-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K4a4J3CghB9z00VFGPbdBHTp0X+ZpNQF/sSyqAKOGU+A6/T+vuJ1PdC6WJkjEpp2 JkO/SMO2kOiF6g1aMhJ1Zg== 0000912057-99-008390.txt : 19991207 0000912057-99-008390.hdr.sgml : 19991207 ACCESSION NUMBER: 0000912057-99-008390 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX SENECA FUNDS CENTRAL INDEX KEY: 0001005020 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-07455 FILM NUMBER: 99769537 BUSINESS ADDRESS: STREET 1: 909 MONTGOMERY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94133 BUSINESS PHONE: 4156771570 MAIL ADDRESS: STREET 1: 909 MONTGOMERY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94133 FORMER COMPANY: FORMER CONFORMED NAME: SENECA FUNDS DATE OF NAME CHANGE: 19951218 N-30D 1 N-30D [LOGO] Phoenix Investment Partners SEPTEMBER 30, 1999 -SENECA- Annual Report Phoenix-Seneca Bond Fund Phoenix-Seneca Growth Fund Phoenix-Seneca Mid-Cap "EDGE" -SM- Fund Phoenix-Seneca Real Estate Securities Fund PHOENIX INVESTMENT PARTNERS [LOGO] PRESIDENT'S MESSAGE THE Y2K FACTOR [PHOTO] Analysis, testing and remediation of critical computer systems throughout 1998 and 1999 appear to have been extremely thorough for large companies, and, in particular, for the financial services industry. We will undoubtedly encounter some glitches, but major systems for securities settlement, portfolio accounting, and bank operations appear sound. Even governmental bureaucracies have made huge strides toward full readiness. Outside the U.S., significant difficulties may occur in less- developed nations, but the volume of financial transactions there is too small to pose a systemic structural threat to world financial systems. More likely than major computer operating failures are "accidents" caused by non-systemic, all-too-human attempts to cope with uncertainty. Inventory stockpiling, cash hoarding, and delivery problems are among the obvious potential problems. All of these will be short-lived, given the inherent ingenuity of the U.S. entrepreneurial system and the lubricant of extra cash the Fed has promised to inject into the system. The Federal Reserve's plan to inject $200 billion in liquidity into the banking system in preparation for any year-end distortions could provide a real boon to the markets. So, too, may "flight to safety" inflows to the U.S., which clearly leads the world in Y2K readiness. And, we believe the sheer relief when the dreaded turn of the year is behind us will almost certainly improve market sentiment. On the following pages, your portfolio managers discuss factors that affected your fund's performance over the last fiscal year and share their outlook for the short term. We hope you find their comments helpful and informative. If you have any questions, please call your financial advisor or contact us at www.phoenixinvestments.com or 1-800-243-1574. /s/ Gail P. Seneca Gail P. Seneca OCTOBER 7, 1999 1 TABLE OF CONTENTS Phoenix-Seneca Bond Fund.................................... 3 Phoenix-Seneca Growth Fund.................................. 14 Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund...................... 23 Phoenix-Seneca Real Estate Securities Fund.................. 32 Notes to Financial Statements............................... 41
2 PHOENIX-SENECA BOND FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, GAIL P. SENECA, PH.D., AND CHARLES DICKE, CFA Q: WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND? A: The Phoenix-Seneca Bond Fund seeks high total return through both current income and capital appreciation. Its value-driven process focuses on issue selection, sector selection, measured interest rate anticipation, and trading opportunities. It is suitable for investors looking for a fund that seeks a balance between enhancing portfolio returns over market cycles and minimizing risk and volatility. Q: HOW DID THE FUND PERFORM OVER THE LAST 12-MONTH REPORTING PERIOD? A: For the 12 months ended September 30, 1999, Class A shares returned 2.46%, Class B shares returned 1.67%, Class C shares returned 1.66%, and Class X shares returned 3.51% compared with a loss of (0.37%) for the Lehman Brothers Aggregate Bond Index(1). All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Q: CAN YOU PROVIDE A BRIEF OVERVIEW OF THE MARKETS FOR THE LAST 12 MONTHS? A: U.S. bond yields, which have been fairly volatile during the reporting period, were particularly so during the third quarter of the year as market expectations of Federal Reserve action gyrated from optimism to pessimism. The yield on the 30-year U.S. Treasury reached a high of 6.28% on August 12, fell to a low of 5.86% on August 25, and closed the quarter with a yield of 6.05%. For the year, total returns on bonds, as measured by the broad market index, the Lehman Brothers Aggregate Bond Index, are in negative territory, reflecting the large rise in interest rate levels since 1998. Corporate bond performance has been particularly weak as large supplies of new issuance forced yields higher and prices lower. Limited liquidity due to Y2K fears also hurt corporate issues. High-yield corporate bonds were especially affected. However, our view remains positive on this sector. Market technicals, the main driver behind the recent negative performance, should turn as we begin the new year. Q: WHAT IS YOUR OUTLOOK FOR THE NEAR TERM? A: Rising rates have been the market's greatest enemy this year. The Fed is on alert to inflation signals, and while it is true that inflation risks are higher when labor is tight, it is also true that disinflationary forces remain very strong. Unused manufacturing capacity is abundant worldwide. Technology advances, particularly the Internet, are profoundly disinflationary. And, global competition is driving price discounting in markets as diverse as telecommunications and toys. Inflation may rebound moderately, but we doubt it will gain traction in this intensely competitive environment. With the good probability, in our opinion, that inflation will not increase significantly, bonds today appear to be fairly valued. We believe that bonds will provide much improved returns in the coming year. OCTOBER 19, 1999 (1) THE LEHMAN BROTHERS AGGREGATE BOND INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF BROAD BOND MARKET TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT. 3 Phoenix-Seneca Bond Fund AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 9/30/99
INCEPTION INCEPTION 1 YEAR TO 9/30/99 DATE ------- ---------- --------- Class X Shares at NAV(2) 3.51% 7.92% 3/7/96 Class A Shares at NAV(2) 2.46 2.40 7/1/98 Class A Shares at POP(3) (2.41) (1.51) 7/1/98 Class B Shares at NAV(2) 1.67 1.57 7/1/98 Class B Shares with CDSC(4) (2.18) (1.48) 7/1/98 Class C Shares at NAV(2) 1.66 1.56 7/1/98 Class C Shares with CDSC(4) 1.66 1.56 7/1/98 Lehman Brothers Aggregate Bond Index(7) (0.37) Note 5 Note 5
(1) Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gains distributions. (2) "NAV" (Net Asset Value) total returns do not include the effect of any sales charge. (3) "POP" (Public Offering Price) total returns include the effect of the maximum front-end 4.75% sales charge. (4) CDSC (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC charges for B shares decline from 5% to 0% over a five year period. CDSC charges for C shares are 1% in the first year and 0% thereafter. (5) Index performance is 6.14% for Class X (since 3/7/96) and 0.55% for Class A, Class B and Class C (since 7/1/98). (6) This chart illustrates NAV returns on Class X shares. Returns on Class A, Class B and Class C shares will vary due to differing sales charges. (7) The Lehman Brothers Aggregate Bond Index is an unmanaged, commonly used measure of broad bond market total return performance. The index's performance does not reflect sales charges. All returns represent past performance which may not be indicative of future performance. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. GROWTH OF $10,000 PERIODS ENDING 9/30 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PHOENIX-SENECA BOND LEHMAN BROTHERS AGGREGATE FUND CLASS X AT NAV(6) BOND INDEX(7) 3/96 $10,000 $10,000 96 $10,413 $10,146 97 $11,586 $11,132 98 $12,679 $12,413 99 $13,124 $12,367
This Growth of $10,000 chart assumes an initial investment of $10,000 made on 3/7/96 (inception of the Fund) in Class X shares and reflects no sales charge. Performance assumes dividends and capital gains are reinvested. The performance of other share classes will be greater or less than that shown based on differences in inception dates, fees and sales charges. SECTOR WEIGHTINGS 9/30/99 As a percentage of bond holdings EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Corporate 67% Agency Mortgage-Backed 11 Non-Agency Mortgage-Backed 6 Foreign Corporate 6 Asset-Backed 4 U.S. Government 3 Agency Non Mortgage-Backed 3
4 Phoenix-Seneca Bond Fund TEN LARGEST HOLDINGS AT SEPTEMBER 30, 1999 (AS A PERCENTAGE OF NET ASSETS) 1. Sprint Spectrum L.P. 3.6% CORPORATE BOND 2. Fannie Mae 7%, 10/15/29 2.9% AGENCY MORTGAGE-BACKED SECURITY 3. GMAC Commercial Mortgage Securities, Inc. 2.8% NON-AGENCY MORTGAGE-BACKED SECURITY 4. U.S. Government Securities 2.7% U.S. TREASURY BONDS & NOTES 5. Fannie Mae 6.50%, 8/15/04 2.7% AGENCY NON MORTGAGE-BACKED SECURITY 6. Freddie Mac 6%, 10/15/27 2.6% AGENCY MORTGAGE-BACKED SECURITY 7. Olympic Automobile Receivables Trust 96-D, A5 2.5% ASSET-BACKED SECURITY 8. Fannie Mae 6.50%, 8/1/29 2.4% AGENCY MORTGAGE-BACKED SECURITY 9. Microsoft Corp. Series A Cv. Pfd. 2.4% CONVERTIBLE PREFERRED STOCK 10. Fox/Liberty Networks LLC 2.3% CORPORATE BOND
INVESTMENTS AT SEPTEMBER 30, 1999
MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- U.S. GOVERNMENT SECURITIES--2.7% U.S. TREASURY BONDS--1.1% U.S. Treasury Bonds 5.25%, 11/15/28..... Aaa $ 510 $ 441,633 U.S. TREASURY NOTES--1.6% U.S. Treasury Notes 4.75%, 2/15/04...... Aaa 450 431,438 U.S. Treasury Notes 6.50%, 10/15/06..... Aaa 200 204,505 ----------- 635,943 ----------- - -------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT SECURITIES (IDENTIFIED COST $1,087,835) 1,077,576 - -------------------------------------------------------------------------- AGENCY MORTGAGE-BACKED SECURITIES--10.8% Fannie Mae 8.75%, 5/25/17............... Aaa 12 12,443 Fannie Mae 6.50%, 12/1/28............... Aaa 384 367,908 Fannie Mae 6.50%, 8/1/29................ Aaa 1,009 967,022 Fannie Mae W.I. 7%, 10/15/29............ Aaa 1,150 1,129,875 Fannie Mae Strip I.O. 3.156%, 10/25/23(c)............................. Aaa 222 5,896 Freddie Mac 8.75%, 12/15/20............. Aaa 5 5,509 Freddie Mac 7%, 7/15/23................. Aaa 769 731,790 Freddie Mac 6%, 10/15/27................ Aaa 1,125 1,045,102 GNMA 7%, 2/15/26........................ Aaa 16 16,197 - -------------------------------------------------------------------------- TOTAL AGENCY MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $4,338,864) 4,281,742 - -------------------------------------------------------------------------- MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- AGENCY NON MORTGAGE-BACKED SECURITIES--2.7% Fannie Mae 6.50%, 8/15/04............... Aaa $1,050 $ 1,055,104 - -------------------------------------------------------------------------- TOTAL AGENCY NON MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $1,059,912) 1,055,104 - -------------------------------------------------------------------------- ASSET-BACKED SECURITIES--3.8% Olympic Automobile Receivables Trust 96-B, CTFS 6.90%, 2/15/04............... Aaa 76 76,847 Olympic Automobile Receivables Trust 96-C, A5 7%, 3/15/04.................... Aaa 400 403,955 Olympic Automobile Receivables Trust 96-D, A5 6.25%, 11/15/04(e)............. Aaa 1,000 1,000,195 Standard Credit Card Master Trust 1 93-2, A 5.95%, 9/7/03................... Aaa 40 39,066 - -------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $1,523,019) 1,520,063 - -------------------------------------------------------------------------- CORPORATE BONDS--64.8% AIR FREIGHT--1.2% Federal Express Corp. Series 98-1A 6.72%, 1/15/22.......................... Aa 499 467,031
See Notes to Financial Statements 5 Phoenix-Seneca Bond Fund
MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- AIRLINES--2.5% Alaska Airlines, Inc. Series A 9.50%, 4/12/10................................. Baa $ 114 $ 120,779 Alaska Airlines, Inc. Series D 9.50%, 4/12/12................................. Baa 452 482,945 Delta Air Lines, Inc. Series B2 10.06%, 1/2/16.................................. Baa 65 73,976 United Airlines, Inc. Series 91-B 10.11%, 2/19/06......................... Baa 18 19,239 United Airlines, Inc. Series 91-E 9.76%, 5/27/06................................. Baa 86 92,181 United Airlines, Inc. Series 95-A1 9.02%, 4/19/12.......................... Baa 181 189,344 ----------- 978,464 ----------- BANKS (MAJOR REGIONAL)--2.4% First Republic Bancorp 7.75%, 9/15/12... BB(d) 300 269,262 Wells Fargo Capital I 7.96%, 12/15/26... Aa 700 681,534 ----------- 950,796 ----------- BANKS (MONEY CENTER)--1.0% BankAmerica Corp. Institutional Series A 144A 8.07%, 12/31/26(b)................. Aa 400 392,072 BROADCASTING (TELEVISION, RADIO & CABLE)--5.5% Chancellor Media Corp. 9.375%, 10/1/04................................. B 75 76,875 Falcon Holding Group L.P. 8.375%, 4/15/10................................. B 500 495,000 Fox/Liberty Networks LLC 0%, 8/15/07(c).............................. Ba 1,180 929,250 Jacor Communications, Inc. 10.125%, 6/15/06................................. B 100 107,500 Jones Intercable, Inc. 9.625%, 3/15/02................................. Baa 300 316,500 SFX Broadcasting Corp. Series B 10.75%, 5/15/06................................. B 56 61,180 Turner Broadcasting System, Inc. 8.40%, 2/1/24.................................. Baa 200 201,987 ----------- 2,188,292 ----------- MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- CONSUMER (JEWELRY, NOVELTIES & GIFTS)--0.1% Finlay Fine Jewelry Corp. 8.375%, 5/1/08.................................. Ba $ 40 $ 38,650 ELECTRONICS (SEMICONDUCTORS)--1.9% SCG Holdings & Semiconductor Co. 144A 12%, 8/1/09(b).......................... B 750 768,750 ENTERTAINMENT--2.8% AMC Entertainment, Inc. 9.50%, 3/15/09................................. B 100 83,500 Royal Caribbean Cruises Ltd. 7.50%, 10/15/27................................ Baa 100 90,527 Time Warner, Inc. 9.125%, 1/15/13....... Baa 65 73,448 Time Warner, Inc. 6.85%, 1/15/26........ Baa 620 623,100 United Artists Theatre Circuit, Inc. Series 95-A 9.30%, 7/1/15............... B 327 222,211 ----------- 1,092,786 ----------- FINANCIAL (DIVERSIFIED)--1.3% Countrywide Capital I 8%, 12/15/26...... A 200 185,028 Dollar Financial Group, Inc. Series A 10.875%, 11/15/06....................... B 75 74,625 Market Hub Partners Finance, Inc. 8.25%, 3/1/08.................................. Ba 250 243,125 ----------- 502,778 ----------- HEALTH CARE (HOSPITAL MANAGEMENT)--1.0% Universal Health Services, Inc. 8.75%, 8/15/05................................. Ba 400 414,048 HEALTH CARE (MEDICAL PRODUCTS & SUPPLIES)--0.7% Dade International, Inc. Series B 11.125%, 5/1/06......................... B 260 275,600 HEALTH CARE (SPECIALIZED SERVICES)--1.2% HEALTHSOUTH Corp. 9.50%, 4/1/01(e)...... Ba 500 484,881 HOMEBUILDING--2.8% Lennar Corp. 7.625%, 3/1/09............. Ba 800 740,000 Toll Corp. 8%, 5/1/09................... Ba 400 381,500 ----------- 1,121,500 -----------
