<PAGE> 1
April 21, 1995
Dear Fellow Shareholder:
It is my pleasure to provide to you the semiannual report for Heritage
Capital Appreciation Trust for the six-month period ended February 28, 1995.
During this period, your Fund had a positive total return of 0.22% (calculated
without the imposition of a front-end sales load), reflecting a decline of
approximately 6% in the first half of the period followed by a gain of slightly
over 6% in the second half of the period. As a comparison, the S&P 500 Composite
Stock Price Index, which is dominated by some of the largest companies in the
market, was up approximately 4%, while the broader Value Line and Russell 2000
indices showed a loss of 2.3% and a gain of 0.6%, respectively.
On February 27, 1995, Liberty Investment Management (Liberty) was approved
as the subadviser for your Fund by an overwhelming vote of the shareholders of
your Fund. Over 90% of the shares that voted were in favor of retaining Liberty.
This action will allow Herb Ehlers to continue as the portfolio manager for the
Fund, a position he has held since the Fund's inception in December 1985. As you
may recall from the recent proxy materials, Herb Ehlers recently resigned as
President of Eagle Asset Management to form Liberty. Liberty will focus
exclusively on managing large institutional portfolios, including Heritage
Capital Appreciation Trust. In total, Liberty manages over $4 billion for
institutional investors such as the pension plans of Chrysler, Montgomery Ward,
Emerson Electric, the State of Florida, the Commonwealth of Pennsylvania and the
City of Boston. We are excited about our new subadvisory arrangement and look
forward to a long and successful relationship between the Fund and Herb Ehlers
and Liberty.
In the letter that follows, Herb Ehlers shares his current thoughts on your
portfolio and the stock market in general. I hope you will find his comments
useful in understanding how your Fund's portfolio is managed.
Thank you for your continuing confidence through the difficult stock market
of 1994. Fortunately, as of the date of this letter, your Fund has more than
recovered in 1995. If you ever have any questions about your investment in
Heritage Capital Appreciation Trust, please contact your account executive or
financial advisor -- or call us at 800/421-4184. On behalf of all of us at
Heritage, we look forward to helping serve your investment needs for years to
come.
Sincerely,
Stephen G. Hill
President
Heritage Capital Appreciation Trust is a member of the Heritage Family of
mutual funds. Other investment alternatives managed by Heritage include Heritage
Cash Trust, which consists of the Money Market and Municipal Money Market Funds,
Heritage Income-Growth Trust, Heritage Income Trust which consists of the
Limited Maturity Government, Diversified and Institutional Government
Portfolios, Heritage Series Trust which consists of the Small Cap Stock Fund and
the Value Equity Fund, and Heritage U.S. Government Income Fund (a closed end
fund that trades on the New York Stock Exchange). We are pleased that many of
you are also investors in these funds. For information and a prospectus for any
of these funds, please contact your account executive. Please read the
prospectus carefully before you invest in any of the funds.
<PAGE> 2
April 21, 1995
Dear Fellow Shareholder:
All of us at Liberty Investment Management appreciate Liberty being approved as
the subadviser for Heritage Capital Appreciation Trust (HCAT). We look forward
to a long and successful relationship with the Fund.
Since I believe that investment managers should "eat their own cooking," I
personally made a substantial investment in HCAT, purchasing the shares in early
March, soon after Liberty was approved as the subadviser. Other members of the
Liberty staff have also recently purchased shares in HCAT.
Our purchases of the Fund shares should clearly confirm that we believe not only
in the long-term outlook for the businesses in the portfolio, but also the
long-term performance of the Fund as well. We recognize, of course, that over
short periods of time business fundamentals and stock prices can diverge in
opposite directions. Many times such divergence creates an excellent investment
opportunity.
Even though HCAT appreciated approximately 6% in its fiscal quarter ended
February 28, and the stock market has been hitting record levels, we still see
many investment opportunities. Indeed, one of the Fund's largest sectors, which
could be broadly defined as "Communications," has recently experienced a wide
divergence between good business fundamentals and weak stock prices, creating an
attractive buying opportunity. This sector would include the cellular telephone
service providers, cable TV operators, long-distance, and newspaper/publishing.
