-----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, Diu36OpdRTiM60xqybDDeVY+D49qZ3rYoJysn2luuAmiWrBp7Ylu+25Z6/x72I/0 z4QTZoYCGHbKEtBmF2ND0Q== 0000950149-96-000720.txt : 19960619 0000950149-96-000720.hdr.sgml : 19960619 ACCESSION NUMBER: 0000950149-96-000720 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960618 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: SENECA FUNDS CENTRAL INDEX KEY: 0001005020 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-07455 FILM NUMBER: 96582440 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 N-30D 1 SENECA FUNDS SEMI-ANNUAL REPORT DATED 3/31/96. 1 LOGO SEMI-ANNUAL REPORT -------------------------------------------- MARCH 31ST, 1996 2 May 20th, 1996 Dear Fellow Shareholder, Welcome to the first semi-annual report for the Seneca Funds. As you may be aware, we formed the Trust on December 18th, 1995 and went effective with the SEC on March 1st, 1996. Each day brings continued growth in both our assets and customer base. This is the first of our regular updates on our fund family and your investments herein. We thank you for your support and appreciate the trust you've placed in GMG/Seneca Capital Management and the Seneca Family of Funds. Stocks continued to surge in this year's first quarter, extending their robust gains of 1995. Bonds, however, fared poorly, as interest rates rose almost a full percentage point. As of this writing, the equity markets continue to provide investors with positive results. Our portfolios are focused on companies with sound, compelling earnings growth prospects. Bonds remain on the defensive due to rising energy prices, and the resulting fear of more widespread inflation. At current yields, bonds offer good value. Our portfolios are locking in the current attractive yield levels, particularly in the corporate bond market. When the inflation threat resolves, the market will again focus on the realities of stable economic growth in an extended business cycle and controlled inflation, ideal conditions for a continued run in financial assets. Add to these ingredients the unabated flow of funds into the markets driven by demographic factors and by the paucity of good investment alternatives, and the recipe for an ongoing bull market is complete. We remain confident in our continuing quest to outperform the markets in each of our investment disciplines. On behalf of all of us here at GMG/Seneca Capital Management, I thank you, the charter investors in the Seneca Funds. We will strive to continue delivering the excellence in investment performance and client service which has been a hallmark of the firm since our inception. Best Regards, Eric L. Munson Managing Director GMG/Seneca Capital Management 3 SENECA FUNDS SENECA GROWTH FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE - ---------------------------------------------------- ------ ------- COMMON STOCKS -- 28.3% BANKS -- (1.0%) BankAmerica Corporation......................... 10 $ 775 ------ BROADCASTING -- (1.2%) Evergreen Media (1)............................. 25 900 ------ BROKERAGE SERVICES -- (1.2%) Charles Schwab Corporation...................... 37 957 ------ BUSINESS SERVICES -- (2.1%) Danka Business Systems ADR...................... 23 972 First Data Corporation.......................... 10 705 ------ 1,677 ------ DRUG AND HEALTH CARE -- (4.7%) Cardinal Health Incorporated.................... 15 964 Healthsouth Corporation......................... 25 850 Medpartners/Mullikin Incorporated (1)........... 32 912 Merck and Company Incorporated.................. 15 934 ------ 3,660 ------ ELECTRICAL EQUIPMENT -- (1.0%) General Electric Company........................ 10 779 ------ ELECTRONICS -- (1.2%) Checkpoint Systems Incorporated (1)............. 37 920 ------ FINANCIAL SERVICES -- (1.0%) Chase Manhattan Corporation New (2)............. 10 705 ------ FOOD AND BEVERAGES -- (1.2%) Pepsico Incorporated............................ 15 949 ------ GAS AND PIPELINE UTILITIES -- (1.2%) Columbia Gas Systems Incorporated............... 20 918 ------ HOMEBUILDERS -- (1.2%) Centex Corporation.............................. 30 930 ------
