HERITAGE CAPITAL APPRECIATION TRUST, 497, 1996-01-18

HERITAGE CAPITAL APPRECIATION TRUST
497, 1996-01-18

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[HERITAGE LOGO]

Heritage Capital Appreciation Trust (the "Trust") is a mutual fund seeking
long-term capital appreciation. The Trust invests principally in those equity
securities that the Trust's portfolio manager believes are undervalued and
therefore offer above-average potential for long-term appreciation. The Trust
offers two classes of shares, Class A shares (sold subject to a front-end sales
load) and Class C shares (sold subject to a contingent deferred sales load).

This Prospectus contains information that should be read before investing
in the Trust and should be kept for future reference. A Statement of Additional
Information dated January 2, 1996 relating to the Trust has been filed with the
Securities and Exchange Commission and is incorporated by reference in this
Prospectus. A copy of the Statement of Additional Information is available free
of charge and shareholder inquiries can be made by writing to Heritage Asset
Management, Inc. or by calling (800) 421-4184.

TRUST SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY
OTHER AGENCY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[HERITAGE LOGO]
Registered Investment Advisor--SEC

880 Carillon Parkway
St. Petersburg, Florida 33716
(800) 421-4184

Prospectus Dated January 2, 1996
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TABLE OF CONTENTS
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<TABLE>
<S> <C>
GENERAL INFORMATION................................................. 1
About the Trust................................................... 1
Total Trust Expenses.............................................. 1
Financial Highlights.............................................. 3
Differences Between A Shares and C Shares......................... 4
Investment Objective, Policies and Risk Factors................... 4
Net Asset Value................................................... 5
Performance Information........................................... 6
INVESTING IN THE TRUST.............................................. 6
How to Buy Shares................................................. 6
Minimum Investment Required/Accounts With Low Balances............ 7
Investment Programs............................................... 8
Alternative Purchase Plans........................................ 9
What Class A Shares Will Cost..................................... 10
What Class C Shares Will Cost..................................... 12
How to Redeem Shares.............................................. 13
Receiving Payment................................................. 14
Exchange Privilege................................................ 15
MANAGEMENT OF THE TRUST............................................. 16
SHAREHOLDER AND ACCOUNT POLICIES.................................... 17
Dividends and Other Distributions................................. 17
Distribution Plans................................................ 18
Taxes............................................................. 18
Shareholder Information........................................... 19
</TABLE>
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GENERAL INFORMATION

ABOUT THE TRUST
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Heritage Capital Appreciation Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated June 21, 1985.
The Trust is an open-end diversified management investment company designed for
individuals, institutions and fiduciaries whose investment objective is long-
term capital appreciation. Any dividend income will be incidental to this
objective. The Trust offers two classes of shares, Class A shares ("A shares")
and Class C shares ("C shares"). The Trust requires a minimum initial investment
of $1,000, except for certain retirement accounts and investment plans for which
lower limits may apply. See "Investing in the Trust."

TOTAL TRUST EXPENSES
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Shown below are all Class A expenses incurred by the Trust during its 1995
fiscal year. Class A annual operating expenses are shown as an annualized
percentage of fiscal 1995 average daily net assets. Because C shares were not
offered for sale prior to April 3, 1995, Class C annual operating expenses are
based on estimated expenses. Shareholder transaction expenses for both classes
are expressed as a percentage of maximum public offering price, cost per
transaction or as otherwise noted.

<TABLE>
<CAPTION>
CLASS A CLASS C
------- -------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales load "charge" on purchases................. 4.75% None
Contingent deferred sales load (as a percentage
of original purchase price or redemption (declining to 0% after
proceeds, as applicable)....................... None 1.00% the first year)
Wire redemption fee.............................. $5.00 $5.00
ANNUAL TRUST OPERATING EXPENSES
Management fee (after fee waiver)................ 0.75% 0.75%
12b-1 Distribution fee........................... 0.50% 1.00%
Other expenses................................... 0.30% 0.30%
------- -------
Total Trust operating expenses (after fee
waiver)........................................ 1.55% 2.05%
====== ======
</TABLE>

The Trust's manager, Heritage Asset Management, Inc. (the "Manager"),
voluntarily will waive its fees and, if necessary, reimburse the Trust to the
extent that Class A annual operating expenses exceed 1.65% of the average daily
net assets and to the extent that Class C annual operating expenses exceed 2.40%
of the average daily net assets attributable to that class for the fiscal year
ending August 31, 1996. The Manager also has voluntarily agreed to waive 25% of
its fee on the first $100 million of average daily net assets. Absent such fee
waiver, the management fee would have been 1.00% for each class. To the extent
that the Manager waives or reimburses fees with respect to one class, it will do
so with respect to the other class on a proportionate basis. Due to the
imposition of Rule 12b-1 distribution fees, it is possible that long-term
shareholders of the Trust may pay more in total sales charges than the economic
equivalent of the maximum front-end sales load permitted by the rules of the
National Association of Securities Dealers, Inc.

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The impact of Trust operating expenses on earnings is illustrated in the
example below assuming a hypothetical $1,000 investment, a 5% annual rate of
return, and a redemption at the end of each period shown.

<TABLE>
<CAPTION>
1 3 5 10
YEAR YEARS YEARS YEARS
----- ------ ------ -------
<S> <C> <C> <C> <C>
Total Operating Expenses -- A shares.......... $63 $ 94 $128 $ 223
Total Operating Expenses -- C shares.......... $30 $ 62 $106 $ 232
</TABLE>

The impact of Trust operating expenses on earnings is illustrated in the
example below assuming a hypothetical $1,000 investment, a 5% annual rate of
return, and no redemption at the end of each period shown.

This is an illustration only and should not be considered a representation
of future expenses. Actual expenses and performance may be greater or less than
that shown above. The purpose of the above tables is to assist investors in
understanding the various costs and expenses that will be borne directly or
indirectly by shareholders. For a further discussion of these costs and
expenses, see "Management of the Trust" and "Distribution Plans."

2
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FINANCIAL HIGHLIGHTS
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The following table shows important financial information for an A share
and a C share of the Trust outstanding for the periods indicated, including net
investment income, net realized and unrealized gain on investments, and certain
other information. It has been derived from financial statements that have been
audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon is included in the Statement of Additional Information ("SAI"), which
may be obtained by calling the Trust at the telephone number on the front page
of this prospectus.

<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31, CLASS C
----------------------------------------------------------------------------------------------------------
1995* 1994 1993 1992 1991 1990 1989 1988 1987 1986+ 1995++
------ ------ ------ ------ ------ ------- ------ ------ ------ ------ --------
<S> <C> <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 $14.18
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME
FROM
INVESTMENT
OPERATIONS:
Net
investment
income... 0.08(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) (0.01)(a)
Net
realized
and
unrealized
gain
(loss)
on
investments... 1.37 1.05 3.29 1.19 1.97 (2.82) 3.77 (1.39) 1.80 1.75 1.33
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
from
Investment
Operations... 1.45 1.07 3.32 1.34 2.25 (2.53) 3.91 (1.31) 1.88 1.82 1.32
------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------
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... $15.53 $15.30 $15.62 $13.64 $12.55 $10.62 $14.48 $10.74 $13.31 $11.52 $15.50
====== ====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL
RETURN(%)(E)... $10.85 7.07 25.72 10.78 21.73 (18.73) 36.88 (8.75) 16.49 18.76(d) $ 9.31(d)
RATIOS(%)/SUPPLEMENTAL
DATA:
Operating
expenses
net, to
average
daily
net
assets.. 1.62(a) 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) 2.17(a)(c)
Net
investment
income
to
average
daily
net
assets.. .49 .15 .24 1.09 2.38 2.54 1.19 0.62 0.74 1.40(c) (0.33)(c)
Portfolio
turnover
rate... 66 65 55 57 80 45 60 103 48 21(c) 66
Net
assets,
end
of
period
(millions)
($):... 73 74 75 65 63 58 62 43 55 40 .4
</TABLE>

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* Liberty Investment Management was retained as an additional investment
subadviser to the Fund on February 27, 1995.
+ For the period December 12, 1985 (commencement of operations) to August 31,
1986.
++ For the period April 3, 1995 (commencement of C shares) to August 31, 1995.
(a) Excludes management fees waived by the Manager in the amount of less than
$0.04, $0.04, $0.04, $0.03, $0.01, $0.01 and of $0.02 per A share,
respectively. The operating expense ratios including such items would be
1.87%, 1.80%, 1.81%, 1.84%, 1.87%, 2.06% and 2.31% (annualized) for A share,
respectively. Excludes management fees waived by the Manager in the amount
of less than $0.04 per C share. The operating expense ratio including such
items would be 2.42% (annualized) for C shares.
(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.

