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                                  SENECA FUNDS

              SUPPLEMENT DATED OCTOBER 17, 1997 TO PROSPECTUS AND
           STATEMENT OF ADDITIONAL INFORMATION DATED JANUARY 2, 1997,
                            AS AMENDED JUNE 26, 1997

        Effective October 18, 1997, the Transfer Agent for the Seneca Funds (the
"Funds") was changed from Investors Fiduciary Trust Company ("IFTC") to Phoenix
Equity Planning Corporation ("PEPCO"). As a result, all communications with the
Transfer Agent, including inquiries about purchases and redemptions of shares of
the Funds, should now be directed to PEPCO at:

                PHOENIX EQUITY PLANNING CORPORATION
                100 BRIGHT MEADOW BOULEVARD
                P.O. BOX 2200
                ENFIELD, CT 06083-2200

                TELEPHONE: 1-800-990-9331
                FACSIMILE: 1-617-774-3245

        PEPCO is a wholly-owned subsidiary of Phoenix Duff & Phelps Corporation
("PDP"). On June 18, 1997, the owners of GMG/Seneca Capital Management LLC
("GMG/Seneca LLC"), the investment manager of the Funds, and of GMG/Seneca
Capital Management, L.P. ("GMG/Seneca LP"), the former investment manager of the
Funds, entered into an acquisition agreement with PDP. At the first closing of
this agreement on July 17, 1997, PDP acquired a majority interest in GMG/Seneca
LLC, and GMG/Seneca LLC changed its name to Seneca Capital Management LLC
("Seneca LLC"). At the same time, Seneca LLC transferred its rights and
obligations as investment manager of the Funds to GMG/Seneca LP.

        At the second closing of the agreement, expected to occur on or about
January 1998, PDP will acquire a majority interest in GMG/Seneca LP. This
acquisition will result in the automatic termination of the current investment
management agreement with the Funds. Prior to the second closing, a new
investment management agreement between the Funds and Seneca LLC will be
submitted to the Trustees and shareholders of the Funds for their approval.
PEPCO has been appointed Transfer Agent of the Funds in advance of this approval
because of scheduling constraints.



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