See notes to financial statements. 1 4 SENECA FUNDS SENECA GROWTH FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE - ---------------------------------------------------- ------ ------- COMMON STOCKS (CONTINUED) HOUSEHOLD PRODUCTS -- (2.2%) Black and Decker Corporation.................... 25 $ 947 Colgate Palmolive............................... 10 779 ------ 1,726 ------ INTERNATIONAL OIL -- (1.0%) Exxon Corporation............................... 10 816 ------ LEISURE TIME -- (1.2%) Walt Disney Company............................. 15 958 ------ PETROLEUM SERVICES -- (1.0%) Schlumberger Limited............................ 10 791 ------ RETAIL TRADE -- (2.3%) Lowes Companies Incorporated.................... 25 894 Wal-Mart Stores Incorporated.................... 40 920 ------ 1,814 ------ SOFTWARE -- (3.6%) HBO and Company................................. 10 942 Oracle Systems Corporation (1).................. 20 942 Sterling Commerce Incorporated (1).............. 30 923 ------ 2,807 ------ TOTAL INVESTMENTS -- (COST $22,132*)................ 28.3% 22,082 OTHER ASSETS LESS LIABILITIES....................... 71.7% 56,003 --- ------ NET ASSETS.......................................... 100.0% $78,085 ---- ------ ------
- --------------- (1) Non-income producing security. (2) Name change from Chemical Banking Corporation * At March 31, 1996, the aggregate cost of investment securities for income tax purposes was $22,132. Net unrealized depreciation aggregated $50, of which $198 related to depreciated investment securities and $148 related to appreciated investment securities. See notes to financial statements. 2 5 SENECA FUNDS SENECA MID-CAP "EDGE" FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE - ----------------------------------------------------- ------ -------- COMMON STOCKS -- 44.8% BUSINESS SERVICES -- (2.0%) Danka Business Systems ADR....................... 67 $ 2,831 ------- BROADCASTING -- (2.0%) Evergreen Media (1).............................. 80 2,880 ------- BROKERAGE SERVICES -- (2.1%) Charles Schwab Corporation....................... 113 2,924 ------- COSMETICS & TOILETRIES -- (2.0%) Revlon Class A (1)............................... 100 2,750 ------- DRUGS & HEALTHCARE -- (12.1%) Amerisource Health Corporation Class A (1)....... 85 2,805 Medpartners/Mullikin Incorporated (1)............ 98 2,793 Meridian Diagnostics............................. 270 2,869 Phycor Incorporated (1).......................... 65 2,860 Physio Control International Corporation (1)..... 140 2,800 Watson Pharmaceuticals Incorporated (1).......... 70 2,800 ------- 16,927 ------- ELECTRONICS -- (6.0%) Altera Corporation (1)........................... 50 2,794 BMC Industries Incorporated Minn................. 130 2,795 Checkpoint Systems Incorporated (1).............. 113 2,811 ------- 8,400 ------- GAS AND PIPELINE UTILITIES -- (2.0%) Columbia Gas Systems Incorporated................ 60 2,753 ------- HOTELS & RESTAURANTS -- (2.1%) HFS Incorporated (1)............................. 60 2,918 ------- RETAIL TRADE -- (4.1%) Orchard Supply Hardware (1)...................... 125 2,953 Kenneth Cole Productions Incorporated Class A (1)............................................ 160 2,860 ------- 5,813 -------
See notes to financial statements. 3 6 SENECA FUNDS SENECA MID-CAP "EDGE" FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE - ----------------------------------------------------- ------ -------- COMMON STOCKS (CONTINUED) SOFTWARE -- (8.0%) Cadence Design Systems Incorporated (1).......... 65 $ 2,868 HBO and Company.................................. 30 2,827 Oracle Systems Corporation (1)................... 60 2,827 Sterling Commerce Incorporated (1)............... 90 2,767 ------- 11,289 ------- TELEPHONE -- (2.4%) Cincinnati Bell Incorporated..................... 65 3,380 ------- TOTAL INVESTMENTS -- (COST $61,856*)................. 44.8% 62,865 OTHER ASSETS LESS LIABILITIES........................ 55.2% 77,594 ---- ------- NET ASSETS........................................... 100.0% $140,459 ---- ------- ---- -------
- --------------- (1) Non-income producing security. * At March 31, 1996, the aggregate cost of investment securities for income tax purposes was $61,856. Net unrealized appreciation aggregated $1,009, of which $1,187 related to appreciated investment securities and $178 related to depreciated investment securities. See notes to financial statements. 4 7 SENECA FUNDS SENECA BOND FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
