-----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, Wd6+hroIdv8iwDLRwF2i4GS6VHzJHtskkM++q2TdlSST+98RGocTPRPbURAjDrBC CuLLkTHUipoNGSd29Wm6Fw== 0000935069-04-002107.txt : 20041209 0000935069-04-002107.hdr.sgml : 20041209 20041209091908 ACCESSION NUMBER: 0000935069-04-002107 CONFORMED SUBMISSION TYPE: N-CSR PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041209 DATE AS OF CHANGE: 20041209 EFFECTIVENESS DATE: 20041209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PHOENIX SENECA FUNDS CENTRAL INDEX KEY: 0001005020 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: N-CSR SEC ACT: 1940 Act SEC FILE NUMBER: 811-07455 FILM NUMBER: 041192100 BUSINESS ADDRESS: STREET 1: 909 MONTGOMERY STREET CITY: SAN FRANCISCO STATE: CA ZIP: 94133 BUSINESS PHONE: 415 677-1570 MAIL ADDRESS: STREET 1: 56 PROSPECT STREET STREET 2: P.O. BOX 150480 CITY: HARTFORD STATE: CT ZIP: 06115-0480 FORMER COMPANY: FORMER CONFORMED NAME: SENECA FUNDS DATE OF NAME CHANGE: 19951218 N-CSR 1 g11779phnxseneca_ncsr.txt PHOENIX SENECA N-CSR 2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-07455 ------------------------- Phoenix-Seneca Funds -------------------------------------------------------------------- (Exact name of registrant as specified in charter) 101 Munson Street Greenfield, MA 01301 -------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Matthew A. Swendiman John R. Flores, Esq. Counsel & Chief Legal Officer Vice President, Litigation/ for Registrant Employment Counsel Phoenix Life Insurance Company Phoenix Life Insurance Company One American Row One American Row Hartford, CT 06102 Hartford, CT 06102 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: (800) 243-1574 --------------- Date of fiscal year end: September 30 ------------- Date of reporting period: September 30, 2004 ------------------- Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles. A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget ("OMB") control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. ss. 3507. ITEM 1. REPORTS TO STOCKHOLDERS. The Report to Shareholders is attached herewith. ANNUAL REPORT > SEPTEMBER 30, 2004 o SENECA o Phoenix-Seneca Bond Fund Phoenix-Seneca Equity Income Fund Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund [GRAPHIC OMITTED] DO YOU WANT TO STOP RECEIVING FUND DOCUMENTS BY MAIL? GO TO PHOENIXINVESTMENTS.COM, LOG IN AND SIGN UP FOR E-DELIVERY [LOGO OMITTED] PHOENIX INVETSMENT PARTNERS, LTD. COMMITTED TO INVESTOR SUCCESS(SM) ---------------------------------------------------------------- Mutual funds are not insured by the FDIC; are not deposits or other obligations of a bank and are not guaranteed by a bank; and are subject to investment risks, including possible loss of the principal invested. ---------------------------------------------------------------- This report is not authorized for distribution to prospective investors in the Phoenix-Seneca Funds unless preceded or accompanied by an effective prospectus which includes information concerning the sales charge, the Trust's record and other pertinent information. MESSAGE FROM THE CHAIRMAN DEAR SHAREHOLDER: [PHILIP R. MCLOUGHLIN PHOTO OMITTED] I encourage you to review the performance overview and outlook provided in this annual report for the Phoenix-Seneca Bond, Equity Income and Mid-Cap "EDGE"(SM) Funds, covering the fiscal year ended September 30, 2004. The pace of U.S. economic growth appears to have cooled off in recent months. Gross domestic product (GDP) and employment growth have slowed in response to rising energy prices and declining consumer optimism. In addition, the Federal Reserve's ongoing commitment to raising rates at a "measured pace" combined with increased oil prices, is likely to keep economic growth subdued through year end. As of this writing, the economy and markets seem to have paused to await the outcome of the presidential election, leaving open the possibility of a post-election rally in the equity markets. As always, short-term performance changes should not distract you from your long-term financial plan. Now may be an opportune time for you to review your portfolio with your financial advisor to make sure that your asset allocation remains on target for you. Keep in mind that finding the best balance of performance and protection requires discipline and diversification. 1 Your Phoenix Fund investment may help in this effort. At this time, the mutual fund industry continues to undergo far-reaching regulatory reforms. The Phoenix Funds Board of Trustees takes these matters seriously and is implementing initiatives to ensure compliance with the letter and the spirit of all requirements. We are confident that the fund industry will emerge stronger and more focused on the interests of shareholders as a result. To learn more about investing and your Fund, including monthly portfolio updates, please visit PhoenixInvestments.com. Sincerely, /s/Philip R. McLoughlin Philip R. McLoughlin Chairman, Phoenix Funds OCTOBER 29, 2004 1 DIVERSIFICATION DOES NOT GUARANTEE AGAINST A LOSS, AND THERE IS NO GUARANTEE THAT A DIVERSIFIED PORTFOLIO WILL OUTPERFORM A NON-DIVERSIFIED PORTFOLIO. The preceding information is the opinion of the Phoenix Funds Board of Trustees. There is no guarantee that market forecasts discussed will be realized. 1 TABLE OF CONTENTS Glossary .................................................................... 3 Phoenix-Seneca Bond Fund .................................................... 4 Phoenix-Seneca Equity Income Fund ........................................... 16 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund ...................................... 26 Notes to Financial Statements ............................................... 36 2 GLOSSARY DOW JONES WILSHIRE REAL ESTATE SECURITIES INDEX (FULL CAP) A market capitalization-weighted index that measures publicly traded real estate securities such as real estate investment trusts and real estate operating companies. The index is calculated on a total-return basis with dividends reinvested. DURATION A measure of a fixed income fund's sensitivity to interest rate changes. For example, if a fund's duration is 5 years, a 1% increase in interest rates would result in a 5% decline in the fund's price. Similarly, a 1% decline in interest rates would result in a 5% gain in the fund's price. FEDERAL FUNDS RATE The interest rate charged on overnight loans of reserves by one financial institution to another in the United States. The federal funds rate is the most sensitive indicator of the direction of interest rates since it is set daily by the market. LEHMAN BROTHERS AGGREGATE BOND INDEX A measure of the U.S. investment grade fixed rate bond market. The index is calculated on a total-return basis. PRICE-TO-EARNINGS RATIO (MULTIPLE) A valuation measure calculated by dividing a stock's price by its current or projected earnings per share. The P/E ratio gives an idea of how much an investor is paying for current or future earnings power. REITS Real estate investment trusts are typically publicly traded companies that own, develop and operate income-producing real estate such as apartments, office buildings, hotels, shopping centers and other commercial properties. RUSSELL MIDCAP(R) GROWTH INDEX A market capitalization-weighted index of medium-capitalization, growth-oriented stocks of U.S. companies. The index is calculated on a total-return basis with dividends reinvested. S&P 500(R) INDEX A market capitalization-weighted index of 500 of the largest U.S. companies. The index is calculated on a total-return basis with dividends reinvested. YIELD CURVE A line chart that shows interest rates at a specific point in time for securities of equivalent quality but with different maturities. A "normal or positive" yield curve indicates that short-term securities have a lower interest rate than long-term securities; an "inverted or negative" yield curve indicates short-term rates are exceeding long-term rates; and a "flat yield curve" means short- and long-term rates are about the same. INDEXES ARE UNMANAGED AND NOT AVAILABLE FOR DIRECT INVESTMENT; THEREFORE THEIR PERFORMANCE DOES NOT REFLECT THE EXPENSES ASSOCIATED WITH THE ACTIVE MANAGEMENT OF AN ACTUAL PORTFOLIO. 3 PHOENIX-SENECA BOND FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM LEADERS, GAIL SENECA, PH.D. AND ALBERT GUTIERREZ, CFA Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix-Seneca Bond Fund seeks high total return from both current income and capital appreciation. There is no guarantee that the Fund will achieve its objective. Q: HOW DID THE FUND PERFORM OVER THE 12 MONTHS ENDED SEPTEMBER 30, 2004? A: For the fiscal year ended September 30, 2004, the Fund's Class X shares returned 4.54%, Class A shares returned 4.33%, Class B shares returned 3.54% and Class C shares returned 3.53%. For the same period, the Lehman Brothers Aggregate Bond Index, which is both the broad-based and style-specific fixed income index appropriate for comparison, returned 3.68%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Q: LOOKING BACK OVER THE LAST 12 MONTHS, HOW WOULD YOU DESCRIBE THE FIXED INCOME MARKET ENVIRONMENT FOR INVESTORS? A: For the 12 months ended September 30, 2004, the bond market surprised most investors. Long-term interest rates fell, despite record oil prices. Bonds outperformed stocks. High yield bonds produced the best returns, continuing their spectacular run of 2003. In the first quarter of 2004, we questioned the overwhelming industry opinion at that time that interest rates would rise sharply this year. We argued that the "conventional wisdom," or the consensus view of market direction, is always suspect because market prognostication is inherently uncertain. We took the opposite side of the "conventional wisdom" on rates and took the position that the then current [low] interest rate conditions, though historically unusual, may be longer lived than the conventional wisdom holds. Now, nine months later, the bond market appears to have endorsed our minority view. Most bond managers, whose portfolios expressed the "conventional wisdom" of rising rates, have underperformed the Lehman Brothers Aggregate Bond Index so far this year while we remained competitive to this broad bond market benchmark through September 30. Q: WHAT FACTORS AFFECTED PERFORMANCE DURING THIS PERIOD? A: The Fund maintained a neutral duration throughout most of the past year. Ordinarily an improving economy combined with a restrictive Federal Reserve (the "Fed") would have produced higher rates. However, the aggressive purchase of Treasuries by foreign governments offset this upward pressure, resulting in relatively stable interest rates. During the first half of the year, we took advantage of the roll-down opportunity provided by the historically steep yield curve and concentrated our maturity distribution in the middle of the yield curve. As the Fed began to raise short-term interest rates, we changed our stance to a barbell--rebalancing the Fund's allocation of bonds between those of long and short durations--to exploit the flattening of the curve. With the Fed continuing to raise rates, and foreign central bank currency intervention waning, 4 PHOENIX-SENECA BOND FUND (CONTINUED) we ended the fiscal year with slightly shorter duration than the benchmark. Our yield curve posture remained barbelled. Throughout the year we maintained a significant Treasury underweighting, combined with an overweighting in spread products, emphasizing both high investment grade corporates and mortgages due to their attractive risk-adjusted spreads. This sector selection contributed to performance throughout the year. Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX TO 12 MONTHS? A: Going forward, we expect that the bond market behavior will remain benign. The economic recovery seems genuine, but uninspired. Robust job growth has yet to materialize. Despite oil, core inflation is modest, and has actually begun to decelerate. Long-term rates will probably creep up, but we believe fears of a bond market debacle are unfounded. Sluggish employment gains and the drop in inflation expectations may require an accommodative monetary policy and a friendly Fed for an extended period. Our strategy is to continue to emphasize steady and superior income generation in this low yield environment. OCTOBER 2004 THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS DISCUSSED WILL BE REALIZED. FOR DEFINITIONS OF INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 3. 5 Phoenix-Seneca Bond Fund - -------------------------------------------------------------------------------- ANNUAL TOTAL RETURNS 1 PERIOD ENDING 9/30/04 - --------------------------------------------------------------------------------
INCEPTION INCEPTION 1 YEAR 5 YEARS TO 9/30/04 DATE -------- -------- ------------ ---------- Class X Shares at NAV 2 4.54% 7.00% 7.38% 3/7/96 Class A Shares at NAV 2 4.33 6.68 5.81 7/1/98 Class A Shares at POP 3 (0.63) 5.65 4.99 7/1/98 Class B Shares at NAV 2 3.54 5.89 5.01 7/1/98 Class B Shares with CDSC 4 (0.44) 5.89 5.01 7/1/98 Class C Shares at NAV 2 3.53 5.89 5.01 7/1/98 Class C Shares with CDSC 4 3.53 5.89 5.01 7/1/98 Lehman Brothers Aggregate Bond Index 3.68 7.48 Note 5 Note 5
- -------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 9/30 - -------------------------------------------------------------------------------- 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. The total return for Class X shares 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. [CHART OMITTED -- EDGAR REPRESENTATION OF DATA IS AS FOLLOWS] Phoenix-Seneca Bond Lehman Brothers Fund Class X 6 Aggregate Bond Index 03/07/1996 $10,000 $10,000 09/30/1996 10,413 10,146 09/30/1997 11,586 11,132 09/30/1998 12,679 12,413 09/30/1999 13,124 12,367 09/29/2000 13,934 13,232 09/28/2001 15,305 14,946 09/30/2002 16,214 16,230 09/30/2003 17,605 17,109 09/30/2004 18,404 17,738 - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS 9/30/04 - -------------------------------------------------------------------------------- As a percentage of total investments [CHART OMITTED -- EDGAR REPRESENTATION OF DATA IS AS FOLLOWS] Corporate 34% Non-Agency Mortgage-Backed 22 Agency Mortgage-Backed 17 U.S. Government 9 Foreign Corporate 7 Short-Term Obligations 6 Foreign Government 3 Asset-Backed 2 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 6.91% for Class X (since 3/7/96) and 6.57% 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, fees and inception dates. For information regarding the index, see the glossary on page 3. ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. 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. PLEASE VISIT PHOENIXINVESTMENTS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END. 6 Phoenix-Seneca Bond Fund ABOUT YOUR FUND'S EXPENSES As a shareholder of the Bond Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchases of Class A shares and contingent deferred sales charges on Class B and Class C shares; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. Class X shares are sold without a sales charge and do not incur distribution and service fees. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Expenses Paid Bond Fund Account Value Account Value During Class X April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $1,007.80 $3.88 Hypothetical (5% return before expenses) 1,000.00 1,021.09 3.91 *EXPENSES ARE EQUAL TO THE FUND'S CLASS X ANNUALIZED EXPENSE RATIO OF 0.77%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS X RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 4.54%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,045.40. Beginning Ending Expenses Paid Bond Fund Account Value Account Value During Class A April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $1,006.10 $5.44 Hypothetical (5% return before expenses) 1,000.00 1,019.51 5.49 *EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.08%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 4.33%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,043.30. Beginning Ending Expenses Paid Bond Fund Account Value Account Value During Class B April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $1,002.50 $9.51 Hypothetical (5% return before expenses) 1,000.00 1,015.38 9.62 *EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 1.90%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 3.54%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,035.40. Beginning Ending Expenses Paid Bond Fund Account Value Account Value During Class C April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $1,002.50 $9.51 Hypothetical (5% return before expenses) 1,000.00 1,015.38 9.62 *EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 1.90%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 3.53%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,035.30. 7 Phoenix-Seneca Bond Fund - -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT SEPTEMBER 30, 2004 (AS A PERCENTAGE OF NET ASSETS)(h) - -------------------------------------------------------------------------------- 1. U.S. Treasury Bond 5.375%, 2/15/31 3.6% 2. Master Asset Securitization Trust Alternative Loans Trust 04-6, 6A1 6.50%, 7/25/34 2.3% 3. Fannie Mae 4%, 5/25/19 2.3% 4. Morgan Stanley Mortgage Loan Trust 04-3, 3A 6%, 4/25/34 2.2% 5. Master Asset Securitization Trust Alternative Loans Trust 03-5, 1A1 5.50%, 6/25/33 2.1% 6. Swedish Export Credit Corp. 0%, 6/5/07 2.0% 7. U.S. Treasury Note 5%, 2/15/11 1.9% 8. Master Asset Securitization Trust Alternative Loans Trust 04-3, 6A1 6.50%, 4/25/34 1.7% 9. Residential Asset Mortgage Products, Inc. 04-Sl1, A4 6.50%, 11/25/31 1.7% 10. Freddie Mac 4%, 4/15/19 1.7% - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 2004 MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- U.S. GOVERNMENT SECURITIES--8.9% U.S. TREASURY BONDS--3.6% U.S. Treasury Bond 5.375%, 2/15/31 ......... Aaa $2,660 $ 2,849,525 U.S. TREASURY NOTES--5.3% U.S. Treasury Note 1.625%, 2/28/06 ......... Aaa 1,195 1,182,817 U.S. Treasury Note 5%, 2/15/11 ............. Aaa 1,400 1,505,164 U.S. Treasury Inflationary Note 3%, 7/15/12(d) ................................. Aaa 1,000 1,166,490 U.S. Treasury Note 4.25%, 8/15/13 .......... Aaa 405 411,059 ----------- 4,265,530 ----------- - ---------------------------------------------------------------------------- TOTAL U.S. GOVERNMENT SECURITIES (IDENTIFIED COST $6,976,261) 7,115,055 - ---------------------------------------------------------------------------- AGENCY MORTGAGE-BACKED SECURITIES--16.6% Fannie Mae 4%, 2/25/19 ..................... Aaa 1,350 1,242,526 Fannie Mae 4%, 4/25/19 ..................... Aaa 1,455 1,331,894 Fannie Mae 4%, 5/25/19 ..................... Aaa 2,035 1,858,873 Fannie Mae 4%, 5/25/19 ..................... Aaa 560 509,235 Freddie Mac 5.50%, '16-'22 ................. Aaa 4,699 4,791,934 Freddie Mac 4%, 3/15/19 .................... Aaa 970 883,497 Freddie Mac 5%, 3/15/19 .................... Aaa 455 451,040 Freddie Mac 4%, 4/15/19 .................... Aaa 1,470 1,340,542 Freddie Mac 4%, 4/15/19 .................... Aaa 1,050 959,395 - ---------------------------------------------------------------------------- TOTAL AGENCY MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $13,132,438) 13,368,936 - ---------------------------------------------------------------------------- MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- ASSET-BACKED SECURITIES--1.4% New Century Home Equity Loan Trust 03-5, A14 4.76%, 11/25/33 ........................ Aaa $1,085 $ 1,104,088 - ---------------------------------------------------------------------------- TOTAL ASSET-BACKED SECURITIES (IDENTIFIED COST $1,071,655) 1,104,088 - ---------------------------------------------------------------------------- NON-AGENCY MORTGAGE-BACKED SECURITIES--21.6% Banc of America Commercial Mortgage, Inc. 00-1, A1A 7.109%, 11/15/31 ................. Aaa 508 551,097 Citigroup Mortgage Loan Trust, Inc. 04-NCM2, 2CB3 8%, 8/25/34 .................. Aaa 1,104 1,159,382 Citigroup Mortgage Loan Trust, Inc. 04-NCM2, 1CB3 7.50%, 8/25/34 ............... Aaa 777 815,982 Countrywide Alternative Loan Trust 04-5CB, 1A1 6%, 3/25/34 .................... Aaa 1,047 1,067,413 CS First Boston Mortgage Securities Corp. 03-23, 5A1 7%, 12/25/33 .................... Aaa 475 498,286 CS First Boston Mortgage Securities Corp. 04-1, 2A1 6.50%, 2/25/34 ................... Aaa 911 934,025 Master Asset Securitization Trust Alternative Loans Trust 03-5, 1A1 5.50%, 6/25/33 .................................... AAA(c) 1,658 1,662,300 Master Asset Securitization Trust Alternative Loans Trust 03-7, 5A1 6.25%, 11/25/33 ................................... AAA(c) 666 688,917 Master Asset Securitization Trust Alternative Loans Trust 04-1, 3A1 7%, 1/25/34 .................................... AAA(c) 720 763,673 Master Asset Securitization Trust Alternative Loans Trust 04-3, 5A1 6.50%, 3/25/34 .................................... Aaa 854 882,306 8 See Notes to Financial Statements Phoenix-Seneca Bond Fund MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- Master Asset Securitization Trust Alternative Loans Trust 04-3, 6A1 6.50%, 4/25/34 ............................. Aaa $1,367 $ 1,403,845 Master Asset Securitization Trust Alternative Loans Trust 04-5, 6A1 7%, 6/25/34 .................................... Aaa 593 619,206 Master Asset Securitization Trust Alternative Loans Trust 04-6, 6A1 6.50%, 7/25/34 .................................... AAA(c) 1,765 1,860,663 Master Asset Securitization Trust Alternative Loans Trust 03-7, 6A1 6.50%, 12/25/33 ................................... AAA(c) 320 327,040 Morgan Stanley Mortgage Loan Trust 04-3, 3A 6%, 4/25/34 ............................. Aaa 1,676 1,749,019 Residential Asset Mortgage Products, Inc. 04-Sl1, A4 6.50%, 11/25/31 ................. AAA(c) 1,338 1,368,234 Residential Asset Mortgage Products, Inc. 04-Sl32, A3 8.50%, 12/25/31 ................ AAA(c) 1,000 1,072,500 - ---------------------------------------------------------------------------- TOTAL NON-AGENCY MORTGAGE-BACKED SECURITIES (IDENTIFIED COST $17,404,684) 17,423,888 - ---------------------------------------------------------------------------- FOREIGN GOVERNMENT SECURITIES--2.8% MEXICO--0.4% United Mexican States 6.75%, 9/27/34 ....... Baa 355 340,978 POLAND--0.4% Republic of Poland 5.25%, 1/15/14 .......... A 305 315,370 SWEDEN--2.0% Swedish Export Credit Corp. 0%, 6/5/07 ..... Aa 1,690 1,595,142 - ---------------------------------------------------------------------------- TOTAL FOREIGN GOVERNMENT SECURITIES (IDENTIFIED COST $2,341,846) 2,251,490 - ---------------------------------------------------------------------------- FOREIGN CORPORATE BONDS(g)--6.6% BERMUDA--0.4% Endurance Specialty Holdings Ltd. 7%, 7/15/34 .................................... Baa 350 357,769 CANADA--2.9% Abitibi-Consolidated, Inc. 8.30%, 8/1/05 ... Ba 345 357,937 Cascades, Inc. 7.25%, 2/15/13 .............. Ba 361 379,952 Corus Entertainment, Inc. 8.75%, 3/1/12 .... B 82 90,918 Norske Skog Canada Ltd. Series D 8.625%, 6/15/11 .................................... Ba 180 196,200 Rogers Cablesystems Ltd. Series B 10%, 3/15/05 .................................... Ba 270 279,113 Tembec Industries, Inc. 8.50%, 2/1/11 ...... Ba 375 393,750 TransCanada Pipelines Ltd. 4%, 6/15/13 ..... A 470 446,745 Videotron Ltd. 6.875%, 1/15/14 ............. Ba 205 211,150 ----------- 2,355,765 ----------- MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- FRANCE--0.5% Crown European Holdings SA 9.50%, 3/1/11 ..................................... B $ 365 $ 408,800 GERMANY--0.5% Deutsche Telekom International Finance DT 8.75%, 6/15/30 ............................. Baa 310 400,699 HONG KONG--0.5% Hutchison Whampoa International Ltd. 144A 6.25%, 1/24/14(b) .......................... A 385 395,082 NETHERLANDS--0.3% ABN AMRO Bank NV 4.65%, 6/4/18 ............. A 240 225,915 UNITED KINGDOM--0.6% BP Capital Markets plc 2.625%, 3/15/07 ..... Aa 200 198,249 British Sky Broadcasting Group plc 8.20%, 7/15/09 .................................... Baa 30 34,959 ICI Wilmington, Inc. 5.625%, 12/1/13 ....... Baa 255 262,048 ----------- 495,256 ----------- UNITED STATES--0.9% Tyco International Group SA 6%, 11/15/13 ... Baa 405 437,092 Tyco International Group SA Participation Certificate Trust 144A 4.436%, 6/15/07(b) .. Baa 260 265,694 ----------- 702,786 ----------- - ---------------------------------------------------------------------------- TOTAL FOREIGN CORPORATE BONDS (IDENTIFIED COST $5,173,233) 5,342,072 - ---------------------------------------------------------------------------- DOMESTIC CORPORATE BONDS--32.8% AEROSPACE & DEFENSE--0.7% Boeing Capital Corp. 6.10%, 3/1/11 ......... A 345 377,864 Goodrich Corp. 7.625%, 12/15/12 ............ Baa 138 162,097 ----------- 539,961 ----------- AUTO PARTS & EQUIPMENT--0.1% Delphi Trust II 6.197%, 11/15/33(e) ........ Baa 115 116,766 AUTOMOBILE MANUFACTURERS--0.8% DaimlerChrysler NA Holdings 2.34%, 9/10/07(e) ................................. A 210 210,222 Ford Motor Co. 6.625%, 10/1/28 ............. Baa 260 235,382 General Motors Corp. 8.375%, 7/15/33 ....... Baa 215 228,281 ----------- 673,885 ----------- BROADCASTING & CABLE TV--4.4% Clear Channel Communications, Inc. 8%, 11/1/08 .................................... Baa 349 396,115 Cox Communications, Inc. 6.75%, 3/15/11 .... Baa 5 5,351 See Notes to Financial Statements 9 Phoenix-Seneca Bond Fund MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- Cox Enterprises, Inc. 144A 4.375%, 5/1/08(b) .................................. Baa $ 265 $ 258,757 CSC Holdings, Inc. 10.50%, 5/15/16 ......... B 555 632,700 CSC Holdings, Inc. Series B 7.625%, 4/1/11 ..................................... B 365 386,444 Echostar DBS Corp. 5.75%, 10/1/08 .......... Ba 360 363,600 Echostar DBS Corp. 9.125%, 1/15/09 ......... Ba 625 698,438 Lenfest Communications, Inc. 10.50%, 6/15/06 .................................... Ba 231 256,988 Liberty Media Corp. 3.50%, 9/25/06 ......... Baa 540 537,817 ----------- 3,536,210 ----------- BUILDING PRODUCTS--0.5% American Standard, Inc. 7.625%, 2/15/10 .... Ba 328 371,460 CASINOS & GAMING--0.5% Caesars Entertainment, Inc. 7.875%, 12/15/05 ................................... Ba 360 379,800 CONSUMER FINANCE--2.0% American General Finance Corp. 4%, 3/15/11 .................................... A 410 400,640 General Electric Capital Corp. Series MTNA 2.85%, 1/30/06 ............................. Aaa 345 345,881 Household Finance Corp. 4.75%, 5/15/09 ..... A 370 381,883 MBNA America Bank NA 5.375%, 1/15/08 ....... Baa 479 502,256 ----------- 1,630,660 ----------- DIVERSIFIED BANKS--0.3% Wachovia Corp. 4.875%, 2/15/14 ............. A 240 239,183 DIVERSIFIED CHEMICALS--0.3% Du Pont (E.I.) de Nemours & Co. 4.125%, 4/30/10 .................................... Aa 250 252,265 ELECTRIC UTILITIES--1.8% Consolidated Edison Co. of New York 5.875%, 4/1/33 ............................. A 135 139,451 FirstEnergy Corp. Series B 6.45%, 11/15/11 ................................... Baa 360 393,277 Pacific Gas & Electric Co. 4.20%, 3/1/11 ... Baa 130 128,508 Progress Energy, Inc. 6.75%, 3/1/06 ........ Baa 376 394,857 Southern California Edison Co. 8%, 2/15/07 .................................... A 330 365,274 ----------- 1,421,367 ----------- ENVIRONMENTAL SERVICES--0.9% Oakmont Asset Trust 144A 4.514%, 12/22/08(b) ................................ Baa 190 189,801 MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- Waste Management, Inc. 6.50%, 11/15/08 ..... Baa $ 513 $ 562,369 ----------- 752,170 ----------- GAS UTILITIES--0.9% NiSource Finance Corp. 7.625%, 11/15/05 .... Baa 656 689,322 HEALTH CARE DISTRIBUTORS--1.4% Cardinal Healthcare, Inc. 6.75%, 2/15/11 ... Baa 185 199,126 Omnicare, Inc. 8.125%, 3/15/11 ............. Ba 580 633,650 Owens & Minor, Inc. 8.50%, 7/15/11 ......... Ba 300 333,000 ----------- 1,165,776 ----------- HEALTH CARE EQUIPMENT--0.2% Fisher Scientific International, Inc. 8%, 9/1/13 ..................................... Ba 155 174,375 HEALTH CARE SERVICES--0.4% Fresenius Medical Capital Trust II 7.875%, 2/1/08 ..................................... Ba 325 355,875 HOMEBUILDING--1.5% D.R. Horton, Inc. 7.50%, 12/1/07 ........... Ba 513 566,865 NVR, Inc. 5%, 6/15/10 ...................... Baa 239 241,390 Toll Corp. 8%, 5/1/09 ...................... Ba 350 365,750 ----------- 1,174,005 ----------- HOTELS, RESORTS & CRUISE LINES--0.7% Hilton Hotels Corp. 7.625%, 12/1/12 ........ Baa 294 343,245 Royal Caribbean Cruises Ltd. 8%, 5/15/10 ... Ba 30 33,937 Royal Caribbean Cruises Ltd. 8.75%, 2/2/11 ..................................... Ba 130 152,425 Royal Caribbean Cruises Ltd. 7.25%, 3/15/18 .................................... Ba 22 23,320 ----------- 552,927 ----------- HOUSEWARES & SPECIALTIES--0.5% American Greetings Corp. Class A 6.10%, 8/1/28 ..................................... Ba 389 417,202 INTEGRATED OIL & GAS--0.8% ConocoPhillips 3.625%, 10/15/07 ............ A 630 636,305 INTEGRATED TELECOMMUNICATION SERVICES--1.3% Sprint Capital Corp. 8.75%, 3/15/32 ........ Baa 410 520,369 Verizon Global Funding Corp. 7.75%, 12/1/30 .................................... A 465 556,894 ----------- 1,077,263 ----------- INVESTMENT BANKING & BROKERAGE--1.4% Bear Stearns Cos., Inc. (The) 2.875%, 7/2/08 ..................................... A 85 82,563 Goldman Sachs Group, Inc. 5.25%, 10/15/13 ................................... Aa 155 156,065 10 See Notes to Financial Statements Phoenix-Seneca Bond Fund MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- Goldman Sachs Group, Inc. 6.125%, 2/15/33(f) ................................. Aa $ 440 $ 441,948 Lehman Brothers Holdings, Inc. 4%, 1/22/08 .................................... A 2 2,031 Merrill Lynch & Co., Inc. 4.125%, 9/10/09 .. Aa 440 441,201 Morgan Stanley 6.75%, 4/15/11 .............. Aa 40 44,822 ----------- 1,168,630 ----------- LIFE & HEALTH INSURANCE--1.1% Protective Life Secured Trust 4%, 4/1/11 ... Aa 930 908,689 METAL & GLASS CONTAINERS--1.0% Ball Corp. 6.875%, 12/15/12 ................ Ba 306 327,420 Owens-Brockway Glass Container, Inc. 8.875%, 2/15/09 ............................ B 298 325,565 Owens-Illinois, Inc. 7.15%, 5/15/05 ........ Caa 150 153,000 ----------- 805,985 ----------- MOVIES & ENTERTAINMENT--0.7% Time Warner, Inc. 9.125%, 1/15/13 .......... Baa 424 530,865 OIL & GAS EXPLORATION & PRODUCTION--0.5% Pioneer Natural Resource Co. 5.875%, 7/15/16 .................................... Baa 350 365,247 OIL & GAS REFINING, MARKETING & TRANSPORTATION--0.4% Kinder Morgan Energy Partners 7.30%, 8/15/33 .................................... Baa 255 287,209 OTHER DIVERSIFIED FINANCIAL SERVICES--0.3% Citigroup, Inc.144A 5%, 9/15/14(b) ......... Aa 230 230,475 PACKAGED FOODS & MEATS--1.2% Dean Foods Co. 8.15%, 8/1/07 ............... Ba 443 483,978 Kraft Foods, Inc. 5.625%, 11/1/11 .......... A 445 470,033 ----------- 954,011 ----------- PAPER PRODUCTS--0.5% Bowater, Inc. 9%, 8/1/09 ................... Ba 375 415,030 PHARMACEUTICALS--0.3% Wyeth 5.50%, 2/1/14 ........................ Baa 225 228,258 PROPERTY & CASUALTY INSURANCE--0.4% Fund American Cos., Inc. 5.875%, 5/15/13 ... Baa 300 306,277 MOODY'S PAR RATING VALUE (Unaudited) (000) VALUE ----------- ------ ----------- REAL ESTATE MANAGEMENT & DEVELOPMENT--0.3% LNR Property Corp. 7.625%, 7/15/13 ......... Ba $ 235 $ 258,500 REGIONAL BANKS--0.5% Colonial Bank 9.375%, 6/1/11 ............... Ba 338 404,612 REITS--1.2% Archstone-Smith Trust 7.90%, 2/15/16 ....... Baa 191 226,187 iStar Financial, Inc. 4.875%, 1/15/09 ...... Ba 535 538,762 iStar Financial, Inc. 6%, 12/15/10 ......... Ba 185 193,413 ----------- 958,362 ----------- RESTAURANTS--1.1% Yum! Brands, Inc. 7.70%, 7/1/12 ............ Baa 748 888,878 THRIFTS & MORTGAGE FINANCE--1.0% Sovereign Bank Class A-1, 144A 10.20%, 6/30/05(b) ................................. Baa 800 823,179 TOBACCO--0.5% Altria Group, Inc. 7%, 11/4/13 ............. Baa 380 396,478 TRUCKING--0.4% Hertz Corp. 6.35%, 6/15/10 ................. Baa 340 352,275 - ---------------------------------------------------------------------------- TOTAL DOMESTIC CORPORATE BONDS (IDENTIFIED COST $25,358,421) 26,439,737 - ---------------------------------------------------------------------------- TOTAL LONG TERM INVESTMENTS--90.7% (IDENTIFIED COST $71,458,538) 73,045,266 - ---------------------------------------------------------------------------- STANDARD & POOR'S RATING (Unaudited) ----------- SHORT-TERM OBLIGATIONS--6.2% U.S. GOVERNMENT SECURITIES--6.2% U.S. Treasury Bill 0%, 10/28/04 ............ AAA 5,000 4,995,159 - ---------------------------------------------------------------------------- TOTAL SHORT-TERM OBLIGATIONS (IDENTIFIED COST $4,995,219) 4,995,159 - ---------------------------------------------------------------------------- TOTAL INVESTMENTS--96.9% (IDENTIFIED COST 76,453,757) 78,040,425(a) Other assets and liabilities, net--3.1% 2,504,168 ----------- NET ASSETS--100.0% $80,544,593 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $2,086,891 and gross depreciation of $520,638 for federal income tax purposes. At September 30, 2004, the aggregate cost of securities for federal income tax purposes was $76,474,172. (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, 2004, these securities amounted to a value of $2,162,988 or 2.7% of net assets. (c) As rated by Standard & Poor's or Fitch. (d) Principal amount is adjusted daily pursuant to the change in the Consumer Price Index. (e) Variable or step coupon security; interest rate shown reflects the rate currently in effect. (f) All or a portion segregated as collateral for delayed delivery contracts. (g) Foreign Corporate Bonds are determined based on the country in which the security is issued. The country of risk, noted in the headers, is determined based on criteria described in Note 2J "Foreign security country determination" in the Notes to Financial Statements. (h) Table excludes short-term obligations. See Notes to Financial Statements 11 Phoenix-Seneca Bond Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2004 ASSETS Investment securities at value (Identified cost $76,453,757) $78,040,425 Cash 1,822,089 Receivables Interest 695,182 Investment securities sold 436,955 Fund shares sold 273,548 Prepaid expenses 23,214 ----------- Total assets 81,291,413 ----------- LIABILITIES Payables Investment securities purchased 436,489 Fund shares repurchased 180,729 Investment advisory fee 41,490 Transfer agent fee 16,712 Distribution and service fees 15,400 Financial agent fee 6,728 Trustees' fee 2,524 Accrued expenses 46,748 ----------- Total liabilities 746,820 ----------- NET ASSETS $80,544,593 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $78,551,106 Accumulated net realized gain 406,819 Net unrealized appreciation 1,586,668 ----------- NET ASSETS $80,544,593 =========== CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $39,475,951) 3,679,182 Net asset value and offering price per share $10.73 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $29,864,450) 2,808,399 Net asset value per share $10.63 Offering price per share $10.63/(1-4.75%) $11.16 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $7,375,126) 706,251 Net asset value and offering price per share $10.44 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $3,829,066) 366,010 Net asset value and offering price per share $10.46 STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2004 INVESTMENT INCOME Interest $3,450,620 ---------- Total investment income 3,450,620 ---------- EXPENSES Investment advisory fee 382,004 Service fees, Class A 64,688 Distribution and service fees, Class B 86,261 Distribution and service fees, Class C 39,611 Financial agent fee 79,829 Transfer agent 95,063 Professional 36,187 Custodian 22,193 Printing 16,142 Registration 12,029 Trustees 10,463 Miscellaneous 19,846 ---------- Total expenses 864,316 Less expenses reimbursed by investment adviser (32,865) ---------- Net expenses 831,451 ---------- NET INVESTMENT INCOME 2,619,169 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments 707,999 Net change in unrealized appreciation (depreciation) on investments (42,179) ---------- NET GAIN ON INVESTMENTS 665,820 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $3,284,989 ========== 12 See Notes to Financial Statements Phoenix-Seneca Bond Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/04 9/30/03 ------------ ------------ FROM OPERATIONS Net investment income (loss) $ 2,619,169 $ 2,715,988 Net realized gain (loss) 707,999 2,948,318 Net change in unrealized appreciation (depreciation) (42,179) 166,483 ----------- ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,284,989 5,830,789 ----------- ------------ FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class X (1,620,719) (1,492,195) Net investment income, Class A (1,010,005) (778,490) Net investment income, Class B (289,090) (318,986) Net investment income, Class C (131,208) (149,071) Net realized short-term gains, Class X (252,338) (217,767) Net realized short-term gains, Class A (167,247) (132,351) Net realized short-term gains, Class B (57,571) (68,404) Net realized short-term gains, Class C (27,108) (31,478) ----------- ------------ DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (3,555,286) (3,188,742) ----------- ------------ FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (1,059,886 and 931,093 shares, respectively) 11,303,257 9,890,760 Net asset value of shares issued from reinvestment of distributions (156,652 and 149,298 shares, respectively) 1,673,558 1,572,658 Cost of shares repurchased (874,764 and 2,422,700 shares, respectively) (9,365,661) (25,366,816) ----------- ------------ Total 3,611,154 (13,903,398) ----------- ------------ CLASS A Proceeds from sales of shares (1,352,113 and 952,708 shares, respectively) 14,336,728 9,955,589 Net asset value of shares issued from reinvestment of distributions (96,898 and 65,813 shares, respectively) 1,025,910 688,645 Cost of shares repurchased (631,018 and 1,080,334 shares, respectively) (6,682,881) (11,324,986) ----------- ------------ Total 8,679,757 (680,752) ----------- ------------ CLASS B Proceeds from sales of shares (50,502 and 292,241 shares, respectively) 527,424 3,004,971 Net asset value of shares issued from reinvestment of distributions (22,472 and 26,320 shares, respectively) 234,221 270,800 Cost of shares repurchased (339,531 and 341,941 shares, respectively) (3,535,857) (3,536,816) ----------- ------------ Total (2,774,212) (261,045) ----------- ------------ CLASS C Proceeds from sales of shares (51,807 and 195,645 shares, respectively) 537,161 2,009,923 Net asset value of shares issued from reinvestment of distributions (11,699 and 13,767 shares, respectively) 122,066 141,868 Cost of shares repurchased (149,275 and 255,505 shares, respectively) (1,562,404) (2,625,231) ----------- ------------ Total (903,177) (473,440) ----------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 8,613,522 (15,318,635) ----------- ------------ NET INCREASE (DECREASE) IN NET ASSETS 8,343,225 (12,676,588) NET ASSETS Beginning of period 72,201,368 84,877,956 ----------- ------------ END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $431,853, RESPECTIVELY] $80,544,593 $ 72,201,368 =========== ============