6 See Notes to Financial Statements Phoenix-Seneca Bond Fund
MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- INVESTMENT BANKING/BROKERAGE--2.1% Donaldson, Lufkin & Jenrette, Inc. 6.875%, 11/1/05......................... A $ 50 $ 48,958 Donaldson, Lufkin & Jenrette, Inc. 6.50%, 6/1/08........................... A 200 187,278 Lehman Brothers Holdings, Inc. Series F 7%, 5/15/03............................. A 500 497,500 Lehman Brothers Holdings, Inc. 8.80%, 3/1/15.................................. A 80 83,417 ----------- 817,153 ----------- LODGING-HOTELS--1.4% Hammons (John Q.) Hotels, Inc. 8.875%, 2/15/04................................. B 530 479,650 Hammons (John Q.) Hotels, Inc. 9.75%, 10/1/05................................. B 100 92,000 ----------- 571,650 ----------- MACHINERY (DIVERSIFIED)--1.3% Better Minerals & Aggregates 144A 13%, 9/15/09(b).............................. B 500 501,250 MANUFACTURING (DIVERSIFIED)--0.0% Hawk Corp. 10.25%, 12/1/03.............. Ba 10 10,150 MANUFACTURING (SPECIALIZED)--1.3% Advanced Glassfiber Yarns 9.875%, 1/15/09................................. B 300 275,250 BGF Industries, Inc. Series B 10.25%, 1/15/09................................. B 300 258,750 ----------- 534,000 ----------- OFFICE EQUIPMENT & SUPPLIES--1.9% CEX Holdings, Inc. Series B 9.625%, 6/1/08.................................. B 700 752,500 OIL & GAS (REFINING & MARKETING)--0.8% El Paso Tenneco RACERS 97-C-1-2 144A 9.14%, 12/31/01(b)...................... NR 300 316,500 MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- PAPER & FOREST PRODUCTS--0.1% Container Corporation of America Series A 11.25%, 5/1/04........................ B $ 40 $ 41,400 PHOTOGRAPHY/IMAGING--0.4% Imax Corp. 7.875%, 12/1/05.............. Ba 150 139,875 PUBLISHING (NEWSPAPERS)--0.8% Garden State Newspapers, Inc. Series B 8.75%, 10/1/09.......................... B 325 299,000 RAILROADS--1.5% Railworks Corp. 11.5%, 4/15/09.......... B 600 600,000 REITS--4.5% ERP Operating L.P. 7.57%, 8/15/26....... A 170 166,495 Evans Withycomb Residential, Inc. 7.50%, 4/15/04................................. A 100 101,496 First Industrial L.P. 7.15%, 5/15/27.... Baa 500 494,309 Property Trust of America 6.875%, 2/15/08................................. Baa 5 4,779 Regency Centers L.P. 7.4%, 4/1/04....... Baa 500 488,750 Security Capital Pacific Trust 7.375%, 10/15/06................................ Baa 100 94,552 Security Capital Pacific Trust 7.90%, 2/15/16................................. Baa 200 185,760 Washington Real Estate Investment Trust 7.125%, 8/13/03......................... Baa 110 109,252 Weingarten Realty Investors Series A 6.88%, 6/25/27.......................... A 150 144,050 ----------- 1,789,443 ----------- RESTAURANTS--1.5% CKE Restaurants, Inc. 4.25%, 3/15/04.... B 500 325,000 Foodmaker, Inc. Series B 9.75%, 11/1/03................................. BB(d) 250 255,625 ----------- 580,625 ----------- RETAIL (DISCOUNTERS)--0.9% AMES Department Stores 10%, 4/15/06..... B 350 340,375
See Notes to Financial Statements 7 Phoenix-Seneca Bond Fund
MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- RETAIL (FOOD CHAINS)--2.9% Kroger Co. 6%, 7/1/00(c)................ Baa $ 275 $ 274,422 Meyer (Fred), Inc. Series 94-A2 8.64%, 7/2/12.................................. BBB(d) 100 105,500 Stater Brothers Holdings, Inc. 144A 10.75%, 08/15/06(b)..................... B 750 767,812 ----------- 1,147,734 ----------- RETAIL (GENERAL MERCHANDISE)--3.3% K Mart Funding Corp. Series F 8.80%, 7/1/10.................................. Ba 500 487,604 Wal-Mart Stores, Inc. Series A-2 8.85%, 1/2/15.................................. Aa 750 838,500 ----------- 1,326,104 ----------- SERVICES (ADVERTISING/MARKETING)--0.9% Outdoor Systems, Inc. 8.875%, 6/15/07... B 350 357,875 SERVICES (COMMERCIAL & CONSUMER)--5.6% Coinmach Laundry Corp. Series D 11.75%, 11/15/05................................ B 255 274,762 Group Maintenance America Corp. 9.75%, 1/15/09................................. B 300 288,000 Loomis Fargo & Co. 10%, 1/15/04......... B 300 297,000 Protection One Alarm Monitoring, Inc. 7.375%, 8/15/05......................... Ba 500 392,500 SC International Services, Inc. 9.25%, 9/1/07.................................. B 190 187,625 United Rentals, Inc. Series B 9.50%, 6/1/08.................................. B 250 247,500 United Rentals, Inc. Series B 8.80%, 8/15/08................................. B 500 475,000 Williams Scotsman, Inc. 9.875%, 6/1/07.................................. B 50 47,625 ----------- 2,210,012 ----------- MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- TELECOMMUNICATIONS (CELLULAR/WIRELESS)--3.7% Orion Network Systems 0%, 1/15/07(c).... B $ 90 $ 41,850 Sprint Spectrum L.P. 0%, 8/15/06(c)..... Baa 1,530 1,415,250 ----------- 1,457,100 ----------- TELECOMMUNICATIONS (LONG DISTANCE)--0.5% Qwest Communications International Corp. 0%, 10/15/07(c)......................... Ba 275 213,469 TEXTILES (APPAREL)--2.2% Levi Strauss & Co. 144A 7%, 11/1/06(b).............................. Ba 1,000 861,250 WASTE MANAGEMENT--1.8% Waste Management, Inc. 6.125%, 7/15/01(c)(e)........................... Ba 750 719,435 WATER UTILITIES--1.0% Marlin Water Trust 144A 7.09%, 12/15/01(b)............................. Baa 405 400,950 - -------------------------------------------------------------------------- TOTAL CORPORATE BONDS (IDENTIFIED COST $26,637,442) 25,663,498 - -------------------------------------------------------------------------- NON-AGENCY MORTGAGE-BACKED SECURITIES--6.5% DLJ Commercial Mortgage Corp. 98-CG1, A1A 6.11%, 12/10/07..................... AAA(d) 924 894,405 GE Capital Mortgage Services, Inc. 94-21, B1 6.50% 8/25/09................. A 29 28,531 GMAC Commercial Mortgage Securities, Inc. 98-C2, A2 6.42%, 8/15/08........... Aaa 1,178 1,116,367 Lehman ABS Corp. 94-C2, A 144A 8.145%, 11/2/07(b).............................. BBB(d) 70 68,450 Morgan Stanley Capital I, 98-WF1, A2 6.55%, 12/15/07(c)...................... NR 485 466,572 - -------------------------------------------------------------------------- TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $2,601,623) 2,574,325 - --------------------------------------------------------------------------
8 See Notes to Financial Statements Phoenix-Seneca Bond Fund
MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- FOREIGN CORPORATE BONDS--5.6% FRANCE--1.5% Societe General Real Estate LLC Series A 144A 7.64%, 12/29/49(b)(c).............. A $ 650 $ 600,927 MEXICO--2.4% Pemex Finance Ltd. 144A 6.30%, 5/15/10(b).............................. Aaa 500 475,000 Pemex Finance Ltd. 144A 9.15%, 11/15/18(b)............................. Baa 500 468,750 ----------- 943,750 ----------- UNITED KINGDOM--1.7% Abbey National PLC 7.35%, 10/29/49(c)... Aa 100 95,711 Credit Suisse Group 144A 7.90%, 5/29/49(b)(c)........................... A 350 333,375 Terra Nova (U.K.) Holdings 7.20%, 8/15/07................................. Baa 250 240,100 ----------- 669,186 ----------- - -------------------------------------------------------------------------- TOTAL FOREIGN CORPORATE BONDS (IDENTIFIED COST $2,373,514) 2,213,863 - -------------------------------------------------------------------------- SHARES ------ PREFERRED STOCKS--0.7% BANKS (MAJOR REGIONAL)--0.7% First Republic Bank Series A 144A 10.50%(b)............................... 300 296,250 - -------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (IDENTIFIED COST $300,000) 296,250 - -------------------------------------------------------------------------- CONVERTIBLE PREFERRED STOCKS--2.7% COMPUTERS (SOFTWARE & SERVICES)--2.3% Microsoft Corp. Series A Cv. Pfd. 2.75%................................... 9,250 931,359 SHARES VALUE ------ ----------- REITS--0.2% Equity Office Properties Trust Series B Cv. Pfd. 144A 5.25%(b).................. 2,000 $ 77,750 SERVICES (COMMERCIAL & CONSUMER)--0.2% United Rentals, Inc. Cv. Pfd. 144A 6.50%(b)................................ 2,000 72,750 - -------------------------------------------------------------------------- TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $1,030,000) 1,081,859 - -------------------------------------------------------------------------- TOTAL LONG-TERM INVESTMENTS--100.3% (IDENTIFIED COST $40,952,209) 39,764,280 - -------------------------------------------------------------------------- PAR VALUE (000) ------ SHORT-TERM OBLIGATIONS--4.7% FEDERAL AGENCY SECURITIES--4.3% FMC 5.20%, 10/1/99...................... $1,700 1,700,000 REPURCHASE AGREEMENT--0.4% State Street Bank & Trust Co. repurchase agreement 4.25% dated 9/30/99 due 10/1/99, repurchase price $158,019 collateralized by U.S. Treasury Bond 7.875%, 11/15/07, market value $162,469................................ 158 158,000 - -------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $1,858,000) 1,858,000 - --------------------------------------------------------------------------
TOTAL INVESTMENTS--105.0% (IDENTIFIED COST $42,810,209) 41,622,280(a) Cash and receivables, less liabilities--(5.0%) (2,000,405) -------------------- NET ASSETS--100.0% $ 39,621,875 ====================
(a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $326,554 and gross depreciation of $1,514,483 for federal income tax purposes. At September 30, 1999, the aggregate cost of securities for federal income tax purposes was $42,810,209. (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, 1999, these securities amounted to a value of $6,401,836 or 16.2% of net assets. (c) Variable or step coupon security; interest rate shown reflects the rate currently in affect. (d) As rated by Standard & Poor's, Fitch or Duff & Phelps. (e) All or a portion segregated as collateral. See Notes to Financial Statements 9 Phoenix-Seneca Bond Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 ASSETS Investment securities at value (Identified cost $42,810,209) $41,622,280 Cash 712 Receivables Investment securities sold 1,109,570 Interest 639,535 Fund shares sold 75,201 Receivable from adviser 34,766 Deferred organization expenses 13,527 Prepaid expenses 1,057 ----------- Total assets 43,496,648 ----------- LIABILITIES Payables Investment securities purchased 3,792,714 Fund shares repurchased 1,159 Transfer agent fee 12,352 Financial agent fee 6,475 Distribution fee 5,810 Trustees' fee 776 Accrued expenses 55,487 ----------- Total liabilities 3,874,773 ----------- NET ASSETS $39,621,875 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $40,317,078 Undistributed net investment income 211,548 Accumulated net realized gain 281,178 Net unrealized depreciation (1,187,929) ----------- NET ASSETS $39,621,875 =========== CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $34,852,599) 3,368,711 Net asset value and offering price per share $10.35 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $2,732,094) 265,475 Net asset value per share $10.29 Offering price per share $10.29/(1-4.75%) $10.80 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $1,593,343) 155,212 Net asset value and offering price per share $10.27 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $443,839) 43,236 Net asset value and offering price per share $10.27
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1999 INVESTMENT INCOME Interest $ 2,467,528 Dividends 45,110 ----------- Total investment income 2,512,638 ----------- EXPENSES Investment advisory fee 164,083 Distribution fee, Class A 2,715 Distribution fee, Class B 8,348 Distribution fee, Class C 4,007 Financial agent fee 63,648 Transfer agent 78,647 Registration 47,193 Trustees 25,636 Professional 21,422 Printing 17,498 Custodian 15,114 Amortization of deferred organization expenses 10,658 Miscellaneous 18,310 ----------- Total expenses 477,279 Less expenses borne by investment adviser (99,399) Custodian fees paid indirectly (1,778) ----------- Net expenses 376,102 ----------- NET INVESTMENT INCOME 2,136,536 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities 286,567 Net change in unrealized appreciation (depreciation) on investments (1,374,017) ----------- NET LOSS ON INVESTMENTS (1,087,450) ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,049,086 ===========