NAME OF ISSUER INTEREST MATURITY PRINCIPAL AND TITLE OF ISSUE RATE DATE AMOUNT VALUE - ------------------------------- -------- ---------- --------- -------- CORPORATE BONDS -- 11.7% FINANCE AND BANKING -- (3.7%) Property Trust America..... 6.875% 02/15/2008 $ 5,000 $ 4,853 -------- INDUSTRIAL -- (8.0%) Corporate Express Incorporated............. 9.125% 03/15/2004 5,000 5,150 Quorum Health Corporation.............. 11.875% 12/15/2002 5,000 5,538 -------- 10,688 -------- TOTAL CORPORATE BONDS -- (COST $15,502)............. 15,541 -------- U.S. GOVERNMENT AND AGENCY SECURITIES -- 18.4% (Cost $24,698) COLLATERALIZED MORTGAGE OBLIGATION Government National Mortgage Association Pool 408215..................... 7.000% 02/15/2026 25,000 24,377 -------- SHORT TERM INVESTMENT -- 37.7% (Cost $49,928) U.S. GOVERNMENT U. S. Treasury Bill........ 5.2% 04/11/1996 50,000 49,928 -------- TOTAL INVESTMENTS -- (COST $90,128*)................ 67.8% 89,846 OTHER ASSETS LESS LIABILITIES....................... 32.2% 42,652 ------- -------- NET ASSETS.......................................... 100.00% $132,498 ======= ========
- --------------- * At March 31, 1996, the aggregate cost of investment securities for income tax purposes was $90,128. Net unrealized depreciation aggregated $282, of which $39 related to appreciated investment securities and $321 related to depreciated investment securities. See notes to financial statements. 5 8 SENECA FUNDS SENECA REAL ESTATE SECURITIES FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE - -------------------------------------------------- ------ ------- COMMON STOCKS -- 29.3% HOTELS AND RESTAURANTS -- (1.1%) Felcor Suite Hotels Incorporated.............. 25 $ 775 ------ REAL ESTATE INVESTMENT TRUST -- (28.2%) Apartment Investment and Management Company Class A..................................... 57 1,189 Associated Estates Realty Corporation......... 25 512 Avalon Properties Incorporated................ 33 710 Cali Realty Corporation....................... 44 985 CBL and Associates Properties................. 16 338 Chateau Properties............................ 33 751 Crescent Real Estate Equities................. 21 706 Crown American Realty Trust................... 76 580 Debartolo Realty Company...................... 57 855 Del Webb Corporation.......................... 33 606 Developers Diversified Realty................. 33 969 First Industrial Realty Trust Incorporated.... 33 755 Franchise Financial Corporation of America.... 25 500 Gables Residential Trust...................... 41 984 Highwoods Properties Incorporated............. 25 697 Irvine Apartment Communities Incorporated..... 46 880 Liberty Property Trust........................ 41 846 Merry Land and Investment Company............. 33 718 Pacific Gulf Properties Incorporated.......... 18 333 Patriot American Hospitality Incorporated..... 13 343 Post Properties Incorporated.................. 16 520 Prime Residential Incorporated................ 16 298 Security Capital Pacific Trust................ 33 726 Shurgard Storage Centers Incorporated Class A........................................... 21 551 Speiker Properties Incorporated............... 25 634 Starwood Lodging Trust........................ 25 844 Storage Trust Realty.......................... 25 556 Summit Properties Incorporated................ 41 820 Trinet Corporate Realty....................... 25 719
See notes to financial statements. 6 9 SENECA FUNDS SENECA REAL ESTATE SECURITIES FUND SCHEDULE OF INVESTMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED)
NAME OF ISSUER AND TITLE OF ISSUE SHARES VALUE - -------------------------------------------------- ------ ------- COMMON STOCKS (CONTINUED) REAL ESTATE INVESTMENT TRUST (CONTINUED) Weeks Corporation............................. 18 450 Wellsford Residential Properties.............. 37 809 ------ 21,184 ------ TOTAL INVESTMENTS -- (Cost $22,289*).............. 29.3% 21,959 OTHER ASSETS LESS LIABILITIES..................... 70.7% 53,082 ------ ------ NET ASSETS........................................ 100.0% $75,041 ------ ------ ------ ------
- --------------- * At March 31, 1996, the aggregate cost of investment securities for income tax purposes was $22,289. Net unrealized depreciation aggregated $330, of which $88 related to appreciated investment securities and $418 related to depreciated investment securities. See notes to financial statements. 7 10 SENECA FUNDS STATEMENTS OF ASSETS AND LIABILITIES MARCH 31, 1996 (UNAUDITED)
