------
Total liabilities 960,244
-------------
NET ASSETS $ 48,721,420
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 41,788,000
Accumulated net realized gain 5,024,371
Net unrealized appreciation 1,909,049
-------------
NET ASSETS $ 48,721,420
-------------
-------------
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $30,712,946) 1,865,630
Net asset value and offering price per share $16.46
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $17,363,523) 1,069,669
Net asset value per share $16.23
Offering price per share $16.23/(1-4.75%) $17.04
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $518,682) 32,039
Net asset value and offering price per share $16.19
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $126,269) 7,802
Net asset value and offering price per share $16.18
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 437,453
Interest 84,120
Foreign taxes withheld (8,786)
------------
Total investment income 512,787
------------
EXPENSES
Investment advisory fee 307,240
Distribution fee--Class A 20,872
Distribution fee--Class B 445
Distribution fee--Class C 255
Administration fee 55,207
Custody and accounting 49,963
Transfer agent 39,386
Registration 25,275
Trustees 17,549
Amortization of deferred organization expenses 9,674
Professional 8,003
Printing 6,189
Miscellaneous 5,163
------------
Total expenses 545,221
Less expenses borne by investment adviser (8,845)
------------
Net expenses 536,376
------------
NET INVESTMENT LOSS (23,589)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 5,786,850
Net change in unrealized appreciation (depreciation) on
investments (3,716,413)
------------
NET GAIN ON INVESTMENTS 2,070,437
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 2,046,848
------------
------------
</TABLE>
See Notes to Financial Statements 9
<PAGE>
Phoenix-Seneca Growth Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income (loss) $ (23,589) $ 57,732
Net realized gain 5,786,850 2,408,148
Net change in unrealized appreciation
(depreciation) (3,716,413) 5,006,042
------------------- -------------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 2,046,848 7,471,922
------------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class X (28,234) (99,739)
Net investment income--Class A -- (3)
Net investment income--Class B -- --
Net investment income--Class C -- --
Net realized gains--Class X (2,638,126) (997,531)
Net realized gains--Class A (456,891) (19,063)
Net realized gains--Class B -- --
Net realized gains--Class C -- --
------------------- -------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (3,123,251) (1,116,336)
------------------- -------------------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (285,390
and 1,193,698 shares, respectively) 4,884,932 16,740,404
Net asset value of shares issued from
reinvestment of distributions
(175,598 and 83,095 shares,
respectively) 2,655,713 1,095,100
Cost of shares repurchased (669,955
and 142,301 shares, respectively) (11,501,669) (2,144,300)
------------------- -------------------
Total (3,961,024) 15,691,204
------------------- -------------------
CLASS A
Proceeds from sales of shares (903,203
and 410,550 shares, respectively) 16,095,224 5,770,465
Net asset value of shares issued from
reinvestment of distributions
(30,397 and 1,364 shares,
respectively) 454,436 17,844
Cost of shares repurchased (233,349
and 76,718 shares, respectively) (3,581,463) (1,114,710)
------------------- -------------------
Total 12,968,197 4,673,599
------------------- -------------------
CLASS B
Proceeds from sales of shares (32,039
and 0 shares, respectively) 544,661 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (0 and 0
shares, respectively) -- --
------------------- -------------------
Total 544,661 --
------------------- -------------------
CLASS C
Proceeds from sales of shares (7,802
and 0 shares, respectively) 139,674 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (0 and 0
shares, respectively) -- --
------------------- -------------------
Total 139,674 --
------------------- -------------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 9,691,508 20,364,803
------------------- -------------------
NET INCREASE IN NET ASSETS 8,615,105 26,720,389
NET ASSETS
Beginning of period 40,106,315 13,385,926
------------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$0 AND $28,234, RESPECTIVELY) $48,721,420 $40,106,315
------------------- -------------------
------------------- -------------------
</TABLE>
10 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS X
-------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/8/96 TO
1998 1997 9/30/96
----------- ----------- ------------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 16.43 $ 13.74 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.00(8) 0.03(1) 0.03(1)
Net realized and unrealized gain 1.28 3.50 3.71
----------- ----------- ------
TOTAL FROM INVESTMENT
OPERATIONS 1.28 3.53 3.74
----------- ----------- ------
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.02) (0.07) --
Dividends from net realized gains (1.23) (0.77) --
----------- ----------- ------
TOTAL DISTRIBUTIONS (1.25) (0.84) --
----------- ----------- ------
Change in net asset value 0.03 2.69 3.74
----------- ----------- ------
NET ASSET VALUE, END OF PERIOD $ 16.46 $ 16.43 $ 13.74
----------- ----------- ------
----------- ----------- ------
Total return(3) 8.48% 27.27% 37.40%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $30,713 $34,093 $12,920
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.14% 1.52%(6) 0.81%(4)(6)
Net investment income (loss) 0.02% 0.31% 0.76%(4)
Portfolio turnover 166% 145.69% 87.66%(5)
<CAPTION>
CLASS A
-------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/8/96 TO
1998 1997 9/30/96
----------- ----------- ------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 16.28 $ 13.63 $ 10.00
Income from investment operations:
Net investment income (loss) (0.06)(8) (0.08)(2) --(2)
Net realized and unrealized gain 1.24 3.50 3.63
----------- ----------- ------
TOTAL FROM INVESTMENT
OPERATIONS 1.18 3.42 3.63
----------- ----------- ------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- -- --
Dividends from net realized gains (1.23) (0.77) --
----------- ----------- ------
TOTAL DISTRIBUTIONS (1.23) (0.77) --
----------- ----------- ------
Change in net asset value (0.05) 2.65 3.63
----------- ----------- ------
NET ASSET VALUE, END OF PERIOD $ 16.23 $ 16.28 $ 13.63
----------- ----------- ------
----------- ----------- ------
Total return(3) 7.93% 26.51% 36.30%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $17,364 $6,013 $466
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.55% 2.48%(7) 1.46%(4)(7)
Net investment income (loss) (0.36)% (0.62)% 0.16%(4)
Portfolio turnover 166% 145.69% 87.66%(5)
</TABLE>
(1) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the
investment adviser had not waived fees and reimbursed expenses, net
investment income (loss) per share would have been $0.03 and $(0.09) for
the year ended September 30, 1997 and the period ended September 30, 1996,
respectively.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the
investment adviser had not waived fees and reimbursed expenses, net
investment income (loss) per share would have been $(0.09) and $(0.34) for
the year ended September 30, 1997 and the period ended September 30, 1996,
respectively.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.52% and
3.49% for the year ended September 30, 1997 and the period ended September
30, 1996, respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.63% and
14.01% for the year ended September 30, 1997 and the period ended September
30, 1996, respectively.
(8) Computed using average shares outstanding.
See Notes to Financial Statements 11
<PAGE>
Phoenix-Seneca Growth Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS B CLASS C
----------- -----------
FROM FROM
INCEPTION INCEPTION
7/1/98 TO 7/1/98 TO
9/30/98 9/30/98
----------- -----------
<S> <C> <C>
Net asset value, beginning of
period $ 18.71 $ 18.71
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.04)(1)(8) (0.06)(2)(8)
Net realized and unrealized gain
(loss) (2.48) (2.47)
------ ------
TOTAL FROM INVESTMENT
OPERATIONS (2.52) (2.53)
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- --
Dividends from net realized gains -- --
------ ------
TOTAL DISTRIBUTIONS -- --
------ ------
Change in net asset value (2.52) (2.53)
------ ------
NET ASSET VALUE, END OF PERIOD $ 16.19 $ 16.18
------ ------
------ ------
Total return(3) (13.47)%(5) (13.52)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $519 $126
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.60%(4)(6) 2.60%(4)(7)
Net investment income (loss) (1.12)%(4) (1.39)%(4)
Portfolio turnover 166% 166%
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.36) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.79) for the period ended September 30, 1998.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 12.48%
for the period ended September 30, 1998.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 20.24%
for the period ended September 30, 1998.
(8) Computed using average shares outstanding.
12 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
INVESTMENTS AT SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
COMMON STOCKS--87.9%
AEROSPACE/DEFENSE--1.3%
Tristar Aerospace Co. (b)........ 17,470 $ 168,149
------------
BANKS (MAJOR REGIONAL)--7.6%
AmSouth Bancorporation........... 7,930 270,611
Comerica, Inc.................... 6,935 380,125
Northern Trust Corp.............. 4,760 324,870
-----------
975,606
-----------
BROADCASTING (TELEVISION, RADIO & CABLE)--3.1%
Chancellor Media Corp. (b)....... 9,370 312,724
Young Broadcasting, Inc. Class A
(b)............................. 2,580 87,720
-----------
400,444
-----------
COMMUNICATIONS EQUIPMENT--2.6%
Ascend Communications, Inc.
(b)............................. 7,350 334,425
-----------
COMPUTERS (SOFTWARE & SERVICES)--12.8%
America Online, Inc. (b)......... 2,150 239,187
Computer Horizons Corp. (b)...... 12,330 307,479
Compuware Corp. (b).............. 7,200 423,900
Documentum, Inc. (b)............. 7,460 295,602
VERITAS Software Corp. (b)....... 6,800 375,700
-----------
1,641,868
ELECTRONICS (INSTRUMENTATION)--6.1%
Flextronics International Ltd.
(b)............................. 6,750 239,203
Gemstar International Group Ltd.
(b)............................. 6,960 322,770
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
ELECTRONICS (INSTRUMENTATION)--CONTINUED
Micron Electronics, Inc. (b)..... 12,880 $ 225,400
-----------
787,373
-----------
ELECTRONICS (SEMICONDUCTORS)--5.3%
Micron Technology, Inc........... 11,440 348,205
Xilinx, Inc. (b)................. 9,560 334,600
-----------
682,805
-----------
HEALTH CARE (DIVERSIFIED)--7.6%
McKesson Corp.................... 6,020 551,582
Mylan Laboratories, Inc.......... 14,470 426,865
-----------
978,447
-----------
HEALTH CARE (HOSPITAL MANAGEMENT)--1.4%
Health Management Associates,
Inc. (b)........................ 9,820 179,215
-----------
HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--11.2%
Allegiance Corp.................. 10,880 323,680
Bausch & Lomb, Inc............... 9,850 387,844
Ocular Sciences, Inc. (b)........ 14,170 297,570
Sofamor Danek Group, Inc. (b).... 4,820 428,980
-----------
1,438,074
-----------
HOUSEHOLD FURNITURE & APPLIANCES--1.8%
Maytag Corp...................... 4,870 232,542
-----------
</TABLE>
16 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
OFFICE EQUIPMENT & SUPPLIES--2.4%
Miller (Herman), Inc............. 15,550 $ 307,112
-----------
OIL (DOMESTIC INTEGRATED)--2.0%
USX-Marathon Group............... 7,140 253,024
-----------
RESTAURANTS--2.7%
CKE Restaurants, Inc............. 11,770 350,158
-----------
RETAIL (DISCOUNTERS)--2.0%
Dollar Tree Stores, Inc. (b)..... 8,220 257,389
-----------
RETAIL (GENERAL MERCHANDISE)--2.8%
Kmart Corp. (b).................. 30,380 362,661
-----------
RETAIL (SPECIALTY)--1.8%
Staples, Inc. (b)................ 7,980 234,413
-----------
RETAIL (SPECIALTY-APPAREL)--2.1%
TJX Companies, Inc............... 15,130 269,503
-----------
SERVICES (ADVERTISING/MARKETING)--3.3%
Outdoor Systems, Inc. (b)........ 21,455 418,373
-----------
SERVICES (COMMERCIAL & CONSUMER)--1.6%
GATX Corp........................ 5,950 196,722
-----------
SERVICES (DATA PROCESSING)--1.7%
Administaff, Inc. (b)............ 6,840 218,453
-----------
TELECOMMUNICATIONS (CELLULAR/WIRELESS)--0.8%
Crown Castle International Corp.