10 See Notes to Financial Statements Phoenix-Seneca Bond Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/99 9/30/98 ----------- ----------- FROM OPERATIONS Net investment income (loss) $ 2,136,536 $ 815,720 Net realized gain (loss) 286,567 272,954 Net change in unrealized appreciation (depreciation) (1,374,017) (52,850) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1,049,086 1,035,824 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class X (1,783,876) (816,277) Net investment income, Class A (62,282) (4,720) Net investment income, Class B (41,217) (2,101) Net investment income, Class C (19,340) (3,926) Net realized gains, Class X (237,256) (157,929) Net realized gains, Class A (6,691) -- Net realized gains, Class B (3,366) -- Net realized gains, Class C (4,337) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (2,158,365) (984,953) ----------- ----------- FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (936,038 and 1,869,631 shares, respectively) 9,870,220 20,104,967 Net asset value of shares issued from reinvestment of distributions (188,148 and 89,132 shares, respectively) 1,984,360 952,261 Cost of shares repurchased (232,292 and 334,511 shares, respectively) (2,442,507) (3,582,416) ----------- ----------- Total 9,412,073 17,474,812 ----------- ----------- CLASS A Proceeds from sales of shares (302,053 and 48,090 shares, respectively) 3,154,123 515,460 Net asset value of shares issued from reinvestment of distributions (5,398 and 388 shares, respectively) 56,422 4,147 Cost of shares repurchased (74,593 and 15,861 shares, respectively) (783,486) (168,344) ----------- ----------- Total 2,427,059 351,263 ----------- ----------- CLASS B Proceeds from sales of shares (167,067 and 23,658 shares, respectively) 1,753,608 253,821 Net asset value of shares issued from reinvestment of distributions (1,944 and 135 shares, respectively) 20,300 1,443 Cost of shares repurchased (35,679 and 1,913 shares, respectively) (375,271) (20,509) ----------- ----------- Total 1,398,637 234,755 ----------- ----------- CLASS C Proceeds from sales of shares (50,510 and 40,951 shares, respectively) 529,791 439,691 Net asset value of shares issued from reinvestment of distributions (1,056 and 183 shares, respectively) 11,082 1,951 Cost of shares repurchased (49,464 and 0 shares, respectively) (522,992) -- ----------- ----------- Total 17,881 441,642 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 13,255,650 18,502,472 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS 12,146,371 18,553,343 NET ASSETS Beginning of period 27,475,504 8,922,161 ----------- ----------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $211,548 AND ($11,789), RESPECTIVELY] $39,621,875 $27,475,504 =========== ===========
See Notes to Financial Statements 11 Phoenix-Seneca Bond Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X -------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30, INCEPTION ------------------------------- 3/7/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 10.68 $ 10.47 $ 10.09 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.69(1)(6) 0.56 0.62(1) 0.31(1) Net realized and unrealized gain (loss) (0.31) 0.40 0.47 0.08 ------- ------- ------- ------ TOTAL FROM INVESTMENT OPERATIONS 0.38 0.96 1.09 0.39 ------- ------- ------- ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.62) (0.57) (0.69) (0.30) Dividends from net realized gains (0.09) (0.18) (0.02) -- ------- ------- ------- ------ TOTAL DISTRIBUTIONS (0.71) (0.75) (0.71) (0.30) ------- ------- ------- ------ Change in net asset value (0.33) 0.21 0.38 0.09 ------- ------- ------- ------ NET ASSET VALUE, END OF PERIOD $ 10.35 $ 10.68 $ 10.47 $10.09 ======= ======= ======= ====== Total return(2) 3.51% 9.44% 11.26% 4.02%(4) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $34,853 $26,455 $ 8,922 $3,927 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 1.06%(5)(7) 1.66% 1.53%(5) 0.56%(3)(5) Net investment income (loss) 6.60% 5.92% 6.31% 7.54%(3) Portfolio turnover 95% 112% 99.68% 52.82%(4)
(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, $0.47 and $(0.05) for the years ended September 30, 1999 and 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 1.13% and 3.41% and 9.31% for the years ended September 30, 1999 and September 30, 1997 and the period ended September 30, 1996, respectively. (6) Computed using average shares outstanding. (7) For the year ended September 30, 1999, the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. 12 See Notes to Financial Statements Phoenix-Seneca Bond Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A CLASS B ----------------------------- ------------------------------ FROM FROM YEAR INCEPTION YEAR INCEPTION ENDED 7/1/98 TO ENDED 7/1/98 TO 9/30/99 9/30/98 9/30/99 9/30/98 Net asset value, beginning of period $10.68 $10.79 $10.67 $10.79 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.59(1)(10) 0.13(1)(10) 0.52(2)(10) 0.11(2)(10) Net realized and unrealized gain (loss) (0.33) (0.07) (0.33) (0.08) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.26 0.06 0.19 0.03 ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.56) (0.17) (0.50) (0.15) Dividends from net realized gains (0.09) -- (0.09) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.65) (0.17) (0.59) (0.15) ------ ------ ------ ------ Change in net asset value (0.39) (0.11) (0.40) (0.12) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $10.29 $10.68 $10.27 $10.67 ====== ====== ====== ====== Total return(4) 2.46% 0.53%(6) 1.67% 0.28%(6) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $2,732 $ 348 $1,593 $ 234 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 1.88%(7)(11) 2.45%(5)(7) 2.62%(8)(11) 3.20%(5)(8) Net investment income (loss) 5.80% 5.17%(5) 5.09% 4.42%(5) Portfolio turnover 95% 112%(6) 95% 112%(6) CLASS C --------------------------- FROM YEAR INCEPTION ENDED 7/1/98 TO 9/30/99 9/30/98 Net asset value, beginning of period $10.67 $10.79 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.49(3)(10) 0.10(3)(10) Net realized and unrealized gain (loss) (0.30) (0.07) ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.19 0.03 ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.50) (0.15) Dividends from net realized gains (0.09) -- ------ ------ TOTAL DISTRIBUTIONS (0.59) (0.15) ------ ------ Change in net asset value (0.40) (0.12) ------ ------ NET ASSET VALUE, END OF PERIOD $10.27 $10.67 ====== ====== Total return(4) 1.66% 0.28%(6) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $ 444 $ 439 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 2.91%(9)(11) 3.20%(5)(9) Net investment income (loss) 4.71% 4.27%(5) Portfolio turnover 95% 112%(6)
(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 and $(0.03) for the periods ended September 30, 1999 and September 30, 1998, 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 $0.21 and $(0.21) for the periods ended September 30, 1999 and September 30, 1998, respectively. (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 $(0.20) and $(0.08) for the periods ended September 30, 1999 and September 30, 1998, respectively. (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 4.08% and 8.99% for the periods ended September 30, 1999 and September 30, 1998, respectively. (8) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 5.67% and 15.79% for the periods ended September 30, 1999 and September 30, 1998, respectively. (9) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 9.50% and 11.22% for the periods ended September 30, 1999 and September 30, 1998, respectively. (10) Computed using average shares outstanding. (11) For the year ended September 30, 1999, the ratio of operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio would not significantly differ. See Notes to Financial Statements 13 PHOENIX-SENECA GROWTH FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, GAIL P. SENECA, PH.D., AND RICHARD D. LITTLE, CFA Q: WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND? A: The Phoenix-Seneca Growth Fund seeks capital appreciation by investing in stocks across all market capitalizations. The Fund takes a growth- with-controlled-risk approach, combining the growth potential of mid-cap stocks with the appreciation potential of well-established, large-cap stocks. The Fund is suitable for investors who seek capital appreciation through a conservative, disciplined approach. Q: CAN YOU PROVIDE A BRIEF OVERVIEW OF THE MARKET? A: In this year's volatile and spotty market, growth stocks, led by the largest technology companies, have been the clear winners. This year's growth stock advantage continues a two-year trend, during which "growth" has outperformed "value" by a wide margin. As a result, today's growth stocks sport their highest valuations ever. We believe these valuations are sustainable. The corporate fundamentals of "growth" stocks today are excellent. Real returns on equity are at all-time highs, meaning that companies are leveraging their capital effectively. Revenue and earnings growth of the largest technology companies is in double-digit territory, a remarkable achievement for multibillion-dollar enterprises. Research and development spending and current capital spending are robust, suggesting investment for future growth. The moderation of the boom/bust cycle in the overall economy should also help sustain generous growth stock valuations. Due largely to technology improvements, inventory-led booms and busts have been notably absent for the last 10 years. Instead, the economy oscillates modestly, pausing only for short and shallow recessions. In this more tempered business cycle, it is difficult for cyclical companies to gain relative advantage. In contrast, growth stocks prosper. Q: HOW DID THE PORTFOLIO PERFORM IN THIS ENVIRONMENT? A: Our growth-oriented portfolio performed very well. Class A shares returned 31.89%, Class B shares earned 30.31%, Class C shares were up 30.20%, and Class X shares earned 32.19% for the fiscal year ended September 30, 1999, compared with a return of 27.73% for the S&P 500 Index(1). All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Q: WHAT IS YOUR NEAR-TERM OUTLOOK? A: Difficult liquidity conditions in the market will probably persist in the near term, and as the media embraces the "Y2K" drama, investors may react rashly. We expect market action in the next few months to rival the volatility that has plagued us all year. Amid this turmoil, however, we believe very favorable fundamental conditions remain intact. Corporate earnings quality is strengthening, with fewer write-offs and stronger operating earnings. And, despite well-advertised inflation threats, actual inflation readings should remain subdued. The Federal Reserve could raise rates yet again, but the bulk of the interest rate rise is very likely behind us, in our opinion. OCTOBER 19, 1999 (1) THE S&P 500 INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF STOCK MARKET TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT. 14 Phoenix-Seneca Growth Fund AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 9/30/99
INCEPTION INCEPTION 1 YEAR TO 9/30/99 DATE ------- ----------- --------- Class X Shares at NAV(2) 32.19% 29.42% 3/8/96 Class A Shares at NAV(2) 31.89 28.65 3/8/96 Class A Shares at POP(3) 25.62 26.90 3/8/96 Class B Shares at NAV(2) 30.31 10.09 7/1/98 Class B Shares with CDSC(4) 26.31 6.95 7/1/98 Class C Shares at NAV(2) 30.20 9.96 7/1/98 Class C Shares with CDSC(4) 30.20 9.96 7/1/98 S&P 500 Index(7) 27.73 Note 5 Note 5
(1) Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gains distributions. (2) "NAV" (Net Asset Value) total returns do not include the effect of any sales charge. (3) "POP" (Public Offering Price) total returns include the effect of the maximum front-end 4.75% sales charge. (4) CDSC (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC charges for B shares decline from 5% to 0% over a five year period. CDSC charges for C shares are 1% in the first year and 0% thereafter. (5) Index performance is 24.05% for Class X and Class A (since 3/8/96) and 10.81% for Class B and Class C (since 7/1/98). (6) This chart illustrates NAV returns on Class X shares and POP returns on Class A shares. Returns on Class B and Class C shares will vary due to differing sales charges. (7) The S&P 500 Index is an unmanaged, commonly used measure of stock market total return performance. The index's performance does not reflect sales charges. All returns represent past performance which may not be indicative of future performance. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. GROWTH OF $10,000 PERIODS ENDING 9/30 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PHOENIX-SENECA GROWTH PHOENIX-SENECA GROWTH S&P Fund Class X at Fund Class A at 500 NAV(6) POP(6) Index(7) 3/8/1996 $10,000 $9,525 $10,000 9/30/1996 $13,740 $12,983 $10,992 9/30/1997 $17,486 $16,424 $15,462 9/30/1998 $18,968 $17,726 $16,876 9/30/1999 $25,074 $23,378 $21,556
This Growth of $10,000 chart assumes an initial investment of $10,000 made on 3/8/96 (inception of the Fund) in Class X and A shares. The total return for Class X shares reflects no sales charge. The total return for Class A shares reflects the maximum sales charge of 4.75% on the initial investment. Performance assumes dividends and capital gains are reinvested. The performance of other share classes will be greater or less than that shown based on differences in inception dates, fees and sales charges. SECTOR WEIGHTINGS 9/30/99 As a percentage of equity holdings EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Technology 32% Consumer Cyclicals 13 Financials 11 Energy 10 Capital Goods 8 Consumer Staples 8 Communication Service 7 Other 11
15 Phoenix-Seneca Growth Fund TEN LARGEST HOLDINGS AT SEPTEMBER 30, 1999 (AS A PERCENTAGE OF NET ASSETS) 1. Tyco International Ltd. 4.2% DIVERSIFIED MANUFACTURING AND SERVICES COMPANY 2. Microsoft Corp. 4.2% WORLD'S LEADING COMPUTER SOFTWARE COMPANY 3. Sun Microsystems, Inc. 4.1% SUPPLIER OF ENTERPRISE NETWORK COMPUTING PRODUCTS 4. Outdoor Systems, Inc. 3.8% OPERATES MALL AND TRANSIT ADVERTISING DISPLAYS 5. Citigroup, Inc. 3.7% DIVERSIFIED FINANCIAL SERVICES HOLDING COMPANY 6. Nortel Networks Corp. (Canada) 3.7% TELECOMMUNICATIONS EQUIPMENT MANUFACTURER 7. General Electric Co. 3.6% DIVERSIFIED MANUFACTURING AND FINANCIAL SERVICES PROVIDER 8. Bristol-Myers Squibb Co. 3.5% COMPREHENSIVE HEALTH-CARE COMPANY 9. Morgan Stanley Dean Witter & Co. 3.5% PROVIDES A BROAD RANGE OF CREDIT AND INVESTMENT PRODUCTS TO INDIVIDUALS 10. Motorola, Inc. 3.5% GLOBAL PROVIDER OF INTEGRATED COMMUNICATIONS PRODUCTS