MID-CAP REAL ESTATE GROWTH "EDGE" BOND SECURITIES FUND -------- -------- -------- ----------- ASSETS Investments in securities, at value -- (Note 2)................. $ 22,082 $ 62,865 $ 89,846 $ 21,959 Cash................................ 28,154 89,498 8,016 25,241 Dividend and interest receivable.... 0 0 390 148 Receivable for securities sold...... 0 0 5,140 0 Receivable for fund shares sold..... 50,000 50,000 50,000 50,000 Deferred organizational costs (Note 5)......................... 53,166 53,166 52,986 53,347 Due from Seneca Management (Note 3)... 8,095 8,066 9,238 6,937 -------- -------- -------- -------- TOTAL ASSETS...................... 161,497 263,595 215,616 157,632 LIABILITIES Payable for securities purchased.... 22,132 61,856 20,858 22,289 Organizational costs payable to Seneca Management (Note 5)........ 54,428 54,428 54,428 54,428 Trustee fees payable................ 574 574 656 492 Accounts payable and accrued expenses.......................... 6,278 6,278 7,176 5,382 -------- -------- -------- -------- TOTAL LIABILITIES................. 83,412 123,136 83,118 82,591 -------- -------- -------- -------- NET ASSETS........................ $ 8,085 $140,459 $132,498 $ 75,041 ======== ======== ======== ======== NET ASSETS Capital paid-in..................... $ 75,200 $134,200 $132,700 $ 75,200 Undistributed net investment income (loss)..................... (19) (49) 55 177 Accumulated net realized gain (loss) on investments.................... 2,954 5,299 25 (6) Net unrealized appreciation (depreciation) of investments..... (50) 1,009 (282) (330) -------- -------- -------- -------- NET ASSETS........................ $ 78,085 $140,459 $132,498 $ 75,041 ======= ======== ======== ======== INSTITUTIONAL CLASS: Net Assets........................ $ 64,045 $126,523 $120,030 $ 62,523 Total shares outstanding.......... 5,739 11,429 12,121 6,290 NET ASSET VALUE, offering and redemption price per Institutional Class share....................... $ 11.16 $ 11.07 $ 9.90 $ 9.94 ======== ======== ======== ======== ADMINISTRATIVE CLASS: Net Assets........................ 14,040 $ 13,936 $ 12,468 $ 12,518 Total shares outstanding.......... 1,259 1,259 1,260 1,260 NET ASSET VALUE, offering and redemption price per Administrative Class share........ $ 11.15 $ 11.07 $ 9.89 $ 9.94 ======== ======== ======== ======== COST OF SECURITIES.................. $ 22,132 $ 61,856 $ 90,128 $ 22,289
See notes to financial statements. 8 11 SENECA FUNDS STATEMENTS OF OPERATIONS FOR THE PERIOD* ENDED MARCH 31, 1996 (UNAUDITED)
MID-CAP REAL ESTATE GROWTH "EDGE" BOND SECURITIES FUND FUND FUND FUND ------- ------- ------- ----------- INVESTMENT INCOME Dividend income..................... $ 0 $ 0 $ 0 $ 195 Interest income..................... 0 0 91 0 ------- ------- ------- ------- TOTAL INCOME...................... 0 0 91 195 ======= ======= ======= ======= EXPENSES Management fee -- Note 3............ 11 37 23 11 Administrative fee -- Note 3........ 5,000 5,000 5,000 5,000 Distribution fees -- Administrative Shares -- Note 3..... 2 2 2 2 Custodian fees...................... 3,752 3,752 4,289 3,216 Audit fees.......................... 143 143 164 126 Legal fees.......................... 430 430 492 369 Trustees fees....................... 574 574 656 492 Transfer agent fees................. 1,865 1,865 2,131 1,598 Organizational expenses............. 1,262 1,262 1,442 1,081 Other............................... 86 86 98 71 ------- ------- ------- ------- Expenses before waivers and reimbursements.................... 13,125 13,151 14,297 11,966 Fees waived by Advisor.............. (5,011) (5,037 ) (5,023) (5,011) Expenses reimbursed by Advisor (Note 3).......................... (8,095) (8,065 ) (9,238) (6,937) ------- ------- ------- ------- TOTAL EXPENSES.................... 19 49 36 18 ------- ------- ------- ------- NET INVESTMENT INCOME/(LOSS)...... (19) (49 ) 55 177 ------- ------- ------- ------- REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain (loss) on investments....................... 2,954 5,299 25 (6) Change in net unrealized appreciation of investments.................... (50) 1,009 (282) (330) ------- ------- ------- ------- NET GAIN (LOSS)................... 2,904 6,308 (257) (336) ------- ------- ------- ------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS..................... $ 2,885 $6,259 $ (202) $ (159) ======= ======= ======= =======
- --------------- * The Growth, Mid-Cap "EDGE", Bond and Real Estate Securities Funds commenced investment operations on March 10, 1996, March 10, 1996, March 7, 1996, and March 12, 1996 respectively. See notes to financial statements. 9 12 SENECA FUNDS STATEMENTS OF CHANGES IN NET ASSETS MARCH 31, 1996 (UNAUDITED)