(b)............................. 10,640 102,410
-----------
TEXTILES (APPAREL)--2.2%
Jones Apparel Group, Inc. (b).... 12,490 286,489
-----------
WASTE MANAGEMENT--1.7%
Republic Services, Inc. Class A
(b)............................. 11,270 219,765
-----------
TOTAL COMMON STOCKS
(Identified cost $11,445,956)............................... 11,295,420
-----------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
FOREIGN COMMON STOCKS--2.9%
ELECTRONICS (SEMICONDUCTORS)--1.6%
PMC-Sierra, Inc. (Canada) (b).... 6,560 $ 209,100
-----------
ENTERTAINMENT--1.3%
News Corporation Ltd. (The)
Sponsored ADR (Australia)....... 6,550 167,844
-----------
TOTAL FOREIGN COMMON STOCKS
(Identified cost $451,608).................................. 376,944
-----------
TOTAL LONG-TERM INVESTMENTS--90.8%
(Identified cost $11,897,564)............................... 11,672,364
-----------
<CAPTION>
PAR
VALUE
(000)
--------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--10.6%
REPURCHASE AGREEMENT--10.6%
State Street Bank & Trust Co.
repurchase agreement, 4.75%
dated 9/30/98 due 10/1/98,
repurchase price $1,362,180
collateralized by U.S. Treasury
Note 7%, 7/15/06, market value
$1,389,735...................... $ 1,362 1,362,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $1,362,000)................................ 1,362,000
-----------
TOTAL INVESTMENTS--101.4%
(Identified cost $13,259,564)............................... 13,034,364(a)
Cash and receivables, less liabilities--(1.4%).............. (179,440)
-----------
NET ASSETS--100.0%............................................ $12,854,924
-----------
-----------
</TABLE>
(a) Federal Income Tax Information: Net unrealized depreciation of investment
securities is comprised of gross appreciation of $1,147,751 and gross
depreciation of $1,374,463 for federal income tax purposes. At September
30, 1998, the aggregate cost of securities for federal income tax purposes
was $13,261,076.
(b) Non-income producing.
See Notes to Financial Statements 17
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Investment securities at value
(Identified cost $13,259,564) $ 13,034,364
Cash 64
Receivables
Investment securities sold 116,666
Dividends and interest 9,321
Fund shares sold 2,423
Deferred organization expenses 24,320
Prepaid expenses 2,212
-------------
Total assets 13,189,370
-------------
LIABILITIES
Payables
Investment securities purchased 276,051
Transfer agent fee 17,000
Investment advisory fee 6,090
Administration fee 5,753
Distribution fee 2,774
Trustees' fee 2,500
Accrued expenses 24,278
-------------
Total liabilities 334,446
-------------
NET ASSETS $ 12,854,924
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 12,539,855
Accumulated net realized gain 540,269
Net unrealized depreciation (225,200)
-------------
NET ASSETS $ 12,854,924
-------------
-------------
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $8,939,892) 647,132
Net asset value and offering price per share $13.81
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $3,666,083) 266,570
Net asset value per share $13.75
Offering price per share $13.75/(1-4.75%) $14.44
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $145,495) 10,599
Net asset value and offering price per share $13.73
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $103,454) 7,538
Net asset value and offering price per share $13.72
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
INVESTMENT INCOME
<S> <C>
Dividends $ 39,564
Interest 40,899
Foreign taxes withheld (35)
------------
Total investment income 80,428
------------
EXPENSES
Investment advisory fee 100,384
Distribution fee--Class A 7,272
Distribution fee--Class B 315
Distribution fee--Class C 308
Administration fee 56,307
Custody and accounting 44,881
Transfer agent 41,191
Registration 22,635
Trustees 17,549
Amortization of deferred organization expenses 9,674
Professional 8,617
Printing 6,272
Miscellaneous 3,240
------------
Total expenses 318,645
Less expenses borne by investment adviser (36,648)
------------
Net expenses 281,997
------------
NET INVESTMENT LOSS (201,569)
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 895,515
Net change in unrealized appreciation (depreciation) on
investments (1,612,591)
------------
NET LOSS ON INVESTMENTS (717,076)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (918,645)
------------
------------
</TABLE>
18 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment loss $ (201,569) $ (122,306)
Net realized gain 895,515 1,355,512
Net change in unrealized appreciation
(depreciation) (1,612,591) 369,616
------------------- -------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (918,645) 1,602,822
------------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class X -- (22,426)
Net investment income--Class A -- (7)
Net investment income--Class B -- --
Net investment income--Class C -- --
Net realized gains--Class X (1,092,044) (89,792)
Net realized gains--Class A (289,481) (12,053)
Net realized gains--Class B -- --
Net realized gains--Class C -- --
------------------- -------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (1,381,525) (124,278)
------------------- -------------------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (135,008
and 403,926 shares, respectively) 2,127,609 5,517,592
Net asset value of shares issued from
reinvestment of distributions
(84,041 and 7,844 shares,
respectively) 1,090,132 109,284
Cost of shares repurchased (142,018
and 337,764 shares, respectively) (2,045,120) (4,917,052)
------------------- -------------------
Total 1,172,621 709,824
------------------- -------------------
CLASS A
Proceeds from sales of shares (159,888
and 291,421 shares, respectively) 2,538,940 4,064,517
Net asset value of shares issued from
reinvestment of distributions
(22,073 and 851 shares,
respectively) 286,061 11,875
Cost of shares repurchased (62,130 and
236,289 shares, respectively) (947,854) (3,238,210)
------------------- -------------------
Total 1,877,147 838,182
------------------- -------------------
CLASS B
Proceeds from sales of shares (10,599
and 0 shares, respectively) 169,635 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (0 and 0
shares, respectively) -- --
------------------- -------------------
Total 169,635 --
------------------- -------------------
CLASS C
Proceeds from sales of shares (7,538
and 0 shares, respectively) 125,992 --
Net asset value of shares issued from
reinvestment of distributions
(0 and 0 shares, respectively) -- --
Cost of shares repurchased (0 and 0
shares, respectively) -- --
------------------- -------------------
Total 125,992 --
------------------- -------------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 3,345,395 1,548,006
------------------- -------------------
NET INCREASE IN NET ASSETS 1,045,225 3,026,550
NET ASSETS
Beginning of period 11,809,699 8,783,149
------------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$0 AND $0, RESPECTIVELY) $12,854,924 $11,809,699
------------------- -------------------
------------------- -------------------
</TABLE>
See Notes to Financial Statements 19
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS X
---------------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/8/96 TO
1998 1997 9/30/96
------ ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 16.47 $ 14.97 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.23)(1)(8) (0.17)(1) 0.01(1)
Net realized and unrealized gain
(loss) (0.58) 1.84 4.96
------ ----------- -----------
TOTAL FROM INVESTMENT
OPERATIONS (0.81) 1.67 4.97
------ ----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- (0.07) --
Dividends from net realized gains (1.85) (0.10) --
------ ----------- -----------
TOTAL DISTRIBUTIONS (1.85) (0.17) --
------ ----------- -----------
Change in net asset value (2.66) 1.50 4.97
------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 13.81 $ 16.47 $ 14.97
------ ----------- -----------
------ ----------- -----------
Total return(3) (4.22)% 11.39% 49.70%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 8,940 $ 9,390 $ 7,428
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.10%(6) 1.74%(6) 0.90%(4)(6)
Net investment income (loss) (1.49)% (0.97)% 0.27%(4)
Portfolio turnover 206% 283.60% 72.34%(5)
<CAPTION>
CLASS A
-----------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/8/96 TO
1998 1997 9/30/96
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 16.49 $ 14.94 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.30)(2)(8) (0.25)(2) (0.01)(2)
Net realized and unrealized gain
(loss) (0.59) 1.90 4.95
----------- ----------- ----------
TOTAL FROM INVESTMENT
OPERATIONS (0.89) 1.65 4.94
----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- -- --
Dividends from net realized gains (1.85) (0.10) --
----------- ----------- ----------
TOTAL DISTRIBUTIONS (1.85) (0.10) --
----------- ----------- ----------
Change in net asset value (2.74) 1.55 4.94
----------- ----------- ----------
NET ASSET VALUE, END OF PERIOD $ 13.75 $ 16.49 $ 14.94
----------- ----------- ----------
----------- ----------- ----------
Total return(3) (4.74)% 11.25% 49.30%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 3,666 $ 2,419 $ 1,355
Ratio to average net assets of:
Operating expenses 2.70%(7) 2.37%(7) 1.55%(4)(7)
Net investment income (loss) (1.95)% (1.60)% (0.46)%(4)
Portfolio turnover 206% 283.60% 72.34%(5)
</TABLE>
(1) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the
investment adviser had not waived fees and reimbursed expenses, net
investment income (loss) per share would have been $(0.27), $(0.33) and
$(0.19) for the years ended September 30, 1998 and 1997 and the period
ended September 30, 1996, respectively.
(2) Net investment income (loss) is after waiver of certain fees and
reimbursement of certain expenses by the investment adviser. If the
investment adviser had not waived fees and reimbursed expenses, net
investment income (loss) per share would have been $(0.31), $(0.55) and
$(0.20) for the years ended September 30, 1998 and 1997 and the period
ended September 30, 1996, respectively.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.38%,
2.77% and 5.73% for the years ended September 30, 1998 and 1997 and the
period ended September 30, 1996, respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 2.74%,
4.32% and 9.73% for the years ended September 30, 1998 and 1997 and the
period ended September 30, 1996, respectively.
(8) Computed using average shares outstanding.
20 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------ -----------
FROM FROM
INCEPTION INCEPTION
7/1/98 TO 7/1/98 TO
9/30/98 9/30/98
------------ -----------
<S> <C> <C>
Net asset value, beginning of
period $ 17.15 $ 17.15
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) (0.09)(1)(8) (0.09)(2)(8)
Net realized and unrealized gain
(loss) (3.33) (3.34)
------ ------
TOTAL FROM INVESTMENT
OPERATIONS (3.42) (3.43)
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income -- --
Dividends from net realized gains -- --
------ ------
Total distributions -- --
------ ------
Change in net asset value (3.42) (3.43)
------ ------
NET ASSET VALUE, END OF PERIOD $ 13.73 $ 13.72
------ ------
------ ------
Total return(3) (19.94)%(5) (20.00)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $145 $103
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 3.45%(4)(6) 3.45%(4)(7)
Net investment income (loss) (2.45)%(4) (2.44)%(4)
Portfolio turnover 206% 206%
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.69) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.77) for the period ended September 30, 1998.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 20.80%
for the period ended September 30, 1998.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 21.14%
for the period ended September 30, 1998.
(8) Computed using average shares outstanding.
See Notes to Financial Statements 21
<PAGE>
Phoenix-Seneca Bond Fund
INVESTMENTS AT SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
U.S. GOVERNMENT SECURITIES--5.7%
U.S. TREASURY BONDS--4.7%
U.S. Treasury Bonds 6.125%,
11/15/27........................ Aaa $ 1,125 $ 1,296,914
-----------
U.S. TREASURY NOTES--1.0%
U.S. Treasury Notes 5.625%,
5/15/08......................... Aaa 250 273,516
-----------
TOTAL U.S. GOVERNMENT SECURITIES
(Identified cost $1,475,710)............................... 1,570,430
-----------
AGENCY MORTGAGE-BACKED SECURITIES--4.0%
Fannie Mae Series 90-4, G 8.75%,
5/25/17......................... Aaa 43 44,062
Fannie Mae Series 89-80, E 9%,
9/25/18......................... Aaa 27 27,353
Fannie Mae Strip, I.O., Series
93-179, S 2.813%, 10/25/23...... Aaa 468 9,645
Freddie Mac Series 1142, H 7.95%,
12/15/20........................ Aaa 215 217,652
Freddie Mac Series 1032, E 8.75%,
12/15/20........................ Aaa 19 19,582
Freddie Mac Series 1562, Z 7%,
7/15/23......................... Aaa 717 763,768
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
AGENCY MORTGAGE-BACKED SECURITIES--CONTINUED
GNMA 7%, 2/15/26................. Aaa $ 19 $ 19,962
-----------
TOTAL AGENCY MORTGAGE-BACKED SECURITIES
(Identified cost $1,081,668)............................... 1,102,024
-----------
ASSET-BACKED SECURITIES--4.6%
Citibank Credit Card Master Trust
1 93-2, A 5.95%, 10/7/04........ Aaa 40 41,494
Lehman ABS Corp. 94-C2, A 144A
8.145%,
11/2/07 (b)..................... BBB+(d) 77 76,809
Olympic Automobile Receivables
Trust 96-B, CTFS 6.90%,
2/15/04......................... Aaa 120 121,821
Olympic Automobile Receivables
Trust 96-D, A5 6.25%,
11/15/04........................ Aaa 1,000 1,028,405
-----------
TOTAL ASSET-BACKED SECURITIES
(Identified cost $1,238,139)............................... 1,268,529
-----------
CORPORATE BONDS--69.5%
AIR FREIGHT--1.9%
Federal Express Corp. Series
98-1A 6.72%, 1/15/22............ Aa 500 532,500
-----------
</TABLE>
See Notes to Financial Statements 25
<PAGE>
Phoenix-Seneca Bond Fund
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
AIRLINES--2.1%
Alaska Airlines, Inc. Series A
9.50%, 4/12/10.................. Baa $ 118 $ 136,601
Delta Air Lines, Inc. Series B2
10.06%, 1/2/16.................. Baa 65 84,854
United Air Lines, Inc. Series
91-B 10.11%, 2/19/06............ Baa 20 23,467
United Air Lines, Inc. Series
91-E 9.76%, 5/27/06............. Baa 90 106,483
United Air Lines, Inc. Series
95-A1 9.02%, 4/19/12............ Baa 185 220,626
-----------
572,031
-----------
BANKS (MAJOR REGIONAL)--3.9%
First Republic Bancorp 7.75%,
9/15/12......................... BB+(d) 300 315,690
Wells Fargo Capital I 7.96%,
12/15/26........................ A 700 743,428
-----------
1,059,118
-----------
BANKS (MONEY CENTER)--1.5%
BankAmerica Corp. Institutional
Series A 144A 8.07%,
12/31/26 (b).................... Aa 400 416,000
-----------
BROADCASTING (TELEVISION, RADIO & CABLE)--5.2%
Capstar Broadcasting Corp. 9.25%,
7/1/07.......................... B 600 609,000
Chancellor Media Corp. 9.375%,
10/1/04......................... Ba 75 78,375
Chancellor Media Corp. Series B
8.75%, 6/15/07.................. Ba 100 99,500
Chancellor Media Corp. 144A 9%,
10/1/08 (b)..................... Ba 250 253,125
Jacor Communications, Inc.