3
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DIFFERENCES BETWEEN A SHARES AND C SHARES
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The primary difference between the A shares and the C shares lies in their
initial sales load and contingent deferred sales load ("CDSL") structures and in
their ongoing expenses, including asset-based sales charges in the form of
distribution fees. These differences are summarized below. In addition, each
class may bear differing amounts of certain class-specific expenses, such as
transfer agent fees, Securities and Exchange Commission ("SEC") registration
fees, state registration fees and expenses of administrative personnel and
services. Each class has distinct advantages and disadvantages for different
investors, and investors may choose the class that best suits their
circumstances and objectives. See "How to Buy Shares," "Alternative Purchase
Plans," "What Class A Shares Will Cost" and "What Class C Shares Will Cost."

<TABLE>
<CAPTION>
ANNUAL RULE 12B-1 FEES AS
A % OF
SALES LOAD AVERAGE DAILY NET ASSETS OTHER INFORMATION
-------------------------- -------------------------- --------------------------
<S> <C> <C> <C>
A SHARES Maximum initial sales load Service fee of 0.25%; Initial sales load waived
of 4.75% distribution fee of up to or reduced for certain
0.25% purchases
C SHARES Maximum CDSL of 1% of Service fee of 0.25%; CDSL wavied for certain
redemption proceeds; distribution fee of up to types of redemptions
declining to zero after 1 0.75%
year
</TABLE>

INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
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The Trust's investment objective is long-term capital appreciation. The
Trust believes that this objective can best be achieved through the purchase of
equity securities that, in the opinion of Liberty Investment Management (the
"Subadviser"), represent companies with the potential for attractive long-term
growth in earnings, cash flow and total worth of the business enterprise. The
Trust prefers to purchase such securities at a price that represents a discount
to the real worth of the company's businesses or, in other words, the securities
that appear, in the opinion of the Subadviser, to be undervalued in relation to
the company's long-term growth fundamentals. Securities may be undervalued
because of many factors, including: the market does not recognize the growth
potential of the company; a stock market decline; poor economic conditions;
tax-loss selling or actual or anticipated unfavorable developments affecting the
issuer of the security. Any or all of these factors may provide buying
opportunities at attractive prices relative to a company's long-term growth
prospects. However, there can be no assurance that the Trust's investment
objective will be achieved. Trust shares will fluctuate in value as a result of
changes in the value of portfolio investments.

The Trust invests primarily in common stocks, but also may invest in
preferred stocks and securities convertible into common stock. Securities rated
in the lowest category of investment grade securities are considered to have
speculative characteristics. The Trust may purchase securities traded on
recognized securities exchanges and in the over-the-counter market. The Trust
normally will invest at least 65% of its total assets in securities that the
Subadviser believes have the potential to achieve capital appreciation. The
Trust may invest its remaining assets in foreign securities and American
Depository Receipts ("ADRs"), U.S. Government securities, repurchase agreements
or other short-term money market instruments. The Trust also may invest up to
10% of its net assets in illiquid securities and may invest in restricted
securities eligible for resale pursuant to Rule 144A under the Securities Act of
1933, as amended (the "1933 Act"). The Trust may purchase and sell a security
without regard to the length of time it will be or has been held.

4
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Repurchase agreements are transactions in which the Trust purchases
securities and simultaneously commits to resell the securities to the original
seller (a member bank of the Federal Reserve System or securities dealers who
are members of a national securities exchange or are market makers in U.S.
Government securities) at an agreed upon date and price reflecting a market rate
of interest unrelated to the coupon rate or the maturity of the purchased
securities. Although repurchase agreements carry certain risks not associated
with direct investments in securities, including possible decline in the market
value of the underlying securities and delays and costs to the Trust if the
other party to the repurchase agreement becomes bankrupt, the Trust intends to
enter into repurchase agreements only with banks and dealers in transactions
believed by the Subadviser to present minimal credit risks in accordance with
guidelines established by the Trust's Board of Trustees (the "Board of Trustees"
or the "Board").

For temporary defensive purposes during anticipated periods of general
market decline, the Trust may invest up to 100% of its assets in money market
instruments, including securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements secured thereby, as
well as bank certificates of deposit and banker's acceptances issued by banks
having net assets of a least $1 billion as of the end of their most recent
fiscal year, high grade commercial paper, and other long- and short-term debt
instruments that are rated A or higher by Standard & Poor's or Moody's Investors
Service, Inc. See Appendix A to the SAI for a description of the ratings of
money market instruments.

While the Trust may invest in foreign securities and ADRs, such investments
may not exceed 10% of the Trust's portfolio. These investments may involve
greater risks than normally are present in domestic investments. There generally
is less publicly available information about foreign companies and there may be
less governmental regulation and supervision of foreign stock exchanges, brokers
and listed companies. In addition, such companies may use different accounting
and financial standards (and certain currencies may become unavailable for
transfer from a foreign country, resulting in the Trust's possible inability to
convert proceeds realized upon the sale of portfolio securities of the affected
foreign companies immediately into U.S. currency). Before investing in foreign
securities, the Trust will consider possible political and financial instability
abroad, as well as the liquidity and volatility of foreign investments.
Fluctuations in monetary exchange rates will affect the dollar value of foreign
investments. Solely to protect against such uncertainty, the Trust may enter
into forward contracts to purchase or sell foreign currencies at a future date.

The Trust's investment objective is fundamental and may not be changed
without the vote of a majority of the outstanding voting securities of the
Trust, as defined in the Investment Company Act of 1940, as amended (the "1940
Act"). All policies of the Trust described in this prospectus may be changed by
the Board of Trustees without shareholder approval. The SAI contains more
detailed information about the Trust's investment policies and risks.

NET ASSET VALUE
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The net asset values of A shares and C shares are calculated by dividing
the value of the total assets of the Trust attributable to that class, less
liabilities attributable to that class, by the number of shares outstanding of
that class. Shares are valued as of the close of regular trading on the New York
Stock Exchange ("Exchange") each day it is open. Trust securities are stated at
market value based on the last 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. In the absence of a
readily available market quote, or if the Manager or the Subadviser has reason
to question the validity of market quotations it receives, securities and other
assets are valued using such methods as the Board of Trustees believe would
reflect fair value. Short-

5
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term investments that will mature in 60 days or less are valued at amortized
cost, which approximates market value. Securities that are quoted in a foreign
currency will be valued daily in U.S. dollars at the foreign currency exchange
rates prevailing at the time the Trust calculates its net asset value per share.
The per share net asset value of A shares and C shares may differ as a result of
the different daily expense accruals applicable to each class. For more
information on the calculation of net asset value, see "Net Asset Value" in the
SAI.

PERFORMANCE INFORMATION
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Total return data of the A shares and C shares from time to time may be
included in advertisements about the Trust. Performance information is computed
separately for A shares and C shares in accordance with the methods described
below. Because C shares bear the expense of a higher distribution fee
attributable to the deferred sales load alternative, the performance of C shares
likely will be lower than that of A shares.

Total return with respect to a class for the one-, five- and ten-year
periods or, if such periods have not elapsed, the period since the establishment
of that class through the most recent calendar quarter represents the average
annual compounded rate of return on an investment of $1,000 in that class at the
public offering price (in the case of A shares, giving effect to the maximum
initial sales load of 4.75% and, in the case of C shares, giving effect to the
deduction of any CDSL that would be payable). In addition, the Trust also may
advertise the total return in the same manner, but without taking into account,
the initial sales load or CDSL. The Trust also may advertise total return
calculated without annualizing the return and total return, may be presented for
other periods. By not annualizing the returns, the total return calculated in
this manner simply will reflect the increase in net asset value per A share and
C share over a period of time, adjusted for dividends and other distributions. A
share and C share performance may be compared with various indices.