GROWTH MID-CAP BOND REAL ESTATE FUND "EDGE" FUND FUND SECURITIES FUND PERIOD PERIOD PERIOD PERIOD ENDED ENDED ENDED ENDED 3/31/96(1) 3/31/96(1) 3/31/96(2) 3/31/96(3) ---------- ------------- ---------- --------------- INCREASE IN NET ASSETS From operations: Net investment income/(loss)...... $ (19) $ (49) $ 55 $ 177 Net realized gain (loss) on investments........ 2,954 5,299 25 (6) Change in net unrealized appreciation (depreciation) of investments........ (50) 1,009 (282) (330) ------- -------- -------- ------- Net increase (decrease) in net assets resulting from operations.... 2,885 6,259 (202) (159) Net increase from trust share transactions (Note 6)............. 50,200 109,200 107,700 50,200 ------- -------- -------- ------- TOTAL INCREASE..... 53,085 115,459 107,498 50,041 Net Assets Beginning of period............. 25,000 25,000 25,000 25,000 ------- -------- -------- ------- End of period (a).... $ 78,085 $ 140,459 $132,498 $75,041 ======= ======== ======== ======= (a) Including undistributed net investment income (accumulated net investment loss)... $ (19) $ (49) $ 55 $ 177
- --------------- (1) For the period March 10, 1996 (commencement of investment operations) through March 31, 1996. (2) For the period March 7, 1996 (commencement of investment operations) through March 31, 1996. (3) For the period March 12, 1996 (commencement of investment operations) through March 31, 1996. See notes to financial statements. 10 13 SENECA FUNDS -- INSTITUTIONAL CLASS SHARES FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD* (UNAUDITED)
REAL MID-CAP ESTATE GROWTH "EDGE" BOND SECURITIES FUND MARCH 31, MARCH 31, MARCH 31, MARCH 31, 1996(1) 1996(1) 1996(2) 1996(3) --------- --------- --------- --------- NET ASSET VALUE AT BEGINNING OF PERIOD................................ $ 10.00 $ 10.00 $ 10.00 $ 10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income/(Loss) (4)...... (0.01) 0.00 0.01 0.04 Net Realized and Unrealized Gain (Loss) on Investments............... 1.17 1.07 (0.11) (0.10) ------- -------- -------- ------- TOTAL FROM INVESTMENT OPERATIONS...... 1.16 1.07 (0.10) (0.06) ------- -------- -------- ------- NET ASSET VALUE AT END OF PERIOD....... $ 11.16 $ 11.07 $ 9.90 $ 9.94 ======= ======== ======== ======= TOTAL RETURN (5)....................... 11.60% 10.70% (1.0)% (0.60)% RATIOS & SUPPLEMENTAL DATA Net Assets at End of Period........... $64,045 $126,523 $120,030 $62,523 Ratio of Operating Expenses to Average Net Assets (6)(7)................... 0.85% 0.95% 0.65% 1.05% Ratio of Net Investment Income/(Loss) to Average Net Assets (6)........... (0.85)% (0.95)% 1.35% 13.85% Portfolio Turnover Rate............... 128% 79% 26% 0% Average Commission Rate (8)........... $ 0.06 $ 0.06 N/A $ 0.06
- --------------- * Per share amounts have been calculated using the monthly average share method, which more appropriately presents the results since commencement of investment operations. (1) For the period March 10, 1996 through March 31, 1996. (2) For the period March 7, 1996 through March 31, 1996. (3) For the period March 12, 1996 through March 31, 1996. (4) Net investment income (loss) is after waiver of certain fees and reimbursement of certain expenses by the Investment Advisor (see Note 3 to the financial statements). If the Investment Advisor had not waived fees and reimbursed expenses, net investment income (loss) per share would have been $(3.36) for the Growth Fund; $(1.45) for Mid-Cap "EDGE"(SM) Fund; $(1.58) for the Bond Fund; and $(2.79) for the Real Estate Securities Fund. (5) Total return represents aggregate total return for the period indicated. The total return would have been lower if certain fees and expenses had not been waived or reimbursed by the advisor. (6) Annualized. (7) If the Investment Advisor had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 796% for the Growth Fund; 265% for Mid-Cap "EDGE"(SM) Fund; 283% for the Bond Fund; and 889% for the Real Estate Securities Fund. (8) The average commission paid is applicable for the funds that invest greater than 10% of average net assets in equity securities transactions on which commissions are charged. See notes to financial statements. 11 14 SENECA FUNDS-ADMINISTRATIVE CLASS SHARES FINANCIAL HIGHLIGHTS FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD* (UNAUDITED)