10.125%, 6/15/06................ B 100 109,500
SFX Broadcasting Corp. Series B
10.75%, 5/15/06................. B 56 61,600
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
BROADCASTING (TELEVISION, RADIO & CABLE)--CONTINUED
Turner Broadcasting System, Inc.
8.40%, 2/1/24................... Baa $ 200 $ 219,832
-----------
1,430,932
-----------
COMMUNICATIONS EQUIPMENT--2.4%
Adelphia Communications Corp.
144A 8.125%, 7/15/03 (b)........ NR 600 603,000
Orion Network Systems, Inc. 0%,
1/15/07 (c)..................... B 90 59,850
-----------
662,850
-----------
CONTAINERS & PACKAGING (PAPER)--0.2%
Container Corporation of America
Series A 11.25%, 5/1/04......... B 40 42,200
-----------
ENTERTAINMENT--2.3%
AMC Entertainment, Inc. 9.50%,
3/15/09......................... B 100 94,500
Clearview Cinema Group, Inc. 144A
10.875%, 6/1/08 (b)............. B 300 318,750
Loews Cineplex Entertainment
Corp. 144A 8.875%, 8/1/08 (b)... B 50 49,625
Time Warner, Inc. 9.125%,
1/15/13......................... Baa 65 82,867
United Artists Theatre Circuit,
Inc. Series 95-A 9.30%,
7/1/15.......................... B 95 90,411
-----------
636,153
-----------
FINANCIAL (DIVERSIFIED)--3.2%
Countrywide Capital I 8%,
12/15/26........................ A 200 201,757
Countrywide Funding Corp. Series
C 5.38%, 4/22/99 (c)............ A 30 29,979
Dollar Financial Group, Inc.
Series A 10.875%, 11/15/06...... B 75 72,375
</TABLE>
26 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Bond Fund
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
FINANCIAL (DIVERSIFIED)--CONTINUED
Socgen Real Estate LLC Series A
144A 7.64%, 12/29/49 (b)(c)..... A $ 650 $ 588,149
-----------
892,260
-----------
GAMING, LOTTERY & PARIMUTUEL COMPANIES--3.1%
Bally's Park Place, Inc. 9.25%,
3/15/04......................... NR 725 757,625
Caesars World, Inc. 8.875%,
8/15/02......................... B 85 86,700
-----------
844,325
-----------
HEALTH CARE (SPECIALIZED SERVICES)--1.5%
Universal Health Services, Inc.
8.75%, 8/15/05.................. Ba 400 404,000
-----------
INVESTMENT BANKING/BROKERAGE--2.5%
Donaldson, Lufkin & Jenrette,
Inc. 6.11%, 5/15/01............. A 350 353,162
Donaldson, Lufkin & Jenrette,
Inc. 6.875%, 11/1/05............ A 50 52,116
Donaldson, Lufkin & Jenrette,
Inc. 6.50%, 6/1/08.............. A 200 202,963
Lehman Brothers Holdings, Inc.
8.80%, 3/1/15................... Baa 80 86,701
-----------
694,942
-----------
LEISURE TIME (PRODUCTS)--0.4%
Royal Caribbean Cruises Ltd.
7.50%, 10/15/27................. Baa 100 99,179
-----------
LODGING-HOTELS--2.2%
Hammons (John Q.) Hotels, Inc.
8.875%, 2/15/04................. B 530 518,075
Hammons (John Q.) Hotels, Inc.
9.75%, 10/1/05.................. B 100 99,250
-----------
617,325
-----------
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
MANUFACTURING (SPECIALIZED)--0.9%
Hawk Corp. 10.25%, 12/1/03....... Ba $ 10 $ 10,050
Tokheim Corp. Series B 11.50%,
8/1/06.......................... B 200 231,000
-----------
241,050
-----------
OIL & GAS (DRILLING & EQUIPMENT)--1.9%
Noble Drilling Corp. 9.125%,
7/1/06.......................... Baa 90 101,721
Trico Marine Services, Inc.
Series F 8.50%, 8/1/05.......... Ba 500 425,000
-----------
526,721
-----------
OIL & GAS (EXPLORATION & PRODUCTION)--2.0%
El Paso Tenneco RACERS 97-C-1-2
144A 9.14%, 12/31/01 (b)........ NR 300 324,300
Harcor Energy, Inc. Series B
14.875%, 7/15/02................ A 200 233,562
-----------
557,862
-----------
PUBLISHING (NEWSPAPERS)--1.1%
Garden State Newspapers, Inc.
Series B 8.75%, 10/1/09......... B 325 315,250
-----------
REITS--5.1%
ERP Operating L.P. 7.57%,
8/15/26......................... A 170 183,769
Evans Withycombe Residential,
Inc. 7.50%, 4/15/04............. A 100 107,337
First Industrial, L.P. 7.15%,
5/15/27......................... Baa 500 509,150
Property Trust of America 6.875%,
2/15/08......................... Baa 5 5,192
Security Capital Pacific Trust
7.375%, 10/15/06................ Baa 100 108,127
Security Capital Pacific Trust
7.90%, 2/15/16.................. Baa 200 203,200
Washington Real Estate Investment
Trust 7.125%, 8/13/03........... Baa 110 114,862
</TABLE>
See Notes to Financial Statements 27
<PAGE>
Phoenix-Seneca Bond Fund
<TABLE>
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
REITS--CONTINUED
Weingarten Realty Investors
Series A 6.88%, 6/25/27......... A $ 150 $ 160,766
-----------
1,392,403
-----------
RESTAURANTS--0.2%
Foodmaker, Inc. Series B 9.75%,
11/1/03......................... BB-(d) 50 50,875
-----------
RETAIL (DRUG STORES)--0.4%
Duane Reade, Inc. 9.25%,
2/15/08......................... B 100 97,500
-----------
RETAIL (FOOD CHAINS)--2.2%
Kroger Co. 6%, 7/1/00............ Baa 500 505,610
Smith's Food & Drug Centers, Inc.
Series 94-A2 8.64%, 7/2/12...... BB+(d) 100 100,000
-----------
605,610
-----------
RETAIL (GENERAL MERCHANDISE)--5.2%
K Mart Funding Corp. Series F
8.80%, 7/1/10................... Ba 500 498,784
Wal-Mart Stores, Inc. Series A-2
8.85%, 1/2/15................... Aa 750 919,451
-----------
1,418,235
-----------
SERVICES (COMMERCIAL & CONSUMER)--12.6%
Coinmach Laundry Corp. Series D
11.75%, 11/15/05................ B 505 532,775
Corporate Express, Inc. 144A
9.625%, 6/1/08 (b).............. B 700 668,500
Loomis Fargo & Co. 10%,
1/15/04......................... B 300 288,000
Protection One, Inc. 144A 7.375%,
8/15/05 (b)..................... Ba 500 506,250
Rental Service Corp. 9%,
5/15/08......................... B 750 708,750
United Rentals, Inc. 144A 9.50%,
6/1/08 (b)...................... B 250 250,625
United Rentals, Inc. 144A 8.80%,
8/15/08 (b)..................... B 500 470,000
Williams Scotsman, Inc. 9.875%,
6/1/07.......................... B 50 49,875
-----------
3,474,775
-----------
TELECOMMUNICATIONS (LONG DISTANCE)--2.7%
MCI WorldCom, Inc. 9.375%,
1/15/04......................... Baa 285 333,587
<CAPTION>
MOODY'S
BOND PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
TELECOMMUNICATIONS (LONG DISTANCE)--CONTINUED
MCI WorldCom, Inc. 6.40%,
8/15/05......................... Baa $ 400 $ 420,330
-----------
753,917
-----------
WASTE MANAGEMENT--2.8%
USA Waste Services, Inc. 6.125%,
7/15/01......................... Baa 750 767,269
-----------
TOTAL CORPORATE BONDS
(Identified cost $19,056,169).............................. 19,105,282
-----------
NON-AGENCY MORTGAGE-BACKED SECURITIES--3.8%
DLJ Commercial Mortgage Corp.
98-CG1, A1A 6.11%, 12/10/07..... AAA(d) 986 1,010,334
G.E. Capital Mortgage Services,
Inc. 94-21, B1 6.50% 8/25/09.... A 32 32,994
-----------
TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES
(Identified cost $1,013,915)............................... 1,043,328
-----------
FOREIGN GOVERNMENT SECURITIES--0.1%
BRAZIL--0.1%
Republic of Brazil - IDU Series A
6.75%, 1/1/01 (c)............... B 18 15,729
-----------
TOTAL FOREIGN GOVERNMENT SECURITIES
(Identified cost $17,584).................................. 15,729
-----------
FOREIGN CORPORATE BONDS--5.3%
CANADA--2.0%
Rogers CableSystems Ltd. Series B
10%, 3/15/05.................... Ba 500 548,750
-----------
JAPAN--0.6%
SB Treasury Co. LLC 144A 9.40%,
12/29/49 (b)(c)................. Baa 200 168,298
-----------
UNITED KINGDOM--2.7%
Abbey National PLC 7.35%,
10/29/49 (c).................... Aa 100 101,080
Credit Suisse Group 144A 7.90%,
5/29/49 (b)(c).................. A 350 368,180
Terra Nova (U.K.) Holdings 7.20%,
8/15/07......................... Baa 250 263,340
-----------
732,600
-----------
TOTAL FOREIGN CORPORATE BONDS
(Identified cost $1,482,872)............................... 1,449,648
-----------
</TABLE>
28 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Bond Fund
<TABLE>
<CAPTION>
SHARES VALUE
----------- -----------
<S> <C> <C> <C>
CONVERTIBLE PREFERRED STOCKS--3.8%
COMPUTERS (SOFTWARE & SERVICES)--3.2%
Microsoft Corp. Series A Cv. Pfd.
$2.196.......................... 9,250 $ 891,469
-----------
REITS--0.3%
Equity Office Properties Trust
Series B Cv. Pfd. 144A 5.25%
(b)............................. 2,000 83,750
-----------
SERVICES (COMMERCIAL & CONSUMER)--0.3%
United Rentals, Inc. Cv. Pfd.
144A 6.50% (b).................. 2,000 71,500
-----------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $1,030,000)............................. 1,046,719
-----------
COMMON STOCKS--0.7%
OIL (DOMESTIC INTEGRATED)--0.7%
Kinder Morgan Energy Partners,
L.P............................. 5,300 175,563
-----------
TOTAL COMMON STOCKS
(Identified cost $195,107)............................... 175,563
-----------
TOTAL LONG-TERM INVESTMENTS--97.5%
(Identified cost $26,591,164)............................ 26,777,252
-----------
</TABLE>
<TABLE>
<CAPTION>
STANDARD
& POOR'S PAR
RATING VALUE
(Unaudited) (000) VALUE
---------- ----------- -----------
<S> <C> <C> <C>
SHORT-TERM OBLIGATIONS--0.7%
FEDERAL AGENCY SECURITIES--0.7%
FHLB 4.95%, 10/1/98.............. A-1+ $ 200 $ 200,000
-----------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $200,000)................................. 200,000
-----------
TOTAL INVESTMENTS--98.2%
(Identified cost $26,791,164).............................. 26,977,252(a)
Cash and receivables, less liabilities--1.8%............... 498,252
-----------
NET ASSETS--100.0%........................................... $27,475,504
-----------
-----------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $637,697 and gross
depreciation of $451,664 for federal income tax purposes. At September 30,
1998, the aggregate cost of securities for federal income tax purposes was
$26,791,219.
(b) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
1998, these securities amounted to a value of $5,216,861 or 19% of net
assets.
(c) Variable or step coupon security; interest rate shown reflects the rate
currently in effect.
(d) As rated by Standard & Poor's, Fitch or Duff & Phelps.