While each of the companies in these sub-industries of the "Communications"
sector has different growth rates and different economic characteristics, I
would like to share with you, as an example, some of the reasons why we own one
of the stocks, Airtouch.
Airtouch Communications (ATI) is one of the largest cellular telephone service
companies in the world, with both domestic and international franchises and
subscribers. The company is experiencing outstanding growth in 1995, on top of
strong growth in 1994 and prior years. In the first quarter ended March 31,
1995, total domestic cellular telephone subscribers increased 46% to 1,664,000
compared to 1,131,000 at March 31, 1994. Impressively, net domestic subscribers
added in the first quarter increased 22% to 104,000 from 85,000. In short,
subscriber growth is going up the "hockey stick" or "J Curve," i.e. very rapid
total subscriber growth. International subscriber growth more than doubled
(+133%) to 445,000. Germany and Japan are two of ATI's largest and fastest
growing international markets. ATI's cash flow increased 26% in the quarter,
which was strong in view of the increased costs associated with substantial
subscriber growth. And where there is current subscriber growth, there almost
certainly will be future cash flow growth, and earnings growth.
ATI's stock is currently selling for approximately 11 times the company's 1995
cash flow estimate of $630 million, and 8 times its 1996 cash flow. We expect
ATI's cash flow to grow 25% - 35% per year for the balance of this decade driven
by subscriber growth in both the United States and international markets. Based
on current and expected cash flows, we believe ATI's business is worth at least
$40 per share, and will be worth over $50 per share in 1996, which is twice the
current stock price of $25 per share.
Ironically, with all this good news, the stock has declined 13% in 1995 in
contrast to a rising stock market. We believe that the excellent fundamental
business results so far in 1995 and the excellent outlook for the balance of
this year and the subsequent years will ultimately be reflected in Airtouch's
stock price. When that occurs, we believe the stock should become an
outperformer. Until then, however, the stock may continue to drift lower and
fall farther behind the stock market. This, of course, is the opportunity. Are
we buying more? Yes! By the time you read this, we will have further added to
our position at the current attractive prices.
We believe ATI has the potential to be a great growth company. We further
believe that, in time, the depressive market attitude toward ATI will give way
to either a normal attitude, or if we're fortunate, manic
<PAGE> 3
euphoria about the outstanding growth of the company's business. Time will tell
whether or not our analysis and judgments are correct. I will report back to you
specifically on Airtouch next year at this time to bring you up-to-date.
Similar to Airtouch, other stocks in the "Communications" sector of the
portfolio have also lagged the market so far in 1995. In future letters, I will
share with you why we own these other stocks, and what has happened to their
fundamentals and stock prices this year.
The stock market has achieved strong gains in early 1995, led primarily by the
largest 100 stock in the S&P 500 Composite Stock Price Index and by technology
stocks. Generally speaking, the HCAT portfolio does not own many of these
largest capitalization-weighted stocks, and none of the stocks in the hot
technology group. As shareholders may know, we prefer to avoid the volatile
technology stock group.
Fortunately, the portfolio has had its share of winners in 1995. While I can
share with you these wonderful success stories (Freddie Mac stock up 25% in
calendar 1995), I have always found it more interesting to discuss those
companies whose business fundamentals were attractive, but whose stock prices
were weak. There are a number of reasons for this: (1) great investment
opportunities usually exist with such stocks, (2) I like to put our conclusions
and forecasts on the line with you in real-time so I can report back to you in
future shareholder letters how a laggard stock performed, and (3) I believe you
should know how we think about such companies and why we own their stocks for
the Fund's portfolio.
Again, I appreciate your confidence in me and the Liberty investment team. We
will continue to work diligently to produce good long-term results for you.