See Notes to Financial Statements 13 Phoenix-Seneca Bond Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X --------------------------------------------------------- YEAR ENDED SEPTEMBER 30, --------------------------------------------------------- 2004 2003 2002(4) 2001 2000 Net asset value, beginning of period $10.78 $10.39 $10.44 $10.16 $10.35 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) 0.40 0.41 0.48 0.70 0.77 Net realized and unrealized gain (loss) 0.08 0.46 0.12 0.26 (0.18) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.48 0.87 0.60 0.96 0.59 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.46) (0.42) (0.49) (0.68) (0.71) Distributions from net realized gains (0.07) (0.06) (0.16) -- (0.07) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.53) (0.48) (0.65) (0.68) (0.78) ------ ------ ------ ------ ------ Change in net asset value (0.05) 0.39 (0.05) 0.28 (0.19) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $10.73 $10.78 $10.39 $10.44 $10.16 ====== ====== ====== ====== ====== Total return 4.54% 8.57% 5.94% 9.84% 6.17% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $39,476 $35,966 $48,606 $48,448 $39,981 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses(3) 0.80% 0.86% 0.83% 0.85% 0.91% Gross operating expenses 0.80% 0.86% 0.83% 0.85% 1.13% Net investment income 3.72% 3.93% 4.75% 6.79% 7.67% Portfolio turnover 136% 244% 410% 170% 74% CLASS A --------------------------------------------------------- YEAR ENDED SEPTEMBER 30, --------------------------------------------------------- 2004 2003 2002(4) 2001 2000 Net asset value, beginning of period $10.68 $10.29 $10.37 $10.11 $10.29 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) 0.36 0.38 0.44 0.67 0.75 Net realized and unrealized gain (loss) 0.08 0.45 0.11 0.26 (0.18) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.44 0.83 0.55 0.93 0.57 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.42) (0.38) (0.47) (0.67) (0.68) Distributions from net realized gains (0.07) (0.06) (0.16) -- (0.07) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.49) (0.44) (0.63) (0.67) (0.75) ------ ------ ------ ------ ------ Change in net asset value (0.05) 0.39 (0.08) 0.26 (0.18) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $10.63 $10.68 $10.29 $10.37 $10.11 ====== ====== ====== ====== ====== Total return(2) 4.33% 8.28% 5.50% 9.54% 5.84% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $29,864 $21,263 $21,127 $15,376 $7,335 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses(3) 1.11% 1.15% 1.15% 1.16% 1.16% Gross operating expenses 1.11% 1.21% 1.22% 1.27% 1.81% Net investment income 3.37% 3.65% 4.38% 6.42% 7.60% Portfolio turnover 136% 244% 410% 170% 74% (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) For the periods ended September 30, 2002, 2001 and 2000 for Class X and the periods ended September 30, 2001 and 2000 for Class A, the ratio of net operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio of net operating expenses to average net assets would have been 0.01% lower than the ratio shown in the table. (4) As required, effective October 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began including paydown gains and losses in interest income. The effect of this change for the year ended September 30, 2002, was to decrease the ratio of net investment income to average net assets from 4.80% to 4.75% and from 4.44% to 4.38% for Class X and Class A, respectively; to decrease net investment income (loss) per share from 0.49 to 0.48 per share and from 0.45 to 0.44 per share for Class X and Class A, respectively; and, to increase net realized and unrealized gain (loss) from 0.11 to 0.12 per share and from 0.10 to 0.11 per share for Class X and Class A, respectively. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
14 See Notes to Financial Statements Phoenix-Seneca Bond Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS B --------------------------------------------------------- YEAR ENDED SEPTEMBER 30, --------------------------------------------------------- 2004 2003 2002(4) 2001 2000 Net asset value, beginning of period $10.50 $10.13 $10.25 $10.04 $10.27 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) 0.28 0.30 0.36 0.57 0.68 Net realized and unrealized gain (loss) 0.08 0.44 0.11 0.28 (0.20) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.36 0.74 0.47 0.85 0.48 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.35) (0.31) (0.43) (0.64) (0.64) Distributions from net realized gains (0.07) (0.06) (0.16) -- (0.07) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.42) (0.37) (0.59) (0.64) (0.71) ------ ------ ------ ------ ------ Change in net asset value (0.06) 0.37 (0.12) 0.21 (0.23) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $10.44 $10.50 $10.13 $10.25 $10.04 ====== ====== ====== ====== ====== Total return(2) 3.54% 7.43% 4.83% 8.67% 5.06% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $7,375 $10,218 $10,093 $7,713 $3,086 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses(3) 1.90% 1.90% 1.90% 1.91% 1.91% Gross operating expenses 2.07% 2.10% 2.16% 2.35% 3.08% Net investment income 2.69% 2.91% 3.63% 5.64% 6.83% Portfolio turnover 136% 244% 410% 170% 74% CLASS C --------------------------------------------------------- YEAR ENDED SEPTEMBER 30, --------------------------------------------------------- 2004 2003 2002(4) 2001 2000 Net asset value, beginning of period $10.52 $10.15 $10.26 $10.06 $10.27 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) 0.28 0.30 0.36 0.58 0.69 Net realized and unrealized gain (loss) 0.08 0.44 0.12 0.26 (0.20) ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.36 0.74 0.48 0.84 0.49 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.35) (0.31) (0.43) (0.64) (0.63) Distributions from net realized gains (0.07) (0.06) (0.16) -- (0.07) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (0.42) (0.37) (0.59) (0.64) (0.70) ------ ------ ------ ------ ------ Change in net asset value (0.06) 0.37 (0.11) 0.20 (0.21) ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $10.46 $10.52 $10.15 $10.26 $10.06 ====== ====== ====== ====== ====== Total return(2) 3.53% 7.42% 4.83% 8.65% 5.12% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $3,829 $4,754 $5,052 $3,842 $1,957 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses(3) 1.90% 1.90% 1.90% 1.91% 1.91% Gross operating expenses 2.37% 2.41% 2.50% 2.78% 4.08% Net investment income 2.64% 2.91% 3.63% 5.69% 6.88% Portfolio turnover 136% 244% 410% 170% 74% (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) For the periods ended September 30, 2001, and 2000 for Class B and Class C, the ratio of net operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if the expense offsets were included, the ratio of net operating expenses to average net assets would have been 0.01% lower than the ratio shown in the table. (4) As required, effective October 1, 2001, the Fund has adopted the provisions of AICPA Audit and Accounting Guide for Investment Companies and began including paydown gains and losses in interest income. The effect of this change for the year ended September 30, 2002, was to decrease the ratio of net investment income to average net assets from 3.69% to 3.63% for Class B and Class C; to decrease net investment income (loss) per share from 0.37 to 0.36 per share for Class B and Class C; and, to increase net realized and unrealized gain (loss) from 0.10 to 0.11 per share and from 0.11 to 0.12 per share for Class B and Class C, respectively. Per share ratios and supplemental data for prior periods have not been restated to reflect this change.
See Notes to Financial Statements 15 PHOENIX-SENECA EQUITY INCOME FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM LEADERS, GAIL SENECA, PH.D. AND ALBERT GUTIERREZ, CFA Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix-Seneca Equity Income Fund seeks high total return in both current income and long-term capital appreciation. There is no guarantee that the Fund will achieve its objective. Q: HOW DID THE FUND PERFORM OVER THE 12 MONTHS ENDED SEPTEMBER 30, 2004? A: For the fiscal year ended September 30, 2004, the Fund's Class X shares returned 21.04%, Class A shares returned 19.99%, Class B shares returned 18.17% and Class C shares returned 18.45%. For the same period, the S&P 500(R) Index, a broad-based equity index, returned 13.86%, and the Dow Jones Wilshire Real Estate Securities Index (Full Cap), which is the Fund's style-specific equity index appropriate for comparison, returned 26.49%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Q: LOOKING BACK OVER THE 12 MONTHS ENDED SEPTEMBER 30, 2004, HOW WOULD YOU DESCRIBE THE MARKET ENVIRONMENT FOR INVESTORS? A: Over the last 12 months, the market environment for REITs was quite favorable. Company fundamentals supported high dividend payout rates and investors directed funds into this market sector. The rise in interest rates in the second quarter of 2004 caused considerable volatility in the sector, and REITs sold off sharply, only to rebound strongly and completely in the third quarter. With interest rates now back to early 2004 levels and industry fundamentals continuing to improve, REITs are again rallying. Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE OVER THE 12 MONTHS ENDED SEPTEMBER 30, 2004? A: While, as noted earlier, the Fund lagged its benchmark during the period, that difference is readily explained. The Fund initially benefited from an overweight position in mortgage REITs and mortgage related companies in late 2003 and early 2004. Then, early in 2004, the Fund reduced its exposure to mortgage related companies and property REITs and increased exposure to diversified financial service firms, primarily banks. This repositioning was beneficial to the Fund's performance early in the second quarter, however, it hindered performance as REITs snapped back from their April slump. The portfolio has since reduced its non-REIT weighting, and we continue to have very limited exposure to mortgage REITs. The Fund has benefited from an overweight position in lodging and retail REITs relative to its benchmark, where improving fundamentals and heightened acquisition activity have driven stock prices higher. 16 PHOENIX-SENECA EQUITY INCOME FUND (CONTINUED) Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX TO 12 MONTHS? A: We expect stable to rising stock prices in the REIT and real estate sectors. We continue to overweight lodging and retail REITs, which should benefit from a revival in travel and ongoing consolidation in retail real estate. We see opportunity in industrial REITs as the global economy recovers. We remain underweight in office REITs as fundamentals have yet to rebound. OCTOBER 2004 THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS DISCUSSED WILL BE REALIZED. FOR DEFINITIONS OF INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 3. 17 Phoenix-Seneca Equity Income Fund - -------------------------------------------------------------------------------- ANNUAL TOTAL RETURNS 1 PERIOD ENDING 9/30/04 - --------------------------------------------------------------------------------
INCEPTION INCEPTION 1 YEAR 5 YEARS TO 9/30/04 DATE -------- --------- ---------- --------- Class X Shares at NAV 2 21.04% 17.51% 11.84% 3/12/96 Class A Shares at NAV 2 19.99 16.07 10.51 3/12/96 Class A Shares at POP 3 13.09 14.70 9.74 3/12/96 Class B Shares at NAV 2 18.17 14.96 7.97 7/1/98 Class B Shares with CDSC 4 14.17 14.96 7.97 7/1/98 Class C Shares at NAV 2 18.45 15.03 8.03 7/1/98 Class C Shares with CDSC 4 18.45 15.03 8.03 7/1/98 S&P 500(R)Index 13.86 (1.29) Note 5 Note 5 Dow Jones Wilshire Real Estate Securities Index (Full Cap) 26.49 18.71 Note 6 Note 6
- -------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 9/30 - -------------------------------------------------------------------------------- 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 5.75% 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. [CHART OMITTED -- EDGAR REPRESENTATION OF DATA IS AS FOLLOWS] Phoenix-Seneca Phoenix-Seneca Dow Jones Equity Income Equity Income Wilshire Real Fund Fund S&P 500(R) Estate Securities Class X 7 Class A 7 Index Index (Full Cap) -------------- -------------- ---------- ----------------- 03/12/1996 $10,000 $ 9,425 $10,000 $10,000 09/30/1996 11,261 10,557 10,929 11,218 09/30/1997 15,252 14,203 15,374 15,933 09/30/1998 12,456 11,430 16,780 13,264 09/30/1999 11,626 10,519 21,434 12,690 09/29/2000 14,998 13,402 24,299 15,895 09/28/2001 16,426 14,469 17,827 17,413 09/30/2002 16,357 14,219 14,176 18,629 09/30/2003 21,526 18,470 17,638 23,645 09/30/2004 26,055 22,162 20,084 29,909 - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS 9/30/04 - -------------------------------------------------------------------------------- As a percentage of total investments [CHART OMITTED -- EDGAR REPRESENTATION OF DATA IS AS FOLLOWS] Regional Malls 21% Apartments 19 Shopping Centers 14 Office 11 Industrial 8 Hotels, Resorts & Cruise Lines 7 Mixed 5 Other 15 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 5.75% 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 8.49% for Class X and Class A (since 3/12/96) and 1.02% for Class B and Class C (since 7/1/98). 6 Index performance is 13.66% for Class X and Class A (since 3/12/96) and 11.59% for Class B and Class C (since 6/30/98). 7 This chart illustrates NAV returns on Class X shares and the application of initial sales charges on Class A shares. Returns on Class B and Class C shares will vary due to differing sales charges, fees and inception dates. For information regarding indexes, see the glossary on page 3. ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. 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. PLEASE VISIT PHOENIXINVESTMENTS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END. 18 Phoenix-Seneca Equity Income Fund ABOUT YOUR FUND'S EXPENSES As a shareholder of the Equity Income Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchases of Class A shares and contingent deferred sales charges on Class B and Class C shares; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. Class X shares are sold without a sales charge and do not incur distribution and service fees. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Expenses Paid Equity Income Fund Account Value Account Value During Class X April 1, 2004 September 30, 2004 Period* - ------------------ --------------- -------------------- ---------------- Actual $1,000.00 $1,014.90 $6.97 Hypothetical (5% return before expenses) 1,000.00 1,017.99 7.01 *EXPENSES ARE EQUAL TO THE FUND'S CLASS X ANNUALIZED EXPENSE RATIO OF 1.38%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS X RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 21.04%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,210.40. Beginning Ending Expenses Paid Equity Income Fund Account Value Account Value During Class A April 1, 2004 September 30, 2004 Period* - ------------------ --------------- -------------------- ---------------- Actual $1,000.00 $1,011.30 $10.26 Hypothetical (5% return before expenses) 1,000.00 1,014.67 10.33 *EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 2.04%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 19.99%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,199.90. Beginning Ending Expenses Paid Equity Income Fund Account Value Account Value During Class B April 1, 2004 September 30, 2004 Period* - ------------------ --------------- -------------------- ---------------- Actual $1,000.00 $1,002.40 $19.02 Hypothetical (5% return before expenses) 1,000.00 1,005.76 19.24 *EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 3.80%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 18.17%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,181.70. Beginning Ending Expenses Paid Equity Income Fund Account Value Account Value During Class C April 1, 2004 September 30, 2004 Period* - ------------------ --------------- -------------------- ---------------- Actual $1,000.00 $1,004.80 $17.30 Hypothetical (5% return before expenses) 1,000.00 1,007.52 17.48 *EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 3.45%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 18.45%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,184.50. 