See Notes to Financial Statements 29
<PAGE>
Phoenix-Seneca Bond Fund
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $26,791,164) $ 26,977,252
Cash 49,259
Receivables
Interest and dividends 446,678
Fund shares sold 33,893
Deferred organization expenses 24,185
Prepaid expenses 1,679
-------------
Total assets 27,532,946
-------------
LIABILITIES
Payables
Fund shares repurchased 195
Dividend distributions 3,875
Transfer agent fee 13,888
Investment advisory fee 9,007
Administration fee 5,753
Trustees' fee 2,500
Distribution fee 1,003
Accrued expenses 21,221
-------------
Total liabilities 57,442
-------------
NET ASSETS $ 27,475,504
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 27,072,307
Undistributed net investment loss (11,789)
Accumulated net realized gain 228,898
Net unrealized appreciation 186,088
-------------
NET ASSETS $ 27,475,504
-------------
-------------
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $26,454,797) 2,476,817
Net asset value and offering price per share $10.68
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $348,268) 32,617
Net asset value per share $10.68
Offering price per share $10.68/(1-4.75%) $11.21
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $233,533) 21,880
Net asset value and offering price per share $10.67
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $438,906) 41,134
Net asset value and offering price per share $10.67
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Interest $ 1,028,979
Dividends 17,558
------------
Total investment income 1,046,537
------------
EXPENSES
Investment advisory fee 69,747
Distribution fee--Class A 154
Distribution fee--Class B 341
Distribution fee--Class C 507
Administration fee 50,146
Custody and accounting 35,950
Transfer agent 27,367
Registration 19,085
Trustees 17,549
Amortization of deferred organization expenses 9,674
Professional 6,708
Printing 2,400
Miscellaneous 3,331
------------
Total expenses 242,959
Less expenses borne by investment adviser (12,142)
------------
Net expenses 230,817
------------
NET INVESTMENT INCOME 815,720
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 272,954
Net change in unrealized appreciation (depreciation) on
investments (52,850)
------------
NET GAIN ON INVESTMENTS 220,104
------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,035,824
------------
------------
</TABLE>
30 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Bond Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 815,720 $ 429,374
Net realized gain 272,954 111,291
Net change in unrealized appreciation
(depreciation) (52,850) 189,346
------------------- -------------------
INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS 1,035,824 730,011
------------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class X (816,277) (462,401)
Net investment income--Class A (4,720) (2,145)
Net investment income--Class B (2,101) --
Net investment income--Class C (3,926) --
Net realized gains--Class X (157,929) (13,922)
Net realized gains--Class A -- (672)
Net realized gains--Class B -- --
Net realized gains--Class C -- --
------------------- -------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (984,953) (479,140)
------------------- -------------------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares
(1,869,631 and 496,127 shares,
respectively) 20,104,967 5,079,683
Net asset value of shares merged from
Class A (0 and 23,704 shares,
respectively) -- 250,425
Net asset value of shares issued from
reinvestment of distributions
(89,132 and 45,088 shares,
respectively) 952,261 460,532
Cost of shares repurchased (334,511
and 101,560 shares, respectively) (3,582,416) (1,048,447)
------------------- -------------------
Total 17,474,812 4,742,193
------------------- -------------------
CLASS A
Proceeds from sales of shares (48,090
and 7,990 shares, respectively) 515,460 82,034
Net asset value of shares issued from
reinvestment of distributions
(388 and 140 shares, respectively) 4,147 1,437
Net asset value of shares merged with
Class X (0 and 24,954 shares,
respectively) -- (250,425)
Cost of shares repurchased (15,861 and
2,595 shares, respectively) (168,344) (26,543)
------------------- -------------------
Total 351,263 (193,497)
------------------- -------------------
CLASS B
Proceeds from sales of shares (23,658
and 0 shares, respectively) 253,821 --
Net asset value of shares issued from
reinvestment of distributions
(135 and 0 shares, respectively) 1,443 --
Cost of shares repurchased (1,913 and
0 shares, respectively) (20,509) --
------------------- -------------------
Total 234,755 --
------------------- -------------------
CLASS C
Proceeds from sales of shares (40,951
and 0 shares, respectively) 439,691 --
Net asset value of shares issued from
reinvestment of distributions
(183 and 0 shares, respectively) 1,951 --
Cost of shares repurchased (0 and 0
shares, respectively) -- --
------------------- -------------------
Total 441,642 --
------------------- -------------------
INCREASE IN NET ASSETS FROM SHARE
TRANSACTIONS 18,502,472 4,548,696
------------------- -------------------
NET INCREASE IN NET ASSETS 18,553,343 4,799,567
NET ASSETS
Beginning of period 8,922,161 4,122,594
------------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME (LOSS) OF
$(11,789) AND $4,453, RESPECTIVELY) $27,475,504 $8,922,161
------------------- -------------------
------------------- -------------------
</TABLE>
See Notes to Financial Statements 31
<PAGE>
Phoenix-Seneca Bond Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS X
----------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/7/96 TO
1998 1997 9/30/96
------------ ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
period $10.47 $ 10.09 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.56 0.62(1) 0.31(1)
Net realized and unrealized gain
(loss) 0.40 0.47 0.08
------------ ----------- -----------
TOTAL FROM INVESTMENT
OPERATIONS 0.96 1.09 0.39
------------ ----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.57) (0.69) (0.30)
Dividends from net realized gains (0.18) (0.02) --
------------ ----------- -----------
TOTAL DISTRIBUTIONS (0.75) (0.71) (0.30)
------------ ----------- -----------
Change in net asset value 0.21 0.38 0.09
------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $10.68 $ 10.47 $ 10.09
------------ ----------- -----------
------------ ----------- -----------
Total return(2) 9.44% 11.26% 4.02%(4)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 26,455 $ 8,922 $ 3,927
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.66% 1.53%(5) 0.56%(3)(5)
Net investment income (loss) 5.92% 6.31% 7.54%(3)
Portfolio turnover 112% 99.68% 52.82%(4)
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $0.47 and $(0.05) for the year ended September 30,
1997 and the period ended September 30, 1996, respectively.
(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 investment adviser.
(3) Annualized.
(4) Not annualized.
(5) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.41% and
9.31% for the year ended September 30, 1997 and the period ended September
30, 1996, respectively.
32 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Bond Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS A CLASS B CLASS C
------------ ----------- -----------
FROM FROM FROM
INCEPTION INCEPTION INCEPTION
7/1/98 TO 7/1/98 TO 7/1/98 TO
9/30/98 9/30/98 9/30/98
------------ ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 10.79 $ 10.79 $ 10.79
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.13(1)(10) 0.11(2)(10) 0.10(3)(10)
Net realized and unrealized gain
(loss) (0.07) (0.08) (0.07)
------ ------ ------
Total from investment
operations 0.06 0.03 0.03
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.17) (0.15) (0.15)
Dividends from net realized gains -- -- --
------ ------ ------
TOTAL DISTRIBUTIONS (0.17) (0.15) (0.15)
------ ------ ------
Change in net asset value (0.11) (0.12) (0.12)
------ ------ ------
NET ASSET VALUE, END OF PERIOD $ 10.68 $ 10.67 $ 10.67
------ ------ ------
------ ------ ------
Total return(4) 0.53%(6) 0.28%(6) 0.28%(6)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $348 $234 $439
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.45%(5)(7) 3.20%(5)(8) 3.20%(5)(9)
Net investment income (loss) 5.17%(5) 4.42%(5) 4.27%(5)
Portfolio turnover 112% 112% 112%
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.03) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.21) for the period ended September 30, 1998.
(3) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.08) for the period ended September 30, 1998.
(4) 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 investment adviser.
(5) Annualized.
(6) Not annualized.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 8.99% for
the period ended September 30, 1998.
(8) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 15.79%
for the period ended September 30, 1998.
(9) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 11.22%
for the period ended September 30, 1998.
(10) Computed using average shares outstanding.
See Notes to Financial Statements 33
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
INVESTMENTS AT SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
COMMON STOCKS--93.5%
REAL ESTATE INVESTMENT TRUSTS--92.4%
COMMERCIAL--29.5%
FINANCE-MORTGAGE REIT--4.1%
Capital Trust Class A (b)............................. 40,000 $ 260,000
Northstar Financial Corp. (c)......................... 35,000 700,000
------------
960,000
------------
OFFICE/INDUSTRIAL--25.4%
Bedford Property Investors, Inc....................... 37,100 667,800
Boston Properties, Inc................................ 6,500 185,250
Cornerstone Properties, Inc........................... 41,500 627,687
Equity Office Properties Trust........................ 45,100 1,104,950
First Industrial Realty Trust, Inc.................... 24,500 624,750
Mack-Cali Realty Corp................................. 32,800 984,000
Prentiss Properties Trust............................. 30,400 725,800
Spieker Properties, Inc............................... 27,000 992,250
------------
5,912,487
------------
TOTAL COMMERCIAL.................................................. 6,872,487
------------
DIVERSIFIED--9.3%
Crescent Real Estate Equities Co...................... 36,000 909,000
Entertainment Properties Trust........................ 12,000 222,000
Liberty Property Trust................................ 8,050 191,691
Pacific Gulf Properties, Inc.......................... 42,050 846,256
------------
2,168,947
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
HOTELS--13.6%
FelCor Lodging Trust, Inc............................. 37,275 $ 906,248
Meristar Hospitality Corp............................. 27,374 467,069
Patriot American Hospitality, Inc..................... 54,539 695,372
Starwood Hotel & Resorts combined certificate......... 16,000 488,000
Sunstone Hotel Investors, Inc......................... 67,500 611,719
------------
3,168,408
------------
NET LEASE--3.6%
TriNet Corporate Realty Trust, Inc.................... 25,500 831,938
------------
RESIDENTIAL--25.4%
APARTMENTS--19.8%
Archstone Communities Trust........................... 59,996 1,222,419
Avalon Bay Communities, Inc........................... 15,750 536,484
Berkshire Realty Company, Inc......................... 43,500 454,031
Equity Residential Properties Trust................... 31,200 1,316,250
Essex Property Trust, Inc............................. 35,000 1,085,000
------------
4,614,184
------------
MANUFACTURED HOMES--5.6%
Chateau Communities, Inc.............................. 20,700 578,306
Manufactured Home Communities, Inc.................... 28,700 730,056
------------
1,308,362
------------
TOTAL RESIDENTIAL................................................. 5,922,546
------------
</TABLE>
36 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
<TABLE>
<CAPTION>
SHARES VALUE
-------- ------------
RETAIL--11.0%
<S> <C> <C>
COMMUNITY/NEIGHBORHOOD--0.8%
Developers Diversified Realty Corp.................... 10,700 $ 195,275
------------
REGIONAL MALLS--10.2%
Macerich Co. (The).................................... 26,500 712,188
Simon Property Group, Inc............................. 20,415 607,346
Urban Shopping Centers, Inc........................... 32,500 1,068,438
------------
2,387,972
------------
TOTAL RETAIL...................................................... 2,583,247
------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $24,687,745)................................... 21,547,573
------------
REAL ESTATE OPERATING COMPANIES--1.1%
Real Estate Development--1.1%
Catellus Development Corp. (b)........................ 19,400 252,200
------------
TOTAL REAL ESTATE OPERATING COMPANIES
(Identified cost $316,589)...................................... 252,200
------------
TOTAL COMMON STOCKS
(Identified cost $25,004,334)................................... 21,799,773
------------
CONVERTIBLE PREFERRED STOCKS--4.8%
REAL ESTATE INVESTMENT TRUSTS--4.8%
COMMERCIAL--2.8%
OFFICE/INDUSTRIAL--2.8%
Reckson Associates Realty Corp. Series A Cv. Pfd.
7.625%............................................... 30,000 656,250
------------
<CAPTION>
SHARES VALUE
-------- ------------
<S> <C> <C>
DIVERSIFIED--2.0%
Glenborough Realty Trust, Inc. Series A Cv. Pfd.
7.75%................................................ 23,050 $ 469,644
------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Identified cost $1,297,061).................................... 1,125,894
------------
TOTAL CONVERTIBLE PREFERRED STOCKS
(Identified cost $1,297,061).................................... 1,125,894
------------
TOTAL LONG-TERM INVESTMENTS--98.3%
(Identified cost $26,301,395)......................... 22,925,667
------------
</TABLE>
<TABLE>
<CAPTION>
PAR
VALUE
(000)
--------
<S> <C> <C>
SHORT-TERM OBLIGATIONS--1.2%
REPURCHASE AGREEMENT--1.2%
State Street Bank & Trust Co. repurchase agreement,
4.75%, dated 9/30/98 due 10/1/98, repurchase price
$281,437 collateralized by U.S. Treasury Note 7%,
7/15/06, market value $287,329....................... $ 281 281,400
------------
TOTAL SHORT-TERM OBLIGATIONS
(Identified cost $281,400)...................................... 281,400
------------
TOTAL INVESTMENTS--99.5%
(Identified cost $26,582,795)................................... 23,207,067(a)
Cash and receivables, less liabilities--0.5%.................... 122,819
------------
NET ASSETS--100.0%................................................ $23,329,886
------------
------------
</TABLE>
(a) Federal Income Tax Information: Net unrealized appreciation of investment
securities is comprised of gross appreciation of $458,863 and gross
depreciation of $3,843,320 for federal income tax purposes. At September
30, 1998, the aggregate cost of securities for federal income tax purposes
was $26,591,524.