All data is based on the Trust's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the Trust's
investment portfolio and the Trust's operating expenses. Investment performance
also often reflects the risks associated with the Trust's investment objective
and policies. These factors should be considered when comparing the Trust's
investment results to those of other mutual funds and other investment vehicles.
For more information on investment performance, see the SAI.

INVESTING IN THE TRUST

HOW TO BUY SHARES
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Shares of the Trust are offered continuously through the Trust's principal
underwriter, Raymond James & Associates, Inc. (the "Distributor"), and through
other participating dealers or banks that have dealer agreements with the
Distributor. The Distributor receives commissions consisting of that portion of
the sales load remaining after the dealer concession is paid to participating
dealers or banks. Such dealers may be deemed to be underwriters pursuant to the
1933 Act.

Shares of the Trust may be purchased through a registered representative of
the Distributor, a participating dealer or a participating bank
("Representative") by placing an order for Trust shares with your
Representative, completing and signing the Account Application found in the back
of this prospectus, and mailing it, along with your payment, within three
business days.

6
<PAGE> 9

The Trust offers and sells two classes of shares, A shares and C shares. A
shares may be purchased at a price equal to their net asset value per share next
determined after receipt of an order, plus a sales load imposed at the time of
purchase. C shares may be purchased at a price equal to their net asset value
per share next determined after receipt of an order. A CDSL of 1% is imposed on
C shares if you redeem those shares within one year of purchase. When you place
an order for Trust shares, you must specify which class of shares you wish to
purchase. See "Alternative Purchase Plans."

All purchase orders received by the Distributor prior to the close of
regular trading on the Exchange -- generally 4:00 p.m., Eastern time -- will be
executed at that day's offering price. Purchase orders received by your
Representative prior to the close of regular trading on the Exchange and
transmitted to the Distributor before 5:00 p.m. Eastern time on that day also
will receive that day's offering price. Otherwise, all purchase orders accepted
after the offering price is determined will be executed at the offering price
determined as of the close of regular trading on the Exchange on the next
trading day. See "What Class A Shares Will Cost" and "What Class C Shares Will
Cost."

You also may purchase shares of the Trust directly by completing and
signing the Account Application found in the back of this prospectus and mailing
it, along with your payment, to Heritage Capital Appreciation Trust, c/o
Shareholder Services, Heritage Asset Management, Inc., P.O. Box 33022, St.
Petersburg, FL 33733.

Shares may be purchased with Federal funds (a commercial bank's deposit
with the Federal Reserve Bank that can be transferred to another member bank on
the same day) sent by Federal Reserve or bank wire to State Street Bank and
Trust Company, Boston, Massachusetts, ABA #011-000-028, Account #3196-769-8.
Wire instructions should include (1) the name of the Trust, (2) the class of
shares to be purchased, (3) your account number assigned by the Trust, and (4)
your name. To open a new account with Federal funds or by wire, you must contact
the Manager or your Representative to obtain a Heritage Mutual Fund account
number. Commercial banks may elect to charge a fee for wiring funds to State
Street Bank and Trust Company. For more information on "How to Buy Shares," see
"Investing in the Trust" in the SAI.

MINIMUM INVESTMENT REQUIRED/ACCOUNTS WITH LOW BALANCES
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Except as provided under "Investment Programs", the minimum initial
investment in the Trust is $1,000, and a minimum account balance of $500 must be
maintained. These minimum requirements may be waived at the discretion of the
Manager. In addition, initial investments in Individual Retirement Accounts
("IRAs") may be reduced or waived under certain circumstances. Contact the
Manager or your Representative for further information.

Due to the high cost of maintaining accounts with low balances, it is
currently the Trust's policy to redeem Trust shares in any account if the
account balance falls below the required minimum value of $500, except for
retirement accounts. The shareholder will be given 30 days' notice to bring the
account balance to the minimum required or the Trust may redeem shares in the
account and pay the proceeds to the shareholder. The Trust does not apply this
minimum account balance requirement to accounts that fall below the minimum due
to market fluctuation.

7
<PAGE> 10

INVESTMENT PROGRAMS
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A variety of automated investment options are available for the purchase of
Trust shares. These plans provide for automatic monthly investments of $50 or
more through various methods described below. You may change the amount to be
automatically invested or may discontinue this service at any time without
penalty. If you discontinue this service before reaching the required account
minimum, the account must be brought up to the minimum in order to remain open.
Shareholders desiring this service should complete the appropriate application
available from the Manager. You will receive a periodic confirmation of all
activity for your account.

AUTOMATIC INVESTMENT OPTIONS:
- ---------------------------------

1. Bank Draft Investing -- You may authorize the Manager to process a monthly
draft from your personal checking account for investment into the Trust. The
draft is returned by your bank the same way a canceled check is returned.

2. Payroll Direct Deposit -- If your employer participates in a direct deposit
program (also known as ACH Deposits) you may have all or a portion of your
payroll directed to the Trust. This will generate a purchase transaction each
time you are paid by your employer. Your employer will report to you the
amount sent from each paycheck.

3. Government Direct Deposit -- If you receive a qualifying periodic payment
from the U.S. Government or other agency that participates in Direct Deposit,
you may have all or a part of each check directed to purchase shares of the
Trust. The U.S. Government or agency will report to you all payments made.

4. Automatic Exchange -- If you own shares of another Heritage mutual fund
advised or administered by the Manager ("Heritage Mutual Fund"), you may
elect to have a preset amount redeemed from that fund and exchanged into the
corresponding class of shares of the Trust. You will receive a statement from
the other Heritage Mutual Fund confirming the redemption.

You may change or terminate any of the above options at any time.

RETIREMENT PLANS:
- -------------------

Shares of the Trust may be purchased as an investment for Heritage IRA
plans. In addition, shares may be purchased as an investment for self-directed
IRAs, defined contribution plans, Simplified Employee Pension Plans ("SEPs") and
other retirement plans.

HERITAGE IRA. Individuals who earn compensation and who have not reached
age 70 1/2 before the close of the year generally may establish a Heritage IRA.
You may make limited contributions to a Heritage IRA through the purchase of
shares of the Trust and/or other Heritage Mutual Funds. The Internal Revenue
Code of 1986, as amended (the "Code"), limits the deductibility of IRA
contributions to taxpayers who are not active participants (and whose spouses
are not active participants) in employer-provided retirement plans or who have
adjusted gross income below certain levels. Nevertheless, the Code permits other
individuals to make nondeductible IRA contributions up to $2,000 per year (or
$2,250, if such contributions also are made for a nonworking spouse and a joint
return is filed). A Heritage IRA also may be used for certain "rollovers" from
qualified benefit plans and from Section 403(b) annuity plans. For more detailed
information on the Heritage IRA, please contact the Manager.

8
<PAGE> 11

Trust shares may be used as the investment medium for qualified retirement
plans (defined benefit or defined contribution plans established by
corporations, partnerships or sole proprietorships). Contributions to qualified
plans may be made (within certain limits) on behalf of the employees, including
owner-employees, of the sponsoring entity.

OTHER RETIREMENT PLANS. Multiple participant payroll deduction retirement
plans also may purchase A shares of any Heritage Mutual Fund at a reduced sales
charge on a monthly basis during the 13-month period following such a plan's
initial purchase. The sales load applicable to such initial purchase of A shares
will be that normally applicable under the schedule of sales loads set forth in
this prospectus to an investment 13 times larger than such initial purchase. The
sales load applicable to each succeeding monthly purchase of A shares will be
that normally applicable, under such schedule, to an investment equal to the sum
of (1) the total purchase previously made during the 13-month period and (2) the
current month's purchase multiplied by the number of months (including the
current month) remaining in the 13-month period. Sales loads previously paid
during such period will not be adjusted retroactively on the basis of later
purchases. Multiple participant payroll deduction retirement plans may purchase
C shares at any time.