Sincerely,
Herbert E. Ehlers
Chairman & Chief Executive Officer
Liberty Investment Management
<PAGE> 4
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
FEBRUARY 28, 1995
(UNAUDITED)
- - - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C>
REPURCHASE AGREEMENT--19.1%(A)
- - - - --------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated February 28, 1995, @ 6.0%, to be
repurchased at $13,602,267 on March 1, 1995, collateralized by $13,355,000 United States Treasury
Notes, 7.5%,
due October 31, 1999 (market value $13,916,569 including interest) (cost $13,600,000)................. $13,600,000
-----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
- - - - -------------------
<C> <S> <C>
COMMON STOCK--74.8%(A)
- - - - --------------------
BANKING--2.2%
---------------
15,000 Citicorp.......................................................................... 675,000
10,000 Crestar Financial Corporation..................................................... 431,250
10,000 Integra Financial Corporation..................................................... 427,500
-----------
1,533,750
-----------
BROADCASTING--1.2%
-------------------
23,500 Infinity Broadcasting Corporation Class "A"*...................................... 828,375
-----------
BUSINESS SERVICES--2.0%
-----------------------
34,000 Reuters Holdings PLC, ADR......................................................... 1,440,750
-----------
CABLE TELEVISION--5.6%
-----------------------
55,000 Bell Cablemedia ADR*.............................................................. 1,127,500
112,500 Tele-Communications, Inc. Class "A"*.............................................. 2,559,375
15,000 Turner Broadcasting Systems Inc., Class "A"....................................... 281,250
-----------
3,968,125
-----------
CASINOS/HOTELS--2.9%
---------------------
16,000 Circus Circus Enterprises, Inc.*.................................................. 420,000
32,500 Mirage Resorts, Inc.*............................................................. 775,938
25,000 Promus Cos., Inc.* ............................................................... 893,750
-----------
2,089,688
-----------
CELLULAR COMMUNICATIONS--2.6%
------------------------------
42,000 Vodafone Group, Sponsored ADR..................................................... 1,281,000
20,000 Airtouch Communications, Inc.*.................................................... 545,000
-----------
1,826,000
-----------
COSMETICS--0.9%
-----------------
12,000 Avon Products, Inc. .............................................................. 675,000
-----------
CREDIT CARD PROCESSING SERVICE--0.7%
-----------------------------------
23,000 SafeCard Services, Inc............................................................ 474,375
-----------
ENERGY--2.3%
--------------
71,339 AES Corporation*.................................................................. 1,319,772
35,000 Sithe Energies, Inc.*............................................................. 332,500
-----------
1,652,272
-----------
ENTERTAINMENT--5.2%
---------------------
80,000 Gaylord Entertainment Company, Class "A".......................................... 2,100,000
42,000 Time Warner Inc................................................................... 1,622,250
-----------
3,722,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
FEBRUARY 28, 1995
(UNAUDITED)
(CONTINUED)
- - - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- - - - ------------------- -----------
<C> <S> <C>
FINANCE--12.3%
----------------
25,000 Allied Capital Commercial Corporation............................................. $ 418,750
45,000 AMBAC, Inc........................................................................ 1,828,125
60,000 Federal Home Loan Mortgage Corporation............................................ 3,480,000
40,000 Federal National Mortgage Association............................................. 3,085,000
-----------
8,811,875
-----------
GLASS & PLASTIC CONTAINERS--2.0%
-------------------------------
80,000 Libbey, Inc....................................................................... 1,460,000
-----------
HEALTH CARE SERVICES--0.7%
---------------------------
30,000 National Medical Enterprises, Inc.*............................................... 465,000
-----------
HOTELS/MOTELS--3.3%
---------------------
100,000 Host Marriott Corporation*........................................................ 1,100,000
40,000 Marriott International, Inc....................................................... 1,240,000
-----------
2,340,000
-----------
INSURANCE--1.9%
-----------------
23,000 CCP Insurance, Inc................................................................ 488,750
13,000 First Colony Holdings Corporation................................................. 290,875