(b) Non-income producing.
(c) Private Placement.
See Notes to Financial Statements 37
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1998
<TABLE>
<S> <C>
ASSETS
Investment securities at value
(Identified cost $26,582,795) $ 23,207,067
Cash 97
Dividends and interest receivable 202,370
Deferred organization expenses 24,185
Prepaid expenses 4,588
-------------
Total assets 23,438,307
-------------
LIABILITIES
Payables
Fund shares repurchased 12,280
Dividend distributions 3,176
Investment advisory fee 32,287
Transfer agent fee 19,135
Administration fee 5,753
Trustees' fee 2,500
Distribution fee 1,400
Accrued expenses 31,890
-------------
Total liabilities 108,421
-------------
NET ASSETS $ 23,329,886
-------------
-------------
NET ASSETS CONSIST OF:
Capital paid in on shares of beneficial interest $ 26,009,050
Undistributed net investment income 169,785
Accumulated net realized gain 526,779
Net unrealized depreciation (3,375,728)
-------------
NET ASSETS $ 23,329,886
-------------
-------------
CLASS X
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $21,794,232) 1,962,015
Net asset value and offering price per share $11.11
CLASS A
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $1,357,306) 123,408
Net asset value per share $11.00
Offering price per share $11.00/(1-4.75%) $11.55
CLASS B
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $90,532) 8,223
Net asset value and offering price per share $11.01
CLASS C
Shares of beneficial interest outstanding, $1 par value,
unlimited authorization (Net Assets $87,816) 7,978
Net asset value and offering price per share $11.01
</TABLE>
STATEMENT OF OPERATIONS
YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<S> <C>
INVESTMENT INCOME
Dividends $ 1,566,519
Interest 24,509
------------
Total investment income 1,591,028
------------
EXPENSES
Investment advisory fee 242,177
Distribution fee--Class A 5,951
Distribution fee--Class B 241
Distribution fee--Class C 231
Administration fee 55,183
Custody and accounting 43,850
Transfer agent 41,787
Registration 21,835
Trustees 17,549
Professional 10,673
Amortization of deferred organization expenses 9,674
Printing 4,108
Miscellaneous 7,250
------------
Total expenses 460,509
Less expenses borne by investment adviser (8,695)
------------
Net expenses 451,814
------------
NET INVESTMENT INCOME 1,139,214
------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain on securities 551,625
Net change in unrealized appreciation (depreciation) on
investments (7,262,351)
------------
NET LOSS ON INVESTMENTS (6,710,726)
------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (5,571,512)
------------
------------
</TABLE>
38 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended Year Ended
September 30, 1998 September 30, 1997
------------------- -------------------
<S> <C> <C>
FROM OPERATIONS
Net investment income $ 1,139,214 $ 440,450
Net realized gain 551,625 1,229,877
Net change in unrealized appreciation
(depreciation) (7,262,351) 3,822,456
------------------- -------------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (5,571,512) 5,492,783
------------------- -------------------
FROM DISTRIBUTIONS TO SHAREHOLDERS
Net investment income--Class X (927,830) (425,038)
Net investment income--Class A (63,404) (29,699)
Net investment income--Class B (523) --
Net investment income--Class C (508) --
Net realized gains--Class X (1,123,456) (4,331)
Net realized gains--Class A (124,174) (194)
Net realized gains--Class B -- --
Net realized gains--Class C -- --
------------------- -------------------
DECREASE IN NET ASSETS FROM
DISTRIBUTIONS TO SHAREHOLDERS (2,239,895) (459,262)
------------------- -------------------
FROM SHARE TRANSACTIONS
CLASS X
Proceeds from sales of shares (190,605
and 2,618,177 shares, respectively) 2,502,892 32,751,944
Net asset value of shares issued from
reinvestment of distributions
(153,188 and 31,702 shares,
respectively) 2,018,886 424,162
Cost of shares repurchased (297,712
and 830,654 shares, respectively) (3,754,823) (10,635,920)
------------------- -------------------
Total 766,955 22,540,186
------------------- -------------------
CLASS A
Proceeds from sales of shares (31,969
and 262,586 shares, respectively) 436,921 3,366,423
Net asset value of shares issued from
reinvestment of distributions
(13,501 and 2,082 shares,
respectively) 179,472 27,973
Cost of shares repurchased (138,471
and 68,344 shares, respectively) (1,815,501) (895,219)
------------------- -------------------
Total (1,199,108) 2,499,177
------------------- -------------------
CLASS B
Proceeds from sales of shares (8,978
and 0 shares, respectively) 113,001 --
Net asset value of shares issued from
reinvestment of distributions
(47 and 0 shares, respectively) 523 --
Cost of shares repurchased (802 and 0
shares, respectively) (9,281) --
------------------- -------------------
Total 104,243 --
------------------- -------------------
CLASS C
Proceeds from sales of shares (7,932
and 0 shares, respectively) 100,250 --
Net asset value of shares issued from
reinvestment of distributions
(46 and 0 shares, respectively) 506 --
Cost of shares repurchased (0 and 0
shares, respectively) -- --
------------------- -------------------
Total 100,756 --
------------------- -------------------
INCREASE (DECREASE) IN NET ASSETS FROM
SHARE TRANSACTIONS (227,154) 25,039,363
------------------- -------------------
NET INCREASE (DECREASE) IN NET ASSETS (8,038,561) 30,072,884
NET ASSETS
Beginning of period 31,368,447 1,295,563
------------------- -------------------
END OF PERIOD (INCLUDING UNDISTRIBUTED
NET INVESTMENT INCOME OF
$169,785 AND $23,407, RESPECTIVELY) $23,329,886 $31,368,447
------------------- -------------------
------------------- -------------------
</TABLE>
See Notes to Financial Statements 39
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
FINANCIAL HIGHLIGHTS
(SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
<TABLE>
<CAPTION>
CLASS X
----------------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/12/96 TO
1998 1997 9/30/96
------------ ----------- -----------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 14.71 $ 11.10 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.54 0.13(1) 0.13(1)
Net realized and unrealized gain
(loss) (3.10) 3.77 1.10
------------ ----------- -----------
TOTAL FROM INVESTMENT
OPERATIONS (2.56) 3.90 1.23
------------ ----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.46) (0.28) (0.13)
Dividends from net realized gains (0.58) (0.01) --
------------ ----------- -----------
TOTAL DISTRIBUTIONS (1.04) (0.29) (0.13)
------------ ----------- -----------
Change in net asset value (3.60) 3.61 1.10
------------ ----------- -----------
NET ASSET VALUE, END OF PERIOD $ 11.11 $ 14.71 $ 11.10
------------ ----------- -----------
------------ ----------- -----------
Total return(3) (18.33)% 35.44% 12.39%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 21,794 $ 28,193 $ 1,073
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 1.47% 1.99%(6) 1.00%(4)(6)
Net investment income (loss) 4.14% 2.38% 4.39%(4)
Portfolio turnover 53% 75.68% 30.70%(5)
<CAPTION>
CLASS A
----------------------------------------
FROM
YEAR ENDED SEPTEMBER 30, INCEPTION
3/12/96 TO
1998 1997 9/30/96
----------- ----------- ----------
<S> <C> <C> <C>
Net asset value, beginning of
period $ 14.68 $ 11.08 $ 10.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.35 0.03(2) 0.13(2)
Net realized and unrealized gain
(loss) (3.08) 3.78 1.08
----------- ----------- ----------
TOTAL FROM INVESTMENT
OPERATIONS (2.73) 3.81 1.21
----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.37) (0.20) (0.13)
Dividends from net realized gains (0.58) (0.01) --
----------- ----------- ----------
TOTAL DISTRIBUTIONS (0.95) (0.21) (0.13)
----------- ----------- ----------
Change in net asset value (3.68) 3.60 1.08
----------- ----------- ----------
NET ASSET VALUE, END OF PERIOD $ 11.00 $ 14.68 $ 11.08
----------- ----------- ----------
----------- ----------- ----------
Total return(3) (19.52)% 34.54% 12.22%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $ 1,357 $ 3,176 $ 222
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 2.76% 2.91%(7) 1.65%(4)(7)
Net investment income (loss) 2.45% 1.37% 4.61%(4)
Portfolio turnover 53% 75.68% 30.70%(5)
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $0.13 and $(1.45) for the year ended September 30,
1997 and the period ended September 30, 1996, respectively.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.04) and $(1.96) for the year ended September 30,
1997 and the period ended September 30, 1996, respectively.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 1.99% and
53.04% for the year ended September 30, 1997 and the period ended September
30, 1996, respectively.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 3.79% and
73.01% for the year ended September 30, 1997 and the period ended September
30, 1996, respectively.
40 See Notes to Financial Statements
<PAGE>
Phoenix-Seneca Real Estate Securities Fund
FINANCIAL HIGHLIGHTS
(Selected data for a share outstanding throughout the indicated period)
<TABLE>
<CAPTION>
CLASS B CLASS C
------------ -----------
FROM FROM
INCEPTION INCEPTION
7/1/98 TO 7/1/98 TO
9/30/98 9/30/98
------------ -----------
<S> <C> <C>
Net asset value, beginning of
period $ 12.58 $ 12.58
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) 0.07(1) 0.07(2)
Net realized and unrealized gain (1.58) (1.58)
------ ------
TOTAL FROM INVESTMENT
OPERATIONS (1.51) (1.51)
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income (0.06) (0.06)
Dividends from net realized gains -- --
------ ------
TOTAL DISTRIBUTIONS (0.06) (0.06)
------ ------
Change in net asset value (1.57) (1.57)
------ ------
NET ASSET VALUE, END OF PERIOD $ 11.01 $ 11.01
------ ------
------ ------
Total return(3) (11.97)%(5) (11.97)%(5)
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(thousands) $91 $88
RATIO TO AVERAGE NET ASSETS OF:
Operating expenses 3.80%(4)(6) 3.80%(4)(7)
Net investment income (loss) 2.50%(4) 2.44%(4)
Portfolio turnover 53% 53%
</TABLE>
(1) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.46) for the period ended September 30, 1998.
(2) Net investment income is after waiver of certain fees and reimbursement of
certain expenses by the investment adviser. If the investment adviser had
not waived fees and reimbursed expenses, net investment income (loss) per
share would have been $(0.48) for the period ended September 30, 1998.
(3) 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 investment adviser.
(4) Annualized.
(5) Not annualized.
(6) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 22.08%
for the period ended September 30, 1998.
(7) If the investment adviser had not waived fees and reimbursed expenses, the
ratio of operating expenses to average net assets would have been 22.93%
for the period ended September 30, 1998.
See Notes to Financial Statements 41
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
1. SIGNIFICANT ACCOUNTING POLICIES
The Phoenix-Seneca Funds (the "Trust") is organized as a Delaware business
trust and is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end management investment company. Shares of the Trust are
divided into four series, each a "Fund" and collectively the "Funds" as follows:
Phoenix-Seneca Growth Fund, Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund,
Phoenix-Seneca Bond Fund and Phoenix-Seneca Real Estate Securities Fund
(formerly Seneca Growth Fund, Seneca Mid-Cap "EDGE"(SM) Fund, Seneca Bond Fund
and Seneca Real Estate Securities Fund, respectively). Each Fund represents an
investment in a separate diversified fund with its own investment objectives.
Growth Fund seeks to achieve long-term capital appreciation. Mid-Cap "EDGE"(SM)
Fund seeks to achieve long-term capital appreciation by investing primarily in a
diversified portfolio of equity securities of companies with market
capitalizations between $500 million and $5 billion. Bond Fund seeks to generate
a high level of current income and capital appreciation. Real Estate Securities
Fund seeks to emphasize capital appreciation and income equally by investing
primarily in marketable securities of publicly-traded real estate investment
trusts (REITS) and companies that invest in, operate, develop and/or manage real
estate located in the United States.