REAL MID-CAP ESTATE GROWTH "EDGE" BOND SECURITIES FUND FUND FUND FUND MARCH 31, MARCH 31, MARCH 31, MARCH 31, 1996 (1) 1996 (1) 1996 (2) 1996 (3) --------- --------- --------- --------- NET ASSET VALUE AT BEGINNING OF PERIOD............................... $ 10.00 $ 10.00 $ 10.00 $ 10.00 INCOME FROM INVESTMENT OPERATIONS: Net Investment Income/(Loss) (4)...... (0.01) (0.01) 0.00 0.07 Net Realized and Unrealized Gain (Loss) on Investments............... 1.16 1.08 (0.11) (0.13) ------- -------- -------- ------- TOTAL FROM INVESTMENT OPERATIONS...... 1.15 1.07 (0.11) (0.06) ------- -------- -------- ------- NET ASSET VALUE AT END OF PERIOD....... $ 11.15 $ 11.07 $ 9.89 $ 9.94 ======= ======== ======== ======= TOTAL RETURN (5)....................... 11.50% 10.70% (1.10)% (0.60)% RATIOS & SUPPLEMENTAL DATA Net Assets at End of Period........... $14,040 $13,936 $12,468 $12,518 Ratio of Operating Expenses to Average Net Assets (6)(7)................... 1.50% 1.60% 1.30% 1.70% Ratio of Net Investment Income/(Loss) to Average Net Assets (6)........... (1.50)% (1.60)% 0.38% 13.19% Portfolio Turnover Rate............... 128% 79% 26% 0% Average Commission Rate (8)........... $ 0.06 $ 0.06 N/A $ 0.06
- --------------- * Per share amounts have been calculated using the monthly average share method, which more appropriately presents the results since commencement of investment operations. (1) For the period March 10, 1996 through March 31, 1996. (2) For the period March 7, 1996 through March 31, 1996. (3) For the period March 12, 1996 through March 31, 1996. (4) Net investment income (loss) is after waiver of certain fees and reimbursement of certain expenses by the Investment Advisor (see Note 3 to the financial statements). If the Investment Advisor had not waived fees and reimbursed expenses, net investment income (loss) per share would have been $(5.37) for the Growth Fund; $(2.42) for Mid-Cap "EDGE"(SM) Fund; $(2.70) for the Bond Fund; and $(4.80) for the Real Estate Securities Fund. (5) Total return represents aggregate total return for the period indicated. The total return would have been lower if certain fees and expenses had not been waived or reimbursed by the advisor. (6) Annualized. (7) If the Investment Advisor had not waived fees and reimbursed expenses, the ratio of operating expenses to average net assets would have been 843% for the Growth Fund; 388% for Mid-Cap "EDGE"(SM) Fund; 416% for the Bond Fund; and 938% for the Real Estate Securities Fund. (8) The average commission paid is applicable for the funds that invest greater than 10% of average net assets in equity securities transactions on which commissions are charged. See notes to financial statements. 12 15 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) NOTE 1 -- ORGANIZATION Seneca Funds (the "Trust") is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. The Trust was organized as a Delaware business trust on December 18, 1995. The Trust consists of four series: Seneca Growth Fund, Seneca Mid-Cap "EDGE"(SM) Fund, Seneca Bond Fund and Seneca Real Estate Securities Fund (individually, the "Fund", and collectively, the "Funds.") The Board of Trustees has authorized each Fund to issue two classes of common shares: Administrative Shares and Institutional Shares. NOTE 2 -- SIGNIFICANT ACCOUNTING POLICIES VALUATION OF INVESTMENTS: Equity securities traded on a national securities exchange are valued at their last sales price; or if no sales are reported, at the mean between the representative bid and asked quotations obtained from a quotation reporting system or from an established market maker. Fixed income securities, other than those having a maturity of 60 days or less, are valued on the basis of quotes obtained from brokers or pricing services. Short-term investments having a maturity of 60 days or less will be valued at amortized cost, when the Trustees determine that amortized cost is fair market value. Securities for which market quotations are not readily available will be valued at fair value as determined in good faith by, or at the direction of, the Trustees. REPURCHASE AGREEMENTS: Each Fund may enter into repurchase agreements where the Fund buys a security and the seller simultaneously agrees to repurchase the security on a specified future date at an agreed-upon price. Because the security constitutes collateral for the repurchase obligation, a repurchase agreement can be considered a collateralized loan. The Fund's risk is the ability of the seller to pay the agreed-upon price on delivery date. The Trustees have established criteria to evaluate the creditworthiness of parties with whom the Funds may enter into repurchase agreements. The Funds will limit the repur- 13 16 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED) chase agreements to securities issued by the United States Government, its agencies, and its instrumentalities. SECURITY TRANSACTIONS, INVESTMENT INCOME and EXPENSES: Investment security transactions are recorded as of trade date. Realized gains and losses on investment security