50,000 Western National Corporation...................................................... 593,750
-----------
1,373,375
-----------
INVESTMENT ADVISORS--1.6%
--------------------------
33,000 Colonial Group, Inc. Class "A".................................................... 1,105,500
-----------
MACHINERY--0.7%
------------------
12,000 Crown Cork & Seal Company*........................................................ 511,500
-----------
OIL & GAS--0.2%
-----------------
6,000 Williams Companies................................................................ 172,500
-----------
PERSONAL SERVICES--2.4%
-----------------------
60,000 Service Corporation International................................................. 1,687,500
-----------
PUBLISHING--8.4%
-----------------
6,500 A.H. Belo Corporation, Class "A".................................................. 366,437
33,000 Gannett Company................................................................... 1,815,000
45,000 The E.W. Scripps Company, Class "A"............................................... 1,310,625
21,000 Tribune Company................................................................... 1,173,375
80,000 Valassis Communications, Inc.*.................................................... 1,370,000
-----------
6,035,437
-----------
REAL ESTATE--1.9%
------------------
24,000 Manufactured Home Communities, Inc., REIT......................................... 357,000
50,000 The Rouse Company................................................................. 987,500
-----------
1,344,500
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
FEBRUARY 28, 1995
(UNAUDITED)
(CONTINUED)
- - - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- - - - ------------------- -----------
<C> <S> <C>
RESTAURANTS--2.1%
------------------
45,000 IHOP Corporation, Inc.*........................................................... $ 1,215,000
50,000 T P I Enterprises, Inc.*.......................................................... 296,875
-----------
1,511,875
-----------
RETAIL--1.4%
--------------
35,000 Toys "R" Us, Inc.*................................................................ 975,625
-----------
STUDENT LOAN--.7%
-------------------
14,000 Student Loan Marketing Association................................................ 516,250
-----------
TELEPHONE COMMUNICATIONS--7.9%
--------------------------------
65,000 American Telephone & Telegraph Company............................................ 3,363,750
50,000 Telephone & Data Systems, Inc..................................................... 2,281,250
-----------
5,645,000
-----------
TOY MANUFACTURING--0.8%
-------------------------
18,000 Hasbro, Inc....................................................................... 567,000
-----------
UTILITIES--0.6%
---------------
20,000 UGI Corporation................................................................... 405,000
-----------
WASTE MANAGEMENT--0.4%
-------------------------
22,000 Wheelabrator Technologies, Inc.................................................... 302,500
-----------
Total common stocks (cost $41,713,462)................................................................. 53,441,022
-----------
CONVERTIBLE PREFERRED STOCK--3.6%(A)
- - - - -----------------------
CELLULAR COMMUNICATIONS
------------------------
50,000 Cellular Communications, Inc., Class "A"*......................................... 2,537,500
-----------
Total convertible preferred stock (cost $1,563,283).................................................... 2,537,500
-----------
DEBT EXCHANGEABLE FOR COMMON STOCK (DECS)--1.2%(A)
- - - - -----------------------------------------
COMMUNICATIONS & INFORMATION
------------------------------
20,000 American Express Company, 6.25%, maturing 10/15/96................................ 942,500
-----------
Total DECS (cost $735,000)............................................................................. 942,500
-----------
TOTAL INVESTMENT PORTFOLIO (cost $57,611,745)(b) 98.7%(a).............................................. 70,521,022
OTHER ASSETS & LIABILITIES, NET 1.3%(a)................................................................ 953,345
-----------
NET ASSETS 100.0%...................................................................................... $71,474,367
==========
</TABLE>
- - - - ------------------
* Not an income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is the same.
Market value includes net unrealized appreciation of $12,909,277, which
consists of aggregate gross unrealized appreciation for all securities in
which there is an excess of market value over tax cost of $13,793,426 and
aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over market value of $884,149.