Each Fund offers Class X (formerly Seneca Institutional), Class A (formerly
Seneca Administrative), Class B and Class C shares. As of December 26, 1996, the
Bond Fund Administrative Shares merged with the Institutional Shares. Class X
shares are sold without a sales charge. 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. Class C shares are sold with a 1% contingent deferred sales
charge if redeemed within one year of purchase. All classes of shares have
identical voting, dividend, liquidation and other rights and the same terms and
conditions, except that Class A, Class B and Class C shares bear distribution
expenses and have exclusive voting rights with respect to their distribution
plans. Investment income and realized and unrealized gains/losses are allocated
among the classes on the basis of net assets of each class. Expenses that relate
to the distribution of shares or services provided to a particular class are
allocated 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 mean between the most recent high bid and the most recent
low asked quotations. 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 their 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 Fund is notified. Interest income is recorded on the accrual
basis. The Trust amortizes premiums and discounts using the effective interest
method. Realized gains and losses are determined on the identified cost basis.
C. INCOME TAXES:
Each Fund is treated as a separate taxable entity. It is the policy of each
Fund to comply with the requirements of the Internal Revenue Code (the "Code")
applicable to regulated investment companies, and to distribute all of its
taxable income to its shareholders. In addition, each Fund 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.
42
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 (Continued)
D. DISTRIBUTIONS TO SHAREHOLDERS:
Distributions are recorded by each Fund 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, market
discount, organization costs, expiring capital loss carryforwards, foreign
currency gain/loss, 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. ORGANIZATION EXPENSE:
In 1996, the Trust incurred organizational expenses which are amortized on a
straight line basis over a period of sixty months from the commencement of
operations. 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 expenses.
F. REPURCHASE AGREEMENTS:
A repurchase agreement is a transaction where a Fund acquires a security for
cash and obtains a simultaneous commitment from the seller to repurchase the
security at an agreed upon price and date. Each Fund, 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 Fund 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.
G. EXPENSES:
Trust 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 among the classes on the basis of relative
average daily net assets of each class.
2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS
Effective July 1, 1998, Phoenix Investment Counsel, Inc, ("PIC" or the
"Adviser") serves as investment adviser to the Phoenix-Seneca Funds and Seneca
Capital Management LLC ("Seneca" or the "Subadviser") serves as investment
subadviser. Prior to July 1, 1998, Seneca served as adviser. All of the
outstanding stock of PIC and a majority of the equity interests of Seneca are
owned by Phoenix Investment Partners Ltd. ("PXP"), an indirect, majority-owned
subsidiary of Phoenix Home Life Mutual Insurance Company ("PHL"). As
compensation for services to the Trust, the adviser receives a fee based upon
the following annual rates as a percentage of the average daily net assets of
each Fund:
<TABLE>
<CAPTION>
ADVISER FEE
-----------
<S> <C>
Growth Fund................................... 0.70%
Mid-Cap "EDGE"(SM) Fund....................... 0.80%
Bond Fund..................................... 0.50%
Real Estate Securities Fund................... 0.85%
</TABLE>
The Adviser pays the Subadviser a fee equal to one half of the Adviser fee.
Effective July 1, 1998, Phoenix Equity Planning Corporation ("PEPCO"), a
direct subsidiary of PXP, serves as Administrator of the Trust. PEPCO receives a
fee for administration services at an annual rate of 0.08% of average daily net
assets of each Fund up to $125 million, 0.06% of average daily net assets of
$125 million to $250 million and 0.04% of average daily net assets greater than
$250 million; a minimum fee may apply. Prior to July 1, 1998, Seneca served as
Administrator at the same contractual rates as PEPCO.
The Adviser and the Administrator voluntarily agreed to waive or reimburse
each Fund's operating expenses until
43
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 (Continued)
September 30, 1998, to the extent that such expenses exceeded the following
percentages of average annual net assets:
<TABLE>
<CAPTION>
CLASS X CLASS A CLASS B CLASS C
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Growth Fund....... 1.25% 1.85% 2.60% 2.60%
Mid-Cap "EDGE"(SM)
Fund.............. 2.10% 2.70% 3.45% 3.45%
Bond Fund......... 1.85% 2.45% 3.20% 3.20%
Real Estate
Securities Fund... 2.35% 3.05% 3.80% 3.80%
</TABLE>
Prior to July 1, 1998, the rates which were in effect were 2.55%, 1.95% and
2.35% for Growth Class A, Growth Class X and Real Estate Class X, respectively.
PEPCO serves as the national distributor of the Trust's shares and has advised
the Trust that it retained net selling commissions of $1,566 for Class A shares
for the year ended September 30, 1998. There were no deferred sales charges
retained by PEPCO for Class B and C shares for the year ended September 30,
1998. In addition, each Fund pays PEPCO a distribution fee at an annual rate of
0.25% for Class A shares and 1.00% for Class B and C shares applied to the
average daily net assets of each Fund. The distributor has advised the Trust
that of the total amount expensed for the year ended September 30, 1998, $22,816
was retained by the Distributor, $13,996 was paid out to unaffiliated
Participants and $80 was paid to W.S. Griffith, an indirect subsidiary of PHL.
PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust
Company as sub-transfer agent. For the year ended September 30, 1998, transfer
agent fees were $149,731 of which PEPCO retained $306 which is net of fees paid
to State Street.
At September 30, 1998, PHL and affiliates held Phoenix-Seneca Fund shares
which aggregated the following:
<TABLE>
<CAPTION>
AGGREGATE
NET ASSET
SHARES VALUE
--------- ----------
<S> <C> <C>
Growth Fund--Class B............ 5,420 $ 87,750
Growth Fund--Class C............ 5,420 87,696
Mid-Cap "EDGE"(SM) Fund--Class
B............................... 5,865 80,527
Mid-Cap "EDGE"(SM) Fund--Class
C............................... 5,865 80,469
Bond Fund--Class X.............. 1,411,819 15,078,222
Bond Fund--Class A.............. 9,374 100,113
Bond Fund--Class B.............. 9,364 99,918
Bond Fund--Class C.............. 9,364 99,918
Real Estate Securities
Fund--Class B................... 7,911 87,104
Real Estate Securities
Fund--Class C................... 7,911 87,104
</TABLE>
3. PURCHASE AND SALE OF SECURITIES
Purchases and sales of securities during the year ended September 30, 1998
(excluding U.S. Government and agency securities and short-term securities)
aggregated the following:
<TABLE>
<CAPTION>
PURCHASES SALES
---------- ----------
<S> <C> <C>
Growth Fund................... $73,681,537 $69,547,783
Mid-Cap "EDGE"(SM) Fund....... 24,754,164 23,861,861
Bond Fund..................... 23,502,001 6,699,019
Real Estate Securities Fund... 15,199,353 14,760,122
</TABLE>
Purchases and sales of long-term U.S. Government and agency securities during
the year ended September 30, 1998, aggregated $10,444,424 and $9,074,353,
respectively, for the Bond Fund.
4. CREDIT 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 fund's ability to
repatriate such amounts.
44
<PAGE>
PHOENIX-SENECA FUNDS
NOTES TO FINANCIAL STATEMENTS
September 30, 1998 (Continued)
5. OTHER
As of September 30, 1998, the Funds had shareholders who each individually
owned more than 10% of total net assets, none of whom are affiliated with PHL or
PXP as follows. In addition, affiliate holdings are presented in the table
located within Note 2.
<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SHAREHOLDERS NET ASSETS
------------ ---------------------
<S> <C> <C>
Growth Fund............. 1 10.3%
Real Estate Securities
Fund.................... 2 28.7%
</TABLE>
6. RECLASS OF CAPITAL ACCOUNTS
In accordance with accounting pronouncements, the Funds have recorded several
reclassifications in the capital accounts. These reclassifications have no
impact on the net asset value of the Funds 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 September 30, 1998, the Funds
recorded the following reclassifications to increase (decrease) the accounts
listed below:
<TABLE>
<CAPTION>
CAPITAL PAID
UNDISTRIBUTED ACCUMULATED IN ON SHARES
NET INVESTMENT NET REALIZED OF BENEFICIAL
INCOME GAIN (LOSS) INTEREST
-------------- ------------ ---------------
<S> <C> <C> <C>
Growth Fund...... $ 23,589 $ (24,161) $ 572
Mid-Cap
"Edge"(SM)
Fund........... 201,569 (202,141) 572
Bond Fund........ (4,938) 4,366 572
Real Estate
Securities
Fund........... (571) -- 571
</TABLE>
TAX INFORMATION NOTICE (Unaudited)
For the fiscal year ended September 30, 1998, the Funds distributed long-term
capital gain dividends as follows:
<TABLE>
<S> <C>
Growth Fund................................. $ 426,348
Mid-Cap "Edge"(SM) Fund..................... 114,155
Bond Fund................................... 17,096
Real Estate Securities Fund................. 11,132
</TABLE>
This report is not authorized for distribution to prospective investors unless
preceded or accompanied by an effective Prospectus which includes information
concerning the sales charge, the Trust's record and other pertinent information.
45
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
[LOGO]
To the Trustees and Shareholders of
Phoenix-Seneca Funds
In our opinion, the accompanying statements of assets and liabilities,
including the schedules of investments (except for bond ratings), 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 Growth Fund, the Mid-Cap "EDGE"-SM- Fund, the Bond Fund and the Real Estate
Securities Fund (constituting the Phoenix-Seneca Funds, hereafter referred to as
the "Funds") at September 30, 1998, and the results of each of their operations,
the changes in each of their net assets and the financial highlights for the
year then ended, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Funds' 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
September 30, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above. The financial statements of
the Funds, formerly the Seneca Funds, for the periods ended September 30, 1997
were audited by other independent accountants whose report dated November 5,
1997 expressed an unqualified opinion on those statements.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
November 17, 1998
<PAGE>
PART C--OTHER INFORMATION
Item 23. Exhibits.
<TABLE>
<S> <C>
a.1. Agreement and Declaration of Trust.(1)
a.2. Certificate of Trust.(1)
a.3. Certificate of Amendment of Seneca Funds.(7)
b. By-Laws.(1)
c. Instruments defining shareholder rights incorporated by reference to Exhibits a.1. and a.2. above.
d.1. Form of Investment Advisory Agreement between the Registrant, on behalf of Phoenix-Seneca Growth Fund,
Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund, Phoenix-Seneca Bond Fund, and Phoenix-Seneca Real Estate Securities
Fund, on the one hand, and Phoenix Investment Counsel, Inc. ("PIC") on the other.(5)
d.2. Form of Subadvisory Agreement between PIC and Seneca Capital Management LLC ("Seneca").(5)
e.1. Form of Underwriting Agreement between the Registrant and Phoenix Equity Planning Corporation ("PEPCO").(5)
e.2. Form of Sales Agreement between PEPCO and dealers.(5)
e.3. Form of Supplement to Phoenix Family of Funds Sales Agreement.(5)
e.4. Form of Financial Institution Sales Contract for the Phoenix Family of Funds.(5)
f. None.
g.1. Form of Custody and Investment Accounting Agreement (the "Custody Agreement") between the Registrant and
Investors Fiduciary Trust Company ("IFTC").(2)
h.1. Form of Transfer Agency and Service Agreement (the "Transfer Agency Agreement") between the Registrant and
PEPCO.(5)
h.2. Form of Administration Agreement (the "Administration Agreement") between the Registrant, on behalf of Seneca
Growth Fund, Seneca Mid-Cap "EDGE"(SM) Fund, Seneca Bond Fund, and Seneca Real Estate Securities Fund, on
the one hand, and Seneca on the other.(4)
h.3. Form of Sub-Administration Agreement (the "Sub-Administration Agreement") between the Registrant, Seneca and
State Street Bank and Trust Company.(4)
i. Opinion and consent of Morris, Nichols, Arsht & Tunnell.(3)
j.1. Consents of PricewaterhouseCoopers LLP and Deloitte & Touche LLP, Independent Public Accountants.(7)
k. None.
l. Form of Share Purchase Agreement (the "Share Purchase Agreement") between Registrant and GMG/Seneca Capital
Management, L.P.(3)
m.1. Form of Amended and Restated Distribution Plan Pursuant to Rule 12b-1 for Class A Shares.(5)
m.2. Form of Distribution Plan Pursuant to Rule 12b-1 for Class B Shares.(5)
m.3. Form of Distribution Plan Pursuant to Rule 12b-1 for Class C Shares.(5)
n. Financial Data Schedules, reflected on EDGAR as Exhibit 27.(7)
o.1. Form of Second Amended and Restated Rule 18f-3 Plan.(5)
p.1. Powers of Attorney for Sandra J. Westhoff, Melinda Ellis Evers, Paul E. Erdman and Mary Ann Cusenza.(3)
p.2. Powers of Attorney for Harry Dalzell-Payne and Norman W. Douglass.(6)
</TABLE>
-----------
(1) Incorporated by reference to Registrant's Registration Statement on Form
N-1A dated December 18, 1995.
(2) Incorporated by reference to Pre-effective Amendment No. 1 to Registrant's
Registration Statement dated February 13, 1996.