ALTERNATIVE PURCHASE PLANS
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The alternative purchase plans offered by the Trust enable you to choose
the class of shares that you believe will be most beneficial given the amount of
your intended purchase, the length of time you expect to hold the shares and
other circumstances. You should consider whether, during the anticipated length
of your intended investment in the Trust, the accumulated continuing
distribution and service fees plus the CDSL on C shares would exceed the initial
sales load plus accumulated service fees on A shares purchased at the same time.
Another factor to consider is whether the potentially higher yield of A shares
due to lower ongoing charges will offset the initial sales load paid on such
shares. Representatives may receive different compensation for sales of A shares
than sales of C shares.

If you purchase sufficient shares to qualify for a reduced sales load, you
may prefer to purchase A shares because similar reductions are not available on
the C shares. For example, if you intend to invest more than $1,000,000 in
shares of the Trust, you should purchase A shares. Moreover, all A shares are
subject to a lower 12b-1 fee and, accordingly, are expected to pay
correspondingly higher dividends on a per share basis. If your purchase will not
qualify for a reduced sales load, you still may wish to purchase A shares if you
expect to hold your shares for an extended period of time because, depending on
the number of years you hold the investment, the continuing distribution and
service fees on C shares eventually would exceed the initial sales load plus the
continuing service fee on A shares during the life of your investment. However,
because initial sales loads are deducted at the time of purchase, not all of the
purchase payment for A shares is invested initially.

You might determine that it would be more advantageous to purchase C shares
in order to have all of your purchase payment invested initially. However, your
investment would remain subject to continuing distribution and service fees and,
for a one year period, be subject to a CDSL. For example, based on current fees
and expenses for the Trust and the maximum A sales load, you would have to hold
A shares approximately eight years before the accumulated distribution and
service fees on the C shares would exceed the initial sales load plus the
accumulated service fees on the A shares.

9
<PAGE> 12

WHAT CLASS A SHARES WILL COST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

A shares are sold on each day on which the Exchange is open. A shares are
sold at their next determined net asset value plus a sales load as described
below.

<TABLE>
<CAPTION>
SALES LOAD AS A DEALER
PERCENTAGE OF CONCESSION
------------------------------ AS PERCENTAGE
NET AMOUNT OF
AMOUNT OF OFFERING INVESTED OFFERING
PURCHASE PRICE (NET ASSET VALUE) PRICE(1)
------------------------------- -------- ----------------- ---------------
<S> <C> <C> <C>
Less than $25,000.............. 4.75% 4.99% 4.25%
$25,000-$49,999................ 4.25% 4.44% 3.75%
$50,000-$99,999................ 3.75% 3.90% 3.25%
$100,000-$249,999.............. 3.25% 3.36% 2.75%
$250,000-$499,999.............. 2.50% 2.56% 2.00%
$500,000-$999,999.............. 1.75% 1.78% 1.25%
$1,000,000 and over............ 1.00% 1.01% 0.75%
</TABLE>

(1) During certain periods, the Distributor may pay 100% of the sales load to
participating dealers. Otherwise, it will pay the Dealer Concession shown
above.

A shares may be sold at net asset value without any sales load to the
Manager and the Subadviser, current and retired officers and Trustees of the
Trust; directors, officers and full-time employees of the Manager, Subadviser of
any Heritage Mutual Fund, the Distributor and their affiliates; registered
representatives of broker-dealers that are parties to dealer agreements with the
Distributor (or financial institutions that have arrangements with such
broker-dealers); directors, officers and full-time employees of banks that are
parties to agency agreements with the Distributor; and all such persons'
immediate relatives and their beneficial accounts. In addition, the American
Psychiatric Association (the "APA Group") has entered into an agreement with the
Distributor that allows its members to purchase A shares at a sales load equal
to two-thirds of the percentages in the above table. The Dealer Concession also
will be adjusted in a like manner. Members of the APA Group also are eligible to
purchase A shares at net asset value in amounts equal to the value of shares
redeemed from other mutual funds that were purchased under reduced sales load
programs available to their organization. A shares also may be purchased without
sales loads by investors who participate in certain broker-dealer wrap fee
investment programs.

A shares also may be purchased at net asset value by trust companies and
bank trust departments for funds over which they exercise exclusive
discretionary authority and are held in a fiduciary, agency, advisory, custodial
or similar capacity. Such purchases are subject to minimum requirements with
respect to amount of purchase. Currently, the minimum purchase required is
$1,000,000, which may be invested over a period of 13 months. The minimum may be
changed from time to time by the Distributor. The minimum may be aggregated
between A shares of the Trust and A shares of any other Heritage Mutual Fund
that would be subject to a sales load. Cities, counties, states or
instrumentalities, and their departments, authorities or agencies, are able to
purchase A shares of the Trust at net asset value as long as certain conditions
are met.

HERITAGE NET ASSET VALUE ("NAV") TRANSFER PROGRAM
- -----------------------------------------------------------

A shares of the Trust may be sold at net asset value without any sales load
under the Manager's NAV Transfer Program. To qualify for the NAV Transfer
Program, you must provide adequate proof that you recently redeemed shares from
a load or no-load mutual fund other than a Heritage Mutual Fund or any money
market fund. To provide adequate proof you must complete a qualification form
and provide a

10
<PAGE> 13

statement showing the value liquidated from the other mutual fund within time
parameters set by the Manager. In addition, shares of the other fund must have
been liquidated no more than 90 days prior to the beginning of the promotion
period and not after the period ends. The Manager may pay Representatives a one-
time fee of up to 0.25% for all trades meeting these requirements. The Manager
reserves the right to recover these fees if A shares are redeemed within 90 days
of purchase.

COMBINED PURCHASE PRIVILEGE (RIGHT OF ACCUMULATION)
- -----------------------------------------------------------

You may qualify for the sales load reductions indicated in the above sales
load schedule by combining purchases of A shares into a single "purchase" if the
resulting "purchase" totals at least $25,000. The term "purchase" refers to a
single purchase by an individual, or to concurrent purchases that, in the
aggregate, are at least equal to the prescribed amounts, by an individual, his
spouse and their children under the age of 21 years purchasing A shares for his
or their own account; a single purchase by a trustee or other fiduciary
purchasing A shares for a single trust, estate or single fiduciary account
although more than one beneficiary is involved; or a single purchase for the
employee benefit plans of a single employer. A "purchase" also may include A
shares purchased at the same time through a single selected dealer of any other
Heritage Mutual Fund that distributes its shares subject to a sales load. To
qualify for the Combined Purchase Privilege on a purchase through a selected
dealer, the investor or selected dealer must provide the Distributor with
sufficient information to verify that each purchase qualifies for the privilege
or discount.

STATEMENT OF INTENTION

You also may obtain the reduced sales loads shown under "What Class A
Shares Will Cost" by means of a written Statement of Intention, which expresses
your intention to invest not less than $25,000 within a period of 13 months in A
shares of the Trust or A shares of any other Heritage Mutual Fund subject to a
sales load ("Statement of Intention").

Investors qualifying for the Combined Purchase Privilege described above
may purchase A shares of the Heritage Mutual Funds under a single Statement of
Intention. For example, if, at the time an investor signs a Statement of
Intention to invest at least $25,000 in A shares of the Trust, the investor and
the investor's spouse each purchase A shares worth $5,000 (for a total of
$10,000), then it will be necessary only to invest a total of $15,000 during the
following 13 months in A shares of the Trust or any other Heritage Mutual Fund
subject to a sales load to qualify for the reduced sales loads on the total
amount being invested.

The Statement of Intention is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. If you would like to enter into a
Statement of Intention in conjunction with your initial investment in A shares
of the Trust, please complete the appropriate portion of the Account Application
at the back of this prospectus. Current Trust shareholders desiring to do so can
obtain a Statement of Intention by contacting the Manager or the Distributor at
the address or telephone number listed on the cover of this prospectus, or from
their Representative.