sales are determined on the basis of identified cost. Dividend income is recorded on the ex-dividend date. Interest income and expenses are recorded daily on an accrual basis. Fund expenses not directly attributable to a specific fund or class are allocated evenly or on the basis of net assets to each Fund. Fund expenses that are not related to the distribution of shares of a particular class or to services provided specifically to a particular class are allocated between the classes on the basis of relative average daily net assets of each class. Expenses that relate to the distribution or services provided to a particular class are allocated to that class. Investment income and realized and unrealized gains/losses are allocated between the classes on the basis of net assets of each class. DIVIDENDS AND DISTRIBUTIONS: Dividends from net investment income on shares of the Seneca Bond Fund are determined at the class level and are declared and paid monthly. Dividends from net investment income on shares of the Seneca Real Estate Securities Fund are determined at the class level and are declared and paid quarterly. Dividends from net investment income on shares of the Seneca Growth Fund and Seneca Mid-Cap "EDGE"(SM) Fund are determined at the class level and are declared and paid annually. Each Fund distributes net realized capital gains, if any, at least annually. FEDERAL INCOME TAXES: Each Fund intends to qualify as a regulated investment company under Subchapter M of the Internal Revenue Code of 1986, as amended, and by distributing to shareholders substantially all of its taxable income. Therefore, no Federal income or excise tax provision is required. Income and capital gain distributions are determined in accordance with income tax regulations which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments for market discount, losses deferred due to wash sales and excise tax regulations. 14 17 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED) ESTIMATES: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and income and expenses at the date of the financial statements. Actual results could differ from these estimates. NOTE 3 -- AGREEMENTS AND TRANSACTIONS WITH AFFILIATES The Trust has an Investment Management Agreement with GMG/Seneca Capital Management L.P. ("Seneca Capital Management"), under which Seneca Capital Management manages the investments of each Fund. For its services, Seneca Capital Management receives a fee from each Fund at an annual percentage of the average daily net assets of each Fund. Such investment management fees are 0.70%, 0.80%, 0.50%, and 0.85% for the Growth Fund, Mid-Cap "EDGE"(SM) Fund, Bond Fund and Real Estate Securities Fund, respectively. The Trust has a Distribution and Services Agreement (the "Agreement") with Genesis Merchant Group Securities L.P. ("GMG Securities") an affiliate of Seneca Capital Management, under which GMG Securities serves as the distributor and principal underwriter of each Fund's shares. Pursuant to the Agreement, GMG Securities receives a fee from each Fund at an annual rate of 0.25% of the average daily net assets attributable to the Administrative Shares of each Fund. The Trust has an Administrative Services Agreement with Seneca Capital Management where Seneca Capital Management is responsible for the day-to-day administrative functions of the Trust. Pursuant to the Agreement, Seneca Capital Management receives a fee from each Fund at an annual rate of 0.08% of the first $125 million, 0.06% of the next $125 million, and 0.04% thereafter, subject to certain minimums which are waived for the first six months during which the Trust is in operation. Seneca Capital Management has entered into an agreement with State Street Bank & Trust Company ("State Street") to provide most of the administrative functions for the Trust. 15 18 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED) Seneca Capital Management has agreed to voluntarily waive its fees and reimburse other operating expenses of each Fund (other than certain extraordinary or nonrecurring expenses) until the earlier of September 30, 1996 or such time as the Fund's assets exceed $50 million, to the extent necessary to prevent the expenses for each Fund and class from exceeding the following percentages of average daily net assets:
FUND ADMINISTRATIVE CLASS INSTITUTIONAL CLASS ---------------------------- -------------------- ------------------- Seneca Growth............... 1.50% 0.85% Seneca Mid-Cap Edge......... 1.60 0.95 Seneca Bond................. 1.30 0.65 Seneca Real Estate Securities................ 1.70 1.05