(3) Incorporated by reference to Pre-effective Amendment No. 2 to Registrant's
Registration Statement dated February 29, 1996.
(4) Incorporated by reference to Post-Effective Amendment No. 1 to
Registrant's Registration Statement dated October 31, 1996.
(5) Incorporated by reference to Post-Effective Amendment No. 5 to
Registrant's Registration Statement filed on May 15, 1998.
(6) Incorporated by reference to Post-Effective Amendment No. 6 to
Registrant's Registration Statement filed on November 23, 1998.
(7) Filed herewith.
C-1
<PAGE>
Item 24. Persons Controlled By or Under Common Control With the Fund.
None.
Item 25. Indemnification
The Agreement and Declaration of Trust dated December 18, 1995 and the
By-Laws of the Registrant provide that no trustee or officer will be
indemnified against any liability to which the Registrant would otherwise be
subject by reason of or for willful misfeasance, bad faith, gross negligence or
reckless disregard of such person's duties. The Administration Agreement and
Sub-Administration Agreement (Section 8), Underwriting Agreement (Section 8),
Custody Agreement (Section 5) and Transfer Agency and Service Agreement
(Article 6) each provides that the Trust will indemnify the other party (or
parties, as the case may be) to the agreement for certain losses.
Insofar as indemnification for liability arising under the Securities Act
of 1933, as amended (the "Act"), may be available to trustees, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a trustee, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such trustee, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
Item 26. Business and Other Connections of Investment Adviser.
All of the information required by this item is set forth in the Form ADV,
as currently amended, of PIC and Seneca (SEC File Nos. 801-5995 (PIC) and
801-51559 (Seneca)), which is incorporated herein by reference.
Item 29. Principal Underwriter.
(a) PEPCO also serves as the principal underwriter for the following other
investment companies:
Phoenix-Aberdeen Series Fund, Phoenix California Tax Exempt Bonds, Inc.,
Phoenix Duff & Phelps Institutional Mutual Funds, Phoenix-Engemann Funds,
Phoenix Equity Series Fund, Phoenix Income and Growth Fund, Phoenix Investment
Trust 97, Phoenix Multi-Portfolio Fund, Phoenix Multi-Sector Fixed Income Fund,
Inc., Phoenix Multi-Sector Short Term Bond Fund, Phoenix Series Fund, Phoenix
Strategic Allocation Fund, Inc., Phoenix Strategic Equity Series Fund, Phoenix
Worldwide Opportunities Fund, Phoenix Home Life Variable Universal Life
Account, Phoenix Home Life Variable Accumulation Account, PHL Variable
Accumulation Account, Phoenix Life and Annuity Variable Universal Life Account
and PHL Variable Separate Account MVA1.
(b) Directors and executive officers of PEPCO are as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- ----------------------------- ---------------------
<S> <C> <C>
Michael E. Haylon Director None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
Philip R. McLoughlin Director and President None
56 Prospect Street
P.O. Box 150480
Hartford, CT 06115-0480
William R. Moyer Director, Senior Vice None
100 Bright Meadow Blvd. President, Chief Financial
P.O. Box 2200 Officer and Treasurer
Enfield, CT 06083-2200
John F. Sharry Executive Vice President, None
56 Prospect Street Retail Distribution
P.O. Box 150480
Hartford, CT 06115-0480
Leonard J. Saltiel Managing Director, None
56 Prospect Street Operations and Service
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
C-2
<PAGE>
<TABLE>
<CAPTION>
Name and Principal Positions and Offices Position and Offices
Business Address with Distributor with Registrant
- ------------------------- ------------------------------- ----------------------
<S> <C> <C>
G. Jeffrey Bohne Vice President, Mutual Fund None
101 Munson Street Customer Service
Greenfield, MA 01301
Nancy G. Curtiss Vice President and Treasurer, None
56 Prospect Street Fund Accounting
P.O. Box 150480
Hartford, CT 06115-0480
Thomas N. Steenburg Vice President, Counsel and Secretary
56 Prospect Street Secretary
P.O. Box 150480
Hartford, CT 06115-0480
Jacqueline M. Porter Assistant Vice President, None
56 Prospect Street Financial Reporting
P.O. Box 150480
Hartford, CT 06115-0480
</TABLE>
(c) To the best of the Registrant's knowledge, no commissions or other
compensation was received by any principal underwriter who is not an affiliated
person of the Registrant or an affiliated person of such affiliated person,
directly or indirectly, from the Registrant during the Registrant's last fiscal
year.
Item 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act and the rules thereunder will be maintained at
the offices of (1) the Registrant at 909 Montgomery Street, Suite 500, San
Francisco, California 94133, (2) Seneca, at 909 Montgomery Street, San
Francisco, California, 94133, (3) State Street Bank and Trust Company, at 1776
Heritage Drive, North Quincy, Massachusetts, 02171-2197, (4) Registrant's
Transfer Agent, Phoenix Equity Planning Corporation, at 100 Bright Meadow
Blvd., Enfield, Connecticut 06082, and (5) Registrant's Custodian, Investors
Fiduciary Trust Company, at 801 Pennsylvania Street, Kansas City, Missouri
64105.
Item 29. Management Services.
None.
Item 30. Undertakings.
Not applicable.
C-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this amendment
to the registration statement to be signed on its behalf by the undersigned,
duly authorized, in the City of San Francisco, and the State of California on
the 22nd day of January, 1999.
SENECA FUNDS
By: /s/GAIL P. SENECA
----------------------------------
Gail P. Seneca
President
Pursuant to the requirements of the Securities Act of 1933, this amendment
to the registration statement has been signed below by the following persons in
the capacities indicated on the 22nd day of January, 1999.
<TABLE>
<CAPTION>
Signature Title
- ------------------------------------- --------------------------
<S> <C>
/s/ GAIL P. SENECA Trustee and President
---------------------------- (Chief Executive Officer)
Gail P. Seneca
/s/ SANDRA J. WESTHOFF Treasurer
---------------------------- (Chief Financial Officer
Sandra J. Westhoff and Accounting Officer)
* Trustee
----------------------------
Mary Ann Cusenza
* Trustee
----------------------------
Harry Dalzell-Payne
* Trustee
----------------------------
Norman W. Douglass
* Trustee
----------------------------
Paul E. Erdman
* Trustee
----------------------------
Melinda Ellis Evers
*By: /s/ GAIL P. SENECA
------------------------
Gail P. Seneca as
Attorney-in-fact
</TABLE>
C-4
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 10:00 AM 07/10/1998
981267901 - 2572612
CERTIFICATE OF AMENDMENT
OF
SENECA FUNDS
UNDER SECTION 3810B OF THE DELAWARE BUSINESS TRUSTS
1. The name of the trust is Seneca Funds.
2. The name is hereby changed to:
Phoenix-Seneca Funds
IN WITNESS WHEREOF, the undersigned has signed this certificate
on 9th day of July, 1998.
/s/ Gail Seneca
--------------------
Gail Seneca, Trustee
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus and
Statement of Additional Information constituting parts of this Post-Effective
Amendment No. 7 to the registration statement on Form N-1A (the "Registration
Statement") of our report dated November 17, 1998, relating to the financial
statements and financial highlights appearing in the September 30, 1998
Annual Report to Shareholders of the Phoenix-Seneca Funds, which are also
incorporated by reference into the Registration Statement. We also consent to
the reference to us under the heading "Financial Highlights" in the Prospectus
and under the heading "Other Information -- Independent Accountants" in the
Statement of Additional Information.
/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
January 21, 1999
<PAGE>
INDEPENDENT AUDITORS' CONSENT
Phoenix-Seneca Funds
We consent to the use in Post-Effective Amendment No. 7 to Registration
Statement No. 33-65137 of our report dated November 5, 1997, included in the
Annual Report to Shareholders for the Year Ended September 30, 1997, and
incorporated by reference in the Statement of Additional Information, which
is a part of such Registration Statement, and to the reference to us under
the captions "Financial Highlights" appearing in the Prospectuses, which also
are a part of this Registration Statement.
/s/ Deloitte & Touche, LLP
Kansas City, Missouri
January 21, 1999
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 011
<NAME> PHOENIX-SENECA GROWTH FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 46,385
<INVESTMENTS-AT-VALUE> 48,294
<RECEIVABLES> 1,354
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,681
<PAYABLE-FOR-SECURITIES> 841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 119
<TOTAL-LIABILITIES> 960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,788
<SHARES-COMMON-STOCK> 1,070
<SHARES-COMMON-PRIOR> 370
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,024
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,909
<NET-ASSETS> 48,721
<DIVIDEND-INCOME> 429
<INTEREST-INCOME> 84
<OTHER-INCOME> 0
<EXPENSES-NET> (537)
<NET-INVESTMENT-INCOME> (24)
<REALIZED-GAINS-CURRENT> 5,787
<APPREC-INCREASE-CURRENT> (3,716)
<NET-CHANGE-FROM-OPS> 2,047
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (457)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 903
<NUMBER-OF-SHARES-REDEEMED> (233)
<SHARES-REINVESTED> 30
<NET-CHANGE-IN-ASSETS> 11,350
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 2,357
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 545
<AVERAGE-NET-ASSETS> 43,891
<PER-SHARE-NAV-BEGIN> 16.28
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> 1.24
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.23
<EXPENSE-RATIO> 1.55
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 012
<NAME> PHOENIX-SENECA GROWTH FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 46,385
<INVESTMENTS-AT-VALUE> 48,294
<RECEIVABLES> 1,354
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,681
<PAYABLE-FOR-SECURITIES> 841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 119
<TOTAL-LIABILITIES> 960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,788
<SHARES-COMMON-STOCK> 32
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,024
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,909
<NET-ASSETS> 48,721
<DIVIDEND-INCOME> 429
<INTEREST-INCOME> 84
<OTHER-INCOME> 0
<EXPENSES-NET> (537)
<NET-INVESTMENT-INCOME> (24)
<REALIZED-GAINS-CURRENT> 5,787
<APPREC-INCREASE-CURRENT> (3,716)
<NET-CHANGE-FROM-OPS> 2,047
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 32
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 519
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 2,357
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 545
<AVERAGE-NET-ASSETS> 43,891
<PER-SHARE-NAV-BEGIN> 18.71
<PER-SHARE-NII> (.04)
<PER-SHARE-GAIN-APPREC> (2.48)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.19
<EXPENSE-RATIO> 2.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 013
<NAME> PHOENIX-SENECA GROWTH FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 46,385
<INVESTMENTS-AT-VALUE> 48,294
<RECEIVABLES> 1,354
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,681
<PAYABLE-FOR-SECURITIES> 841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 119
<TOTAL-LIABILITIES> 960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,788
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,024
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,909
<NET-ASSETS> 48,721
<DIVIDEND-INCOME> 429
<INTEREST-INCOME> 84
<OTHER-INCOME> 0
<EXPENSES-NET> (537)
<NET-INVESTMENT-INCOME> (24)
<REALIZED-GAINS-CURRENT> 5,787
<APPREC-INCREASE-CURRENT> (3,716)
<NET-CHANGE-FROM-OPS> 2,047
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 126
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 2357
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 545
<AVERAGE-NET-ASSETS> 43,891
<PER-SHARE-NAV-BEGIN> 18.71
<PER-SHARE-NII> (.06)
<PER-SHARE-GAIN-APPREC> (2.47)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.18
<EXPENSE-RATIO> 2.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 017
<NAME> PHOENIX-SENECA GROWTH FUND - CLASS X
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 46,385
<INVESTMENTS-AT-VALUE> 48,294
<RECEIVABLES> 1,354
<ASSETS-OTHER> 33
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 49,681
<PAYABLE-FOR-SECURITIES> 841
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 119
<TOTAL-LIABILITIES> 960
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 41,788
<SHARES-COMMON-STOCK> 1,866
<SHARES-COMMON-PRIOR> 2,075
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,024
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,909
<NET-ASSETS> 48,721
<DIVIDEND-INCOME> 429
<INTEREST-INCOME> 84
<OTHER-INCOME> 0
<EXPENSES-NET> (537)
<NET-INVESTMENT-INCOME> (24)
<REALIZED-GAINS-CURRENT> 5,787
<APPREC-INCREASE-CURRENT> (3,716)
<NET-CHANGE-FROM-OPS> 2,047
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (28)
<DISTRIBUTIONS-OF-GAINS> (2,638)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 285
<NUMBER-OF-SHARES-REDEEMED> (670)
<SHARES-REINVESTED> 176
<NET-CHANGE-IN-ASSETS> (3,380)
<ACCUMULATED-NII-PRIOR> 28
<ACCUMULATED-GAINS-PRIOR> 2,357
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 307
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 545
<AVERAGE-NET-ASSETS> 43,891
<PER-SHARE-NAV-BEGIN> 16.43
<PER-SHARE-NII> .00
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> (.02)