ADR--American Depository Receipt
REIT--Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
STATEMENT OF ASSETS AND LIABILITIES
FEBRUARY 28, 1995
(UNAUDITED)
- - - - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
- - - - ------
Investments, at market value (identified cost $44,011,745) (Note 1)........................ $56,921,022
Repurchase agreement (identified cost $13,600,000) (Note 1)................................ 13,600,000
Cash....................................................................................... 2,746
Receivables:
Investments sold......................................................................... 1,290,207
Dividends and interest................................................................... 54,627
Fund shares sold......................................................................... 48,881
Deferred state registration expenses (Note 1).............................................. 15,831
-----------
Total assets....................................................................... 71,933,314
Liabilities
- - - - -----------
Payables (Note 4):
Investments purchased.................................................................... $312,178
Fund shares redeemed..................................................................... 19,347
Accrued management fee................................................................... 40,669
Accrued distribution fee................................................................. 27,112
Other accrued expenses................................................................... 59,641
--------
Total liabilities.................................................................. 458,947
-----------
Net assets, at market value................................................................ $71,474,367
==========
Net Assets
- - - - ----------
Net assets consist of:
Undistributed net investment income...................................................... $ 50,918
Net unrealized appreciation on investments............................................... 12,909,277
Accumulated net realized gain............................................................ 1,454,176
Paid-in capital.......................................................................... 57,059,996
-----------
Net assets, at market value................................................................ $71,474,367
==========
Net asset value and redemption price per share ($71,474,367 divided by 5,089,297 shares of
beneficial interest outstanding, no par value) (Note 2).................................. $14.04
Maximum offering price per share (100/96 of $14.04)........................................ $14.63
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED FEBRUARY 28, 1995
(UNAUDITED)
- - - - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
- - - - -----------------
Income:
Dividends............................................................................. $ 420,905
Interest.............................................................................. 322,184
------------
Total income.................................................................... 743,089
Expenses (Notes 1 and 4):
Management fee........................................................................ $ 349,200
Distribution fee...................................................................... 174,600
Shareholder servicing................................................................. 31,892
Professional fees..................................................................... 28,185
Custodian fees........................................................................ 25,915
Amortization of state registration expenses........................................... 12,224
Reports to shareholders............................................................... 4,946
Trustees' fees and expenses........................................................... 4,636
Insurance............................................................................. 3,616
Other................................................................................. 1,015
----------
Total expenses before waiver.................................................... 636,229
Fees waived by Manager (Note 4)....................................................... (87,300) 548,929
---------- ------------
Net investment Income................................................................... 194,160
------------
Realized and Unrealized Gain (Loss) on Investments
- - - - --------------------------------------------------
Net realized gain from investment transactions.......................................... 2,762,713
Net decrease in unrealized appreciation of investments during the period................ (2,898,554)
------------
Net loss on investments......................................................... (135,841)
------------
Net increase in net assets resulting from operations.................................... $ 58,319
===========
</TABLE>
- - - - --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- - - - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED FOR THE
FEBRUARY 28, 1995 YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
----------------- ---------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................................... $ 194,160 $ 115,326
Net realized gain from investment transactions............................ 2,762,713 6,641,529
Net decrease in unrealized appreciation of investments during the
period.................................................................. (2,898,554) (1,517,671)
----------------- ---------------
Net increase in net assets resulting from operations...................... 58,319 5,239,184
Distributions to shareholders from:
Net investment income ($.06 and $.03 per share, respectively)............. (258,567) (158,881)
Net realized gains ($1.16 and $1.36 per share, respectively).............. (5,533,950) (6,632,397)
Increase in net assets from Fund share transactions (Note 2)................ 2,831,248 648,126
----------------- ---------------
Decrease in net assets...................................................... (2,902,950) (903,968)
Net assets, beginning of period............................................. 74,377,317 75,281,285
----------------- ---------------
Net assets, end of the period (including undistributed net investment income
of $50,918 and $115,326, respectively).................................... $71,474,367 $74,377,317
================= ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
FINANCIAL HIGHLIGHTS
- - - - --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED AUGUST 31,
2/28/95 -------------------------------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988 1987 1986+
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD............ $ 15.30 $15.62 $13.64 $12.55 $10.62 $14.48 $10.74 $13.31 $11.52 $ 9.70
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income.......... 0.04(a) 0.02(a) 0.03(a) 0.15(a) 0.28(a) 0.29(b) 0.14(b) 0.08(a) 0.08(b) 0.07(a)
Net realized and
unrealized gain
(loss) on
investments..... (0.08)(f) 1.05 3.29 1.19 1.97 (2.82) 3.77 (1.39) 1.80 1.75
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total from
Investment
Operations...... (0.04) 1.07 3.32 1.34 2.25 (2.53) 3.91 (1.31) 1.88 1.82
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment
income.......... (0.06) (0.03) (0.07) (0.25) (0.32) (0.19) (0.06) (0.11) (0.05) --
Distributions from
net realized
gains........... (1.16) (1.36) (1.27) -- -- (1.14) (0.11) (1.15) (0.04) --
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
Distributions... (1.22) (1.39) (1.34) (0.25) (0.32) (1.33) (0.17) (1.26) (0.09) --
--------- ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF PERIOD..... $ 14.04 $15.30 $15.62 $13.64 $12.55 $10.62 $14.48 $10.74 $13.31 $11.52
=========== ======= ======= ======= ======= ======= ======= ======= ======= =======
TOTAL
RETURN(%)(E)...... .22(d) 7.07 25.72 10.78 21.73 (18.73) 36.88 (8.75) 16.49 18.76(d)
RATIOS
(%)/SUPPLEMENTAL
DATA:
Operating
expenses, net,
to average daily
net assets...... 1.57(a)(c) 1.55(a) 1.56(a) 1.66(a) 1.86(a) 1.96(b) 2.00(b) 2.00(a) 2.00(b) 2.00(a)(c)
Net investment
income to
average daily
net assets...... .56(c) .15 .24 1.09 2.38 2.54 1.19 0.62 0.74 1.40(c)
Portfolio turnover
rate............ 55(c) 65 55 57 80 45 60 103 48 21(c)
Net assets, end of
period
(millions):..... $71 $74 $75 $65 $63 $58 $62 $43 $55 $40
</TABLE>
- - - - ---------------
+ For the period December 12, 1985 (commencement of operations) to August 31,
1986.