For the period ended March 31, 1996, Seneca Capital Management waived $5,011, $5,037, $5,023, and $5,011 in fees for the Growth, Mid-Cap EDGE(SM) , Bond, and Real Estate Securities Funds, respectively. In addition, for the period ended March 31, 1996, Seneca Capital Management reimbursed expenses of $8,095, $8,066, $9,238, and $6,937 for the Growth, Mid-Cap EDGE(SM) , Bond and Real Estate Securities Funds, respectively. Trustees of the Trust who are not interested persons receive a fee of $2,500 for each meeting attended and are reimbursed for expenses incurred in connection with such attendance. 16 19 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED) NOTE 4 -- INVESTMENT TRANSACTIONS Purchases and proceeds from sales and maturities of investments, excluding short term securities, for the Trust, for the period ended March 31, 1996 were as follows:
NON- NON- GOVERNMENT GOVERNMENT GOVERNMENT GOVERNMENT PURCHASES PURCHASES SALES SALES ---------- ---------- ---------- ---------- Seneca Growth Fund.............. $ 33,232 $ 0 $ 14,054 $0 Seneca Mid-Cap "EDGE"(SM) Fund... 81,455 0 24,898 0 Seneca Bond Fund.... 15,502 24,698 0 0 Seneca Real Estate Securities Fund... 22,289 0 0 0
NOTE 5 -- ORGANIZATION COSTS The Trust bears all costs in connection with its organization. The organization costs will be amortized on a straight-line basis over a period of sixty months from the commencement of investment operations. The costs associated with state registration of shares will be amortized on a straight-line basis over a period of twelve months. If any of the Initial Shares are redeemed before the end of the amortization period, the proceeds of the redemption will be reduced by the pro rata share of unamortized organization and state registration costs. 17 20 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED) NOTE 6 -- CAPITAL STOCK TRANSACTIONS For the period from commencement of investment operations through March 31, 1996:
INSTITUTIONAL SHARES ADMINISTRATIVE SHARES SHARES DOLLARS SHARES DOLLARS ------ -------- ------ -------- GROWTH FUND (1) Shares sold............ 4,489 $ 50,100 9 $ 100 Shares issued to shareholders in reinvestment......... 0 0 0 0 Shares redeemed........ 0 0 0 0 ------ -------- ------ -------- Net increase........... 4,489 $ 50,100 9 $ 100 ====== ======== ====== ========
INSTITUTIONAL SHARES ADMINISTRATIVE SHARES SHARES DOLLARS SHARES DOLLARS ------ -------- ------ -------- MID-CAP "EDGE"(SM) FUND (1) Shares sold............ 10,179 $109,100 9 $ 100 Shares issued to shareholders in reinvestment......... 0 0 0 0 Shares redeemed........ 0 0 0 0 ------ -------- ------ -------- Net increase........... 10,179 $109,100 9 $ 100 ====== ======== ====== ========
INSTITUTIONAL SHARES ADMINISTRATIVE SHARES SHARES DOLLARS SHARES DOLLARS ------ -------- ------ -------- BOND FUND (2) Shares sold............ 10,871 $107,600 10 $ 100 Shares issued to shareholders in reinvestment......... 0 0 0 0 Shares redeemed........ 0 0 0 0 ------ -------- ------ -------- Net increase........... 10,871 $107,600 10 $ 100 ====== ======== ====== ========
18 21 SENECA FUNDS NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (CONTINUED) (UNAUDITED) NOTE 6 -- CAPITAL STOCK TRANSACTIONS (CONTINUED)
INSTITUTIONAL SHARES ADMINISTRATIVE SHARES SHARES DOLLARS SHARES DOLLARS ------ -------- ------ -------- REAL ESTATE SECURITIES FUND (3) Shares sold.......... 5,040 $ 50,100 10 $ 100 Shares issued to shareholders in reinvestment....... 0 0 0 0 Shares redeemed...... 0 0 0 0 ------ -------- ------ -------- Net increase......... 6,280 $ 50,100 10 $ 100 ====== ======== ====== ========
- --------------- (1) For the period March 10, 1996 (commencement of investment operations) through March 31, 1996. (2) For the period March 7, 1996 (commencement of investment operations) through March 31, 1996. (3) For the period March 12, 1996 (commencement of investment operations) through March 31, 1996. NOTE 7 -- SHARES OF BENEFICIAL INTEREST At March 31, 1996, certain shareholders were record owners of more than 10% of total outstanding shares of the following Portfolios:
NUMBER OF PERCENTAGE OF NAME OF PORTFOLIO SHAREHOLDERS SHARES OWNED - ---------------------------------------- ------------ -------------- Growth Fund............................. 2 100% Mid-Cap "EDGE"(SM) Fund................. 3 93% Bond Fund............................... 3 94% Real Estate Securities Fund............. 2 100%
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