<PER-SHARE-DISTRIBUTIONS> (1.23)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 16.46
<EXPENSE-RATIO> 1.14
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 021
<NAME> PHOENIX-SENECA MID CAP EDGE FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 13,259
<INVESTMENTS-AT-VALUE> 13,034
<RECEIVABLES> 129
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,189
<PAYABLE-FOR-SECURITIES> 276
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58
<TOTAL-LIABILITIES> 334
<SENIOR-EQUITY> 0
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<ACCUMULATED-NET-GAINS> 540
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (225)
<NET-ASSETS> 12,855
<DIVIDEND-INCOME> 39
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<EXPENSES-NET> (282)
<NET-INVESTMENT-INCOME> (202)
<REALIZED-GAINS-CURRENT> 896
<APPREC-INCREASE-CURRENT> (1,613)
<NET-CHANGE-FROM-OPS> (919)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (289)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 160
<NUMBER-OF-SHARES-REDEEMED> (62)
<SHARES-REINVESTED> 22
<NET-CHANGE-IN-ASSETS> 1,247
<ACCUMULATED-NII-PRIOR> 0
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<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319
<AVERAGE-NET-ASSETS> 12,548
<PER-SHARE-NAV-BEGIN> 16.49
<PER-SHARE-NII> (.30)
<PER-SHARE-GAIN-APPREC> (.59)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.85)
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<PER-SHARE-NAV-END> 13.75
<EXPENSE-RATIO> 2.70
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 022
<NAME> PHOENIX-SENECA MID CAP EDGE FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 13,259
<INVESTMENTS-AT-VALUE> 13,034
<RECEIVABLES> 129
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<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,189
<PAYABLE-FOR-SECURITIES> 276
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58
<TOTAL-LIABILITIES> 334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,540
<SHARES-COMMON-STOCK> 11
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 540
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (225)
<NET-ASSETS> 12,855
<DIVIDEND-INCOME> 39
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<OTHER-INCOME> 0
<EXPENSES-NET> (282)
<NET-INVESTMENT-INCOME> (202)
<REALIZED-GAINS-CURRENT> 896
<APPREC-INCREASE-CURRENT> (1,613)
<NET-CHANGE-FROM-OPS> (919)
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<DISTRIBUTIONS-OF-INCOME> 0
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<NUMBER-OF-SHARES-SOLD> 11
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 145
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,228
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319
<AVERAGE-NET-ASSETS> 12548
<PER-SHARE-NAV-BEGIN> 17.15
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> (3.33)
<PER-SHARE-DIVIDEND> 0
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.73
<EXPENSE-RATIO> 3.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 023
<NAME> PHOENIX-SENECA MID CAP EDGE FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 13,259
<INVESTMENTS-AT-VALUE> 13,034
<RECEIVABLES> 129
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,189
<PAYABLE-FOR-SECURITIES> 276
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58
<TOTAL-LIABILITIES> 334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,540
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 540
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (225)
<NET-ASSETS> 12,855
<DIVIDEND-INCOME> 39
<INTEREST-INCOME> 41
<OTHER-INCOME> 0
<EXPENSES-NET> (282)
<NET-INVESTMENT-INCOME> (202)
<REALIZED-GAINS-CURRENT> 896
<APPREC-INCREASE-CURRENT> (1,613)
<NET-CHANGE-FROM-OPS> (919)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 8
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 103
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,228
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319
<AVERAGE-NET-ASSETS> 12,548
<PER-SHARE-NAV-BEGIN> 17.15
<PER-SHARE-NII> (.09)
<PER-SHARE-GAIN-APPREC> (3.34)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.72
<EXPENSE-RATIO> 3.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 027
<NAME> PHOENIX-SENECA MID CAP EDGE FUND - CLASS X
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 13,259
<INVESTMENTS-AT-VALUE> 13,034
<RECEIVABLES> 129
<ASSETS-OTHER> 26
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 13,189
<PAYABLE-FOR-SECURITIES> 276
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 58
<TOTAL-LIABILITIES> 334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 12,540
<SHARES-COMMON-STOCK> 647
<SHARES-COMMON-PRIOR> 570
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 540
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (225)
<NET-ASSETS> 12,855
<DIVIDEND-INCOME> 39
<INTEREST-INCOME> 41
<OTHER-INCOME> 0
<EXPENSES-NET> (282)
<NET-INVESTMENT-INCOME> (202)
<REALIZED-GAINS-CURRENT> 896
<APPREC-INCREASE-CURRENT> (1,613)
<NET-CHANGE-FROM-OPS> (919)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> (1,092)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 135
<NUMBER-OF-SHARES-REDEEMED> (142)
<SHARES-REINVESTED> 84
<NET-CHANGE-IN-ASSETS> (450)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 1,228
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 100
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319
<AVERAGE-NET-ASSETS> 12,548
<PER-SHARE-NAV-BEGIN> 16.47
<PER-SHARE-NII> (.23)
<PER-SHARE-GAIN-APPREC> (.58)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> (1.85)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 13.81
<EXPENSE-RATIO> 2.10
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 031
<NAME> PHOENIX-SENECA BOND FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 26,791
<INVESTMENTS-AT-VALUE> 26,977
<RECEIVABLES> 481
<ASSETS-OTHER> 75
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,533
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,072
<SHARES-COMMON-STOCK> 33
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12)
<ACCUMULATED-NET-GAINS> 229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 186
<NET-ASSETS> 27,476
<DIVIDEND-INCOME> 18
<INTEREST-INCOME> 1,029
<OTHER-INCOME> 0
<EXPENSES-NET> (231)
<NET-INVESTMENT-INCOME> 816
<REALIZED-GAINS-CURRENT> 273
<APPREC-INCREASE-CURRENT> (53)
<NET-CHANGE-FROM-OPS> 1,036
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (5)
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 48
<NUMBER-OF-SHARES-REDEEMED> (16)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 348
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 110
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 243
<AVERAGE-NET-ASSETS> 13,949
<PER-SHARE-NAV-BEGIN> 10.79
<PER-SHARE-NII> .13
<PER-SHARE-GAIN-APPREC> (.07)
<PER-SHARE-DIVIDEND> (.17)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.68
<EXPENSE-RATIO> 2.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 032
<NAME> PHOENIX-SENECA BOND FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 26,791
<INVESTMENTS-AT-VALUE> 26,977
<RECEIVABLES> 481
<ASSETS-OTHER> 75
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,533
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,072
<SHARES-COMMON-STOCK> 22
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12)
<ACCUMULATED-NET-GAINS> 229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 186
<NET-ASSETS> 27,476
<DIVIDEND-INCOME> 18
<INTEREST-INCOME> 1,029
<OTHER-INCOME> 0
<EXPENSES-NET> (231)
<NET-INVESTMENT-INCOME> 816
<REALIZED-GAINS-CURRENT> 273
<APPREC-INCREASE-CURRENT> (53)
<NET-CHANGE-FROM-OPS> 1,036
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (2)
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 24
<NUMBER-OF-SHARES-REDEEMED> (2)
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 233
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 110
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 243
<AVERAGE-NET-ASSETS> 13,949
<PER-SHARE-NAV-BEGIN> 10.79
<PER-SHARE-NII> .11
<PER-SHARE-GAIN-APPREC> (.08)
<PER-SHARE-DIVIDEND> (.15)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.67
<EXPENSE-RATIO> 3.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 033
<NAME> PHOENIX-SENECA BOND FUND - CLASS C
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 26,791
<INVESTMENTS-AT-VALUE> 26,977
<RECEIVABLES> 481
<ASSETS-OTHER> 75
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,533
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,072
<SHARES-COMMON-STOCK> 41
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12)
<ACCUMULATED-NET-GAINS> 229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 186
<NET-ASSETS> 27,476
<DIVIDEND-INCOME> 18
<INTEREST-INCOME> 1,029
<OTHER-INCOME> 0
<EXPENSES-NET> (231)
<NET-INVESTMENT-INCOME> 816
<REALIZED-GAINS-CURRENT> 273
<APPREC-INCREASE-CURRENT> (53)
<NET-CHANGE-FROM-OPS> 1,036
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (4)
<DISTRIBUTIONS-OF-GAINS> 0
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<NUMBER-OF-SHARES-SOLD> 41
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<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 439
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 110
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 243
<AVERAGE-NET-ASSETS> 13,949
<PER-SHARE-NAV-BEGIN> 10.79
<PER-SHARE-NII> .10
<PER-SHARE-GAIN-APPREC> (.07)
<PER-SHARE-DIVIDEND> (.15)
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.67
<EXPENSE-RATIO> 3.20
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 037
<NAME> PHOENIX-SENECA BOND FUND - CLASS X
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 26,791
<INVESTMENTS-AT-VALUE> 26,977
<RECEIVABLES> 481
<ASSETS-OTHER> 75
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 27,533
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 57
<TOTAL-LIABILITIES> 57
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 27,072
<SHARES-COMMON-STOCK> 2,477
<SHARES-COMMON-PRIOR> 853
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (12)
<ACCUMULATED-NET-GAINS> 229
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 186
<NET-ASSETS> 27,476
<DIVIDEND-INCOME> 18
<INTEREST-INCOME> 1,029
<OTHER-INCOME> 0
<EXPENSES-NET> (231)
<NET-INVESTMENT-INCOME> 816
<REALIZED-GAINS-CURRENT> 273
<APPREC-INCREASE-CURRENT> (53)
<NET-CHANGE-FROM-OPS> 1,036
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (816)
<DISTRIBUTIONS-OF-GAINS> (158)
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1,870
<NUMBER-OF-SHARES-REDEEMED> (335)
<SHARES-REINVESTED> 89
<NET-CHANGE-IN-ASSETS> 17,533
<ACCUMULATED-NII-PRIOR> 4
<ACCUMULATED-GAINS-PRIOR> 110
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 70
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 243
<AVERAGE-NET-ASSETS> 13,949
<PER-SHARE-NAV-BEGIN> 10.47
<PER-SHARE-NII> .56
<PER-SHARE-GAIN-APPREC> .40
<PER-SHARE-DIVIDEND> (.57)
<PER-SHARE-DISTRIBUTIONS> (.18)
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.68
<EXPENSE-RATIO> 1.66
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 041
<NAME> PHOENIX-SENECA REAL ESTATE SECURITIES FUND - CLASS A
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 26,583
<INVESTMENTS-AT-VALUE> 23,207
<RECEIVABLES> 202
<ASSETS-OTHER> 29
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,438
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108
<TOTAL-LIABILITIES> 108
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,009
<SHARES-COMMON-STOCK> 123
<SHARES-COMMON-PRIOR> 216
<ACCUMULATED-NII-CURRENT> 170
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 527
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,376)
<NET-ASSETS> 23,330
<DIVIDEND-INCOME> 1,567
<INTEREST-INCOME> 24
<OTHER-INCOME> 0
<EXPENSES-NET> (452)
<NET-INVESTMENT-INCOME> 1,139
<REALIZED-GAINS-CURRENT> 551
<APPREC-INCREASE-CURRENT> (7,262)
<NET-CHANGE-FROM-OPS> (5,572)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> (63)
<DISTRIBUTIONS-OF-GAINS> (124)
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<NUMBER-OF-SHARES-SOLD> 32
<NUMBER-OF-SHARES-REDEEMED> (138)
<SHARES-REINVESTED> 14
<NET-CHANGE-IN-ASSETS> (1,819)
<ACCUMULATED-NII-PRIOR> 23
<ACCUMULATED-GAINS-PRIOR> 1,223
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 242
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 461
<AVERAGE-NET-ASSETS> 28,493
<PER-SHARE-NAV-BEGIN> 14.68
<PER-SHARE-NII> .35
<PER-SHARE-GAIN-APPREC> (3.08)
<PER-SHARE-DIVIDEND> (.37)
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<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 11.00
<EXPENSE-RATIO> 2.76
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 042
<NAME> PHOENIX-SENECA REAL ESTATE SECURITIES FUND - CLASS B
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 26,583
<INVESTMENTS-AT-VALUE> 23,207
<RECEIVABLES> 202
<ASSETS-OTHER> 29
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 23,438
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 108
<TOTAL-LIABILITIES> 108
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 26,009
<SHARES-COMMON-STOCK> 8
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 170
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 527
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (3,376)
<NET-ASSETS> 23,330
<DIVIDEND-INCOME> 1,567
<INTEREST-INCOME> 24
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<EXPENSES-NET> (452)
<NET-INVESTMENT-INCOME> 1,139
<REALIZED-GAINS-CURRENT> 551
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<NAME> PHOENIX-SENECA REAL ESTATE SECURITIES FUND - CLASS C
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<NAME> PHOENIX-SENECA REAL ESTATE SECURITIES FUND - CLASS X
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