REINSTATEMENT PRIVILEGE
- -------------------------

A shareholder who has redeemed any or all of his A shares of the Trust may
reinvest all or any portion of the redemption proceeds in A shares at net asset
value without any sales load, provided that such reinvestment is made within 90
calendar days after the redemption date. A shareholder who has redeemed any or
all of his

11
<PAGE> 14

C shares of the Trust and has paid a CDSL on those shares or has held those
shares long enough so that the CDSL no longer applies, may reinvest all or any
portion of the redemption proceeds in C shares at net asset value without paying
a CDSL on future redemptions of those shares, provided that such reinvestment is
made within 90 calendar days after the redemption date. A reinstatement pursuant
to this privilege will not cancel the redemption transaction; therefore, (1) any
gain realized on the transaction will be recognized for Federal income tax
purposes, while (2) any loss realized will not be recognized for those purposes
to the extent that the redemption proceeds are reinvested in shares of the
Trust. See "Taxes." The reinstatement privilege may be utilized by a shareholder
only once, irrespective of the number of shares redeemed, except that the
privilege may be utilized without limitation in connection with transactions
whose sole purpose is to transfer a shareholder's interest in the Trust to his
defined contribution plan, IRA or SEP. Investors must notify the Fund if they
intend to exercise the reinstatement privilege.

For more information on "What Class A Shares Will Cost" and a further
explanation of instances in which the sales load will be waived or reduced, see
"Investing in the Trust" in the SAI.

WHAT CLASS C SHARES WILL COST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

A CDSL of 1% is imposed on C shares if, within one year of purchase, you
redeem an amount that causes the current value of your account to fall below the
total dollar amount of C shares purchased subject to the CDSL. The CDSL will not
be imposed on the redemption of C shares acquired as dividends or other
distributions, or on any increase in the net asset value of the redeemed C
shares above the original purchase price. Thus, the CDSL will be imposed on the
lower of net asset value or purchase price.

Redemptions will be processed in a manner intended to minimize the amount
of redemption that will be subject to the CDSL. When calculating the CDSL, it
will be assumed that the redemption is made first of C shares acquired as
dividends, second of C shares that have been held for over one year, and finally
of C shares held for less than one year on a first-in first-out basis.

For example, assume you purchase 100 C shares at $10 per share (for a total
cost of $1,000) and, during the year you purchase such shares, the net asset
value increases to $12 per share and you acquire 10 additional shares as
dividends. If you redeem 50 shares (or $600) within the first year of purchase,
10 shares would not be subject to the CDSL because redemptions are made first of
shares acquired as dividends. With respect to the remaining shares, the CDSL is
applied only to the original cost of $10 per share and not to the higher net
asset value of $12 per share. Therefore, only 40 of the 50 shares (or $400)
being redeemed would be subject to a CDSL at a rate of 1%.

WAIVER OF THE CONTINGENT DEFERRED SALES LOAD. The CDSL currently is waived
for (1) any partial or complete redemption in connection with a distribution
without penalty under Section 72(t) of the Code from a qualified retirement
plan, including a Keogh or IRA upon attaining age 70 1/2; (2) any redemption
resulting from a tax-free return of an excess contribution to a qualified
employer retirement plan or an IRA; (3) any partial or complete redemption
following death or disability (as defined in Section 72(m)(7) of the Code) of a
shareholder (including one who owns the shares as joint tenant with his spouse)
from an account in which the deceased or disabled is named, provided the
redemption is requested within one year of the death or initial determination of
disability; (4) certain periodic redemptions under the Systematic Withdrawal
Plan from an account meeting certain minimum balance requirements, in amounts
representing certain maximums established from time to time by the Distributor
(currently a maximum of 12% annually of the account balance at the beginning of
the Systematic Withdrawal Plan); or (5) involuntary redemptions by the Trust of

12
<PAGE> 15

C shares in shareholder accounts that do not comply with the minimum balance
requirements. The Distributor may require proof of documentation prior to waiver
of the CDSL described in sections (1) through (4) above, including distribution
letters, certification by plan administrators, applicable tax forms or death or
physicians certificates.

For more information about C shares, see "Reinstatement Privilege" and
"Exchange Privilege."

HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Redemptions of Trust shares can be made by:

CONTACTING YOUR REPRESENTATIVE. Your Representative will transmit an order
to the Trust for redemption and may charge you a fee for this service.

TELEPHONE REQUEST. You may redeem shares by placing a telephone request to
the Trust (800-421-4184) prior to the close of regular trading on the Exchange.
If you do not wish to have telephone exchange/redemption privileges, you should
so elect by completing the appropriate section of the Account Application. The
Trust, Manager, Distributor and their Trustees, directors, officers and
employees are not liable for any loss arising out of telephone instructions they
reasonably believe are authentic. These parties will employ reasonable
procedures to confirm that telephone instructions are authentic. To the extent
that the Trust, Manager, Distributor and their Trustees, directors, officers and
employees do not follow reasonable procedures, some or all of them may be liable
for losses due to unauthorized or fraudulent transactions. For more information
on these procedures, see "Redeeming Shares - Telephone Transactions" in the SAI.
You may elect to have the funds wired to the bank account specified on the
Account Application. Funds normally will be sent the next business day, and you
will be charged a wire fee by the Manager (currently $5.00). For redemptions of
less than $25,000, you may request that the check be mailed to your address of
record, providing that such address has not been changed in the past 60 days.
For your protection, all other redemption checks will be transferred to the bank
account specified on the Account Application.

WRITTEN REQUEST. Trust shares may be redeemed by sending a written request
for redemption to "Heritage Capital Appreciation Trust, c/o Shareholder
Services, Heritage Asset Management, Inc., P.O. Box 33022, St. Petersburg, FL
33733". Signature guarantees will be required on the following types of
requests: redemptions from any account that has had an address change in the
past 60 days, redemptions greater than $25,000, redemptions that are sent to an
address other than the address of record and exchanges or transfers into other
Heritage accounts that have different titles. The Manager will transmit an order
to the Trust for redemption.

SYSTEMATIC WITHDRAWAL PLAN. Withdrawal plans are available that provide
for regular periodic withdrawals of $50 or more on a monthly, quarterly,
semiannual or annual basis. Under these plans, sufficient shares of the Trust
are redeemed to provide the amount of the periodic withdrawal payment. The
purchase of A shares while participating in the Systematic Withdrawal Plan
ordinarily will be disadvantageous to you because you will be paying a sales
load on the purchase of those shares at the same time that you are redeeming A
shares upon which you may already have paid a sales load. Therefore, the Trust
will not knowingly permit the purchase of A shares through an Automatic
Investment Plan if you are at the same time making systematic withdrawals of A
shares. The Manager reserves the right to cancel systematic withdrawals if
insufficient shares are available for two or more consecutive months.

13
<PAGE> 16

Please contact the Manager or your Representative for further information
or see "Redeeming Shares" in the SAI.

RECEIVING PAYMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

If a request for redemption is received by the Trust in good order (as
described below) before the close of regular trading on the Exchange, the shares
will be redeemed at the net asset value per share determined at the close of
regular trading on the Exchange on that day, less any applicable CDSL for C
shares. Requests for redemption received by the Trust after the close of regular
trading on the Exchange will be executed at the net asset value determined at
the close of regular trading on the Exchange on the next trading day, less any
applicable CDSL for C shares.

Payment for shares redeemed by the Trust normally will be made on the
business day after redemption was made. If the shares to be redeemed recently
have been purchased by personal check, the Trust may delay mailing a redemption
check until the purchase check has cleared, which may take up to seven days.
This delay can be avoided by wiring funds for purchases. The proceeds of a
redemption may be more or less than the original cost of Trust shares.

A redemption request will be considered to be received in "good order" if:

- the number or amount of shares and the class of shares to be redeemed
and shareholder account number have been indicated;

- any written request is signed by the shareholder and by all co-owners
of the account with exactly the same name or names used in establishing
the account;

- any written request is accompanied by certificates representing the
shares that have been issued, if any, and the certificates have been
endorsed for transfer exactly as the name or names appear on the
certificates or an accompanying stock power has been attached; and

- the signatures on any written redemption request of $25,000 or more and
on any certificates for shares (or an accompanying stock power) have
been guaranteed by a national bank, a state bank that is insured by the
Federal Deposit Insurance Corporation, a trust company, or by any
member firm of the New York, American, Boston, Chicago, Pacific or
Philadelphia Stock Exchanges. Signature guarantees also will be
accepted from savings banks and certain other financial institutions
that are deemed acceptable by the Manager, as transfer agent, under its
current signature guarantee program.