INVESTMENTS AT SEPTEMBER 30, 1999
SHARES VALUE ------- ----------- COMMON STOCKS--85.8% ALUMINUM--3.5% Alcoa, Inc.............................. 40,660 $ 2,523,461 BANKS (MAJOR REGIONAL)--3.0% Mellon Bank Corp........................ 64,410 2,173,838 BROADCASTING (TELEVISION, RADIO & CABLE)--3.3% AMFM, Inc.(b)........................... 39,590 2,410,041 CHEMICALS--2.1% Dow Chemical Co......................... 13,210 1,500,986 COMMUNICATIONS EQUIPMENT--6.2% General Motors Corp. Class H(b)......... 34,540 1,977,415 Motorola, Inc........................... 28,770 2,531,760 ----------- 4,509,175 ----------- COMPUTERS (HARDWARE)--6.0% International Business Machines Corp.... 11,590 1,406,736 Sun Microsystems, Inc.(b)............... 32,000 2,976,000 ----------- 4,382,736 ----------- COMPUTERS (NETWORKING)--3.0% Cisco Systems, Inc.(b).................. 29,140 1,997,911 Internap Network Services Corp.(b)...... 4,040 180,285 ----------- 2,178,196 ----------- COMPUTERS (SOFTWARE & SERVICES)--4.2% Microsoft Corp.(b)...................... 33,740 3,055,579 SHARES VALUE ------- ----------- ELECTRICAL EQUIPMENT--3.6% General Electric Co..................... 22,060 $ 2,615,489 ELECTRONICS (SEMICONDUCTORS)--1.3% Intel Corp.............................. 13,200 980,925 FINANCIAL (DIVERSIFIED)--7.2% Citigroup, Inc.......................... 61,930 2,724,920 Morgan Stanley Dean Witter & Co......... 28,450 2,537,384 ----------- 5,262,304 ----------- FOODS--1.8% General Mills, Inc...................... 16,480 1,336,940 HEALTH CARE (DIVERSIFIED)--5.9% Bristol-Myers Squibb Co................. 37,940 2,560,950 Johnson & Johnson....................... 18,940 1,740,113 ----------- 4,301,063 ----------- HOUSEHOLD FURNISHINGS & APPLIANCES--1.2% Whirlpool Corp.......................... 13,990 913,722 HOUSEHOLD PRODUCTS (NON-DURABLE)--2.4% Procter & Gamble Co. (The).............. 18,540 1,738,125 MANUFACTURING (DIVERSIFIED)--4.2% Tyco International Ltd.................. 29,610 3,057,233 OIL & GAS (DRILLING & EQUIPMENT)--6.4% Baker Hughes, Inc....................... 74,100 2,148,900 Halliburton Co.......................... 60,870 2,495,670 ----------- 4,644,570 -----------
16 See Notes to Financial Statements Phoenix-Seneca Growth Fund
SHARES VALUE ------- ----------- OIL (INTERNATIONAL INTEGRATED)--3.1% Texaco, Inc............................. 36,350 $ 2,294,594 RETAIL (COMPUTERS & ELECTRONICS)--3.1% Tandy Corp.............................. 43,750 2,261,328 RETAIL (GENERAL MERCHANDISE)--1.9% Wal-Mart Stores, Inc.................... 29,900 1,422,119 RETAIL (SPECIALTY-APPAREL)--2.4% TJX Companies, Inc. (The)............... 62,290 1,748,013 SERVICES (ADVERTISING/MARKETING)--3.8% Outdoor Systems, Inc.(b)................ 76,590 2,738,093 TELECOMMUNICATIONS (LONG DISTANCE)--3.2% MCI WorldCom, Inc.(b)................... 32,950 2,368,281 TELEPHONE--3.0% Bell Atlantic Corp...................... 32,190 2,166,789 - ------------------------------------------------------------------ TOTAL COMMON STOCKS (IDENTIFIED COST $52,029,496) 62,583,600 - ------------------------------------------------------------------ FOREIGN COMMON STOCKS--9.7% COMMUNICATIONS EQUIPMENT--6.9% Nokia Oyj Sponsored ADR (Finland)....... 25,850 2,321,653 Nortel Networks Corp. (Canada).......... 52,730 2,689,230 ----------- 5,010,883 ----------- ELECTRONICS (SEMICONDUCTORS)--2.8% STMicroelectronics N.V. (Netherlands)... 27,300 2,020,200 - ------------------------------------------------------------------ TOTAL FOREIGN COMMON STOCKS (IDENTIFIED COST $6,778,972) 7,031,083 - ------------------------------------------------------------------ TOTAL LONG-TERM INVESTMENTS--95.5% (IDENTIFIED COST $58,808,468) 69,614,683 - ------------------------------------------------------------------
PAR VALUE (000) VALUE ------- ----------- SHORT-TERM OBLIGATIONS--7.6% REPURCHASE AGREEMENT--7.6% State Street Bank & Trust Co. repurchase agreement, 4.25%, dated 9/30/99 due 10/1/99, repurchase price $5,545,655 collateralized by U.S. Treasury Note 5.50%, 3/31/00, market value $5,657,063.............................. $ 5,545 $ 5,545,000 - ------------------------------------------------------------------ TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $5,545,000) 5,545,000 - ------------------------------------------------------------------
TOTAL INVESTMENTS--103.1% (IDENTIFIED COST $64,353,468) 75,159,683(a) Cash and receivables, less liabilities--(3.1%) (2,236,353) -------------------- NET ASSETS--100.0% $ 72,923,330 ====================
(a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $12,536,684 and gross depreciation of $1,844,747 for federal income tax purposes. At September 30, 1999, the aggregate cost of securities for federal income tax purposes was $64,467,746. (b) Non-income producing. See Notes to Financial Statements 17 Phoenix-Seneca Growth Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 ASSETS Investment securities at value (Identified cost $64,353,468) $75,159,683 Cash 898 Receivables Fund shares sold 158,602 Dividends and interest 35,815 Deferred organization expenses 13,527 Prepaid expenses 3,669 ----------- Total assets 75,372,194 ----------- LIABILITIES Payables Investment securities purchased 2,292,003 Fund shares repurchased 7,910 Distribution fee 32,748 Transfer agent fee 13,453 Investment advisory fee 13,450 Financial agent fee 5,852 Trustees' fee 856 Accrued expenses 82,592 ----------- Total liabilities 2,448,864 ----------- NET ASSETS $72,923,330 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $55,020,063 Accumulated net realized gain 7,097,052 Net unrealized appreciation 10,806,215 ----------- NET ASSETS $72,923,330 =========== CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $35,694,595) 1,791,537 Net asset value and offering price per share $19.92 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $31,000,738) 1,584,310 Net asset value per share $19.57 Offering price per share $19.57/(1-4.75%) $20.55 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $4,394,693) 227,897 Net asset value and offering price per share $19.28 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $1,833,304) 95,222 Net asset value and offering price per share $19.25
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1999 INVESTMENT INCOME Dividends $ 465,256 Interest 141,205 ----------- Total investment income 606,461 ----------- EXPENSES Investment advisory fee 443,317 Distribution fee, Class A 66,526 Distribution fee, Class B 24,197 Distribution fee, Class C 9,293 Financial agent fee 85,097 Transfer agent 88,614 Registration 53,567 Printing 40,695 Trustees 25,716 Professional 23,412 Custodian 12,443 Amortization of deferred organization expenses 10,658 Miscellaneous 23,541 ----------- Total expenses 907,076 Less expenses borne by investment adviser (49,249) ----------- Net expenses 857,827 ----------- NET INVESTMENT LOSS (251,366) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities 7,420,446 Net change in unrealized appreciation (depreciation) on investments 8,897,166 ----------- NET GAIN ON INVESTMENTS 16,317,612 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $16,066,246 ===========
18 See Notes to Financial Statements Phoenix-Seneca Growth Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/99 9/30/98 ----------- ----------- FROM OPERATIONS Net investment income (loss) $ (251,366) $ (23,589) Net realized gain (loss) 7,420,446 5,786,850 Net change in unrealized appreciation (depreciation) 8,897,166 (3,716,413) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 16,066,246 2,046,848 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class X -- (28,234) Net realized gains, Class X (2,678,808) (2,638,126) Net realized gains, Class A (2,257,410) (456,891) Net realized gains, Class B (125,950) -- Net realized gains, Class C (32,675) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (5,094,843) (3,123,251) ----------- ----------- FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (191,178 and 285,390 shares, respectively) 3,657,324 4,884,932 Net asset value of shares issued from reinvestment of distributions (152,656 and 175,598 shares, respectively) 2,665,381 2,655,713 Cost of shares repurchased (417,927 and 669,955 shares, respectively) (7,626,080) (11,501,669) ----------- ----------- Total (1,303,375) (3,961,024) ----------- ----------- CLASS A Proceeds from sales of shares (713,052 and 903,203 shares, respectively) 12,978,542 16,095,224 Net asset value of shares issued from reinvestment of distributions (130,999 and 30,397 shares, respectively) 2,250,565 454,436 Cost of shares repurchased (329,410 and 233,349 shares, respectively) (5,879,689) (3,581,463) ----------- ----------- Total 9,349,418 12,968,197 ----------- ----------- CLASS B Proceeds from sales of shares (209,861 and 32,039 shares, respectively) 3,860,313 544,661 Net asset value of shares issued from reinvestment of distributions (5,386 and 0 shares, respectively) 92,053 -- Cost of shares repurchased (19,389 and 0 shares, respectively) (368,688) -- ----------- ----------- Total 3,583,678 544,661 ----------- ----------- CLASS C Proceeds from sales of shares (88,996 and 7,802 shares, respectively) 1,633,483 139,674 Net asset value of shares issued from reinvestment of distributions (1,890 and 0 shares, respectively) 32,392 -- Cost of shares repurchased (3,466 and 0 shares, respectively) (65,089) -- ----------- ----------- Total 1,600,786 139,674 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 13,230,507 9,691,508 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS 24,201,910 8,615,105 NET ASSETS Beginning of period 48,721,420 40,106,315 ----------- ----------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0, RESPECTIVELY] $72,923,330 $48,721,420 =========== ===========
See Notes to Financial Statements 19 Phoenix-Seneca Growth Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X ---------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30 INCEPTION ------------------------------------ 3/8/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 16.46 $ 16.43 $ 13.74 $ 10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.04)(1) 0.00(1) 0.03(2) 0.03(2) Net realized and unrealized gain (loss) 5.11 1.28 3.50 3.71 ------- ------- -------- ------- TOTAL FROM INVESTMENT OPERATIONS 5.07 1.28 3.53 3.74 ------- ------- -------- ------- LESS DISTRIBUTIONS: Dividends from net investment income -- (0.02) (0.07) -- Dividends from net realized gains (1.61) (1.23) (0.77) -- ------- ------- -------- ------- TOTAL DISTRIBUTIONS (1.61) (1.25) (0.84) -- ------- ------- -------- ------- Change in net asset value 3.46 0.03 2.69 3.74 ------- ------- -------- ------- NET ASSET VALUE, END OF PERIOD $ 19.92 $ 16.46 $ 16.43 $ 13.74 ======= ======= ======== ======= Total return(3) 32.19 % 8.48% 27.27% 37.40%(5) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $35,695 $30,713 $34,093 $12,920 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 1.16 % 1.14% 1.52%(6) 0.81%(4)(6) Net investment income (loss) (0.20)% 0.02% 0.31% 0.76%(4) Portfolio turnover 169 % 166% 145.69% 87.66%(5)
(1) Computed using average shares outstanding. (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 $0.03 and $(0.09) 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. 20 See Notes to Financial Statements Phoenix-Seneca Growth Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A -------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30 INCEPTION ---------------------------------- 3/8/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 16.23 $ 16.28 $13.63 $10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.09)(1) (0.06)(1) (0.08)(2) --(2) Net realized and unrealized gain 5.04 1.24 3.50 3.63 ------- ------- ------ ------ TOTAL FROM INVESTMENT OPERATIONS 4.95 1.18 3.42 3.63 ------- ------- ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- -- Dividends from net realized gains (1.61) (1.23) (0.77) -- ------- ------- ------ ------ TOTAL DISTRIBUTIONS (1.61) (1.23) (0.77) -- ------- ------- ------ ------ Change in net asset value 3.34 (0.05) 2.65 3.63 ------- ------- ------ ------ NET ASSET VALUE, END OF PERIOD $ 19.57 $ 16.23 $16.28 $13.63 ======= ======= ====== ====== Total return(3) 31.89 % 7.93 % 26.51 % 36.30%(5) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $31,001 $17,364 $6,013 $466 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 1.44 % 1.55 % 2.48 %(6) 1.46%(4)(6) Net investment income (loss) (0.49)% (0.36)% (0.62)% 0.16%(4) Portfolio turnover 169 % 166 % 145.69 % 87.66%(5)
(1) Computed using average shares outstanding. (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 2.63% and 14.01% for the year ended September 30, 1997 and the period ended September 30, 1996, respectively. See Notes to Financial Statements 21 Phoenix-Seneca Growth Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS B CLASS C ------------------------------ ------------------------------ FROM FROM YEAR INCEPTION YEAR INCEPTION ENDED 7/1/98 TO ENDED 7/1/98 TO 9/30/99 9/30/98 9/30/99 9/30/98 Net asset value, beginning of period $16.19 $18.71 $16.18 $18.71 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.31)(1)(8) (0.04)(1)(8) (0.32)(2)(8) (0.06)(2)(8) Net realized and unrealized gain (loss) 5.01 (2.48) 5.00 (2.47) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 4.70 (2.52) 4.68 (2.53) ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- -- Dividends from net realized gains (1.61) -- (1.61) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.61) -- (1.61) -- ------ ------ ------ ------ Change in net asset value 3.09 (2.52) 3.07 (2.53) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $19.28 $16.19 $19.25 $16.18 ====== ====== ====== ====== Total return(3) 30.31 % (13.47)%(5) 30.20 % (13.52)%(5) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $4,395 $519 $1,833 $126 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 2.60 %(6) 2.60 %(4)(6) 2.60 %(7) 2.60%(4)(7) Net investment income (loss) (1.66)% (1.12)%(4) (1.66)% (1.39)%(4) Portfolio turnover 169 % 166 %(5) 169 % 166 %(5)