19 Phoenix-Seneca Equity Income Fund - -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT SEPTEMBER 30, 2004 (AS A PERCENTAGE OF NET ASSETS)(e) - -------------------------------------------------------------------------------- 1. Property Simon Group, Inc. 6.5% 2. General Growth Properties, Inc. 6.0% 3. Equity Residential Properties 4.7% 4. ProLogis 4.5% 5. Equity Office Properties Trust 4.0% 6. Kimco Realty Corp. 3.7% 7. Regency Centers Corp. 3.7% 8. Weingarten Realty Investors 3.6% 9. Vornado Realty Trust 3.5% 10. Starwood Hotels & Resorts Worldwide, Inc. 3.3% - -------------------------------------------------------------------------------- SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 2004 SHARES VALUE ------ ----------- DOMESTIC COMMON STOCKS--98.4% REAL ESTATE INVESTMENT TRUSTS--87.7% DIVERSIFIED--4.5% iStar Financial, Inc. .............................. 6,980 $ 287,784 Vornado Realty Trust ............................... 15,520 972,794 - ----------------------------------------------------------------------------- TOTAL DIVERSIFIED 1,260,578 - ----------------------------------------------------------------------------- INDUSTRIAL/OFFICE--23.3% INDUSTRIAL--7.6% AMB Property Corp. ................................. 23,380 865,527 ProLogis ........................................... 35,320 1,244,677 ----------- 2,110,204 ----------- MIXED--4.8% Duke Realty Corp. .................................. 23,050 765,260 Reckson Associates Realty Corp. .................... 19,500 560,625 ----------- 1,325,885 ----------- OFFICE--10.9% Boston Properties, Inc. ............................ 15,510 859,099 Equity Office Properties Trust ..................... 40,685 1,108,666 Glenborough Realty Trust, Inc. ..................... 13,000 270,010 Trizec Properties, Inc. ............................ 50,900 812,873 ----------- 3,050,648 ----------- - ----------------------------------------------------------------------------- TOTAL INDUSTRIAL/OFFICE 6,486,737 - ----------------------------------------------------------------------------- LODGING/RESORTS--3.0% Host Marriott Corp.(b) ............................. 53,960 757,059 LaSalle Hotel Properties ........................... 3,510 96,876 - ----------------------------------------------------------------------------- TOTAL LODGING/RESORTS 853,935 - ----------------------------------------------------------------------------- SHARES VALUE ------ ----------- MORTGAGE--2.2% COMMERCIAL FINANCING--1.0% RAIT Investment Trust .............................. 10,460 $ 286,081 RESIDENTIAL FINANCING--1.2% Saxon Capital, Inc.(b) ............................. 15,000 322,500 - ----------------------------------------------------------------------------- TOTAL MORTGAGE 608,581 - ----------------------------------------------------------------------------- RESIDENTIAL--19.6% APARTMENTS--18.6% Archstone-Smith Trust .............................. 27,546 871,555 Avalonbay Communities, Inc. ........................ 13,190 794,302 BRE Properties, Inc. Class A ....................... 20,900 801,515 Equity Residential Properties ...................... 42,360 1,313,160 Essex Property Trust, Inc. ......................... 11,860 852,141 United Dominion Realty Trust, Inc. ................. 27,410 543,540 ----------- 5,176,213 ----------- MANUFACTURED HOMES--1.0% Manufactured Home Communities, Inc. ................ 8,500 282,540 - ----------------------------------------------------------------------------- TOTAL RESIDENTIAL 5,458,753 - ----------------------------------------------------------------------------- RETAIL--35.1% REGIONAL MALLS--21.1% General Growth Properties, Inc. .................... 53,570 1,660,670 Macerich Co. (The) ................................. 13,600 724,744 Mills Corp. (The) .................................. 13,520 701,282 Rouse Co. (The) .................................... 9,850 658,768 Simon Property Group, Inc. ......................... 33,915 1,818,862 Taubman Centers, Inc. .............................. 11,500 297,045 ----------- 5,861,371 ----------- See Notes to Financial Statements 20 Phoenix-Seneca Equity Income Fund SHARES VALUE ------ ----------- SHOPPING CENTERS--14.0% Developers Diversified Realty Corp. ................ 22,490 $ 880,483 Kimco Realty Corp. ................................. 19,910 1,021,383 Regency Centers Corp. .............................. 21,850 1,015,807 Weingarten Realty Investors ........................ 30,085 993,106 ----------- 3,910,779 ----------- - ----------------------------------------------------------------------------- TOTAL RETAIL 9,772,150 - ----------------------------------------------------------------------------- TOTAL REAL ESTATE INVESTMENT TRUSTS (IDENTIFIED COST $22,419,942) 24,440,734 - ----------------------------------------------------------------------------- HOTELS, RESORTS & CRUISE LINES--7.1% Boca Resorts, Inc.(b) .............................. 41,960 779,197 La Quinta Corp.(b) ................................. 36,850 287,430 Starwood Hotels & Resorts Worldwide, Inc. .......... 19,630 911,225 ----------- (Identified cost $1,549,522) 1,977,852 ----------- THRIFTS & MORTGAGE FINANCE--1.5% New Century Financial Corp. ........................ 6,900 415,518 (Identified cost $400,200) INVESTMENT BANKING & BROKERAGE--1.5% Northstar Capital Investment Corp. 144A(b)(c)(d) ... 35,000 420,000 (Identified cost $720,625) REAL ESTATE MANAGEMENT & DEVELOPMENT--0.6% LNR Property Corp. ................................. 2,460 152,299 (Identified cost $136,082) - ----------------------------------------------------------------------------- TOTAL DOMESTIC COMMON STOCKS (IDENTIFIED COST $25,226,371) 27,406,403 - ----------------------------------------------------------------------------- SHARES VALUE ------ ----------- DOMESTIC PREFERRED STOCKS--0.7% THRIFTS & MORTGAGE FINANCE--0.7% Accredited Mortgage Loan REIT Trust Series A Pfd. 9.75% ................................ $7,700 $ 195,965 - ----------------------------------------------------------------------------- TOTAL DOMESTIC PREFERRED STOCKS (IDENTIFIED COST $192,500) 195,965 - ----------------------------------------------------------------------------- TOTAL INVESTMENTS--99.1% (IDENTIFIED COST $25,418,871) 27,602,368(a) Other assets and liabilities, net--0.9% 259,516 ----------- NET ASSETS--100.0% $27,861,884 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $2,678,878 and gross depreciation of $495,381 for federal income tax purposes. At September 30, 2004, the aggregate cost of securities for federal income tax purposes was $25,418,871. (b) Non-income producing. (c) 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, 2004, this security amounted to a value of $420,000 or 1.5% of net assets. (d) Illiquid. Security valued at fair value as determined in good faith by or under the direction of the Trustees. At September 30, 2004, this security amounted to a value of $420,000 or 1.5% of net assets. (e) Table excludes short-term obligations. See Notes to Financial Statements 21 Phoenix-Seneca Equity Income Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2004 ASSETS Investment securities at value, (Identified cost $25,418,871) $27,602,368 Cash 176,588 Receivables Investment securities sold 429,529 Dividends and interest 110,720 Fund shares sold 20,722 Fund share loss receivable from adviser 325 Prepaid expenses 20,397 ----------- Total assets 28,360,649 ----------- LIABILITIES Payables Investment securities purchased 400,200 Fund shares repurchased 7,131 Professional fee 33,938 Investment advisory fee 26,218 Transfer agent fee 14,532 Financial agent fee 3,974 Distribution and service fees 3,494 Trustees' fee 2,524 Accrued expenses 6,754 ----------- Total liabilities 498,765 ----------- NET ASSETS $27,861,884 =========== NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $21,819,600 Accumulated net realized gain 3,858,787 Net unrealized appreciation 2,183,497 ----------- NET ASSETS $27,861,884 =========== CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $21,046,999) 1,245,935 Net asset value and offering price per share $16.89 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $3,510,994) 212,729 Net asset value per share $16.50 Offering price per share $16.50/(1-5.75%) $17.51 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $1,507,799) 92,169 Net asset value and offering price per share $16.36 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $1,796,092) 109,456 Net asset value and offering price per share $16.41 STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2004 INVESTMENT INCOME Dividends $ 879,159 Interest 3,655 ---------- Total investment income 882,814 ---------- EXPENSES Investment advisory fee 226,920 Service fees, Class A 8,900 Distribution and service fees, Class B 14,156 Distribution and service fees, Class C 18,965 Financial agent fee 48,670 Transfer agent 85,765 Professional 34,357 Registration 15,076 Printing 13,336 Trustees 10,463 Custodian 9,893 Miscellaneous 9,516 ---------- Total expenses 496,017 Less expenses reimbursed by investment adviser (4,661) Custodian fees paid indirectly (10) ---------- Net expenses 491,346 ---------- NET INVESTMENT INCOME 391,468 ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments 5,230,086 Net realized loss on options (52,488) Net change in unrealized appreciation (depreciation) on investments (811,137) ---------- NET GAIN ON INVESTMENTS 4,366,461 ---------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $4,757,929 ========== See Notes to Financial Statements 22 Phoenix-Seneca Equity Income Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/04 9/30/03 ----------- ----------- FROM OPERATIONS Net investment income (loss) $ 391,468 $ 377,894 Net realized gain (loss) 5,177,598 1,746,673 Net change in unrealized appreciation (depreciation) (811,137) 3,864,630 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,757,929 5,989,197 ----------- ----------- FROM DISTRIBUTIONS TO SHAREHOLDERS Net investment income, Class X (349,886) (343,679) Net investment income, Class A (24,019) (22,710) Net investment income, Class B (7,224) (5,058) Net investment income, Class C (10,339) (6,447) Net realized short-term gains, Class X (672,432) (370,029) Net realized short-term gains, Class A (115,104) (49,537) Net realized short-term gains, Class B (37,074) (12,720) Net realized short-term gains, Class C (50,200) (19,415) Net realized long-term gains, Class X (674,051) -- Net realized long-term gains, Class A (122,621) -- Net realized long-term gains, Class B (52,569) -- Net realized long-term gains, Class C (76,238) -- ----------- ----------- DECREASE IN NET ASSETS FROM DISTRIBUTIONS TO SHAREHOLDERS (2,191,757) (829,595) ----------- ----------- FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (123,094 and 35,379 shares, respectively) 1,997,050 465,027 Net asset value of shares issued from reinvestment of distributions (104,370 and 51,915 shares, respectively) 1,661,083 691,255 Cost of shares repurchased (144,988 and 380,751 shares, respectively) (2,357,172) (5,045,694) ----------- ----------- Total 1,300,961 (3,889,412) ----------- ----------- CLASS A Proceeds from sales of shares (172,637 and 216,922 shares, respectively) 2,771,123 2,701,734 Net asset value of shares issued from reinvestment of distributions (16,080 and 4,966 shares, respectively) 248,568 64,703 Cost of shares repurchased (176,118 and 235,156 shares, respectively) (2,748,422) (2,852,530) ----------- ----------- Total 271,269 (86,093) ----------- ----------- CLASS B Proceeds from sales of shares (33,517 and 75,743 shares, respectively) 512,637 1,076,762 Net asset value of shares issued from reinvestment of distributions (5,926 and 1,275 shares, respectively) 90,831 16,460 Cost of shares repurchased (22,581 and 85,797 shares, respectively) (356,697) (1,178,515) ----------- ----------- Total 246,771 (85,293) ----------- ----------- CLASS C Proceeds from sales of shares (30,267 and 50,351 shares, respectively) 478,558 665,381 Net asset value of shares issued from reinvestment of distributions (8,072 and 1,544 shares, respectively) 123,582 20,202 Cost of shares repurchased (48,634 and 32,144 shares, respectively) (752,864) (418,176) ----------- ----------- Total (150,724) 267,407 ----------- ----------- INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS 1,668,277 (3,793,391) ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS 4,234,449 1,366,211 NET ASSETS Beginning of period 23,627,435 22,261,224 ----------- ----------- END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $0, RESPECTIVELY] $27,861,884 $23,627,435 =========== ===========
See Notes to Financial Statements 23 Phoenix-Seneca Equity Income Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $15.26 $12.07 $12.62 $11.89 $ 9.69 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) 0.30 0.27 0.49 0.42 0.34 Net realized and unrealized gain (loss) 2.78 3.46 (0.51) 0.69 2.35 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 3.08 3.73 (0.02) 1.11 2.69 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.30) (0.26) (0.53) (0.38) (0.49) Distributions from net realized gains (1.15) (0.28) -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.45) (0.54) (0.53) (0.38) (0.49) ------ ------ ------ ------ ------ Change in net asset value 1.63 3.19 (0.55) 0.73 2.20 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $16.89 $15.26 $12.07 $12.62 $11.89 ====== ====== ====== ====== ====== Total return 21.04% 31.60% (0.42)% 9.52% 29.00% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $21,047 $17,754 $17,584 $17,349 $16,713 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses (3) 1.44% 1.62% 1.55 % 1.60% 1.79% Gross operating expenses 1.44% 1.62% 1.55 % 1.60% 1.79% Net investment income 1.83% 2.06% 3.73 % 3.49% 3.35% Portfolio turnover 156% 91% 111 % 40% 65% CLASS A ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $14.88 $11.78 $12.32 $11.67 $ 9.54 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) 0.16 0.11 0.32 0.25 0.21 Net realized and unrealized gain (loss) 2.70 3.36 (0.51) 0.67 2.30 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 2.86 3.47 (0.19) 0.92 2.51 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.11) (0.12) (0.35) (0.27) (0.38) Distributions from net realized gains (1.13) (0.25) -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.24) (0.37) (0.35) (0.27) (0.38) ------ ------ ------ ------ ------ Change in net asset value 1.62 3.10 (0.54) 0.65 2.13 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $16.50 $14.88 $11.78 $12.32 $11.67 ====== ====== ====== ====== ====== Total return(2) 19.99% 29.90% (1.73)% 7.96% 27.40% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $3,511 $2,979 $2,515 $2,410 $1,437 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.32% 2.92% 2.83 % 3.05% 3.05% Gross operating expenses 2.32% 2.92% 2.83 % 3.18% 4.28% Net investment income 1.01% 0.89% 2.50 % 2.11% 2.11% Portfolio turnover 156% 91% 111 % 40% 65% (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) For the periods ended September 30, 2003 and 2001 for Class X, the ratio of net operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio of net operating expenses to average net assets would have been 0.01% lower than the ratio shown in the table.
See Notes to Financial Statements 24 Phoenix-Seneca Equity Income Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS B ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $14.84 $11.74 $12.28 $11.66 $ 9.55 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) (0.08) (0.01) 0.20 0.17 0.12 Net realized and unrealized gain (loss) 2.69 3.36 (0.50) 0.65 2.31 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 2.61 3.35 (0.30) 0.82 2.43 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.08) (0.07) (0.24) (0.20) (0.32) Distributions from net realized gains (1.01) (0.18) -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.09) (0.25) (0.24) (0.20) (0.32) ------ ------ ------ ------ ------ Change in net asset value 1.52 3.10 (0.54) 0.62 2.11 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $16.36 $14.84 $11.74 $12.28 $11.66 ====== ====== ====== ====== ====== Total return(2) 18.17 % 28.82 % (2.63)% 7.21% 26.37% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $1,508 $1,117 $987 $554 $287 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 3.80 % 3.80 % 3.80 % 3.81% (3) 3.80% Gross operating expenses 4.13 % 5.61 % 6.17 % 9.33% 15.48% Net investment income (loss) (0.50)% (0.09)% 1.59 % 1.43% 1.19% Portfolio turnover 156 % 91 % 111 % 40% 65% CLASS C ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $14.85 $11.75 $12.28 $11.66 $ 9.55 INCOME FROM INVESTMENT OPERATIONS Net investment income (loss)(1) -- (0.02) 0.21 0.16 0.14 Net realized and unrealized gain (loss) 2.65 3.37 (0.50) 0.66 2.29 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 2.65 3.35 (0.29) 0.82 2.43 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Dividends from net investment income (0.08) (0.07) (0.24) (0.20) (0.32) Distributions from net realized gains (1.01) (0.18) -- -- -- ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS (1.09) (0.25) (0.24) (0.20) (0.32) ------ ------ ------ ------ ------ Change in net asset value 1.56 3.10 (0.53) 0.62 2.11 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $16.41 $14.85 $11.75 $12.28 $11.66 ====== ====== ====== ====== ====== Total return(2) 18.45% 28.80 % (2.47)% 7.12% 26.37% RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $1,796 $1,778 $1,175 $525 $329 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 3.64% 3.80 % 3.80 % 3.81% (3) 3.80% Gross operating expenses 3.64% 4.58 % 6.10 % 9.18% 13.58% Net investment income (loss) 0.01% (0.18)% 1.63 % 1.38% 1.36% Portfolio turnover 156% 91 % 111 % 40% 65% (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation. (3) For the period ended September 30, 2001 for Class B and Class C, the ratio of net operating expenses to average net assets excludes the effect of expense offsets for custodian fees; if expense offsets were included, the ratio of net operating expenses to average net assets would have been 0.01% lower than the ratio shown in the table.