The Trust has the right to suspend redemption or postpone payment at times
when the Exchange is closed (other than customary weekend or holiday closings)
or during periods of emergency or other periods as permitted by the SEC. In the
case of any such suspension you may either withdraw your request for redemption
or receive payment based upon the net asset value next determined after the
suspension is lifted. If a redemption check remains outstanding after six
months, the Manager reserves the right to redeposit those funds into your
account. For more information on receiving payment, see "Redeeming
Shares - Receiving Payment" in the SAI.

14
<PAGE> 17

EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

If you have held A shares or C shares for at least 30 days, you may
exchange some or all of your shares for shares of the same class of any other
Heritage Mutual Fund. All exchanges will be based on the respective net asset
values of the Heritage Mutual Funds involved. All exchanges are subject to the
minimum investment requirements and any other applicable terms set forth in the
prospectus for the Heritage Mutual Fund whose shares are being acquired.
Exchanges involving the redemption of shares recently purchased by check will be
permitted only after the Heritage Mutual Fund whose shares have been tendered
for exchange is reasonably assured that the check has cleared, normally seven
calendar days following the purchase date. Exchanges of shares of Heritage
Mutual Funds generally will result in the realization of a taxable gain or loss
for Federal income tax purposes.

For purposes of calculating the commencement of the one-year CDSL holding
period for shares exchanged from the Fund to the C shares of any other Heritage
Mutual Fund, except Heritage Cash Trust-Money Market Fund ("Money Market Fund"),
the original purchase date of those shares exchanged will be used. Any time
period that the exchanged shares were held in the Money Market Fund will not be
included in this calculation.

If you exchange A shares or C shares for corresponding shares of the Money
Market Fund, you may, at any time thereafter, exchange such shares for the
corresponding class of shares of any other Heritage Mutual Fund. Because the
Money Market Fund is a no-load mutual fund, if you exchange shares of that fund
acquired by purchase (rather than exchange) for shares of another Heritage
Mutual Fund, you will be subject to the sales load, if any, that would be
applicable to a purchase of that Heritage Mutual Fund. In addition, if you
exchange C shares of the Trust for corresponding shares of the Money Market
Fund, the period during which an investment is held in shares of the Money
Market Fund will not count for purposes of calculating the one-year CDSL holding
period for such shares. As a result, if you redeem C shares of the Money Market
Fund before the expiration of the one-year CDSL holding period, you will be
subject to the applicable CDSL. A shares of the Trust may be exchanged for A
shares of the Heritage Cash Trust -- Municipal Money Market Fund, which is the
only class of shares offered by that fund. Because the Heritage Cash
Trust -- Municipal Money Market Fund is a no-load fund, if you exchange shares
of that fund acquired by purchase (rather than exchange) for shares of another
Heritage Mutual Fund, you also will be subject to the sales load, if any, that
would be applicable to a purchase of that Heritage Mutual Fund. C shares are not
eligible for exchange into the Heritage Cash Trust -- Municipal Money Market
Fund.

Shares acquired pursuant to a telephone request for exchange will be held
under the same account registration as the shares redeemed through such an
exchange. For a discussion of limitation of liability of certain entities, see
"How to Redeem Shares -- Telephone Request."

Telephone exchanges can be effected by calling the Manager at 800-421-4184
or by calling your Representative. In the event that you or your Representative
are unable to reach the Manager by telephone, an exchange can be effected by
sending a telegram to Heritage Asset Management, Inc., attention: Shareholder
Services. Due to the volume of calls or other unusual circumstances, telephone
exchanges may be difficult to implement during certain time periods.

The exchange privilege is available only in states where shares of the
Heritage Mutual Fund being acquired may be legally sold. Each Heritage Mutual
Fund reserves the right to reject any order to acquire its shares through
exchange or otherwise to restrict or terminate the exchange privilege at any
time. In addition, each Heritage Mutual Fund may terminate this exchange
privilege upon 60 days' notice. For further

15
<PAGE> 18

information on this exchange privilege, contact the Manager or your
Representative and see "Exchange Privilege" in the SAI.

MANAGEMENT OF THE TRUST

BOARD OF TRUSTEES

The business and affairs of the Trust are managed by or under the direction
of its Board of Trustees. The Trustees are responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
to the shareholders. A Trustee may be removed by the other Trustees or by a
two-thirds vote of the outstanding Trust shares.

INVESTMENT ADVISER, FUND ACCOUNTANT, ADMINISTRATOR AND TRANSFER AGENT

Heritage Asset Management, Inc. is the Trust's investment adviser, fund
accountant, administrator and transfer agent. The Manager is responsible for
reviewing and establishing investment policies for the Trust and determining the
allocation of assets to the subadvisers as well as administering the Trust's
noninvestment affairs. The Manager is a wholly-owned subsidiary of Raymond James
Financial, Inc., which, together with its subsidiaries, provides a wide range of
financial services to retail and institutional clients. The Manager manages,
supervises and conducts the business and administrative affairs of the Trust and
the other Heritage Mutual Funds with net assets totaling approximately $2.0
billion as of October 31, 1995. The Manager's annual investment advisory and
administration fee paid monthly by the Trust to the Manager is based on the
Trust's average daily net assets shown on the chart below. The Trust pays the
Manager directly for fund accounting and transfer agent services.

<TABLE>
<CAPTION>
ADVISORY FEE
AS % OF AVERAGE
AVERAGE DAILY DAILY NET
NET ASSETS ASSETS
- ------------------ ---------------
<S> <C> <C>
First $100 million......................... 1.00%
Over $100 million.......................... .75%
</TABLE>

This fee is higher than that charged for most other mutual funds with a
similar investment objective. The Manager has voluntarily agreed to waive 25% of
its fee on the first $100 million of the Trust's average daily net assets. The
advisory fee may be further reduced pursuant to regulations in various states
where Trust shares are qualified for sale which impose limitations on the annual
expense ratio of the Trust. The Manager reserves the right to discontinue any
voluntary waiver of its fees or reimbursements to the Trust in the future. The
Manager also may recover advisory fees waived in the two previous years if the
recovery does not cause the Trust to exceed applicable state expense
limitations. It currently is not anticipated that the Manager will recover these
fees.

SUBADVISERS

The Manager has entered into an agreement with Liberty Investment
Management, 2502 Rocky Point Drive, Tampa, Florida 33607, to provide investment
advice and portfolio management services, including placement of brokerage
orders, on behalf of the Trust. For these services, the Manager pays the
Subadviser an annual fee of .25% of the Trust's average daily net assets,
without regard to any reduction in fees actually paid to the Manager as a result
of state expense limitations or other voluntary fee waivers by the Manager. The
Subadviser provides investment advisory services to institutional clients,
including employee benefit plans,

16
<PAGE> 19

endowments, foundations, other tax-exemption organizations and registered
investment companies; the net assets for these institutional clients totaled
approximately $4.9 billion as of November 30, 1995. The Subadviser may use the
Distributor as broker for agency transactions in listed and over-the-counter
securities at commission rates and under circumstances consistent with the
policy of best price and execution. See "Brokerage Transactions" in the SAI.

The Manager also has entered into a subadvisory agreement with Eagle Asset
Management, Inc. ("Eagle"). However, the Manager has chosen not to allocate
assets to Eagle at this time.

PORTFOLIO MANAGEMENT

Herbert E. Ehlers serves as portfolio manager of the Trust. Mr. Ehlers has
been responsible for the day-to-day management of the Trust's investment
portfolio, subject to the general oversight of the Manager and the Board, since
the Trust's inception in December 1985. Mr. Ehlers has been the Chief Executive
Officer and Chief Investment Officer of the Subadviser since January 1, 1995
(commencement of operations). From 1984 to December 31, 1994, Mr. Ehlers was
President, Chief Investment Officer and a director of Eagle.