(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 $(0.36) for the periods ended September 30, 1999 and September 30, 1998, 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 $(0.90) and $(0.79) for the periods ended September 30, 1999 and September 30, 1998, 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 3.46% and 12.48% for the periods ended September 30, 1999 and September 30, 1998, 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 5.67% and 20.24% for the periods ended September 30, 1999 and September 30, 1998, respectively. (8) Computed using average shares outstanding. 22 See Notes to Financial Statements PHOENIX-SENECA MID-CAP "EDGE"-SM- FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, GAIL P. SENECA, PH.D., AND RICHARD D. LITTLE, CFA Q: WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND? A: The Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund seeks capital appreciation by investing in rapidly growing companies with the potential for accelerating revenues and increasing profits. Q: HOW DID THE FUND PERFORM OVER THE LAST 12 MONTHS? A: For the fiscal year ended September 30, 1999, Class A shares returned 32.27%, Class B shares earned 31.05%, Class C shares were up 31.07%, and Class X shares rose 33.02%. These returns compare with a return of 25.49% for the S&P 400 MidCap Index(1). All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Q: WHAT FACTORS LED TO YOUR STRONG PERFORMANCE RELATIVE TO THE BENCHMARK? A: Good stock selection and the outperformance of "growth" sectors, such as technology, helped the portfolio's performance. The best performing stocks included Xilinx, a producer of programmable semiconductors, RF Micro Devices, a developer of power boosters that extend battery life and improve cell phone range, and VERITAS Software, a maker of computer storage management products. We also benefited from limited exposure to the financial services and health-care sectors, which continued to underperform. Q: WHAT IS YOUR NEAR-TERM OUTLOOK? A: Difficult liquidity conditions in the market will probably persist in the near term, and as the media embraces the "Y2K" drama, investors may react rashly. We expect market action in the next few months to rival the volatility that has plagued us all year. Amid this turmoil, however, we believe very favorable fundamental conditions remain intact. Corporate earnings quality is strengthening, with fewer write-offs and stronger operating earnings. And, despite well-advertised inflation threats, actual inflation readings should remain subdued. The Federal Reserve could raise rates yet again, but the bulk of the interest rate rise is very likely behind us, in our opinion. OCTOBER 19, 1999 (1) THE S&P 400 MIDCAP INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF MID-CAP STOCK TOTAL RETURN PERFORMANCE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT. 23 Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 9/30/99
INCEPTION INCEPTION 1 YEAR TO 9/30/99 DATE ------- ---------- --------- Class X Shares at NAV(2) 33.02% 23.54% 3/8/96 Class A Shares at NAV(2) 32.27 23.02 3/8/96 Class A Shares at POP(3) 25.99 21.35 3/8/96 Class B Shares at NAV(2) 31.05 3.92 7/1/98 Class B Shares with CDSC(4) 27.05 0.73 7/1/98 Class C Shares at NAV(2) 31.07 3.87 7/1/98 Class C Shares with CDSC(4) 31.07 3.87 7/1/98 S&P 400 MidCap Index(7) 25.49 Note 5 Note 5
(1) Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gains distributions. (2) "NAV" (Net Asset Value) total returns do not include the effect of any sales charge. (3) "POP" (Public Offering Price) total returns include the effect of the maximum front-end 4.75% sales charge. (4) CDSC (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC charges for B shares decline from 5% to 0% over a five year period. CDSC charges for C shares are 1% in the first year and 0% thereafter. (5) Index performance is 17.54% for Class X and Class A (since 3/8/96) and 4.53% for Class B and Class C (since 7/1/98). (6) This chart illustrates NAV returns on Class X shares and POP returns on Class A shares. Returns on Class B and Class C shares will vary due to differing sales charges. (7) The S&P 400 MidCap Index is an unmanaged, commonly used measure of mid-cap stock total return performance. The index's performance does not reflect sales charges. All returns represent past performance which may not be indicative of future performance. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. GROWTH OF $10,000 PERIODS ENDING 9/30 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PHOENIX-SENECA MID-CAP PHOENIX-SENECA MID-CAP S&P 400 "EDGE"-SM- Fund Class "EDGE"-SM- Fund Class MidCap X at NAV(6) A at POP(6) Index(7) 3/96 $10,000 $9,525 $10,000 96 $14,970 $14,221 $10,876 97 $16,676 $15,820 $15,129 98 $15,972 $15,070 $14,176 99 $21,246 $19,933 $17,791
This Growth of $10,000 chart assumes an initial investment of $10,000 made on 3/8/96 (inception of the Fund) in Class X and A shares. The total return for Class X shares reflects no sales charge. The total return for Class A shares reflects the maximum sales charge of 4.75% on the initial investment. Performance assumes dividends and capital gains are reinvested. The performance of other share classes will be greater or less than that shown based on differences in inception dates, fees and sales charges. SECTOR WEIGHTINGS 9/30/99 As a percentage of equity holdings EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Technology 44% Consumer Cyclicals 22 Energy 8 Capital Goods 7 Financials 7 Basic Materials 6 Consumer Staples 6
24 Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund TEN LARGEST HOLDINGS AT SEPTEMBER 30, 1999 (AS A PERCENTAGE OF NET ASSETS) 1. Comverse Technology, Inc. 4.7% MANUFACTURES SPECIAL PURPOSE COMPUTER AND TELECOMMUNICATIONS SYSTEMS 2. Tandy Corp. 4.5% CONSUMER ELECTRONICS RETAILER 3. VERITAS Software Corp. 4.5% SUPPLIER OF DATA STORAGE MANAGEMENT SOLUTIONS 4. Xilinx, Inc. 3.9% DESIGNS AND SELLS PROGRAMMABLE LOGIC DEVICES 5. Weatherford International, Inc. 3.9% OIL AND GAS EQUIPMENT SUPPLIER 6. KLA-Tencor Corp. 3.8% SEMICONDUCTOR MANUFACTURER 7. UnionBanCal Corp. 3.8% PACIFIC REGIONAL BANK 8. PMC-Sierra, Inc. 3.7% MANUFACTURER OF SEMICONDUCTORS AND INTEGRATED CIRCUITS 9. Nabors Industries, Inc. 3.5% OIL AND GAS LAND DRILLING CONTRACTOR 10. SPX Corp. 3.5% PROVIDES SERVICE TOOLS TO THE MOTOR VEHICLE INDUSTRY
INVESTMENTS AT SEPTEMBER 30, 1999
SHARES VALUE ------- ------------ COMMON STOCKS--95.0% AUTO PARTS & EQUIPMENT--2.3% Lear Corp.(b)................. 13,100 $ 460,956 BANKS (MAJOR REGIONAL)--2.7% Comerica, Inc................. 10,505 531,816 BANKS (REGIONAL)--3.8% UnionBanCal Corp.............. 20,500 743,125 BROADCASTING (TELEVISION, RADIO & CABLE)--6.1% AMFM, Inc.(b)................. 10,660 648,927 EchoStar Communications Corp.(b)...................... 6,240 566,670 ----------- 1,215,597 ----------- CHEMICALS (SPECIALTY)--1.5% Hercules, Inc................. 10,310 295,124 COMMUNICATIONS EQUIPMENT--7.0% American Tower Corp. Class A(b).......................... 23,850 466,566 Comverse Technology, Inc.(b)....................... 9,795 923,791 ----------- 1,390,357 ----------- COMPUTERS (HARDWARE)--4.2% Copper Mountain Networks, Inc.(b)....................... 4,460 390,807 Paradyne Networks, Inc.(b).... 15,770 441,560 ----------- 832,367 ----------- COMPUTERS (SOFTWARE & SERVICES)--4.5% VERITAS Software Corp.(b)..... 11,690 887,709 SHARES VALUE ------- ------------ ELECTRICAL EQUIPMENT--4.7% SPX Corp.(b).................. 7,540 $ 684,255 Universal Electronics, Inc.(b)....................... 10,750 248,594 ----------- 932,849 ----------- ELECTRONICS (SEMICONDUCTORS)--19.2% Applied Micro Circuits Corp.(b)...................... 9,520 542,640 LSI Logic Corp.(b)............ 10,100 520,150 PMC-Sierra, Inc.(b)........... 7,940 734,450 RF Micro Devices, Inc.(b)..... 14,520 664,290 SDL, Inc.(b).................. 7,250 553,266 Xilinx, Inc.(b)............... 11,790 772,613 ----------- 3,787,409 ----------- EQUIPMENT (SEMICONDUCTOR)--3.8% KLA-Tencor Corp.(b)........... 11,530 749,450 GAMING, LOTTERY & PARI-MUTUEL COMPANIES--0.5% Park Place Entertainment Corp.(b)...................... 7,600 95,000 MANUFACTURING (DIVERSIFIED)--2.0% Yankee Candle Co., Inc. (The)(b)...................... 20,650 398,803 OIL & GAS (DRILLING & EQUIPMENT)--7.4% Nabors Industries, Inc.(b).... 27,590 689,750 Weatherford International, Inc.(b)....................... 23,880 764,160 ----------- 1,453,910 ----------- PAPER & FOREST PRODUCTS--4.7% Mead Corp. (The).............. 12,250 421,094
See Notes to Financial Statements 25 Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund
SHARES VALUE ------- ------------ PAPER & FOREST PRODUCTS--CONTINUED Smurfit-Stone Container Corp.(b)...................... 23,300 $ 503,863 ----------- 924,957 ----------- RETAIL (COMPUTERS & ELECTRONICS)--6.8% Best Buy Co., Inc.(b)......... 7,430 461,124 Tandy Corp.................... 17,200 889,025 ----------- 1,350,149 ----------- RETAIL (SPECIALTY-APPAREL)--5.8% Abercrombie & Fitch Co. Class A(b).......................... 16,910 575,997 TJX Companies, Inc. (The)..... 20,290 569,388 ----------- 1,145,385 ----------- SERVICES (ADVERTISING/MARKETING)--3.2% Outdoor Systems, Inc.(b)...... 17,485 625,089 SERVICES (COMMERCIAL & CONSUMER)--2.1% Crown Castle International Corp.(b)...................... 22,220 415,931 SERVICES (DATA PROCESSING)--2.7% Concord EFS, Inc.(b).......... 25,890 533,981 - --------------------------------------------------------- TOTAL COMMON STOCKS (IDENTIFIED COST $16,579,214) 18,769,964 - --------------------------------------------------------- TOTAL LONG-TERM INVESTMENTS--95.0% (IDENTIFIED COST $16,579,214) 18,769,964 - ---------------------------------------------------------
PAR VALUE (000) VALUE ------- ------------ SHORT-TERM OBLIGATIONS--10.4% REPURCHASE AGREEMENT--10.4% State Street Bank & Trust Co. repurchase agreement, 4.25%, dated 9/30/99 due 10/1/99, repurchase price $2,052,242 collateralized by U.S. Treasury Note 5.50%, 3/31/00, market value $2,097,619....... $ 2,052 $ 2,052,000 - --------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $2,052,000) 2,052,000 - ---------------------------------------------------------
TOTAL INVESTMENTS--105.4% (IDENTIFIED COST $18,631,214) 20,821,964(a) Cash and receivables, less liabilities--(5.4%) (1,074,280) ----------- NET ASSETS--100.0% $19,747,684 ===========
(a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $3,283,643 and gross depreciation of $1,093,324 for federal income tax purposes. At September 30, 1999, the aggregate cost of securities for federal income tax purposes was $18,631,645. (b) Non-income producing. 26 See Notes to Financial Statements Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 ASSETS Investment securities at value (Identified cost $18,631,214) $20,821,964 Cash 14,621 Receivables Fund shares sold 112,218 Investment securities sold 42,843 Dividends and interest 8,604 Receivable from adviser 7,917 Deferred organization expenses 13,527 Prepaid expenses 1,132 ----------- Total assets 21,022,826 ----------- LIABILITIES Payables Investment securities purchased 1,177,527 Fund shares repurchased 1,037 Transfer agent fee 13,298 Distribution fee 10,031 Financial agent fee 5,352 Trustees' fee 913 Accrued expenses 66,984 ----------- Total liabilities 1,275,142 ----------- NET ASSETS $19,747,684 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest 15,537,102 Accumulated net realized gain 2,019,832 Net unrealized appreciation 2,190,750 ----------- NET ASSETS $19,747,684 =========== CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $10,640,039) 598,363 Net asset value and offering price per share $17.78 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $6,456,794) 366,822 Net asset value per share $17.60 Offering price per share $17.60/(1-4.75%) $18.48 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $1,675,972) 96,280 Net asset value and offering price per share $17.41 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $974,879) 56,027 Net asset value and offering price per share $17.40
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1999 INVESTMENT INCOME Dividends $ 66,889 Interest 56,334 ---------- Total investment income 123,223 ---------- EXPENSES Investment advisory fee 142,594 Distribution fee, Class A 13,633 Distribution fee, Class B 8,493 Distribution fee, Class C 4,918 Financial agent fee 54,410 Transfer agent 85,382 Registration 44,456 Printing 29,112 Trustees 25,773 Professional 16,744 Amortization of deferred organization expenses 10,658 Custodian 9,906 Miscellaneous 4,879 ---------- Total expenses 450,958 Less expenses borne by investment adviser (51,919) ---------- Net expenses 399,039 ---------- NET INVESTMENT LOSS (275,816) ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on securities 2,299,388 Net change in unrealized appreciation (depreciation) on investments 2,415,950 ---------- NET GAIN ON INVESTMENTS 4,715,338 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,439,522 ==========