See Notes to Financial Statements 25 PHOENIX-SENECA MID-CAP "EDGE"(SM) FUND A DISCUSSION WITH THE FUND'S PORTFOLIO MANAGEMENT TEAM, GAIL SENECA, PH.D., RICK LITTLE, CFA AND RON JACKS, CFA Q: WHAT IS THE FUND'S INVESTMENT OBJECTIVE? A: The Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund seeks capital appreciation. There is no guarantee that the Fund will achieve its objective. Q: HOW DID THE FUND PERFORM OVER THE 12 MONTHS ENDED SEPTEMBER 30, 2004? A: For the fiscal year ended September 30, 2004, the Fund's Class X shares returned 1.68%, Class A shares returned 1.44%, Class B shares returned 0.65% and Class C shares returned 0.58%. For the same period, the S&P 500(R) Index, a broad-based equity index, returned 13.86%, and the Russell Midcap(R) Growth Index, which is the Fund's style-specific index appropriate for comparison, returned 13.68%. All performance figures assume reinvestment of distributions and exclude the effect of sales charges. Past performance is no guarantee of future results and current performance may be higher or lower than the performance shown above. Q: LOOKING BACK OVER THE LAST 12 MONTHS, HOW WOULD YOU DESCRIBE THE EQUITY MARKET ENVIRONMENT FOR INVESTORS? A: Most of the gains produced in the equity market for the 12 months ended September 30, 2004 came in the fourth quarter of 2003, as typified by the returns of the S&P 500(R) and Russell Midcap Growth indexes cited earlier. The market dropped off considerably in each of the consecutive three quarters. The market's overall trendlessness, despite activity in single stocks and sectors, reflects offsetting economic and political forces. Economic fundamentals were solidly positive as retail spending remained robust, corporate spending rebounded, and the long-awaited upturn in jobs finally materialized. All of that was good news; however, the dismal situation in Iraq, coupled with the uncertainty surrounding interest rates, caused stocks to move sideways. Q: WHAT FACTORS AFFECTED THE FUND'S PERFORMANCE? A: The Fund has been most affected by the disconnect between the strongest and most reliable correlation in finance: that of stock prices and corporate earnings. This aberration conflicts with Seneca's investment philosophy and process which seeks to exploit this long-standing, historic correlation. Since the market's bubble burst in 2000, individual stock price movements have not been closely correlated to company earnings. The rally of 2003 was, in fact, led by companies with no current earnings (e.g., ImClone Systems) and those with the worst quality balance sheets (e.g., Amkor Tech and American Tower). Additionally, small-cap stocks excelled versus large-cap companies and value stocks have outperformed growth stocks, and within growth indexes, dividend-paying stocks have outperformed stocks that don't pay dividends. The biggest detractors to performance relative to the Russell Midcap(R) Growth Index in the past year have been our health care holdings. While our stocks had a positive return, they lagged the index's sector return. Eon Labs came under pressure when a competitor entered the market to sell a generic version of Eon's best selling drug. Mylan Labs suffered from concerns of soft sales and an announced acquisition that threatened to limit expansion of the company's valuation. We sold both stocks. Additionally, within health care, some of the best performing names were biotechnology companies like ImClone Systems and Protein Design Labs, which do not meet our investment criteria. 26 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund (continued) Consumer discretionary stocks also hurt performance. While our slight overweight to this strong sector helped, our stocks did not keep up with the index's sector return, which was driven by homebuilders and casinos & gaming companies to which we had very little exposure. Helping performance was our overweight exposure to the strong materials. Lyondell Chemical led the way in this area. The company continues to benefit from improved pricing and robust demand for commodity chemicals. Q: WHAT IS YOUR OUTLOOK FOR THE NEXT SIX TO 12 MONTHS? A: Before providing our outlook, we must first review stock market behavior over the past few years. Growth stocks have earned the dubious distinction of being the most unloved and the most out of favor. Since the bubble burst in early 2000, growth stocks have underperformed value stocks by a wide margin. In contrast value stocks have traded at near record levels. The near universal disdain for growth is not restricted to technology stocks. The growth label covers a wide swath of companies, from health care to retail to consumer products. And virtually all of those companies, many with excellent pedigrees, as measured by corporate history and quality management, have suffered this year. For example, only 23 companies in the S&P 500(R) Index have delivered earnings growth in excess of 10% in each of the last nine years. Most have underperformed the market year-to-date through September 30, 2004. What exactly ails growth? Conventional wisdom might suggest a fundamental, irredeemable flaw, some secular economic change which makes growth inherently fragile or unattainable. We disagree. Historically, growth and value cycles have always alternated in markets. Based on time and relative valuation alone, we believe growth is poised to rebound. We see more fundamental reasons for a growth revival as well. Growth, and particularly "quality" growth, historically leads markets as the profits cycle decelerates. When earnings growth becomes scarce, high quality growth stocks gain premium valuations. After two years of tremendous earnings acceleration, we believe 2005 is likely to see much lower profit growth. High quality, reliable growth stocks should benefit. Our affection for growth should not be equated with unbridled market bullishness. War, oil price spikes and rising federal funds rates are not the ingredients of a raging bull market. But neither are the conditions for a bear market in place. Core inflation remains low, productivity and corporate profit margins are strong, and we believe the overall level of profits should continue to rise into 2005. Market valuation, moreover, has improved. With price-to-earnings ratios at roughly 15x earnings, and long-term interest rates at just 4%, market valuation is near its 2002 lows, and on an average with the stock market's "pre-bubble" levels. In our opinion, stock investors should not expect to earn the heady results of the late 1990s, but neither should they expect Armageddon. And within the stock market, we believe that the unloved growth stocks should merit better treatment. OCTOBER 2004 THE PRECEDING INFORMATION IS THE OPINION OF PORTFOLIO MANAGEMENT. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS, AND THERE IS NO GUARANTEE THAT MARKET FORECASTS DISCUSSED WILL BE REALIZED. FOR DEFINITIONS OF INDEXES CITED AND CERTAIN INVESTMENT TERMS USED IN THIS REPORT, SEE THE GLOSSARY ON PAGE 3. 27 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund - -------------------------------------------------------------------------------- ANNUAL TOTAL RETURNS 1 PERIOD ENDING 9/30/04 - --------------------------------------------------------------------------------
INCEPTION INCEPTION 1 YEAR 5 YEARS TO 9/30/04 DATE ------ ------- ---------- --------- Class X Shares at NAV 2 1.68% 0.60% 9.58% 3/8/96 Class A Shares at NAV 2 1.44 0.35 9.22 3/8/96 Class A Shares at POP 3 (4.39) (0.83) 8.47 3/8/96 Class B Shares at NAV 2 0.65 (0.45) 0.40 7/1/98 Class B Shares with CDSC 4 (3.35) (0.45) 0.40 7/1/98 Class C Shares at NAV 2 0.58 (0.44) 0.40 7/1/98 Class C Shares with CDSC 4 0.58 (0.44) 0.40 7/1/98 S&P 500(R) Index 13.86 (1.29) Note 5 Note 5 Russell Midcap(R) Growth Index 13.68 0.63 Note 6 Note 6
- -------------------------------------------------------------------------------- GROWTH OF $10,000 PERIODS ENDING 9/30 - -------------------------------------------------------------------------------- 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 5.75% 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. [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Phoenix-Seneca Phoenix-Seneca Russell Mid-Cap Mid-Cap Midcap(R) "EDGE"(SM) Fund "EDGE"(SM) Fund S&P 500(R) Growth Class X 7 Class A 7 Index Index --------------- --------------- ---------- --------- 03/08/1996 $10,000 $ 9,425 $10,000 $10,000 09/30/1996 14,970 14,072 10,992 11,010 09/30/1997 16,676 15,654 15,462 14,274 09/30/1998 15,972 14,912 16,876 12,937 09/30/1999 21,246 19,724 21,556 17,748 09/29/2000 40,751 37,733 24,438 28,463 09/28/2001 22,720 20,970 17,929 13,728 09/30/2002 18,104 16,670 14,257 11,601 09/30/2003 21,534 19,786 17,739 16,112 09/30/2004 21,896 20,072 20,199 18,316 - -------------------------------------------------------------------------------- SECTOR WEIGHTINGS 9/30/04 - -------------------------------------------------------------------------------- As a percentage of total investments [GRAPHIC OMITTED] EDGAR REPRESENTATION OF DATA USED IN PRINTED GRAPHIC AS FOLLOWS: Consumer Discretionary 26% Information Technology 24 Health Care 21 Materials 10 Financials 6 Energy 4 Industrials 4 Other 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 5.75% 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 8.55% for Class X and Class A (since 3/8/96) and 1.02% for Class B and Class C (since 7/1/98). 6 Index performance is 7.32% for Class X and Class A (since 3/8/96) and 2.55% for Class B and Class C (since 7/1/98). 7 This chart illustrates NAV returns on Class X shares and the application of initial sales charges on Class A shares. Returns on Class B and Class C shares will vary due to differing sales charges, fees and inception dates. For information regarding indexes, see the glossary on page 3. ALL RETURNS REPRESENT PAST PERFORMANCE WHICH IS NO GUARANTEE OF FUTURE RESULTS. CURRENT PERFORMANCE MAY BE HIGHER OR LOWER THAN THE PERFORMANCE SHOWN. 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. PLEASE VISIT PHOENIXINVESTMENTS.COM FOR PERFORMANCE DATA CURRENT TO THE MOST RECENT MONTH-END. 28 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund ABOUT YOUR FUND'S EXPENSES As a shareholder of the Mid-Cap "EDGE"(SM) Fund, you incur two types of costs: (1) transaction costs, including sales charges on purchases of Class A shares and contingent deferred sales charges on Class B and Class C shares; and (2) ongoing costs, including investment advisory fees; distribution and service fees; and other expenses. Class X shares are sold without a sales charge and do not incur distribution and service fees. These examples are intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. These examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period. ACTUAL EXPENSES The first line of the accompanying tables provides information about actual account values and actual expenses. You may use the information in this line, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first line under the heading entitled "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The second line of the accompanying tables provides information about hypothetical account values and hypothetical expenses based on the Fund's actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not your Fund's actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your Fund and other funds. To do so, compare these 5% hypothetical examples with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the accompanying tables are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges or contingent deferred sales charges. Therefore, the second line of the accompanying tables is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. Beginning Ending Expenses Paid Mid-Cap "Edge"(SM) Fund Account Value Account Value During Class X April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $ 917.50 $5.27 Hypothetical (5% return before expenses) 1,000.00 1,019.43 5.57 *EXPENSES ARE EQUAL TO THE FUND'S CLASS X ANNUALIZED EXPENSE RATIO OF 1.10%, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS X RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 1.68%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,016.80. Beginning Ending Expenses Paid Mid-Cap "Edge"(SM) Fund Account Value Account Value During Class A April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $ 916.10 $6.71 Hypothetical (5% return before expenses) 1,000.00 1,017.91 7.09 *EXPENSES ARE EQUAL TO THE FUND'S CLASS A ANNUALIZED EXPENSE RATIO OF 1.40%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS A RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 1.44%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,014.40. Beginning Ending Expenses Paid Mid-Cap "Edge"(SM) Fund Account Value Account Value During Class B April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $ 912.40 $10.28 Hypothetical (5% return before expenses) 1,000.00 1,014.12 10.88 *EXPENSES ARE EQUAL TO THE FUND'S CLASS B ANNUALIZED EXPENSE RATIO OF 2.15%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS B RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 0.65%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,006.50. Beginning Ending Expenses Paid Mid-Cap "Edge"(SM) Fund Account Value Account Value During Class C April 1, 2004 September 30, 2004 Period* - ----------------------- ------------- ------------------ ------------- Actual $1,000.00 $ 912.40 $10.28 Hypothetical (5% return before expenses) 1,000.00 1,014.12 10.88 *EXPENSES ARE EQUAL TO THE FUND'S CLASS C ANNUALIZED EXPENSE RATIO OF 2.15%, WHICH INCLUDES WAIVED FEES AND REIMBURSED EXPENSES, MULTIPLIED BY THE AVERAGE ACCOUNT VALUE OVER THE PERIOD, MULTIPLIED BY THE NUMBER OF DAYS IN THE MOST RECENT FISCAL HALF-YEAR, THEN DIVIDED BY 366 TO REFLECT THE ONE-HALF YEAR PERIOD. ACTUAL RETURN AS CALCULATED IN THE ABOVE TABLE IS BASED ON THE FUND'S CLASS C RETURN FOR THE PAST SIX MONTHS. WHILE REQUIRED TO BE PRESENTED IN THIS FORMAT, IT IS NOT THE CLASS' ACTUAL CLASS RETURN FOR THE YEAR ENDED SEPTEMBER 30, 2004. THE CLASS' ACTUAL RETURN AT NAV FOR THE FISCAL YEAR ENDED WAS 0.58%. UTILIZING THIS RETURN IN THE ABOVE CALCULATION YIELDS AN ENDING ACCOUNT VALUE AT SEPTEMBER 30, 2004 OF $1,005.80. 29 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund - -------------------------------------------------------------------------------- TEN LARGEST HOLDINGS AT SEPTEMBER 30, 2004 (AS A PERCENTAGE OF NET ASSETS)(c) - -------------------------------------------------------------------------------- 1. Lyondell Chemical Co. 4.0% 2. BJ Services Co. 3.9% 3. VeriSign, Inc. 3.8% 4. Global Payments, Inc. 3.7% 5. Williams-Sonoma, Inc. 3.6% 6. Juniper Networks, Inc. 3.6% 7. Kinetic Concepts, Inc. 3.5% 8. L-3 Communications Holdings, Inc. 3.5% 9. Chicago Mercantile Exchange Holdings, Inc. 3.5% 10. Sherwin-Williams Co. (The) 3.5% SCHEDULE OF INVESTMENTS AT SEPTEMBER 30, 2004 SHARES VALUE ------ ----------- DOMESTIC COMMON STOCKS--99.1% AEROSPACE & DEFENSE--3.5% L-3 Communications Holdings, Inc. .................. 49,720 $ 3,331,240 APPAREL RETAIL--2.4% Chico's FAS, Inc.(b) ............................... 65,500 2,240,100 APPAREL, ACCESSORIES & LUXURY GOODS--3.1% Coach, Inc.(b) ..................................... 68,230 2,894,317 BIOTECHNOLOGY--2.6% Genzyme Corp.(b) ................................... 44,590 2,426,141 CASINOS & GAMING--6.4% International Game Technology ...................... 82,010 2,948,259 Station Casinos, Inc. .............................. 63,660 3,121,885 ----------- 6,070,144 ----------- COMMODITY CHEMICALS--4.0% Lyondell Chemical Co. .............................. 166,310 3,735,323 COMMUNICATIONS EQUIPMENT--3.6% Juniper Networks, Inc.(b) .......................... 141,600 3,341,760 COMPUTER STORAGE & PERIPHERALS--3.0% Lexmark International, Inc. Class A(b) ............. 33,770 2,837,018 DATA PROCESSING & OUTSOURCED SERVICES--6.4% Alliance Data Systems Corp.(b) ..................... 63,080 2,558,525 Global Payments, Inc. .............................. 65,370 3,500,563 ----------- 6,059,088 ----------- HEALTH CARE DISTRIBUTORS--2.1% McKesson Corp. ..................................... 75,840 1,945,296 HEALTH CARE EQUIPMENT--3.5% Kinetic Concepts, Inc.(b) .......................... 63,400 3,331,670 HEALTH CARE FACILITIES--3.1% Triad Hospitals, Inc.(b) ........................... 83,880 2,888,827 HEALTH CARE SERVICES--3.0% Caremark Rx, Inc.(b) ............................... 87,300 2,799,711 SHARES VALUE ------ ----------- HOME IMPROVEMENT RETAIL--3.4% Sherwin-Williams Co. (The) ......................... 73,850 $ 3,246,446 INTERNET SOFTWARE & SERVICES--3.8% VeriSign, Inc.(b) .................................. 181,880 3,615,774 OIL & GAS EQUIPMENT & SERVICES--3.9% BJ Services Co. .................................... 70,800 3,710,628 PAPER PRODUCTS--2.6% Georgia-Pacific Corp. .............................. 67,320 2,420,154 PERSONAL PRODUCTS--2.9% Estee Lauder Cos., Inc. (The) Class A .............. 66,110 2,763,398 PHARMACEUTICALS--6.1% Allergan, Inc. ..................................... 34,770 2,522,563 Eon Labs, Inc.(b) .................................. 15,510 336,567 Sepracor, Inc.(b) .................................. 59,250 2,890,215 ----------- 5,749,345 ----------- RESTAURANTS--2.4% Darden Restaurants, Inc. ........................... 95,050 2,216,566 SEMICONDUCTOR EQUIPMENT--2.2% KLA-Tencor Corp.(b) ................................ 49,650 2,059,482 SEMICONDUCTORS--2.4% Microchip Technology, Inc. ......................... 84,130 2,258,049 SPECIALIZED FINANCE--3.5% Chicago Mercantile Exchange Holdings, Inc. ......... 20,140 3,248,582 SPECIALTY CHEMICALS--3.2% Rohm and Haas Co. .................................. 69,910 3,004,033 SPECIALTY STORES--8.1% Bed Bath & Beyond, Inc.(b) ......................... 49,900 1,851,790 Staples, Inc. ...................................... 80,570 2,402,597 Williams-Sonoma, Inc.(b) ........................... 89,400 3,356,971 ----------- 7,611,358 ----------- SYSTEMS SOFTWARE--2.2% Adobe Systems, Inc. ................................ 41,890 2,072,298 See Notes to Financial Statements 30 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund SHARES VALUE ------ ----------- THRIFTS & MORTGAGE FINANCE--2.9% MGIC Investment Corp. .............................. 40,780 $ 2,713,910 WIRELESS TELECOMMUNICATION SERVICES--2.8% Nextel Partners, Inc. Class A(b) ................... 161,760 2,681,981 - ----------------------------------------------------------------------------- TOTAL DOMESTIC COMMON STOCKS (IDENTIFIED COST $88,166,006) 93,272,639 - ----------------------------------------------------------------------------- TOTAL INVESTMENTS--99.1% (IDENTIFIED COST $88,166,006) 93,272,639(a) Other assets and liabilities, net--0.9% 827,111 ----------- NET ASSETS--100.0% $94,099,750 =========== (a) Federal Income Tax Information: Net unrealized appreciation of investment securities is comprised of gross appreciation of $8,153,962 and gross depreciation of $3,047,329 for federal income tax purposes. At September 30, 2004, the aggregate cost of securities for federal income tax purposes was $88,166,006. (b) Non-income producing. (c) Table excludes short-term obligations. See Notes to Financial Statements 31 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund STATEMENT OF ASSETS AND LIABILITIES SEPTEMBER 30, 2004 ASSETS Investment securities at value (Identified cost $88,166,006) $ 93,272,639 Receivables Investment securities sold 1,342,697 Fund shares sold 39,207 Dividends and interest 11,698 Prepaid expenses 25,434 ------------ Total assets 94,691,675 ------------ LIABILITIES Cash overdraft 41,893 Payables Fund shares repurchased 311,781 Investment advisory fee 74,996 Transfer agent fee 55,192 Distribution and service fees 41,572 Professional fees 35,488 Financial agent fee 7,579 Trustees' fee 2,524 Accrued expenses 20,900 ------------ Total liabilities 591,925 ------------ NET ASSETS $ 94,099,750 ============ NET ASSETS CONSIST OF: Capital paid in on shares of beneficial interest $167,620,686 Accumulated net realized loss (78,627,569) Net unrealized appreciation 5,106,633 ------------ NET ASSETS $ 94,099,750 ============ CLASS X Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $13,606,065) 899,258 Net asset value and offering price per share $15.13 CLASS A Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $40,058,464) 2,716,725 Net asset value per share $14.75 Offering price per share $14.75/(1-5.75%) $15.65 CLASS B Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $18,611,952) 1,333,006 Net asset value and offering price per share $13.96 CLASS C Shares of beneficial interest outstanding, $1 par value, unlimited authorization (Net Assets $21,823,269) 1,562,983 Net asset value and offering price per share $13.96 STATEMENT OF OPERATIONS YEAR ENDED SEPTEMBER 30, 2004 INVESTMENT INCOME Dividends $ 700,279 Interest 12,504 ----------- Total investment income 712,783 ----------- EXPENSES Investment advisory fee 1,028,470 Service fees, Class A 142,616 Distribution and service fees, Class B 233,468 Distribution and service fees, Class C 299,019 Financial agent fee 113,505 Transfer agent 309,630 Printing 73,090 Professional 34,357 Custodian 19,724 Trustees 10,463 Miscellaneous 12,359 ----------- Total expenses 2,276,701 Less expenses reimbursed by investment adviser (126,819) Custodian fees paid indirectly (31) ----------- Net expenses 2,149,851 ----------- NET INVESTMENT LOSS (1,437,068) ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS Net realized gain on investments 4,100,834 Net change in unrealized appreciation (depreciation) on investments 611,661 ----------- NET GAIN ON INVESTMENTS 4,712,495 ----------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 3,275,427 =========== See Notes to Financial Statements 32 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund STATEMENT OF CHANGES IN NET ASSETS
Year Ended Year Ended 9/30/04 9/30/03 ------------ ------------ FROM OPERATIONS Net investment income (loss) $ (1,437,068) $ (1,740,406) Net realized gain (loss) 4,100,834 (9,256,160) Net change in unrealized appreciation (depreciation) 611,661 33,021,742 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 3,275,427 22,025,176 ------------ ------------ FROM SHARE TRANSACTIONS CLASS X Proceeds from sales of shares (418,890 and 567,444 shares, respectively) 6,763,471 7,557,348 Cost of shares repurchased (729,650 and 254,379 shares, respectively) (11,616,620) (3,346,680) ------------ ------------ Total (4,853,149) 4,210,668 ------------ ------------ CLASS A Proceeds from sales of shares (638,034 and 1,673,842 shares, respectively) 9,966,592 22,497,136 Cost of shares repurchased (2,278,645 and 2,734,805 shares, respectively) (35,315,811) (36,063,026) ------------ ------------ Total (25,349,219) (13,565,890) ------------ ------------ CLASS B Proceeds from sales of shares (113,481 and 251,861 shares, respectively) 1,682,816 3,179,186 Cost of shares repurchased (522,593 and 426,167 shares, respectively) (7,548,596) (5,331,313) ------------ ------------ Total (5,865,780) (2,152,127) ------------ ------------ CLASS C Proceeds from sales of shares (176,158 and 417,888 shares, respectively) 2,642,935 5,334,001 Cost of shares repurchased (927,935 and 762,053 shares, respectively) (13,409,828) (9,688,751) ------------ ------------ Total (10,766,893) (4,354,750) ------------ ------------ INCREASE (DECREASE) IN NET ASSETS FROM SHARE TRANSACTIONS (46,835,041) (15,862,099) ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (43,559,614) 6,163,077 NET ASSETS Beginning of period 137,659,364 131,496,287 ------------ ------------ END OF PERIOD [INCLUDING UNDISTRIBUTED NET INVESTMENT INCOME OF $0 AND $0, RESPECTIVELY] $ 94,099,750 $137,659,364 ============ ============
See Notes to Financial Statements 33 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS X ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $14.88 $12.51 $15.70 $31.18 $17.78 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) (0.09) (0.11) (0.13) (0.14) (0.19) Net realized and unrealized gain (loss) 0.34 2.48 (3.06) (12.91) 15.65 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.25 2.37 (3.19) (13.05) 15.46 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized gains -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ Change in net asset value 0.25 2.37 (3.19) (15.48) 13.40 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $15.13 $14.88 $12.51 $15.70 $31.18 ====== ====== ====== ====== ====== Total return 1.68 % 18.94 % (20.32)% (44.25)% 91.81 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $13,606 $18,005 $11,219 $14,198 $23,016 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 1.13 % 1.15 % 1.15 % 1.15 % 1.27 % Gross operating expenses 1.13 % 1.24 % 1.24 % 1.22 % 1.43 % Net investment income (loss) (0.57)% (0.77)% (0.75)% (0.61)% (0.72)% Portfolio turnover 200 % 164 % 135 % 96 % 124 % CLASS A ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $14.54 $12.25 $15.41 $30.75 $17.60 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) (0.13) (0.13) (0.16) (0.19) (0.24) Net realized and unrealized gain (loss) 0.34 2.42 (3.00) (12.72) 15.45 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.21 2.29 (3.16) (12.91) 15.21 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized gains -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ Change in net asset value 0.21 2.29 (3.16) (15.34) 13.15 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $14.75 $14.54 $12.25 $15.41 $30.75 ====== ====== ====== ====== ====== Total return(2) 1.44 % 18.69 % (20.51)% (44.42)% 91.30 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $40,058 $63,365 $66,384 $66,411 $50,150 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 1.40 % 1.40 % 1.40 % 1.40 % 1.47 % Gross operating expenses 1.51 % 1.55 % 1.46 % 1.40 % 1.59 % Net investment income (loss) (0.85)% (1.01)% (0.99)% (0.86)% (0.91)% Portfolio turnover 200 % 164 % 135 % 96 % 124 % (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation.