SHAREHOLDER AND ACCOUNT POLICIES

DIVIDENDS AND OTHER DISTRIBUTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Dividends from net investment income are declared and paid annually. The
Trust distributes to shareholders along with its annual dividend substantially
all net realized capital gains on portfolio securities and net realized gains
from foreign currency transactions, if any, after the end of the year in which
the gains are realized. Dividends and other distributions on shares held in
retirement plans and by shareholders maintaining a Systematic Withdrawal Plan
generally are declared and paid in additional Trust shares. Other shareholders
may elect to:

- receive both dividends and other distributions in additional Trust
shares;

- receive dividends in cash and other distributions in additional Trust
shares;

- receive both dividends and other distributions in cash; or

- receive both dividends and other distributions in cash for investment in
another Heritage Mutual Fund.

If you select none of these options, the first option will apply. In any
case when you receive a dividend or a other distribution in additional Trust
shares, your account will be credited with shares valued at the net asset value
of the shares determined at the close of regular trading on the Exchange on the
day following the record date for the dividend or capital gain distribution.
Distribution options can be changed at any time by notifying the Manager in
writing.

Dividends paid by the Trust with respect to its A shares and C shares are
calculated in the same manner and at the same time and will be in the same
amount relative to the aggregate net asset value of the shares in each class,
except that dividends on C shares may be lower than dividends on A shares
primarily as a result of the higher distribution fee and class-specific expenses
applicable to C shares.

17
<PAGE> 20

DISTRIBUTION PLANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

As compensation for services rendered and expenses borne by the Distributor
in connection with the distribution of A shares and in connection with personal
services rendered to Class A shareholders and the maintenance of Class A
accounts, the Trust may pay the Distributor a service fee of up to 0.25% and a
distribution fee of up to 0.25% of the Trust's average daily net assets
attributable to A shares. The Trust currently pays the Distributor a service fee
of up to 0.25% on A shares purchased prior to April 3, 1995. This fee represents
compensation for the maintenance of Class A accounts. This fee is computed daily
and paid monthly.

As compensation for services rendered and expenses borne by the Distributor
in connection with the distribution of C shares and in connection with personal
services rendered to Class C shareholders and the maintenance of Class C
accounts, the Trust pays the Distributor a service fee of up to 0.25% and a
distribution fee of up to 0.75% of the Trust's average daily net assets
attributable to C shares. This fee is computed daily and paid monthly.

The above-referenced fees paid to the Distributor are made under
Distribution Plans adopted pursuant to Rule 12b-1 under the 1940 Act. These
Plans authorize the Distributor to spend such fees on any activities or expenses
intended to result in the sale of A shares and C shares, including, but not
limited to, compensation (in addition to the sales load) paid to
Representatives; advertising, salaries and other expenses of the Distributor
relating to selling or servicing efforts; expenses of organizing and conducting
sales seminars; printing of prospectuses, statements of additional information
and reports for other than existing shareholders; and preparation and
distribution of advertising material and sales literature and other sales
promotion expenses. The Distributor has entered into dealer agreements with
participating dealers who also will distribute shares of the Trust.

If the Plan is terminated, the obligation of the Trust to make payments to
the Distributor pursuant to the Plan will cease and the Trust will not be
required to make any payment past the date the Plan terminates.

TAXES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

The Trust intends to qualify for treatment as a regulated investment
company under the Code for its current taxable year. By doing so, the Trust (but
not its shareholders) will be relieved of Federal income tax on that part of its
investment company taxable income (generally consisting of net investment
income, net short-term capital gain and net gains from certain foreign currency
transactions) and net capital gain (the excess of net long-term capital gain
over net short-term capital loss) that is distributed to its shareholders.
Dividends from the Trust's investment company taxable income are taxable to
shareholders as ordinary income, to the extent of the Trust's earnings and
profits, whether received in cash or in additional Trust shares. Distributions
of the Trust's net capital gain, when designated as such, are taxable to
shareholders as long-term capital gains, whether received in cash or in
additional Trust shares and regardless of the length of time the shares have
been held. A portion of the dividends paid by the Trust, whether received in
cash or in additional Trust shares, may be eligible for the dividends-received
deduction allowed to corporations. The eligible portion may not exceed the
aggregate dividends received by the Trust from U.S. corporations. However,
dividends received by a corporate shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the alternative minimum
tax.

18
<PAGE> 21

Dividends and other distributions declared by the Trust in October,
November or December of any calendar year and payable to shareholders of record
on a date in any of these months will be deemed to have been paid by the Trust
and received by the shareholders on December 31 of that year if they are paid by
the Trust during the following January. Shareholders receive Federal income tax
information regarding dividends and other distributions after the end of each
year. The Trust is required to withhold 31% of all dividends, capital gain
distributions, and redemption proceeds payable to individuals and certain other
non-corporate shareholders who do not provide the Trust with a correct taxpayer
identification number. Withholding at that rate also is required from dividends
and capital gain distributions payable to such shareholders who otherwise are
subject to backup withholding.

The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting the Trust and its shareholders. See the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You are therefore urged to
consult your tax adviser.

SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

Each share of the Trust gives the shareholder one vote in matters submitted
to shareholders for a vote. A shares and C shares of the Trust have equal voting
rights, except that, in matters affecting only a particular class, only shares
of that class are entitled to vote. As a Massachusetts business trust, the Trust
is not required to hold annual shareholder meetings. Shareholder approval will
be sought only for certain changes in the Trust's operation and for the election
of Trustees under certain circumstances. Trustees may be removed by the Trustees
or shareholders at a special meeting. A special meeting of shareholders shall be
called by the Trustees upon the written request of shareholders owning at least
10% of the Trust's outstanding shares.

No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Trust or the Distributor. This Prospectus does
not constitute an offering in any state in which such offering may not lawfully
be made.

19
<PAGE> 22

[HERITAGE LOGO]

Prospectus
January 2, 1996

Heritage Capital Appreciation Trust
P.O. Box 33022
St. Petersburg, FL 33733

--------------------------------------------

Address Change Requested

Prospectus

INVESTMENT ADVISER/
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 LLP

8M HAM017

<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

HERITAGE CAPITAL APPRECIATION TRUST

This Statement of Additional Information ("SAI") dated January 2,
1996 should be read with the Prospectus of the Heritage Capital
Appreciation Trust dated January 2, 1996. This SAI is not a prospectus
itself. To receive a copy of the Prospectus, write to Heritage Asset
Management, Inc. at the address below or call (800) 421-4184.

Heritage Asset Management, Inc.
880 Carillon Parkway
St. Petersburg, Florida 33716

TABLE OF CONTENTS
Page
----
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective . . . . . . . . . . . . . . . . . . . . . 2
Investment Policies . . . . . . . . . . . . . . . . . . . . . 2
Industry Classifications . . . . . . . . . . . . . . . . . . . 6
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . 7
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 10
INVESTING IN THE TRUST . . . . . . . . . . . . . . . . . . . . . . . . 11
Alternative Purchase Plans . . . . . . . . . . . . . . . . . . 11
Class A Purchases at Net Asset Value . . . . . . . . . . . . . 12
Class A Combined Purchase Privilege (Right of
Accumulation) . . . . . . . . . . . . . . . . 12
Class A Statement of Intention . . . . . . . . . . . . . . . . 13
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . . 14
Telephone Transactions . . . . . . . . . . . . . . . . . . . . 15
Redemption in Kind . . . . . . . . . . . . . . . . . . . . . . 15
Receiving Payment . . . . . . . . . . . . . . . . . . . . . . 15
EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
TRUST INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Management of the Trust . . . . . . . . . . . . . . . . . . . 20
Investment Adviser and Administrator; Subadvisers . . . . 22
Brokerage Practices . . . . . . . . . . . . . . . . . . . . . 25
Distribution of Shares . . . . . . . . . . . . . . . . . . . . 26
Administration of the Trust . . . . . . . . . . . . . . . . . 28
Potential Liability . . . . . . . . . . . . . . . . . . . . . 29
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
REPORT OF INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . . . A-2
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . A-3
<PAGE>

GENERAL INFORMATION
-------------------
Heritage Capital Appreciation Trust (the "Trust") was established
as a Massachusetts business trust under a Declaration of Trust dated June
21, 1985. The Trust offers two classes of shares, Class A shares sold
subject to a front-end sales load ("A shares") and Class C shares sold
subject to a contingent deferred sales load ("CDSL") ("C shares").