(a) Excludes management fees waived by the Manager in the amount of less than
$0.02, $0.04, $0.04, $0.03, $0.01, $0.01 and of $0.02 per share,
respectively. The operating expense ratios including such items would be
1.82% (annualized), 1.81%, 1.81%, 1.84%, 1.87%, 2.06% and 2.31%
(annualized), respectively.
(b) Includes management fees previously waived by the Manager and recovered
during the year of less than $0.01 per share.
(c) Annualized.
(d) Not annualized.
(e) Does not reflect the imposition of a sales charge.
(f) The amount shown for a share outstanding throughout the period does not
accord with the change in aggregate gains and losses in the portfolio
securities during the period because of the timing of sales and purchases of
Fund shares in relation to fluctuating market values during the period.
9
<PAGE> 10
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- - - - --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Capital Appreciation Trust
(the "Fund") is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The policies
described below are followed consistently by the Fund in the preparation
of its financial statements in conformity with generally accepted
accounting principles.
Security Valuation: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, market value is based on the most recent quoted bid price and
in the absence of a market quote, securities are valued using such
methods as the Board of Trustees believes would reflect fair market
value. Short term investments having a maturity of 60 days or less are
valued at cost which, when combined with accrued interest included in
interest receivable or discount earned, approximates market.
Repurchase Agreements: The Fund enters into repurchase agreements
whereby the Fund, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of purchase
is required to be in an amount equal to at least 100% of the resale
price.
Federal Income Taxes: The Fund's policy is to comply with the
requirements of the Internal Revenue Code of 1986, as amended, which are
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no provision has been made for federal income and excise
taxes.
Distribution of Income and Gains: Distributions of net investment income
are made annually. Net realized gains from investment transactions
during any particular year in excess of available capital loss
carryforwards, which, if not distributed, would be taxable to the Fund,
will be distributed to shareholders in the following fiscal year. The
Fund uses the identified cost method for determining realized gain or
loss on investments for both financial and federal income tax reporting
purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Other: Investment security transactions are accounted for on a trade
date plus one basis. Dividend income and distributions to
shareholders are recorded on the ex-dividend date. Interest income is
recorded on the accrual basis.
Capital Accounts: The Fund reports the undistributed net investment
income and accumulated net realized gain (loss) accounts on a basis
approximating amounts available for future tax distributions (or to
offset future taxable realized gains when a capital loss carryforward is
available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the
net asset value of the Fund.
Note 2: FUND SHARES. At February 28, 1995, there was an unlimited number of
shares of beneficial interest of no par value authorized. Transactions
in shares of the Fund during the six month period ended February 28,
1995 and the fiscal year ended August 31, 1994, were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
FEBRUARY 28, 1995 FOR THE YEAR ENDED
(UNAUDITED) AUGUST 31, 1994
------------------------ -------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold............................................... 155,292 $ 2,187,763 2,079,461 $ 32,311,244
Shares issued on reinvestment of distributions............ 428,528 5,682,169 448,374 6,680,774
Shares redeemed........................................... (355,026) (5,038,684) (2,487,289) (38,343,892)
---------- ----------- ---------- ------------
Net increase.............................................. 228,794 $ 2,831,248 40,546 $ 648,126
========== ===========
Shares outstanding:
Beginning of period..................................... 4,860,503 4,819,957
---------- ----------
End of period........................................... 5,089,297 4,860,503
========= =========
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the six month period ended
February 28, 1995, purchases and sales of investment securities
(excluding repurchase agreements and short term obligations) aggregated
$15,971,302 and $23,739,999, respectively.