See Notes to Financial Statements 34 Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund FINANCIAL HIGHLIGHTS (SELECTED DATA FOR A SHARE OUTSTANDING THROUGHOUT THE INDICATED PERIOD)
CLASS B ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $13.87 $11.78 $14.93 $30.09 $17.41 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) (0.23) (0.23) (0.28) (0.34) (0.45) Net realized and unrealized gain (loss) 0.32 2.32 (2.87) (12.39) 15.19 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.09 2.09 (3.15) (12.73) 14.74 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized gains -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ Change in net asset value 0.09 2.09 (3.15) (15.16) 12.68 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $13.96 $13.87 $11.78 $14.93 $30.09 ====== ====== ====== ====== ====== Total return(2) 0.65 % 17.74 % (21.10)% (44.83)% 89.49 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $18,612 $24,172 $22,577 $23,519 $15,879 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.15 % 2.15 % 2.15 % 2.15 % 2.29 % Gross operating expenses 2.36 % 2.46 % 2.43 % 2.34 % 2.70 % Net investment income (loss) (1.59)% (1.76)% (1.74)% (1.61)% (1.73)% Portfolio turnover 200 % 164 % 135 % 96 % 124 % CLASS C ---------------------------------------------------------- YEAR ENDED SEPTEMBER 30, ---------------------------------------------------------- 2004 2003 2002 2001 2000 Net asset value, beginning of period $13.88 $11.78 $14.93 $30.08 $17.40 INCOME FROM INVESTMENT OPERATIONS: Net investment income (loss)(1) (0.23) (0.22) (0.28) (0.34) (0.45) Net realized and unrealized gain (loss) 0.31 2.32 (2.87) (12.38) 15.19 ------ ------ ------ ------ ------ TOTAL FROM INVESTMENT OPERATIONS 0.08 2.10 (3.15) (12.72) 14.74 ------ ------ ------ ------ ------ LESS DISTRIBUTIONS: Distributions from net realized gains -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ TOTAL DISTRIBUTIONS -- -- -- (2.43) (2.06) ------ ------ ------ ------ ------ Change in net asset value 0.08 2.10 (3.15) (15.15) 12.68 ------ ------ ------ ------ ------ NET ASSET VALUE, END OF PERIOD $13.96 $13.88 $11.78 $14.93 $30.08 ====== ====== ====== ====== ====== Total return(2) 0.58 % 17.83 % (21.10)% (44.81)% 89.54 % RATIOS/SUPPLEMENTAL DATA: Net assets, end of period (thousands) $21,823 $32,118 $31,317 $30,874 $18,218 RATIO TO AVERAGE NET ASSETS OF: Net operating expenses 2.15 % 2.15 % 2.15 % 2.15 % 2.25 % Gross operating expenses 2.20 % 2.26 % 2.21 % 2.20 % 2.65 % Net investment income (loss) (1.60)% (1.76)% (1.74)% (1.61)% (1.68)% Portfolio turnover 200 % 164 % 135 % 96 % 124 % (1) Computed using average shares outstanding. (2) Sales charges are not reflected in total return calculation.
See Notes to Financial Statements 35 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 1. ORGANIZATION 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 an open-end management investment company. Currently, three Funds are offered for sale (each a "Fund"). Phoenix-Seneca Bond Fund is diversified and has an investment objective of high total return from both current income and capital appreciation. Phoenix-Seneca Equity Income Fund (formerly Phoenix-Seneca Real Estate Securities Fund) is non-diversified and has an investment objective of high total return in both current income and long-term capital appreciation. Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund is diversified and has an investment objective of capital appreciation. Each Fund offers Class X, Class A, Class B, and Class C shares. Class X shares are sold without a sales charge. Class A shares of Bond Fund are sold with a front-end sales charge of up to 4.75%. Class A shares of Equity Income Fund and Mid-Cap "EDGE"(SM) Fund are sold with a front-end sales charge of up to 5.75%. 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. Each class of shares has identical voting, dividend, liquidation and other rights and the same terms and conditions, except that each class bears different distribution and/or service expenses and has exclusive voting rights with respect to its distribution plan. Class X bears no distribution and/or service expenses. Income and expenses and realized and unrealized gains and losses of each Fund are borne pro rata by the holders of each class of shares, except for transfer agent and registration expenses which are unique to each class. 2. SIGNIFICANT ACCOUNTING POLICIES 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 accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, disclosure of contingent assets and liabilities; revenues and expenses. Actual results could differ from those estimates. A. SECURITY VALUATION: Equity securities are valued at the official closing price (typically last sale) on the exchange on which the securities are primarily traded, or if no closing price is available, at the last bid price. 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. As required some securities and assets are valued at fair value as determined in good faith by or under the direction of the Trustees. Certain foreign common stocks may be fair valued in cases where closing prices are not readily available or are deemed not reflective of readily available market prices. For example, significant events (such as movement in the U.S. securities market, or other regional and local developments) may occur between the time that foreign markets close (where the security is principally traded) and the time that the Fund calculates its net asset value (generally, the close of the NYSE) that may impact the value of securities traded in these foreign markets. In these cases, information from an external vendor may be utilized to adjust closing market prices of certain foreign common stocks to reflect their fair value. Because the frequency of significant events is not predictable, fair valuation of certain foreign common stocks may occur on a frequent basis. Short-term investments having a remaining maturity of 60 days or less are valued at amortized cost, which approximates market. 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. Each Fund amortizes premiums and accretes 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 in the Trust to comply with the requirements of the Internal Revenue Code (the "Code") and to distribute substantially 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. The Funds may be subject to foreign taxes on income, gains on investments or currency repatriation, a portion of which may be recoverable. The Funds will accrue such taxes and recoveries as applicable, based upon their current interpretations of the tax rules and regulations that exist in the markets in which they invest. 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 accounting principles generally accepted in the United States of America. These differences may include the treatment of non-taxable dividends, market premium and discount, non-deductible expenses, expiring capital loss carryovers, foreign currency gain or loss, gain or loss on futures contracts, partnerships, operating losses and losses deferred due to wash sales. Permanent book and tax basis differences relating to 36 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (CONTINUED) shareholder distributions will result in reclassifications to capital paid in on shares of beneficial interest. 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 effective at the trade date. The gain or loss resulting from a change in currency exchange rates between the trade and settlement date 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 Funds do 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. 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. At September 30, 2004, the Trust had no options outstanding. G. EXPENSES: Expenses incurred with respect to more than one Fund are allocated in proportion to the net assets of each Fund, except where allocation of direct expense to each Fund or an alternative allocation method can be more fairly made. 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. Expenses that relate to the distribution of shares or services provided to a particular class are allocated to that class. H. 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. I. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS: Each Fund may engage in when-issued or delayed delivery transactions. Each Fund records when-issued securities on the trade date and maintains collateral for the securities purchased. Securities purchased on a when-issued or delayed delivery basis begin earning interest on the settlement date. J. FOREIGN SECURITY COUNTRY DETERMINATION: A combination of the following criteria is used to assign the countries of risk listed in the schedules of investments: Country of incorporation, actual building address, primary exchange on which security is traded and country in which the greatest percentage of company revenue is generated. 3. INVESTMENT ADVISORY FEE AND RELATED PARTY TRANSACTIONS As compensation for its services to the Trust, Phoenix Investment Counsel, Inc. (the "Adviser"), an indirect, wholly-owned subsidiary of The Phoenix Companies, Inc. ("PNX") is entitled to 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% Equity Income Fund ................................................. 0.85% Mid-Cap "EDGE"(SM) Fund ............................................ 0.80% The Adviser has voluntarily agreed to reimburse each Fund's operating expenses through January 31, 2005, 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% Equity Income Fund ............... 2.35% 3.05% 3.80% 3.80% Mid-Cap "EDGE"(SM) Fund .......... 1.15% 1.40% 2.15% 2.15% The Adviser will not seek to recapture any prior years' reimbursed or waived investment advisory fees. 37 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (CONTINUED) Seneca Capital Management LLC ("Seneca") is the subadviser to each of the Funds. A majority of the equity interests of Seneca are owned by Phoenix Investment Partners, Ltd. ("PXP"), an indirect, wholly-owned subsidiary of PNX. The Adviser pays the subadviser a fee based upon the following annual rates as a percentage of the average daily net assets of each Fund: Bond Fund .......................................................... 0.25% Equity Income Fund ................................................. 0.425% Mid-Cap "EDGE"(SM) Fund ............................................ 0.40% As Distributor of the Trust's shares, Phoenix Equity Planning Corporation ("PEPCO"), an indirect, wholly-owned subsidiary of PNX, has advised the Trust that it retained net selling commissions and deferred sales charges for the period ended September 30, 2004, as follows: Class A Class B Class C Net Selling Deferred Deferred Commissions Sales Charges Sales Charges ----------- ------------- ------------- Bond Fund .................... $1,378 $ 39,477 $ 168 Equity Income Fund ........... 1,642 3,456 228 Mid-Cap "EDGE"(SM) Fund ...... 4,798 101,511 8,605 In addition to these amounts, for the period October 1, 2003 to May 31, 2004, the following was paid to W.S. Griffith Securities, Inc., an indirect subsidiary of PNX, for Class A net selling commissions: Bond Fund .................... $1,056 Equity Income Fund ........... 942 Mid-Cap "EDGE"(SM) Fund ...... 4,236 W.S. Griffith Securities, Inc. no longer writes any business for the Funds. In addition, each Fund pays PEPCO distribution and/or service fees at an annual rate of 0.25% for Class A shares, 1.00% for Class B shares and 1.00% for Class C shares applied to the average daily net assets of each respective Class. PEPCO has advised the Trust of the following information for the period ended September 30, 2004: Distribution Distribution Distribution and/or and/or Service and/or Service Service Fees Fees Paid to Fees Paid to Retained by Unaffiliated W.S. Griffith Distributor Participants Securities, Inc.(1) ------------ -------------- ------------------- Bond Fund ............... $ 88,525 $100,157 $1,878 Equity Income Fund ...... 21,507 19,710 804 Mid-Cap "EDGE"(SM) Fund . 473,898 197,704 3,501 (1) For the period ended May 31, 2004. Under certain circumstances, shares of certain Phoenix Funds may be exchanged for shares of the same class of certain other Phoenix Funds on the basis of the relative net asset values per share at the time of the exchange. On exchanges with share classes that carry a contingent deferred sales charge, the CDSC schedule of the original shares purchased continues to apply. As Financial Agent of the Trust, PEPCO receives a financial agent fee equal to the sum of (1) the documented cost to PEPCO to provide tax services and oversight of the performance of PFPC Inc. (subagent to PEPCO) plus (2) the documented cost of fund accounting and related services provided by PFPC Inc. The fee schedule of PFPC Inc. ranges from 0.065% to 0.03% of the average daily net asset values of each Fund. Certain minimum fees may apply. For the period ended September 30, 2004, the Trust incurred PEPCO financial agent fees totaling $242,004. PEPCO serves as the Trust's Transfer Agent with State Street Bank and Trust Company serving as sub-transfer agent. For the period ended September 30, 2004, transfer agent fees were $490,458 as reported in the Statements of Operations, of which PEPCO retained the following: Transfer Agent Fee Retained -------------- Bond Fund .................................................... -- Equity Income Fund ........................................... -- Mid-Cap "EDGE"(SM) Fund ...................................... $59,303 At September 30, 2004, PNX and its affiliates, and the retirement plans of PNX and its affiliates, held shares of the Trust which aggregated the following: Aggregate Net Asset Shares Value ------ --------- Bond Fund Class A ................................. 1,296,460 $13,781,370 Equity Income Fund Class B ................................. 9,831 160,835 Class C ................................. 9,831 161,327 4. PURCHASE AND SALE OF SECURITIES Purchases and sales of securities during the period ended September 30, 2004 (excluding U.S. Government and agency securities, short-term securities and options) were as follows: Purchases Sales ------------ ------------ Bond Fund .................................. $ 56,703,145 $ 54,400,872 Equity Income Fund ......................... 41,000,589 39,845,238 Mid-Cap "EDGE"(SM) Fund .................... 244,785,077 280,723,163 Purchases and sales of long-term U.S. Government and agency securities during the period ended September 30, 2004 were as follows: Purchases Sales ------------ ------------ Bond Fund .................................. $46,410,130 $44,503,649 38 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (CONTINUED) Written call option activity for the period ended September 30, 2004 was as follows: Equity Income Fund ---------------------- Number of Amount of Options Premiums --------- --------- Options outstanding at September 30, 2003 ........ -- $ -- Options written .................................. 500 49,462 Options expired .................................. -- -- Options closed ................................... (500) (49,462) Options exercised ................................ -- -- ---- -------- Options outstanding at September 30, 2004 ........ -- -- ==== ======== 5. 10% SHAREHOLDERS As of September 30, 2004, certain Funds had single shareholder and omnibus shareholder accounts (which are comprised of a group of individual shareholders), which individually amounted to more than 10% of the total shares outstanding. Neither shareholder is affiliated with PNX. Number of % of Shares Accounts Outstanding --------- ----------- Equity Income Fund ......................... 1 Account 54.5% Mid-Cap "EDGE"(SM) Fund .................... 1 Omnibus Account 13.6% 6. CREDIT RISK AND ASSET CONCENTRATIONS 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. Certain funds may invest a high percentage of their assets in specific sectors of the market in their pursuit of a greater investment return. Fluctuations in these sectors of concentration may have a greater impact on a fund, positive or negative, than if a fund did not concentrate its investments in such sectors. High yield/high risk debt securities typically entail greater price volatility and/or principal and interest rate risk. There is a greater chance that an issuer will not be able to make principal and interest payments on time. Analysis of the creditworthiness of issuers of high yield securities may be complex and as a result, it may be more difficult for the Adviser to accurately predict risk. 7. ILLIQUID AND RESTRICTED SECURITIES Investments shall be considered illiquid if they cannot be disposed of in seven days in the ordinary course of business at the approximate amount at which such securities have been valued by the Fund. Additionally, the following information is also considered in determining illiquidity: the frequency of trades and quotes for the investment, whether the investment is listed for trading on a recognized domestic exchange and/or whether two or more brokers are willing to purchase or sell the security at a comparable price, the extent of market making activity in the investment and the nature of the market for investment. Illiquid securities are footnoted as such at the end of the Fund's Schedule of Investments where applicable. Restricted securities are illiquid securities, as defined above, not registered under the Securities Act of 1933. Generally, 144A securities are excluded from this category, except where defined as illiquid. At September 30, 2004, the Trust held the following restricted securities: Market % of Acquisition Acquisition Value Net Assets Equity Income Fund Date Cost at 9/30/04 at 9/30/04 - ------------------ ----------- ----------- ---------- ---------- NorthStar Capital Investment Corp. Shares 20,000 ... 12/17/97 $400,000 Shares 15,000 ... 3/24/98 320,625 -------- $720,625 $420,000 1.5% ======== At the end of the period, the value of restricted securities amounted to $420,000 or 1.5% of net assets. The Fund will bear any costs, including those involved in registration under the Securities Act of 1933, in connection with the disposition of such securities. 8. FEDERAL INCOME TAX INFORMATION The Funds have capital loss carryovers, which may be used to offset future capital gains, as follows: Expiration Year ------------------------------------- Fund 2010 2011 Total - ---- ----------- ----------- ----------- Mid-Cap "EDGE"(SM) Fund .................. $38,911,392 $39,716,177 $78,627,569 A Fund may not realize the benefit of these losses to the extent it does not realize gains on investments prior to the expiration of the capital loss carryovers. For the period ended September 30, 2004, the Funds utilized losses deferred in prior years against current year capital gains as follows: Mid-Cap "EDGE"(SM) Fund .......................... $4,100,834 39 PHOENIX-SENECA FUNDS NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 2004 (CONTINUED) The components of distributable earnings on a tax basis (excluding unrealized appreciation (depreciation) which is disclosed in the Schedules of Investments) consist of undistributed ordinary income and undistributed long-term capital gains as follows: Undistributed Undistributed Ordinary Long-Term Income Capital Gains ------------- ------------- Bond Fund .................................. $ 50,931 $ 376,303 Equity Income Fund ......................... 418,594 3,440,193 Mid-Cap "EDGE"(SM) Fund .................... -- -- The differences between the book and tax basis components of distributable earnings relate principally to the timing of recognition of income and gains for federal income tax purposes. Short-term gain distributions reported in the Statements of Changes in Net Assets, if any, are reported as ordinary income for federal tax purposes. 9. RECLASSIFICATION OF CAPITAL ACCOUNTS For financial reporting purposes, book basis capital accounts are adjusted to reflect the tax character of permanent book/tax differences. Permanent reclassifications can arise primarily from differing treatments of certain income and gain transactions, nondeductible current year operating losses, expiring capital loss carryovers, and investments in passive foreign investment companies. The reclassifications have no impact on the net assets or net asset value of the Funds. For the period ended September 30, 2004 the Funds recorded reclassifications to increase (decrease) the accounts listed below: Capital Paid in on Shares of Accumulated Undistributed Beneficial Net Realized Net Investment Interest Gain (Loss) Income (Loss) ------------ ------------ -------------- Mid-Cap "EDGE"SM Fund .... $(1,437,068) $ -- $1,437,068 10. OTHER Effective December 3, 2003, the Equity Income Fund changed its name from Phoenix-Seneca Real Estate Securities Fund to Phoenix-Seneca Equity Income Fund. 11. PROXY VOTING PROCEDURES (UNAUDITED) The Adviser and subadviser vote proxies relating to portfolio securities in accordance with procedures that have been approved by the Trust's Board of Trustees. You may obtain a description of these procedures, free of charge, by calling toll-free 800-243-1574. These procedures and information regarding how the Funds voted proxies during the most recent twelve-month period ended June 30, is also available through the Securities and Exchange Commission's website at http://www.sec.gov. 12. FORM N-Q INFORMATION (UNAUDITED) The Funds will be filing complete schedules of portfolio holdings with the Securities and Exchange Commission (the "SEC") for the first and third quarters of each fiscal year on Form N-Q. Each Fund's Form N-Q will be available on the SEC's website at http://www.sec.gov. Furthermore, each Fund's Form N-Q may be reviewed and copied at the SEC's Public Reference Room. Information on the operation of the SEC's Public Reference Room can be obtained at http://www.sec.gov/info/edgar/prrules.htm. This is a new filing requirement by the SEC. The initial Form N-Q filing for these Funds will be as of December 31, 2004 and will be available on the SEC's website on or about March 1, 2005. - -------------------------------------------------------------------------------- TAX INFORMATION NOTICE (UNAUDITED) For the fiscal year ended September 30, 2004, for federal income tax purposes, 10% of the ordinary income dividends paid by the Equity Income Fund qualify for the dividends received deduction for corporate shareholders. Effective for the fiscal year ended September 30, 2004, the Equity Income Fund hereby designates 10%, or the maximum allowable of its ordinary income dividends to qualify for the lower tax rate applicable to individual shareholders. The actual percentage for the calendar year will be designated in the year-end tax statements. For the fiscal year ended September 30, 2004, the Funds designated long-term capital gains dividends as follows: Bond Fund .............................................. $ 376,303 Equity Income Fund ..................................... 3,990,562 - -------------------------------------------------------------------------------- 40 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM [GRAPHIC OMITTED] PRICEWATERHOUSECOOPERS To the Board of Trustees of Phoenix-Seneca Funds and Shareholders of Phoenix-Seneca Bond Fund Phoenix-Seneca Equity Income Fund Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, 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 Phoenix-Seneca Bond Fund, Phoenix-Seneca Equity Income Fund (formerly Phoenix-Seneca Real Estate Securities Fund) and Phoenix-Seneca Mid-Cap "EDGE"(SM) Fund (constituting Phoenix-Seneca Funds, hereafter referred to as the "Trust") at September 30, 2004 and the results of each of their operations, the changes in each of their net assets and their financial highlights for each of the periods indicated, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Trust's 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards 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, 2004 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. /s/ PRICEWATERHOUSECOOPERS LLP Boston, Massachusetts November 12, 2004 41 FUND MANAGEMENT Information pertaining to the Trustees and officers of the Trust is set forth below. The statement of additional information (SAI) includes additional information about the Trustees and is available without charge, upon request, by calling (800) 243-4361. The address of each individual, unless otherwise noted, is 56 Prospect Street, Hartford, CT 06115-0480. There is no stated term of office for Trustees of the Trust.