See Notes to Financial Statements 27 Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/99 9/30/98 ----------- ----------- FROM OPERATIONS Net investment income (loss) $ (275,816) $ (201,569) Net realized gain (loss) 2,299,388 895,515 Net change in unrealized appreciation (depreciation) 2,415,950 (1,612,591) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,439,522 (918,645) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net realized gains, Class X (355,856) (1,092,044) Net realized gains, Class A (166,088) (289,481) Net realized gains, Class B (11,063) -- Net realized gains, Class C (9,446) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (542,453) (1,381,525) ----------- ----------- FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (143,563 and 135,008 shares, respectively) 2,478,919 2,127,609 Net asset value of shares issued from reinvestment of distributions (21,703 and 84,041 shares, respectively) 354,621 1,090,132 Cost of shares repurchased (214,035 and 142,018 shares, respectively) (3,757,537) (2,045,120) ----------- ----------- Total (923,997) 1,172,621 ----------- ----------- CLASS A Proceeds from sales of shares (228,931 and 159,888 shares, respectively) 3,836,768 2,538,940 Net asset value of shares issued from reinvestment of distributions (10,097 and 22,073 shares, respectively) 163,976 286,061 Cost of shares repurchased (138,776 and 62,130 shares, respectively) (2,331,488) (947,854) ----------- ----------- Total 1,669,256 1,877,147 ----------- ----------- CLASS B Proceeds from sales of shares (86,897 and 10,599 shares, respectively) 1,460,274 169,635 Net asset value of shares issued from reinvestment of distributions (684 and 0 shares, respectively) 11,062 -- Cost of shares repurchased (1,900 and 0 shares, respectively) (31,603) -- ----------- ----------- Total 1,439,733 169,635 ----------- ----------- CLASS C Proceeds from sales of shares (49,078 and 7,538 shares, respectively) 821,159 125,992 Net asset value of shares issued from reinvestment of distributions (402 and 0 shares, respectively) 6,510 -- Cost of shares repurchased (991 and 0 shares, respectively) (16,970) -- ----------- ----------- Total 810,699 125,992 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 2,995,691 3,345,395 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS 6,892,760 1,045,225 NET ASSETS Beginning of period 12,854,924 11,809,699 ----------- ----------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $0 AND $0, RESPECTIVELY] $19,747,684 $12,854,924 =========== ===========
28 See Notes to Financial Statements Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X ----------------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30 INCEPTION -------------------------------------------- 3/8/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 13.81 $ 16.47 $ 14.97 $ 10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.21)(1) (0.23)(1)(2) (0.17)(2) 0.01(2) Net realized and unrealized gain (loss) 4.72 (0.58) 1.84 4.96 ------- ------- ------- ------- TOTAL FROM INVESTMENT OPERATIONS 4.51 (0.81) 1.67 4.97 ------- ------- ------- ------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- (0.07) -- Dividends from net realized gains (0.54) (1.85) (0.10) -- ------- ------- ------- ------- TOTAL DISTRIBUTIONS (0.54) (1.85) (0.17) -- ------- ------- ------- ------- Change in net asset value 3.97 (2.66) 1.50 4.97 ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 17.78 $ 13.81 $ 16.47 $ 14.97 ======= ======= ======= ======= Total return(3) 33.02 % (4.22) % 11.39 % 49.70%(5) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $10,640 $ 8,940 $ 9,390 $ 7,428 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 1.96 % 2.10 %(6) 1.74 %(6) 0.90%(4)(6) Net investment income (loss) (1.27)% (1.49)% (0.97) % 0.27%(4) Portfolio turnover 192 % 206 % 283.60 % 72.34%(5)
(1) Computed using average shares outstanding. (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 $(0.27), $(0.33) and $(0.19) 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. See Notes to Financial Statements 29 Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A ----------------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30 INCEPTION -------------------------------------------- 3/8/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 13.75 $ 16.49 $ 14.94 $ 10.00 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.31)(1) (0.30)(1)(2) (0.25)(2) (0.01)(2) Net realized and unrealized gain (loss) 4.70 (0.59) 1.90 4.95 ------- ------- ------- ------- TOTAL FROM INVESTMENT OPERATIONS 4.39 (0.89) 1.65 4.94 ------- ------- ------- ------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- -- Dividends from net realized gains (0.54) (1.85) (0.10) -- ------- ------- ------- ------- TOTAL DISTRIBUTIONS (0.54) (1.85) (0.10) -- ------- ------- ------- ------- Change in net asset value 3.85 (2.74) 1.55 4.94 ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 17.60 $ 13.75 $ 16.49 $ 14.94 ======= ======= ======= ======= Total return(3) 32.27 % (4.74) % 11.25 % 49.30 %(5) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $ 6,457 $ 3,666 $ 2,419 $ 1,355 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 2.51 % 2.70 %(6) 2.37 %(6) 1.55 %(4)(6) Net investment income (loss) (1.81) % (1.95) % (1.60) % (0.46) %(4) Portfolio turnover 192 % 206 % 283.60 % 72.34 %(5)
(1) Computed using average shares outstanding. (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 2.74%, 4.32% and 9.73% for the years ended September 30, 1998 and 1997 and the period ended September 30, 1996, respectively. 30 See Notes to Financial Statements Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS B CLASS C ----------------------------- ------------------------------ FROM FROM YEAR INCEPTION YEAR INCEPTION ENDED 7/1/98 TO ENDED 7/1/98 TO 9/30/99 9/30/98 9/30/99 9/30/98 Net asset value, beginning of period $ 13.73 $ 17.15 $ 13.72 $ 17.15 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) (0.47)(1)(2) (0.09)(1)(2) (0.47)(1)(3) (0.09)(1)(3) Net realized and unrealized gain (loss) 4.69 (3.33) 4.69 (3.34) ------- ------- ------- ------- TOTAL FROM INVESTMENT OPERATIONS 4.22 (3.42) 4.22 (3.43) ------- ------- ------- ------- LESS DISTRIBUTIONS: Dividends from net investment income -- -- -- -- Dividends from net realized gains (0.54) -- (0.54) -- ------- ------- ------- ------- TOTAL DISTRIBUTIONS (0.54) -- (0.54) -- ------- ------- ------- ------- Change in net asset value 3.68 (3.42) 3.68 (3.43) ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 17.41 $ 13.73 $ 17.40 $ 13.72 ======= ======= ======= ======= Total return(4) 31.05 % (19.94)%(6) 31.07 % (20.00)%(6) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $1,676 $145 $975 $103 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 3.45 %(7) 3.45 %(5)(7) 3.45 %(8) 3.45 %(5)(8) Net investment income (loss) (2.78)% (2.45)%(5) (2.78)% (2.44)%(5) Portfolio turnover 192 % 206 %(6) 192 % 206 %(6)
(1) Computed using average shares outstanding. (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 $(0.96) and $(0.69) for the periods ended September 30, 1999 and September 30, 1998, respectively. (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 $(1.40) and $(0.77) for the periods ended September 30, 1999 and September 30, 1998, respectively. (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 6.33% and 20.80% for the periods ended September 30, 1999 and September 30, 1998, respectively. (8) If the investment adviser had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 9.03% and 21.14% for the periods ended September 30, 1999 and September 30, 1998, respectively. See Notes to Financial Statements 31 PHOENIX-SENECA REAL ESTATE SECURITIES FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGERS, GAIL P. SENECA, PH.D., AND DAVID SHAPIRO, J.D. Q: WHAT IS THE INVESTMENT OBJECTIVE OF THE FUND? A: The Phoenix-Seneca Real Estate Securities Fund seeks high total return, both current income and capital appreciation, through investments in Real Estate Investment Trusts (REITs) and real estate-related securities. Investors should note that real estate investing involves certain risks, such as refinancing, economic impact on the industry, changes in property values, dependency on management skills, and risks similar to those of small-company investing. Q: HOW DID THE FUND PERFORM OVER THE LAST 12 MONTHS? A: For the fiscal year ended September 30, 1999, Class A shares returned (7.97)%, Class B shares returned (8.59)%, Class C shares returned (8.58)%, and Class X shares returned (6.66)% compared with a return of (4.73)% for the Wilshire REIT Index(1). All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Q: HOW IS THE PORTFOLIO CURRENTLY POSITIONED? A: With the underlying economy strong, we look for the fundamentals of real estate to remain positive. Our investment strategy is a two-pronged approach. Instead of focusing on the various real estate sectors to maximize returns, we will seek to own companies with strong management and dominant market positions, such as Equity Residential, Spieker Properties, and value stocks with solid market niches and savvy management, such as Essex, Pacific Gulf, and Macerich. While real estate fundamentals at the operating level remain excellent, the public markets for real estate company stocks have been in a steady decline. We believe this disconnect between the public and private market for real estate is an opportunity to focus on the arbitrage opportunities. Accordingly, we will look to own quality companies that are selling at substantial discounts to their net asset value. OCTOBER 19, 1999 (1) THE WILSHIRE REIT INDEX IS AN UNMANAGED, COMMONLY USED MEASURE OF TOTAL RETURN PERFORMANCE OF PUBLICLY TRADED REAL ESTATE EQUITY. THE INDEX IS COMPRISED OF COMPANIES WHOSE CHARTER IS THE EQUITY OWNERSHIP AND OPERATION OF COMMERCIAL REAL ESTATE. THE INDEX IS NOT AVAILABLE FOR DIRECT INVESTMENT AND IS CALCULATED MONTHLY RATHER THAN DAILY. 32 Phoenix-Seneca Real Estate Securities Fund AVERAGE ANNUAL TOTAL RETURNS(1) PERIOD ENDING 9/30/99
INCEPTION INCEPTION 1 YEAR TO 9/30/99 DATE -------- ----------- --------- Class X Shares at NAV(2) (6.66)% 4.33% 3/12/96 Class A Shares at NAV(2) (7.97) 3.14 3/12/96 Class A Shares at POP(3) (12.34) 1.74 3/12/96 Class B Shares at NAV(2) (8.59) (15.96) 7/1/98 Class B Shares with CDSC(4) (12.06) (18.51) 7/1/98 Class C Shares at NAV(2) (8.58) (15.96) 7/1/98 Class C Shares with CDSC(4) (8.58) (15.96) 7/1/98 Wilshire REIT Index(7) (4.73) Note 5 Note 5
(1) Total returns are historical and include changes in share price and the reinvestment of both dividends and capital gains distributions. (2) "NAV" (Net Asset Value) total returns do not include the effect of any sales charge. (3) "POP" (Public Offering Price) total returns include the effect of the maximum front-end 4.75% sales charge. (4) CDSC (contingent deferred sales charge) is applied to redemptions of certain classes of shares that do not have a sales charge applied at the time of purchase. CDSC charges for B shares decline from 5% to 0% over a five year period. CDSC charges for C shares are 1% in the first year and 0% thereafter. (5) Index performance is 7.52% for Class X and Class A (since 3/29/96) and (12.07)% for Class B and Class C (since 6/30/98). (6) This chart illustrates NAV returns on Class X shares and POP returns on Class A shares. Returns on Class B and Class C shares will vary due to differing sales charges. (7) The Wilshire REIT Index is an unmanaged, commonly used measure of total return performance of publicly traded real estate equity. The index's performance does not reflect sales charges. All returns represent past performance which may not be indicative of future performance. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. GROWTH OF $10,000 PERIODS ENDING 9/30 EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
PHOENIX-SENECA REAL ESTATE PHOENIX-SENECA REAL ESTATE WILSHIRE SECURITIES FUND CLASS X AT SECURITIES FUND CLASS A AT REIT NAV(6) POP(3) INDEX(7) 3/96 $10,000 $9,525 $10,000 96 $11,261 $10,669 $11,111 97 $15,252 $14,353 $15,800 98 $12,456 $11,551 $13,538 99 $11,626 $10,631 $12,897
This Growth of $10,000 chart assumes an initial investment of $10,000 made on 3/12/96 (inception of the Fund) in Class X and A shares. The total return for Class X shares reflects no sales charge. The total return for Class A shares reflects the maximum sales charge of 4.75% on the initial investment. Performance assumes dividends and capital gains are reinvested. The performance of other share classes will be greater or less than that shown based on differences in inception dates, fees and sales charges. SECTOR WEIGHTINGS 9/30/99 As a percentage of equity holdings EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC Office 26% Apartments 21 Regional Malls 12 Diversified 11 Lodging/Resorts 8 Industrial 8 Manufactured Homes 7 Other 7
33 Phoenix-Seneca Real Estate Securities Fund TEN LARGEST HOLDINGS AT SEPTEMBER 30, 1999 (AS A PERCENTAGE OF NET ASSETS) 1. Equity Residential Properties Trust 6.4% APARTMENT REIT 2. Essex Property Trust, Inc. 6.3% APARTMENT REIT 3. Equity Office Properties Trust 5.6% OFFICE REIT 4. Macerich Co. (The) 4.8% REGIONAL MALL REIT 5. Mack-Cali Realty Corp. 4.7% OFFICE REIT 6. Urban Shopping Centers, Inc. 4.7% REGIONAL MALL REIT 7. Pacific Gulf Properties, Inc. 4.4% DIVERSIFIED REIT 8. Manufactured Home Communities, Inc. 4.2% MANUFACTURED HOMES REIT 9. Spieker Properties, Inc. 4.1% OFFICE REIT 10. Cornerstone Properties, Inc. 4.0% OFFICE REIT
INVESTMENTS AT SEPTEMBER 30, 1999