10
<PAGE> 11
- - - - --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- - - - --------------------------------------------------------------------------------
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administration
Agreement with Heritage Asset Management, Inc. ( the "Manager"), the
Fund agrees to pay to the Manager a fee equal to an annualized rate of
1.00% of the first $100,000,000 of the Fund's average daily net assets,
and 0.75% of any excess over $100,000,000 of such net assets, computed
daily and payable monthly. Since January 2, 1992, the Manager has
voluntarily agreed to waive .25% of its fee on the first $100 million of
average net assets. Fees waived by the Manager for the six month period
ended February 28, 1995 amounted to $87,300 ($.0173 per share).
Effective February 27, 1995, the Manager entered into an agreement with
Liberty Investment Management, (the "Subadviser") to provide to the Fund
investment advice, portfolio management services (including the
placement of brokerage orders) and certain compliance and other services
for a fee payable, by the Manager, equal to an annualized rate of .25%
of average daily net assets, computed daily and paid monthly. From
December 1985 (commencement of operations) through February 26, 1995,
Eagle Asset Management, Inc. was subadvisor to the Fund. Eagle remains a
subadvisor to the Fund. However, there are no assets currently allocated
to Eagle.
The Manager is also the Dividend Paying and Shareholder Servicing Agent
for the Fund. The amount payable to the Manager for such expenses as of
February 28, 1995 was $10,000. In addition, the Manager performs Fund
Accounting services and charged $16,713 during the current period of
which $5,400 was payable as of February 28, 1995.
Pursuant to a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund pays Raymond James
& Associates, Inc. (the "Distributor") a fee equal to 0.50% of average
daily net assets for the services it provides in connection with the
promotion and distribution of Fund shares. Such fee is accrued daily and
payable monthly. The Manager, the Subadviser, the Distributor and the
Shareholder Servicing Agent are all wholly-owned subsidiaries of Raymond
James Financial, Inc.
Trustees of the Fund also serve as Trustees for Heritage Cash Trust,
Heritage Income-Growth Trust, Heritage Income Trust, Heritage Series
Trust and Heritage U.S. Government Income Fund, mutual funds that are
also advised by the Manager (collectively referred to as the Heritage
mutual funds). Each Trustee of the Heritage mutual funds who is not an
interested person of the Manager receives an annual fee of $8,000 and an
additional fee of $2,000 for each combined quarterly meeting of the
Heritage mutual funds attended. Trustees' fees and expenses are shared
equally by each of the Heritage mutual funds.
11
<PAGE> 12
<TABLE>
<CAPTION>
[LOGO]
HERITAGE
--------------------
CAPITAL APPRECIATION
TRUST(TM)
--------------------
<S> <C>
A mutual fund
--------------------------
seeking long-term
--------------------------
capital appreciation
--------------------------
SEMIANNUAL REPORT
(Unaudited) and Investment
Performance Review for the
Six Month Period Ended
FEBRUARY 28, 1995
A member of the
Heritage Family of Mutual Funds(TM)
</TABLE>
<TABLE>
<S> <C>
Heritage Capital Appreciation Trust -----------------
P.O. Box 33022 BULK RATE
St. Petersburg, FL 33733 U.S. POSTAGE
- - - - --------------------------------- PAID
PERMIT NO. 39
Address Change Requested ATLANTA, GA
-----------------
Semiannual Report
INVESTMENT ADVISOR/
SHAREHOLDER SERVICING AGENT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
(800) 421-4184
DISTRIBUTOR
Raymond James & Associates, Inc.
P.O. Box 12749
St. Petersburg, FL 33733
(813) 573-3800
LEGAL COUNSEL
Kirkpatrick & Lockhart
This report is for the information of shareholders of
Heritage Capital Appreciation Trust. It may also be used as
sales literature when preceded or accompanied by a prospectus.
10M 4/95 HAM007
</TABLE>