INDEPENDENT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF PORTFOLIOS IN FUND COMPLEX PRINCIPAL OCCUPATION(S) NAME, ADDRESS AND LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND DATE OF BIRTH TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ E. Virgil Conway Served since 35 Chairman, Rittenhouse Advisors, LLC (consulting firm) since 2001. Rittenhouse Advisors, LLC 2000. Trustee/Director, Realty Foundation of New York (1972-present), Pace 101 Park Avenue University (Director/Trustee Emeritus) (1978-present), New York Housing New York, NY 10178 Partnership Development Corp. (Chairman) (1981-present), Greater New DOB: 8/2/29 York Councils, Boy Scouts of America (1985-present), The Academy of Political Science (Vice Chairman) (1985-present), Urstadt Biddle Property Corp. (1989-present), The Harlem Youth Development Foundation, Chairman (1998-2002). Colgate University (Trustee Emeritus) (since 2004). Chairman/Director, Metropolitan Transportation Authority (1992-2001). Director, Trism, Inc. (1994-2001), Consolidated Edison Company of New York, Inc. (1970-2002), Atlantic Mutual Insurance Company (1974-2002), Centennial Insurance Company (1974-2002), Josiah Macy, Jr., Foundation (1975-present), Union Pacific Corp. (1978-2002), BlackRock Freddie Mac Mortgage Securities Fund (Advisory Director) (1990-2000), Accuhealth (1994-2002). - ------------------------------------------------------------------------------------------------------------------------------------ Harry Dalzell-Payne Served since 35 Currently retired. The Flat, Elmore Court 1999. Elmore, GL0S, GL2 3NT U.K. DOB: 8/9/29 - ------------------------------------------------------------------------------------------------------------------------------------ Geraldine M. McNamara Served since 35 Managing Director, U.S. Trust Company of New York (private bank) U.S. Trust Company of 2001. (1982-present). New York 11 West 54th Street New York, NY 10019 DOB: 4/17/51 - ------------------------------------------------------------------------------------------------------------------------------------ Everett L. Morris Served since 35 Currently retired, Vice President, W.H. Reaves and Company (investment 164 Laird Road 2000. management) (1993-2003). Colts Neck, NJ 07722 DOB: 5/26/28 - ------------------------------------------------------------------------------------------------------------------------------------
42 FUND MANAGEMENT (CONTINUED) INTERESTED TRUSTEES Each of the individuals listed below is an "interested person" of the Trust, as defined in Section 2(a)(19) of the Investment Company Act of 1940, as amended, and the rules and regulations thereunder.
- ------------------------------------------------------------------------------------------------------------------------------------ NUMBER OF NAME, ADDRESS, PORTFOLIOS IN DATE OF BIRTH FUND COMPLEX PRINCIPAL OCCUPATION(S) AND POSITION(S) LENGTH OF OVERSEEN BY DURING PAST 5 YEARS AND WITH TRUST TIME SERVED TRUSTEE OTHER DIRECTORSHIPS HELD BY TRUSTEE - ------------------------------------------------------------------------------------------------------------------------------------ *Philip R. McLoughlin Served since 66 Consultant, Phoenix Investment Partners, Ltd. (2002-present). Director, DOB: 10/23/46 1999. PXRE Corporation (Delaware) (1985-present), World Trust Fund (1991-present). Chairman (1997-2002), Director (1995-2002), Vice Chairman Chairman (1995-1997) and Chief Executive Officer (1995-2002), Phoenix Investment Partners, Ltd. Director and Executive Vice President, (2000-2002), The Phoenix Companies, Inc., Director (1994-2002) and Executive Vice President, Investments (1987-2002), Phoenix Life Insurance Company. Director (1983-2002) and Chairman (1995-2002), Phoenix Investment Counsel, Inc. Director (1982-2002) and President (1982-2000), Phoenix Equity Planning Corporation. Chairman and President, Phoenix/Zweig Advisers LLC (2001-2002). Director (2001-2002) and President (April 2002-September 2002), Phoenix Investment Management Company. Director and Executive Vice President, Phoenix Life and Annuity Company (1996-2002). Director (1995-2000) and Executive Vice President and Chief Investment Officer (1994-2002), PHL Variable Insurance Company. Director, Phoenix National Trust Holding Company (2001-2002). Director (1985-2002), Vice President (1986-2002), and Executive Vice President (2002-2002), PM Holdings, Inc. Director, W.S. Griffith Associates, Inc. (1995-2002). Director (1992-2002) and President (1993-1994), W.S. Griffith Securities, Inc. - ------------------------------------------------------------------------------------------------------------------------------------ * Mr. McLoughlin is an "interested person," as defined in the Investment Company Act of 1940, by reason of his relationship with Phoenix Investment Partners, Ltd. and its affiliates.
43 FUND MANAGEMENT (CONTINUED)
OFFICERS OF THE TRUST WHO ARE NOT TRUSTEES - ------------------------------------------------------------------------------------------------------------------------------------ POSITION(S) HELD WITH NAME, ADDRESS AND TRUST AND LENGTH OF PRINCIPAL OCCUPATION(S) DATE OF BIRTH TIME SERVED DURING PAST 5 YEARS - ------------------------------------------------------------------------------------------------------------------------------------ Gail P. Seneca President since 1996. President and Chief Executive and Investment Officer, Seneca Capital 909 Montgomery Street Management LLC (1996-present). Managing Director, Equities, Phoenix San Francisco, CA 94133 Investment Counsel, Inc. (1998-present). Managing General Partner and Chief DOB: 3/7/53 Executive and Investment Officer, GMG/Seneca Capital Management LP (1989-present). President, GenCap, Inc. (1994-present). Trustee, Phoenix-Seneca Funds (1996-2000). - ------------------------------------------------------------------------------------------------------------------------------------ John F. Sharry Executive Vice President Executive Vice President, Phoenix Investment Partners, Ltd. (1998-present), DOB: 3/28/52 since 2000. President, Phoenix Equity Planning Corporation (2000-present). Senior Vice President, The Phoenix Companies, Inc. (2004 to present). Executive Vice President, certain funds within the Phoenix Fund Complex (1998-present). - ------------------------------------------------------------------------------------------------------------------------------------ Nancy G. Curtiss Treasurer since 2000. Vice President, Fund Accounting (1994-2000), Treasurer (1996-2000), Assistant DOB: 11/24/52 Treasurer (2001-2003), Vice President, Operations (2003-present), Phoenix Equity Planning Corporation. Treasurer, certain funds within the Phoenix Fund Complex (1994-present). - ------------------------------------------------------------------------------------------------------------------------------------ Matthew A. Swendiman Secretary since 2004. Counsel, Phoenix Life Insurance Company (2002-present). Vice President, One American Row Counsel, Chief Legal Officer and Secretary, certain of the funds within the Hartford, CT 06102 Phoenix Fund Complex (2004-present). Assistant Vice President and Assistant DOB: 4/5/73 Counsel, Conseco Capital Management (2000-2002). - ------------------------------------------------------------------------------------------------------------------------------------
44 PHOENIX-SENECA FUNDS 909 Montgomery Street San Francisco, California 94133 TRUSTEES E. Virgil Conway Harry Dalzell-Payne Philip R. McLoughlin, Chairman of the Board Geraldine M. McNamara Everett L. Morris OFFICERS Gail P. Seneca, President John F. Sharry, Executive Vice President Nancy G. Curtiss, Treasurer Matthew A. Swendiman, Chief Legal Officer and Secretary 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 56 Prospect Street Hartford, Connecticut 06115-0480 CUSTODIAN State Street Bank and Trust Company P.O. Box 5501 Boston, Massachusetts 02206-5501 TRANSFER AGENT Phoenix Equity Planning Corporation 56 Prospect Street Hartford, Connecticut 06115-0480 INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM PricewaterhouseCoopers LLP 125 High Street Boston, Massachusetts 02110 HOW TO CONTACT US Mutual Fund Services 1-800-243-1574 Advisor Consulting Group 1-800-243-4361 Text Telephone 1-800-243-1926 Web site PHOENIXINVESTMENTS.COM - -------------------------------------------------------------------------------- IMPORTANT NOTICE TO SHAREHOLDERS The Securities and Exchange Commission has modified mailing regulations for semiannual and annual shareholder fund reports to allow mutual fund companies to send a single copy of these reports to shareholders who share the same mailing address. If you would like additional copies, please call Mutual Fund Services at 1-800-243-1574. - -------------------------------------------------------------------------------- (This page has been left blank intentionally.) (This page has been left blank intentionally.) (This page has been left blank intentionally.) PHOENIX EQUITY PLANNING CORPORATION P.O. Box 150480 Hartford, CT 06115-0480 [GRAPHIC OMITTED] PHOENIX INVESTMENT PARTNERS, LTD. A MEMBER OF THE PHOENIX COMPANIES, INC. For more information about Phoenix mutual funds, please call your financial representative or contact us at 1-800-243-4361 or PHOENIXINVESTMENTS.COM. NOT INSURED BY FDIC/NCUA OR ANY FEDERAL GOVERNMENT AGENCY. NO BANK GUARANTEE. NOT A DEPOSIT. MAY LOSE VALUE. PXP 1140 (11/04) ITEM 2. CODE OF ETHICS. (a) The registrant, as of the end of the period covered by this report, has adopted a code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party. (c) There have been no amendments, during the period covered by this report, to a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, and that relates to any element of the code of ethics description. (d) The registrant has not granted any waivers, including an implicit waiver, from a provision of the code of ethics that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, regardless of whether these individuals are employed by the registrant or a third party, that relates to one or more of the items set forth in paragraph (b) of this item's instructions. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. As of the end of the period covered by the report, the Board of Trustees of the Fund has determined that E. Virgil Conway and Everett L. Morris possess the technical attributes identified in Instruction 2(b) of Item 3 to Form N-CSR to qualify as an "audit committee financial expert". Mr. Conway and Mr. Morris are "independent" trustees pursuant to paragraph (a) (2) of Item 3 to form N-CSR. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Audit Fees - ---------- (a) The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years are $81,060 for 2003 and $81,060 for 2004. Audit-Related Fees - ------------------ (b) The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item are $0 for 2003 and $0 for 2004. Tax Fees - -------- (c) The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning are $14,750 for 2003 and $14,500 for 2004. "Tax Fees" are those primarily associated with review of the Trust's tax provision and qualification as a regulated investment company (RIC) in connection with audits of the Trust's financial statement, review of year-end distributions by the Fund to avoid excise tax for the Trust, periodic discussion with management on tax issues affecting the Trust, and reviewing and signing the Fund's federal income and excise tax returns. All Other Fees - -------------- (d) The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item are $0 for 2003 and $0 for 2004. (e)(1) Disclose the audit committee's pre-approval policies and procedures described in paragraph (c)(7) of Rule 2-01 of Regulation S-X. The Phoenix Seneca Funds (the "Fund") Board has adopted policies and procedures with regard to the pre-approval of services provided by PwC. Audit, audit-related and tax compliance services provided to the Fund on an annual basis require specific pre-approval by the Board. As noted above, the Board must also approve other non-audit services provided to the Fund and those non-audit services provided to the Fund's Affiliated Service Providers that relate directly to the operations and financial reporting of the Fund. Certain of these non-audit services that the Board believes are a) consistent with the SEC's auditor independence rules and b) routine and recurring services that will not impair the independence of the independent auditors may be approved by the Board without consideration on a specific case-by-case basis ("general pre-approval"). The Audit Committee has determined that Mr. E. Virgil Conway, Chair of the Audit Committee, may provide pre-approval for such services that meet the above requirements in the event such approval is sought between regularly scheduled meetings. In the event that Mr. Conway determines that the full board should review the request, he has the opportunity to convene a meeting of the Funds Board. In any event, the Board is informed of each service approved subject to general pre-approval at the next regularly scheduled in-person board meeting. (e)(2) The percentage of services described in each of paragraphs (b) through (d) of this Item that were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X are as follows: 2003 2004 (b) N/A N/A (c) 0% 100% (d) N/A N/A (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than fifty percent. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant was $294,250 for 2003 and $385,928 for 2004. (h) The registrant's audit committee of the board of directors HAS considered whether the provision of non-audit services that were rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant's independence. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS Not yet applicable. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not yet applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. There have been no material changes to the procedures by which the shareholders may recommend nominees to the registrant's board of directors, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 7(d)(2)(ii)(G) of Schedule 14A (17 CFR 240.14a-101), or this Item. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive and principal financial officers, or persons performing similar functions, have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the "1940 Act") (17 CFR 270.30a-3(c))) are effective, as of a date within 90 days of the filing date of the report that includes the disclosure required by this paragraph, based on their evaluation of these controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rules 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934, as amended (17 CFR 240.13a-15(b) or 240.15d-15(b)). (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant's last fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Code of ethics, or any amendment thereto, that is the subject of disclosure required by Item 2 is attached hereto. (a)(2) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. (a)(3) Not applicable. (b) Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 are attached hereto. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (registrant) Phoenix-Seneca Funds ---------------------------------------------------------------- By (Signature and Title)* /s/ Philip R. McLoughlin --------------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) Date December 9, 2004 ------------------------------------------------------------------------ Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By (Signature and Title)* /s/ Philip R. McLoughlin --------------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) Date December 9, 2004 ------------------------------------------------------------------------ By (Signature and Title)* /s/ Nancy G. Curtiss --------------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) Date December 9, 2004 ------------------------------------------------------------------------ * Print the name and title of each signing officer under his or her signature. EX-99.CODE ETH 2 g11779_ethics.txt CODE OF ETHICS EX-99.CODE ETH THE "CODE" - ---------- THE CODE OF ETHICS APPLIES TO THE PRINCIPAL EXECUTIVE, FINANCIAL AND ACCOUNTING OFFICERS OF THE PHOENIX COMPANIES, INC. ("PNX"). IT CONSTITUTES THE MAIN PART OF THE PHOENIX CODE OF CONDUCT, WHICH HAS APPLIED TO ALL EMPLOYEES OF PNX AND ITS SUBSIDIARIES FOR MANY YEARS. WE PLAN TO CONTINUE TO REVISE BOTH CODES FROM TIME TO TIME AS NEEDED TO KEEP THEM VIABLE, RELEVANT AND IN COMPLIANCE WITH ALL APPLICABLE LEGISLATIVE AND REGULATORY REQUIREMENTS. COMMITMENT TO SHAREHOLDERS - -------------------------- PHOENIX IS COMMITTED TO PROVIDING SHAREHOLDER VALUE. ONE WAY WE DO THIS IS BY OBSERVING THE HIGHEST STANDARDS OF LEGAL AND ETHICAL CONDUCT IN ALL OF OUR BUSINESS DEALINGS. CONFLICTS OF INTEREST Phoenix expects every employee, officer and director to maintain the highest moral and ethical standards and to avoid conflicts of interest in conducting business activities. A "conflict of interest" occurs when an individual's private interest interferes, or even appears to interfere, in any way with the interests of the corporation as a whole. A conflict situation can arise when an employee, officer or director takes actions or has interests that may make it difficult to perform his or her work for the Company objectively and effectively. Conflicts of interest also arise when an employee, officer or director, or a member of his or her family, receives improper personal benefits as a result of his or her position in the Company. Employees requested to serve on the Board of Directors of another company by Phoenix owe a fiduciary duty to Phoenix as well as to the company on whose Board of Directors he or she serves. Where conflicts of interest arise between the interests of Phoenix and the other company, the employee should consult Phoenix's General Counsel for guidance. Moreover, no employee requested to serve on the Board of Directors of another company shall accept fees or other compensation for Board service. In the event the company for which an employee serves as a director requires directors to receive fees, any remuneration received by the employee shall be donated to a charitable organization. The Company will offset any tax consequences incurred by the employee. All conflicts of interest must be disclosed in writing to the Chief Compliance Officer. Employees, officers and directors are required to file a Conflict of Interest Statement annually. Any conflicts of interest that arise following completion of the Conflict of Interest Statement must be promptly reported to the Chief Compliance Officer in writing. CORPORATE OPPORTUNITIES Employees, officers and directors owe a duty to the Company to advance its legitimate interests when the opportunity to do so arises. Consequently, employees, officers and directors are prohibited from engaging in the following activities: o Taking for themselves personal opportunities that are discovered through the use of corporate property, information or position; o Using Company property, information or position for personal gain; and o Competing with the Company. INSIDER TRADING AND PERSONAL TRADING Federal securities laws and Company policy prohibit the purchase or sale of securities while in possession of material non-public information and prohibit passing such information on to others. No employee, officer or director may buy or sell Phoenix securities if he or she has material non-public information. This restriction also applies to an employee's spouse, other adults living in the employee's household, and minor children. Employees and their family members also must avoid passing non-public information on to third parties. Information is "material" if a reasonable investor would probably consider the information important in deciding whether to buy, hold or sell securities of the company to which the information relates. Officers are subject to certain restrictions under New York Insurance Law governing ownership of Phoenix stock. Officers and their family members are prohibited from purchasing shares of Phoenix stock for a period of two years from the date of demutualization. All employees with a title of Vice President or higher, plus certain other employees whose positions place them in regular contact with non-public information, are subject to a further restriction as well. These employees may only buy or sell Phoenix securities during "window" periods. No employee, officer or director may buy or sell securities of another company with the knowledge that those securities are being considered for purchase or sale by Phoenix, any of its subsidiaries or any advisory accounts. In the case of any company in which Phoenix owns 10 percent or more of the outstanding equity, no employee (or family member) may make any personal investment without prior approval from the Law Department. Certain employees who are involved with the Company's investment adviser and broker-dealer operations may be required to secure preclearance of and/or report all personal securities transactions. In addition, Phoenix reserves the right to require duplicate confirmations, quarterly transaction reports and prior clearance for any personal securities transactions. If you have any question whether your position requires preclearance or reporting, you should contact the compliance officer for your business area (investment adviser or broker-dealer) or the Corporate Compliance Department. CONFIDENTIALITY Employees are required to maintain the confidentiality of information entrusted to them by the Company or its customers. Disclosure of confidential information is restricted to authorized persons or in situations in which disclosure is legally mandated. Confidential information includes all non-public information that may or may not be of use to competitors, or harmful to the Company or its customers if disclosed, including, but not limited to: internal operating procedures; investment strategies; sales data and customer lists; financial plans; projections; and reports. An employee's obligation to protect confidential information continues even after termination of his or her employment. PROTECTION AND USE OF COMPANY PROPERTY AND ASSETS Employees are given access to Company property to assist them in effectively carrying out their duties to the Company. Company property should only be used for legitimate purposes. All employees should protect the Company's property and ensure its efficient use. Theft, fraud, carelessness and waste have a direct impact on the Company's profitability. Examples of Company property include proprietary and non-public information, equipment, facilities, vehicles, funds and other assets. Improper use or abuse of Company property is prohibited. Expenses to be paid for by the Company, via reimbursement or direct payment, are limited to those expenses that are authorized and related to legitimate business activities. CORPORATE DISCLOSURES As a public company, Phoenix is required to publicly disclose certain information on a regular basis. This includes financial information and other material information about The Phoenix Companies, Inc. It is imperative that such