SHARES VALUE ------- ----------- COMMON STOCKS--92.3% REAL ESTATE INVESTMENT TRUSTS--90.5% DIVERSIFIED--7.9% Crescent Real Estate Equities Co........ 26,000 $ 468,000 Entertainment Properties Trust.......... 12,000 175,500 Pacific Gulf Properties, Inc............ 41,290 823,219 ----------- 1,466,719 ----------- INDUSTRIAL/OFFICE--34.2% INDUSTRIAL--7.0% Bedford Property Investors, Inc......... 41,600 702,000 First Industrial Realty Trust, Inc...... 24,500 606,375 ----------- 1,308,375 ----------- MIXED--2.5% TriNet Corporate Realty Trust, Inc...... 19,500 464,344 MORTGAGE BACKED--2.7% Northstar Financial Corp.(b)(c)......... 35,000 507,500 OFFICE--22.0% Cornerstone Properties, Inc............. 48,500 739,625 Equity Office Properties Trust.......... 45,100 1,048,575 Mack-Cali Realty Corp................... 32,800 879,450 Prentiss Properties Trust............... 30,400 674,500 Spieker Properties, Inc................. 22,000 763,125 ----------- 4,105,275 ----------- - ------------------------------------------------------------------ TOTAL INDUSTRIAL/ OFFICE 6,385,494 - ------------------------------------------------------------------ SHARES VALUE ------- ----------- LODGING/RESORTS--8.0% FelCor Lodging Trust, Inc............... 37,275 $ 652,312 MeriStar Hospitality Corp............... 27,374 417,454 Starwood Hotel & Resorts Worldwide, Inc..................................... 16,000 357,000 Sunstone Hotel Investors, Inc........... 7,510 65,713 ----------- 1,492,479 ----------- RESIDENTIAL--27.4% APARTMENTS--20.3% Archstone Communities Trust............. 32,996 637,235 Avalonbay Communities, Inc.............. 15,750 533,531 Berkshire Realty Co., Inc............... 21,200 254,400 Equity Residential Properties Trust..... 28,200 1,194,975 Essex Property Trust, Inc............... 33,450 1,168,659 ----------- 3,788,800 ----------- MANUFACTURED HOMES--7.1% Chateau Communities, Inc................ 20,700 538,200 Manufactured Home Communities, Inc...... 33,200 776,050 ----------- 1,314,250 ----------- - ------------------------------------------------------------------ TOTAL RESIDENTIAL 5,103,050 - ------------------------------------------------------------------ RETAIL--13.0% REGIONAL MALLS--11.9% Macerich Co. (The)...................... 38,400 888,000 Simon Property Group, Inc............... 20,415 458,062 Urban Shopping Centers, Inc............. 30,000 870,000 ----------- 2,216,062 -----------
34 See Notes to Financial Statements Phoenix-Seneca Real Estate Securities Fund
SHARES VALUE ------- ----------- STRIP CENTERS--1.1% Developers Diversified Realty Corp...... 15,200 $ 212,800 - ------------------------------------------------------------------ TOTAL RETAIL 2,428,862 - ------------------------------------------------------------------ TOTAL REAL ESTATE INVESTMENT TRUSTS (IDENTIFIED COST $20,311,794) 16,876,604 - ------------------------------------------------------------------ REAL ESTATE OPERATING COMPANIES--1.8% DIVERSIFIED--0.2% Catellus Development Corp.(b)........... 2,400 28,200 INDUSTRIAL/OFFICE--0.8% Capital Trust Class A(b)................ 31,500 155,531 LODGING/RESORTS--0.8% Wyndham International, Inc. Class A(b).................................... 58,538 153,662 - ------------------------------------------------------------------ TOTAL REAL ESTATE OPERATING COMPANIES (IDENTIFIED COST $1,663,782) 337,393 - ------------------------------------------------------------------ TOTAL COMMON STOCKS (IDENTIFIED COST $21,975,576) 17,213,997 - ------------------------------------------------------------------ SHARES VALUE ------- ----------- CONVERTIBLE PREFERRED STOCKS--6.1% REAL ESTATE INVESTMENT TRUSTS--6.1% DIVERSIFIED--2.9% Glenborough Realty Trust, Inc. Series A Cv. Pfd. 7.75%.......................... 32,550 $ 535,041 INDUSTRIAL/OFFICE--3.2% MIXED--3.2% Reckson Associates Realty Corp. Series A Cv. Pfd. 7.625%......................... 30,000 605,625 - ------------------------------------------------------------------ TOTAL REAL ESTATE INVESTMENT TRUSTS (IDENTIFIED COST $1,470,254) 1,140,666 - ------------------------------------------------------------------ TOTAL CONVERTIBLE PREFERRED STOCKS (IDENTIFIED COST $1,470,254) 1,140,666 - ------------------------------------------------------------------
TOTAL INVESTMENTS--98.4% (IDENTIFIED COST $23,445,830) 18,354,663(a) Cash and receivables, less liabilities--1.6% 307,360 ----------- NET ASSETS--100.0% $18,662,023 ===========
(a) Federal Income Tax Information: Net unrealized depreciation of investment securities is comprised of gross appreciation of $312,920 and gross depreciation of $5,404,087 for federal income tax purposes. At September 30, 1999, the aggregate cost of securities for federal income tax purposes was $23,445,830. (b) Non-income producing. (c) Private Placement. See Notes to Financial Statements 35 Phoenix-Seneca Real Estate Securities Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 1999 ASSETS Investment securities at value (Identified cost $23,445,830) $18,354,663 Receivables Dividends and interest 206,542 Investment securities sold 178,563 Deferred organization expenses 13,527 Prepaid expenses 2,149 ----------- Total assets 18,755,444 ----------- LIABILITIES Payables Custodian 8,309 Fund shares repurchased 12,372 Transfer agent fee 12,008 Investment advisory fee 7,839 Financial agent fee 5,199 Distribution fee 1,681 Trustees' fee 913 Accrued expenses 45,100 ----------- Total liabilities 93,421 ----------- NET ASSETS $18,662,023 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $24,193,732 Undistributed net investment income 223,188 Accumulated net realized loss (663,730) Net unrealized depreciation (5,091,167) ----------- NET ASSETS $18,662,023 =========== CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $17,346,011) 1,789,967 Net asset value and offering price per share $9.69 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $918,535) 96,249 Net asset value per share $9.54 Offering price per share $9.54/(1-4.75%) $10.02 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $197,438) 20,676 Net asset value and offering price per share $9.55 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $200,039) 20,955 Net asset value and offering price per share $9.55
STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 1999 INVESTMENT INCOME Dividends $ 1,304,610 Interest 13,214 ----------- Total investment income 1,317,824 ----------- EXPENSES Investment advisory fee 181,649 Distribution fee, Class A 2,743 Distribution fee, Class B 1,715 Distribution fee, Class C 1,571 Financial agent fee 55,598 Transfer agent 77,424 Registration 36,379 Trustees 25,773 Professional 17,224 Printing 14,720 Amortization of deferred organization expenses 10,658 Custodian 5,358 Miscellaneous 10,670 ----------- Total expenses 441,482 Less expenses borne by investment adviser (63,940) ----------- Net expenses 377,542 ----------- NET INVESTMENT INCOME 940,282 ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized loss on securities (655,001) Net change in unrealized appreciation (depreciation) on investments (1,715,439) ----------- NET LOSS ON INVESTMENTS (2,370,440) ----------- NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(1,430,158) ===========
36 See Notes to Financial Statements Phoenix-Seneca Real Estate Securities Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/99 9/30/98 ------------- ------------- FROM OPERATIONS Net investment income (loss) $ 940,282 $ 1,139,214 Net realized gain (loss) (655,001) 551,625 Net change in unrealized appreciation (depreciation) (1,715,439) (7,262,351) ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS (1,430,158) (5,571,512) ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class X (837,674) (927,830) Net investment income, Class A (38,060) (63,404) Net investment income, Class B (4,962) (523) Net investment income, Class C (3,646) (508) Net realized gains, Class X (499,713) (1,123,456) Net realized gains, Class A (30,097) (124,174) Net realized gains, Class B (4,310) -- Net realized gains, Class C (2,368) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (1,420,830) (2,239,895) ----------- ----------- FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (210,923 and 190,605 shares, respectively) 2,123,311 2,502,892 Net asset value of shares issued from reinvestment of distributions (132,293 and 153,188 shares, respectively) 1,320,535 2,018,886 Cost of shares repurchased (515,264 and 297,712 shares, respectively) (5,249,668) (3,754,823) ----------- ----------- Total (1,805,822) 766,955 ----------- ----------- CLASS A Proceeds from sales of shares (21,611 and 31,969 shares, respectively) 225,249 436,921 Net asset value of shares issued from reinvestment of distributions (6,494 and 13,501 shares, respectively) 64,196 179,472 Cost of shares repurchased (55,264 and 138,471 shares, respectively) (559,210) (1,815,501) ----------- ----------- Total (269,765) (1,199,108) ----------- ----------- CLASS B Proceeds from sales of shares (11,520 and 8,978 shares, respectively) 120,191 113,001 Net asset value of shares issued from reinvestment of distributions (933 and 47 shares, respectively) 9,271 523 Cost of shares repurchased (0 and 802 shares, respectively) -- (9,281) ----------- ----------- Total 129,462 104,243 ----------- ----------- CLASS C Proceeds from sales of shares (12,513 and 7,932 shares, respectively) 124,671 100,250 Net asset value of shares issued from reinvestment of distributions (589 and 46 shares, respectively) 5,859 506 Cost of shares repurchased (125 and 0 shares, respectively) (1,280) -- ----------- ----------- Total 129,250 100,756 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (1,816,875) (227,154) ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS (4,667,863) (8,038,561) NET ASSETS Beginning of period 23,329,886 31,368,447 ----------- ----------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME (LOSS) OF $223,188 AND $169,785, RESPECTIVELY] $18,662,023 $23,329,886 =========== ===========
See Notes to Financial Statements 37 Phoenix-Seneca Real Estate Securities Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X ------------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30, INCEPTION --------------------------------------- 3/12/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 11.11 $ 14.71 $ 11.10 $ 10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) 0.47(6) 0.54 0.13(1) 0.13(1) Net realized and unrealized gain (loss) (1.20) (3.10) 3.77 1.10 ------- ------- ------- -------- TOTAL FROM INVESTMENT OPERATIONS (0.73) (2.56) 3.90 1.23 ------- ------- ------- -------- LESS DISTRIBUTIONS Dividends from net investment income (0.44) (0.46) (0.28) (0.13) Dividends from net realized gains (0.25) (0.58) (0.01) -- ------- ------- ------- -------- TOTAL DISTRIBUTIONS (0.69) (1.04) (0.29) (0.13) ------- ------- ------- -------- Change in net asset value (1.42) (3.60) 3.61 1.10 ------- ------- ------- -------- NET ASSET VALUE, END OF PERIOD $ 9.69 $ 11.11 $ 14.71 $ 11.10 ======= ======= ======= ======== Total return(2) (6.66)% (18.33)% 35.44% 12.39%(4) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $17,346 $21,794 $28,193 $ 1,073 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 1.66 % 1.47 % 1.99%(5) 1.00%(3)(5) Net investment income (loss) 4.50 % 4.14 % 2.38% 4.39%(3) Portfolio turnover 5 % 53 % 75.68% 30.70%(4)
(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) 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 1.99% and 53.04% for the year ended September 30, 1997 and the period ended September 30, 1996, respectively. (6) Computed using average shares outstanding. 38 See Notes to Financial Statements Phoenix-Seneca Real Estate Securities Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS A ------------------------------------------------------------- FROM YEAR ENDED SEPTEMBER 30, INCEPTION --------------------------------------------- 3/12/96 TO 1999 1998 1997 9/30/96 Net asset value, beginning of period $ 11.00 $ 14.68 $ 11.08 $ 10.00 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss) 0.32(1)(6) 0.35 0.03(1) 0.13(1) Net realized and unrealized gain (loss) (1.19) (3.08) 3.78 1.08 ------- ------- ------- ------- TOTAL FROM INVESTMENT OPERATIONS (0.87) (2.73) 3.81 1.21 ------- ------- ------- ------- LESS DISTRIBUTIONS Dividends from net investment income (0.34) (0.37) (0.20) (0.13) Dividends from net realized gains (0.25) (0.58) (0.01) -- ------- ------- ------- ------- TOTAL DISTRIBUTIONS (0.59) (0.95) (0.21) (0.13) ------- ------- ------- ------- Change in net asset value (1.46) (3.68) 3.60 1.08 ------- ------- ------- ------- NET ASSET VALUE, END OF PERIOD $ 9.54 $ 11.00 $ 14.68 $ 11.08 ======= ======= ======= ======= Total return(2) (7.97)% (19.52)% 34.54% 12.22%(4) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $ 919 $ 1,357 $ 3,176 $ 222 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 3.05 %(5) 2.76 % 2.91%(5) 1.65%(3)(5) Net investment income (loss) 3.13 % 2.45 % 1.37% 4.61%(3) Portfolio turnover 5 % 53 % 75.68% 30.70%(4)
(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 $0.20, $(0.04) and $(1.96) for the years ended September 30, 1999 and 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 4.27%, 3.79% and 73.01% for the years ended September 30, 1999 and 1997 and the period ended September 30, 1996, respectively. (6) Computed using average shares outstanding. See Notes to Financial Statements 39 Phoenix-Seneca Real Estate Securities Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS B CLASS C ------------------------------ ------------------------------ FROM FROM YEAR INCEPTION YEAR INCEPTION ENDED 7/1/98 TO ENDED 7/1/98 TO 9/30/99 9/30/98 9/30/99 9/30/98 Net asset value, beginning of period $11.01 $12.58 $11.01 $12.58 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss) 0.29(1)(8) 0.07(1) 0.29(2)(8) 0.07(2) Net realized and unrealized gain (1.22) (1.58) (1.22) (1.58) ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS (0.93) (1.51) (0.93) (1.51) ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.28) (0.06) (0.28) (0.06) Dividends from net realized gains (0.25) -- (0.25) -- ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.53) (0.06) (0.53) (0.06) ------ ------ ------ ------ Change in net asset value (1.46) (1.57) (1.46) (1.57) ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $ 9.55 $11.01 $ 9.55 $11.01 ====== ====== ====== ====== Total return(3) (8.59)% (11.97)%(5) (8.58)% (11.97)%(5) RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $197 $91 $200 $88 RATIO TO AVERAGE NET ASSETS OF: Operating expenses 3.80 %(6) 3.80 %(4)(6) 3.80 %(7) 3.80 %(4)(7) Net investment income (loss) 2.79 % 2.50 %(4) 2.80 % 2.44 %(4) Portfolio turnover 5 % 53 %(5) 5 % 53 %(5)
(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 $(1.23) and $(0.46) for the periods ended September 30, 1999 and September 30, 1998, 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 $(1.39) and $(0.48) for the periods ended September 30, 1999 and September 30, 1998, 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 18.50% and 22.08% for the periods ended September 30, 1999 and September 30, 1998, 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 19.95% and 22.93% for the periods ended September 30, 1999 and September 30, 1998, respectively. (8) Computed using average shares outstanding. 40 See Notes to Financial Statements PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 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 Bond Fund, Phoenix-Seneca Growth Fund, Phoenix-Seneca Mid-Cap "EDGE"-SM- Fund and Phoenix-Seneca Real Estate Securities Fund (formerly Seneca Bond Fund, Seneca Growth Fund, Seneca Mid-Cap "EDGE"-SM- Fund and Seneca Real Estate Securities Fund, respectively). Each Fund has distinct investment objectives. Bond Fund seeks to generate a high level of current income and capital appreciation. 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. 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. 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. 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. FOREIGN CURRENCY TRANSLATION: Foreign securities and other assets and liabilities are valued using the foreign currency exchange rate effective at the end of the reporting period. Cost of investments is translated at the currency exchange rate 41 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (CONTINUED) effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement dates of a portfolio transaction is treated as a gain or loss on foreign currency. Likewise, the gain or loss resulting from a change in currency exchange rates between the date income is accrued and paid is treated as a gain or loss on foreign currency. The Trust does not separate that portion of the results of operations arising from changes in exchange rates and that portion arising from changes in the market prices of securities. F. FORWARD CURRENCY CONTRACTS: Each Fund may enter into forward currency contracts in conjunction with the planned purchase or sale of foreign denominated securities in order to hedge the U.S. dollar cost or proceeds. Forward currency contracts involve, to varying degrees, elements of market risk in excess of the amount recognized in the statement of assets and liabilities. Risks arise from the possible movements in foreign exchange rates or if the counterparty does not perform under the contract. A forward currency contract involves an obligation to purchase or sell a specific currency at a future date, which may be any number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. These contracts are traded directly between currency traders and their customers. The contract is marked-to-market daily and the change in market value is recorded by each Fund as an unrealized gain (or loss). When the contract is closed or offset with the same counterparty, the Fund records a realized gain (or loss) equal to the change in the value of the contract when it was opened and the value at the time it was closed or offset. G. OPTIONS: Each Fund may write covered options or purchase options contracts for the purpose of hedging against changes in the market value of the underlying securities or foreign currencies. Each Fund will realize a gain or loss upon the expiration or closing of the option transaction. Gains and losses on written options are reported separately in the Statement of Operations. When a written option is exercised, the proceeds on sales or amounts paid are adjusted by the amount of premium received. Options written are reported as a liability in the Statement of Assets and Liabilities and subsequently marked-to-market to reflect the current value of the option. The risk associated with written options is that the change in value of options contracts may not correspond to the change in value of the hedged instruments. In addition, losses may arise from changes in the value of the underlying instruments, or if a liquid secondary market does not exist for the contracts. Each Fund may purchase options which are included in the Funds' Schedule of Investments and subsequently marked-to-market to reflect the current value of the option. When a purchased option is exercised, the cost of the security is adjusted by the amount of premium paid. The risk associated with purchased options is limited to the premium paid. H. 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. I. 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. J. 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. 2. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS 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. 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 42 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (CONTINUED) 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:
Adviser Fee -------- Bond Fund.................................... 0.50% Growth Fund.................................. 0.70% Mid-Cap "EDGE"-SM- Fund...................... 0.80% Real Estate Securities Fund.................. 0.85%
The Adviser pays the Subadviser a fee equal to one half of the Adviser fee. Phoenix Equity Planning Corporation ("PEPCO"), a direct subsidiary of PXP, serves as Administrator of the Trust. PEPCO received a fee for administration services through December 31, 1998 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 applied. Effective January 1, 1999, PEPCO receives a financial agent fee equal to the sum of (1) the documented cost of fund accounting and related services provided by PFPC Inc. (subagent to PEPCO), plus (2) the documented cost to PEPCO to provide financial reporting, tax services and oversight of the subagent's performance. The current fee schedule of PFPC Inc. ranges from 0.085% to 0.0125% of the average daily net asset values of the Trust. Certain minimum fees and fee waivers may apply. The Adviser voluntarily agreed to waive or reimburse each Fund's operating expenses until July 1, 2000, to the extent that such expenses exceed the following percentages of average annual net assets:
Class X Class A Class B Class C -------- -------- -------- -------- Bond Fund.................. 0.90% 1.15% 1.90% 1.90% 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%
Prior to July 1, 1999, the Adviser voluntarily agreed to waive or reimburse the Bond Fund's operating expenses until July 1, 2000, to the extent that such expenses exceeded the following percentages of average annual net assets: 1.85% for Class X, 2.45% for Class A and 3.20% for Class B and Class C. PEPCO serves as the national distributor of the Trust's shares and has advised the Trust that it retained net selling commissions of $16,238 for Class A shares for the year ended September 30, 1999. Deferred sales charges retained by PEPCO for the year ended September 30, 1999 were $6,758 for Class B shares and $689 for Class C shares. 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, 1999, $121,864 was retained by the Distributor, $24,658 was paid out to unaffiliated Participants and $1,637 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, 1999, transfer agent fees were $330,067 of which PEPCO retained $425 which is net of fees paid to State Street. At September 30, 1999, PHL and affiliates held Phoenix-Seneca Fund shares which aggregated the following:
Aggregate Net Asset Shares Value --------- ----------- Bond Fund--Class X.................. 1,496,147 $15,485,121 Bond Fund--Class A.................. 9,878 101,646 Bond Fund--Class B.................. 9,816 100,810 Bond Fund--Class C.................. 9,815 100,800 Growth Fund--Class B................ 829 15,982 Growth Fund--Class C................ 5,931 114,177 Mid-Cap "EDGE"-SM- Fund--Class B.... 6,062 105,532 Mid-Cap "EDGE"-SM- Fund--Class C.... 6,062 105,479 Real Estate Securities Fund--Class B....................... 8,345 79,697 Real Estate Securities Fund--Class C....................... 8,346 79,700
3. PURCHASE AND SALE OF SECURITIES Purchases and sales of securities during the year ended September 30, 1999 (excluding U.S. Government and agency securities and short-term securities) aggregated the following:
Purchases Sales ------------ ------------ Bond Fund........................ $ 26,311,365 $ 16,449,029 Growth Fund...................... 108,894,225 101,158,985 Mid-Cap "EDGE"-SM- Fund.......... 34,069,753 31,673,766 Real Estate Securities Fund...... 1,130,983 3,044,370
Purchases and sales of long-term U.S. Government and agency securities during the year ended September 30, 1999, aggregated $18,227,311 and $13,990,110, 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. 43 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 (CONTINUED) 5. OTHER As of September 30, 1999, 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.
Number of % of Total shareholders net assets ------------ ------------ Growth Fund....................... 1 12.1 % Real Estate Securities Fund....... 2 33.8 %
6. CAPITAL LOSS CARRYOVERS At September 30, 1999, the Real Estate Securities Fund had a capital loss carryover of $24,701, expiring in 2007, which may be used to offset future capital gains. Under current tax law, capital losses realized after October 31 may be deferred and treated as occurring on the first day of the following fiscal year. For the year ended September 30, 1999 the Real Estate Securities Fund deferred capital losses of $639,028. 7. RECLASS OF CAPITAL ACCOUNTS In accordance with accounting pronouncements, the Funds have recorded reclassifications in the capital accounts. These reclassifications have no impact on the net asset value of each 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, 1999, the Funds recorded the following reclassifications to increase (decrease) the accounts listed below:
Capital paid Undistributed Accumulated in on shares net investment net realized of beneficial income gain (loss) interest -------------- ------------ ------------- Bond Fund................... $ (6,484) $ 17,363 $(10,879) Growth Fund................. 251,366 (252,922) 1,556 Mid-Cap "EDGE"-SM- Fund..... 275,816 (277,372) 1,556 Real Estate Securities Fund........................ (2,537) 980 1,557
TAX INFORMATION NOTICE (UNAUDITED) For the fiscal year ended September 30, 1999, the Funds distributed long-term capital gain dividends as follows: Bond Fund...................................... $ 182,516 Growth Fund.................................... 1,530,633 Mid-Cap "EDGE"-SM- Fund........................ 542,452 Real Estate Securities Fund.................... 535,508
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. 44 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 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 (constituting the Phoenix-Seneca Funds, hereafter referred to as the "Funds") at September 30, 1999, and the results of each of their operations, the changes in each of their net assets and the financial highlights for the periods indicated, in conformity with generally accepted accounting principles. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the 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, 1999 by correspondence with the custodian and brokers, provide a reasonable basis for the opinion expressed above. The financial highlights 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 16, 1999 45 RESULTS OF SHAREHOLDER MEETING (UNAUDITED) A special meeting of Shareholders of the Phoenix-Seneca Funds was held on May 19, 1999 to approve the following matters: 1. Fix the number of trustees at eight and elect such number as detailed below. 2. Ratification of the selection of PricewaterhouseCoopers LLP as the Trust's independent auditors for the fiscal year ending September 30, 1999. On the record date for this meeting there were 94,344,980 shares outstanding and 70.86% of the shares outstanding and entitled to vote were present by proxy. NUMBER OF VOTES
FOR WITHHELD ---------- -------- 1. Election of Trustees Mary Ann Cusenza 94,209,124 135,856 Harry Dalzell-Payne 94,209,124 135,856 Norman W. Douglass 94,204,170 140,810 Paul E. Erdman 94,205,742 139,238 Melinda Ellis Evers 94,209,124 135,856 Paul B. Fay, Jr. 94,156,852 188,128 Philip R. McLoughlin 94,158,662 186,318 Gail P. Seneca 94,207,552 137,428 FOR AGAINST ABSTAIN ---------- ---------- ------- 2. PricewaterhouseCoopers LLP 94,125,711 87,193 132,076
46 PHOENIX-SENECA FUNDS 909 Montgomery Street San Francisco, California 94133 TRUSTEES AND OFFICERS Mary Ann Cusenza, Trustee Harry Dalzell-Payne, Trustee Norman W. Douglass, Trustee Paul E. Erdman, Trustee Melinda Ellis Evers, Trustee Paul B. Fay, Jr., Trustee Philip R. McLoughlin, Trustee Gail P. Seneca, President and Trustee Thomas N. Steenburg, Secretary Sandra J. Monticelli, Treasurer INVESTMENT ADVISER Phoenix Investment Counsel, Inc. 56 Prospect Street Hartford, Connecticut 06115-0480 SUBADVISER Seneca Capital Management LLC 909 Montgomery Street San Francisco, California 94133 PRINCIPAL UNDERWRITER Phoenix Equity Planning Corporation 100 Bright Meadow Boulevard P.O. Box 2200 Enfield, Connecticut 06083-2200 CUSTODIAN State Street Bank and Trust Company P. O. Box 351 Boston, Massachusetts 02101 TRANSFER AGENT Phoenix Equity Planning Corporation 100 Bright Meadow Boulevard P.O. Box 2200 Enfield, Connecticut 06083-2200 INDEPENDENT ACCOUNTANTS PricewaterhouseCoopers LLP 160 Federal Street Boston, Massachusetts 02110 HOW TO CONTACT US The Fund Connection 1-800-243-1574 Customer Service 1-800-243-1574 (option 0) Investment Strategy Hotline 1-800-243-4361 (option 2) Marketing Department 1-800-243-4361 (option 3) Text Telephone 1-800-243-1926
World Wide Web address: WWW.PHOENIXINVESTMENTS.COM Phoenix Equity Planning Corporation PRSRT STD PO Box 2200 U.S. Postage Enfield CT 06083-2200 PAID Springfield, MA [LOGO] PHOENIX Permit No. 444 INVESTMENT PARTNERS PXP 1140 (11/99) -----END PRIVACY-ENHANCED MESSAGE-----