information is disseminated in a consistent manner and in accordance with SEC disclosure requirements and Company policy. In order to ensure that information released is accurate and properly disseminated, only certain individuals are authorized to speak on behalf of the Company. Employees are prohibited from speaking with rating agencies, analysts, investors or the press without obtaining prior authorization from the President and Chief Executive Officer. Employees receiving any such inquiries should refer such individuals to the appropriate area for response: o Press and News Media - All inquiries must be referred to the Senior Vice President, Corporate Communications. o Rating Agencies - All inquiries must be referred to the Chief Financial Officer. o Securities Analysts and Investors - All inquiries must be referred to the Vice President, Investor Relations or the Chief Financial Officer. Employees are prohibited from disclosing any non-public information about the Company's financial performance or commenting on the Company's stock performance. ACCURACY AND RETENTION OF COMPANY RECORDS The integrity of Phoenix's records is vital to the Company's continued success. The altering, falsification or misuse of Company documents is strictly prohibited. Phoenix's business transactions must be accurately recorded on the Company's books and records in accordance with generally accepted accounting principles, any other required accounting basis and established Company policy. Financial information must fairly represent all relevant information. The retention and destruction of Company records shall be in accordance with established Company policies and applicable legal and regulatory requirements. COMMITMENT TO CLIENTS - --------------------- Phoenix upholds its commitment to our clients by conducting our business fairly and honestly, and maintaining the highest ethical standards in all dealings with customers. SAFEGUARDING CUSTOMER ASSETS Employees have an obligation to safeguard the assets of our customers at all times, and to protect them from all forms of misuse. Misappropriation of funds can include theft, fraud, embezzlement or unauthorized borrowing. Employees must not, under any circumstances, misappropriate funds, property or other assets, or assist another individual in doing so. ETHICAL MARKET CONDUCT The Company expects all who are involved in the sales and marketing of its products and services to abide by the following principles: o Conduct business according to high standards of honesty and fairness; o Provide competent and customer-focused sales and service; o Engage in active and fair competition; o Provide clear, honest and fair advertising and sales materials; o Handle customer complaints and disputes in an appropriate and timely manner; and o Monitor sales and service procedures to help ensure compliance with ethical market conduct. PRIVACY AND CONFIDENTIAL PERSONAL INFORMATION It is the responsibility of every employee to maintain the privacy of confidential personal information. Confidential personal information includes non-public financial and health information obtained from consumers and customers in connection with providing a financial product or service. Specific examples of confidential personal information include information concerning assets, income, businesses, estates, financial plans and health. The misuse of confidential personal information could subject Phoenix and its employees to civil liability or criminal penalties. Before releasing confidential information to anyone, employees must make certain that releasing it is permitted under Phoenix's policies or authorized in writing by the person to whom it relates. CUSTOMER COMPLAINTS The Company is committed to fairly and expeditiously handling all customer complaints. All complaints must be handled and reported in accordance with established corporate policies as well as procedures established for the applicable business unit or affiliate. Maintaining centralized records serves not only regulatory authorities with oversight of the Companies, but also provides Phoenix and its affiliates with information to consider areas where changes or improvements are needed. FRAUD The Company strongly supports all efforts to detect and prevent fraud. It believes that only through aggressive action to combat fraud can the Company continue to meet its fundamental obligations to its stockholders and customers. When there is reason to believe that Phoenix has been the target of fraud or attempted fraud, it will aggressively work with the appropriate law enforcement officials to seek prosecution and conviction of the responsible individual(s). Any employee who is aware of or suspects fraud must report it to the Corporate Audit Department immediately. INSURANCE ANTI-FRAUD PLAN In accordance with insurance regulatory requirements, Phoenix has a comprehensive insurance anti-fraud plan that is designed to: o Prevent insurance fraud, including: internal fraud involving the Company's officers, employees or agents, fraud resulting from misrepresentations on applications for insurance, and claims fraud; o Report insurance fraud to appropriate law enforcement and regulatory authorities; o Encourage cooperation in the prosecution of insurance fraud cases; and o Aggressively pursue recovery of all sums improperly paid by the Company as a result of fraud. COMMITMENT TO CORPORATE CITIZENSHIP - ----------------------------------- Phoenix is committed to being a responsible corporate citizen, which includes compliance with applicable laws and regulations of the jurisdictions in which we operate as well as engaging in fair competition in the marketplace. COMPLYING WITH LEGAL AND REGULATORY REQUIREMENTS The Company expects all employees to conduct business in accordance with all applicable laws and regulations. The laws and regulations related to the financial services industry are complex, thus placing a duty on each employee to take all reasonable steps to ensure his or her actions are in compliance. Compliance with the law does not comprise our entire ethical responsibility. Rather, it is a minimum standard for performance of our duties. ACCOUNTING, INTERNAL ACCOUNTING CONTROLS OR AUDITING MATTERS The Company treats complaints about accounting, internal accounting controls, or auditing matters seriously and expeditiously. Employees will be given the opportunity to submit confidential and anonymous complaints about accounting or auditing matters for review by representatives of Phoenix, and if appropriate, the Audit Committee of the Board of Directors. These complaints will be handled in a manner that protects the confidentiality and anonymity of the employee when so requested by the employee. No employee will be terminated or otherwise retaliated against for submitting a complaint under this procedure if the employee reasonably believes that the complaint involves a violation of federal securities or anti-fraud laws. FAIR DEALING Each employee must deal fairly with the Company's customers, suppliers, competitors and employees. No employee shall take unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or other unfair-dealing practice. ANTITRUST Phoenix is committed to preserving a free and competitive marketplace and will not engage in any understandings or agreements with any competitor that could result in a restraint of trade. Employees must avoid engaging in any conduct that violates the antitrust laws, such as agreements with competitors regarding prices, terms of sale, division of markets and allocations of customers. Discussions with competitors related to market share, projected sales for any specific product or service, revenues and expenses, production schedules, unannounced products and services, pricing or marketing strategies are prohibited. The antitrust laws also apply to informal contacts with competitors, such as trade shows or meetings of professional organizations. Every employee has an obligation to avoid situations that could result in a violation of the antitrust laws. Any questions concerning the legality or appropriateness of specific acts should be directed to the Law Department. ANTI-MONEY LAUNDERING It is the responsibility of every employee to protect the Company from exploitation by individuals engaged in money laundering activities. Accordingly, each employee must undertake the following: o Become familiar with the anti-money laundering laws and their requirements as applied to the Company; and o Learn and fully comply with the Company's anti-money laundering policies and procedures. Failure to comply with applicable laws or the Company's policies may result in significant criminal and civil penalties to the Company as well as those individuals involved. Furthermore, association with any money laundering activity subjects both the Company and its employees to civil and criminal penalties. LOBBYING AND POLITICAL CONTRIBUTIONS Lobbying is generally defined as communicating with a public official, or a member of his or her staff, in the legislative or executive branch of government, for the purpose of influencing legislative or administrative action. Lobbying is highly regulated and lobbyists are required to be registered and to report their activities. No employee may engage in lobbying on behalf of Phoenix without prior permission of the Law Department. The giving of gifts to local public officials and members of their staff, whether in the form of meals, tickets to events or otherwise, is strictly regulated by most states and by the federal government. Employees must be careful to distinguish between personal and corporate political activities. Unless specifically requested by the Company to communicate on its behalf on a particular issue, you should identify communications with legislators as expressing your own personal beliefs and not those of Phoenix. The use of Phoenix stationery for any personal political communication is prohibited. Any employee wishing to be a candidate for elective office should consult with his or her supervisor and department head in advance. Questions regarding the Company's position on proposed legislation or regulation should be referred to Government Relations or the Law Department. FOREIGN CORRUPT PRACTICES ACT The Foreign Corrupt Practices Act prohibits the payment or authorization of the payment of any money, or the giving of value, directly or indirectly, to a foreign official for the purpose of: o Influencing any act or decision of the foreign official; or o Inducing the foreign official to use his influence to assist in obtaining business for or directing business to any person. A "foreign official" is any person acting in an official capacity on behalf of a foreign government, agency, department or instrumentality. Also included under the term "foreign official" are foreign political parties, officials of political parties and candidates for foreign political office. The Foreign Corrupt Practices Act applies to all officers, directors, employees and agents of the Company. Violation of the act can result in both fines and imprisonment. COPYRIGHTS, TRADEMARKS AND PATENTS Employees must avoid infringing upon the intellectual property rights of others. Intellectual property includes copyrights, trademarks, service marks, patents and trade secrets. Improper use includes copying, distributing or modifying third party copyrighted materials without permission. Infringement may result in criminal as well as civil liabilities for Phoenix and its employees. The Company has an agreement with the Copyright Clearance Center that gives a license to Phoenix employees to make photocopies of many publications for business purposes. Contact the Corporate Compliance Department with any questions about the types of copying that are covered by the agreement. COMMITMENT TO EMPLOYEES - ----------------------- PHOENIX'S EMPLOYEES ARE OUR MOST IMPORTANT ASSET AND WE ARE COMMITTED TO FOSTERING A WORK ENVIRONMENT IN WHICH EMPLOYEES HAVE THE OPPORTUNITY TO GROW, CONTRIBUTE AND PARTICIPATE FREE FROM DISCRIMINATION. EQUAL OPPORTUNITY Phoenix employs and promotes on the basis of merit and achievement without regard to age, race, gender, color, religion, national origin, ancestry, sexual orientation, marital status, or disability. This policy applies to every phase of the employment process and every aspect of the employment relationship: recruitment, hiring, training, promotions, transfers, terminations, benefits, compensation and participation in Company-sponsored educational, social and recreational programs. SEXUAL HARASSMENT Phoenix prohibits sexual harassment in the workplace. Sexual harassment includes unwelcome sexual advances, requests for sexual favors and other verbal, visual or physical conduct when: o Submission is made either explicitly or implicitly a term or condition of a person's employment; o Submission to or rejection of inappropriate conduct by an employee is used as the basis for employment decisions affecting the employee; or o The conduct has the purpose or effect of unreasonably interfering with an individual's work performance or creating an intimidating, hostile or offensive working environment. Sexual harassment also includes unwelcome sexual flirtations and advances; verbal abuse of a sexual nature; inappropriate touching; graphic or verbal comments about an individual's body; displaying in the workplace a sexually suggestive object or picture; and sexually explicit or offensive jokes. EMPLOYMENT OF RELATIVES The employment of relatives of any director or officer, or any employee working in the Human Resources Department, Corporate Audit Department or Corporate Compliance Department is prohibited. If a situation arises in which relatives are employed by the company and one or both of them later become officers or employees in the departments specified so as to be covered by this policy, a request for a waiver to continue employment of both individuals must be submitted to the Senior Vice President, Corporate Services. Under no circumstances will exceptions be granted for officers at the Vice President level and above, or directors. In addition, related non-officer employees are prohibited from working in the same department, reporting to the same supervisor or reporting to a relative. This policy applies to directors, officers and employees of all affiliated companies, including situations in which the employees may be employed by separate legal entities. This policy also applies to consultants and service providers. For the purposes of this policy, a relative is defined as a spouse, child, parent, sibling, step-parent, step-child, step-sibling, grandparent, grandchild, aunt, uncle, nephew, niece, first cousin and in-law. WORKPLACE SAFETY Phoenix is committed to maintaining a work environment that is safe and healthy for its employees and others. Questions concerning health and safety matters should be referred to your supervisor or Human Resources representative. All job-related injuries or illnesses should be reported immediately to your supervisor or Human Resources representative. Phoenix also does not tolerate acts of violence or threats of violence against employees or Company property. Possession of firearms or other weapons anywhere on Company property or while conducting Company business is prohibited. Any situation or concern involving violent behavior or the threat of violence should be immediately reported to Security or Human Resources. DRUGS AND ALCOHOL The sale, purchase, use, possession or transfer of narcotics or other legally controlled substances by employees while on Company premises or on Company business (other than use of prescription drugs in accordance with a physician's orders) is prohibited. Employees attending functions on behalf of the Company where alcohol is served are expected to use good judgment and avoid consuming excessive amounts of alcoholic beverages. VIOLENT CRIME CONTROL AND LAW ENFORCEMENT ACT OF 1994 Federal Law prohibits the employment of any person convicted of a felony involving dishonesty or breach of trust by an insurance company without the consent of the appropriate state insurance department. To assist the Company in fulfilling its responsibilities under this law, employees are required to disclose any felony conviction to the Company at the time of application for employment. Any employee who is subsequently convicted of a felony must report this fact to the Company immediately. EMPLOYEE OWNERSHIP OF PHOENIX STOCK Employees, officers and directors are subject to various requirements including federal securities laws, and New York Insurance law restrictions governing the ownership of Company stock. Please refer to the Insider Trading and Personal Trading section of this Code for more information. COMMITMENT TO ETHICS AND COMPLIANCE - ----------------------------------- A STRONG COMMITMENT TO BUSINESS ETHICS AND COMPLIANCE IS THE FOUNDATION OF A SUCCESSFUL ORGANIZATION. EVERY EMPLOYEE IS EXPECTED TO CARRY OUT THE COMPANY'S BUSINESS ACTIVITIES IN AN ETHICAL MANNER AND CONSISTENT WITH APPLICABLE LAWS, REGULATIONS, POLICIES AND GUIDELINES. ETHICAL DECISION MAKING Phoenix's success is dependent on each of us applying the highest ethical standards to whatever we do on behalf of the Company. Consider the following guidelines in making ethical decisions. o Is my action consistent with approved Company practices? o Is my action consistent with the Company's preeminent values? o Does my action give the appearance of impropriety? o Can I, in good conscience, defend my action to my supervisor, other employees or the general public? o Does my action meet my personal code of ethical behavior? o Does my action conform to the spirit of these guidelines? COMPLIANCE WITH LAWS AND REGULATIONS Phoenix values its corporate reputation for complying with all applicable laws and regulations in the conduct of its business. Every employee, officer and director shall comply with all applicable laws and regulations while acting on behalf of the Company. MONITORING CODE COMPLIANCE The Corporate Compliance and the Corporate Audit Departments are responsible for monitoring the compliance activities of all areas and ensuring that the Code is being followed. Compliance will be monitored by periodic audits where appropriate. OBTAINING GUIDANCE In any instance where you are uncertain of your obligations under the Code, you should seek guidance before taking any action. If you have a question concerning the Code or any of the Company's related policies or procedures, you should contact the Corporate Compliance Department or the Law Department. TOLL-FREE HELP LINE Phoenix maintains a confidential, 24-hour, toll-free telephone help line for the purpose of requesting assistance or reporting violations. Assistance is available during regular business hours. If you call outside of regular business hours, leave a confidential message and your call will be returned the following business day. Special security measures have been taken with this help line to ensure confidentiality. If you wish to remain anonymous, you may request a case identification number and refer to that number in subsequent phone calls. OBLIGATION TO REPORT Employees are obligated to report suspected violations of the Code to their department head, the Chief Compliance Officer or the Law Department. Failure to do so will result in disciplinary action, including potential termination of employment. WHISTLEBLOWER PROTECTION No retaliation or retribution of any kind will be taken against an employee who reports a suspected violation of the Code in good faith. INVESTIGATION All allegations of suspected violations will be promptly investigated and appropriate action will be taken. Investigations will be conducted in an objective, professional manner. The specifics of an investigation, including the identity of the individual reporting the information, will be kept confidential except as such disclosure is necessary to fully investigate the allegations, facilitate resolution and/or report the results to appropriate authorities. DISCLOSURE TO GOVERNMENT AUTHORITIES Certain actions and omissions prohibited by the Code may also violate criminal laws and may subject violators to criminal prosecution. The Law Department will review the results of investigations that indicate potential violations of criminal law and recommend to the appropriate senior officers whether disclosure to appropriate enforcement authorities is warranted. DISCIPLINARY ACTION FOR VIOLATIONS Failure to adhere to the Code as well as other Company policies and applicable laws may result in disciplinary action up to and including termination of employment. Situations in which disciplinary action may be appropriate include: o Authorization of or participation in activities that violate the law, the Code or other Company policies; o Retaliation, direct or indirect, or encouragement of others to retaliate against an employee who reports a suspected violation; o Failure to cooperate with an investigation of suspected violations, including interfering with or obstructing an investigation; and o Failure to report a violation of the law, the Code or other Company policies. EX-99.CERT 3 g11779_302cert.txt 302 CERTIFICATION CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Philip R. McLoughlin, certify that: 1. I have reviewed this report on Form N-CSR of Phoenix-Seneca Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 9, 2004 /s/ Philip R. McLoughlin ------------------------- ------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 302 OF THE SARBANES-OXLEY ACT I, Nancy G. Curtiss, Treasurer, certify that: 1. I have reviewed this report on Form N-CSR of Phoenix-Seneca Funds; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, changes in net assets, and cash flows (if the financial statements are required to include a statement of cash flows) of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) [Omitted] (c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of a date within 90 days prior to the filing date of this report based on such evaluation; and (d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal half-year (the registrant's second fiscal half-year in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: December 9, 2004 /s/ Nancy G. Curtiss ------------------------- ------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) EX-99.906 4 g11779_906cert.txt 906 CERTIFICATION CERTIFICATION PURSUANT TO RULE 30A-2(A) UNDER THE 1940 ACT AND SECTION 906 OF THE SARBANES-OXLEY ACT I, Philip R. McLoughlin, Chairman of Phoenix-Seneca Funds (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: December 9, 2004 /s/ Philip R. McLoughlin ------------------------- ------------------------------------------- Philip R. McLoughlin, Chairman (principal executive officer) I, Nancy G. Curtiss, Treasurer of Phoenix-Seneca Funds (the "Registrant"), certify that: 1. The Form N-CSR of the Registrant (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: December 9, 2004 /s/ Nancy G. Curtiss ------------------------- ------------------------------------------- Nancy G. Curtiss, Treasurer (principal financial officer) -----END PRIVACY-ENHANCED MESSAGE-----