INVESTMENT INFORMATION
----------------------
Investment Objective
--------------------
The Trust's investment objective, as described in the prospectus,
is long-term capital appreciation.

Investment Policies
-------------------
American Depository Receipts. The Trust may invest in sponsored
American Depository Receipts ("ADRs"). ADRs are receipts typically issued
by a U.S. bank or trust company evidencing ownership of the underlying
securities of foreign issuers and other forms of depository receipts for
securities of foreign issuers. Generally, ADRs, in registered form, are
denominated in U.S. dollars and are designed for use in the U.S.
securities markets. Thus, these securities are not denominated in the
same currency as the securities into which they may be converted. ADRs
are considered to be foreign securities by the Trust for purposes of
certain investment limitation calculations.

Convertible Securities. The Trust may invest in convertible
securities. While no securities investment is without some risk,
investments in convertible securities generally entail less risk than the
issuer's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security
sells above its value as a fixed income security. The Trust's investment
subadvisers, Liberty Investment Management ("Liberty") and Eagle Asset
Management, Inc. ("Eagle") (collectively, the "Subadvisers"), will decide
whether to invest in convertible securities based upon a fundamental
analysis of the long-term attractiveness of the issuer and the underlying
common stock, the evaluation of the relative attractiveness of the current
price of the underlying common stock, and the judgment of the value of the
convertible security relative to the common stock at current prices.
Convertible securities in which the Trust may invest include corporate
bonds, notes and preferred stock that can be converted into common stock.
Convertible securities combine the fixed-income characteristics of bonds
and preferred stock with the potential for capital appreciation. As with
all debt securities, the market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as
interest rates decline. While convertible securities generally offer
lower interest or dividend yields than nonconvertible debt securities of
similar quality, they do enable the investor to benefit from increases in
the market price of the underlying common stock.

- 2 -
<PAGE>

Forward Currency Contracts. Because investments in foreign
companies usually will involve currencies of foreign countries, and
because the Trust temporarily may hold funds in bank deposits in foreign
currencies during the completion of investment programs, the value of
Trust assets as measured in U.S. dollars may be affected favorably or
unfavorably by changes in foreign currency exchange rates and exchange
control regulations, and the Trust may incur costs in connection with
conversions between various currencies. The Trust will conduct its
foreign currency exchange transactions on a spot (i.e., cash) basis at the
spot rate prevailing in the foreign currency exchange market. In
addition, in order to protect against uncertainty in the level of future
exchange rates, the Trust may enter into contracts to purchase or sell
foreign currencies at a future date (i.e., a "forward currency contract"
or "forward contract") that is not more than 30 days from the date of the
contract.

The Trust may enter into forward contracts to purchase or sell
foreign currencies for a fixed amount of U.S. dollars or another foreign
currency or basket of foreign currencies. Such transactions may serve as
long hedges -- for example the Trust may purchase a forward contract to
lock in the U.S. dollar price of a security denominated in a foreign
currency that the Trust intends to acquire. Forward contract transactions
also may serve as short hedges -- for example, the Trust may sell a
forward contract to lock in the U.S. dollar equivalent of the proceeds
from the anticipated sale of a security, or from a dividend or interest
payment on a security, denominated in a foreign currency.

As noted above, the Trust may seek to hedge against changes in
the value of a particular currency by using forward contracts on another
foreign currency or a basket of currencies, the value of which the
Subadvisers believe will have a positive correlation to the values of the
currency being hedged. Use of a different foreign currency magnifies the
risk that movements in the price of the forward contract will not
correlate or will correlate unfavorably with the foreign currency being
hedged.

The cost to the Trust of engaging in forward contracts varies
with factors such as the currency involved, the length of the contract
period and the market conditions then prevailing. Because forward
contracts usually are entered into on a principal basis, no fees or
commissions are involved. When the Trust enters into a forward contract,
it relies on its counterparty to make or take delivery of the underlying
currency at the maturity of the contract. Failure by the counterparty to
do so would result in the loss of any expected benefit of the transaction.

Sellers or purchasers of forward contracts can enter into
offsetting closing transactions by purchasing or selling, respectively, an
instrument identical to the instrument bought or sold. Secondary markets
generally do not exist for forward contracts, with the result that closing
transactions generally can be made for forward contracts only by
negotiating directly with the counterparty. Thus, there can be no
assurance that the Trust will in fact be able to close out a forward

- 3 -
<PAGE>

contract at a favorable price prior to maturity. In addition, in the
event of insolvency of the counterparty, the Trust might be unable to
close out a forward contract at any time prior to maturity. In either
event, the Trust would continue to be subject to market risk with respect
to the position, and would continue to be required to maintain a position
in the securities or currencies that are the subject of the hedge or to
maintain cash or securities in a segregated account.

The precise matching of forward contract amounts and the value of
the securities involved generally will not be possible because the value
of such securities, measured in the foreign currency, will change after
the foreign contract has been established. Thus, the Trust might need to
purchase or sell foreign currencies in the spot (cash) market to the
extent such foreign currencies are not covered by forward contracts. The
projection of short-term currency market movements is extremely difficult,
and the successful execution of a short-term hedging strategy is highly
uncertain.

Foreign Currency Strategies - Special Considerations. The value
of forward contracts depends on the value of the underlying currency
relative to the U.S. dollar. Because foreign currency transactions
occurring in the interbank market might involve substantially larger
amounts than those involved in the use of forward contracts, the Trust
could be disadvantaged by having to deal in the odd-lot market (generally
consisting of transactions of less than $1 million) for the underlying
foreign currencies at prices that are less favorable than for round lots.

There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market.

Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Trust might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.

Limitations on the Use of Forward Currency Contracts. The Trust
may enter into forward currency contracts or maintain a net exposure to
such contracts only if (1) the consummation of the contracts would not
obligate the Trust to deliver an amount of foreign currency in excess of
the value of the position being hedged by such contracts or (2) the Trust
maintains cash, U.S. Government securities or liquid, high-grade debt
securities in a segregated account in an amount not less than the value of
its total assets committed to the consummation of the contract and not
covered as provided in (1) above, as marked to market daily.

- 4 -
<PAGE>

Foreign Securities. The Trust may invest in foreign securities;
however, such investment may not exceed 10% of the Trust's investment
portfolio. Investing in securities issued by companies whose principal
business activities are outside the United States may involve significant
risks not present in domestic investments. For example, there generally
is less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting
requirements of U.S. securities laws. Foreign issuers generally are not
bound by uniform accounting, auditing and financial reporting requirements
comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of the Trust,
political or financial instability or diplomatic and other developments
that could affect such investments. Further, the economies of some
countries may differ favorably or unfavorably from the economy of the
United States.

It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside the United States. Foreign stock markets, while growing
in volume and sophistication, generally are not as well developed as those
in the United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In addition,
foreign brokerage commissions generally are higher than commissions on
securities traded in the United States. In general, there is less overall
governmental supervision and regulation of securities exchanges, brokers
and listed companies than in the United States.

It is the Trust's policy not to invest in foreign securities when
there are currency or trading restrictions in force or when, in the
judgment of the Subadvisers, such restrictions are likely to be imposed.
However, certain currencies may become blocked (i.e., not freely available
for transfer from a foreign country), resulting in the possible inability
of the Trust to convert proceeds realized upon the sale of portfolio
securities of the affected foreign companies into U.S. currency.

Illiquid Securities. As stated in the prospectus, the Trust will
not purchase or otherwise acquire any security if, as a result, more than
10% of its net assets (taken at current value) would be invested in
securities that are illiquid by virtue of the absence of a readily
available market or legal or contractual restrictions on resale.

Preferred Stock. A preferred stock is a blend of the
characteristics of a bond and common stock. It can offer the higher yield
of a bond and has priority over common stock in equity ownership but does
not have the seniority of a bond and its participation in the issuer's
growth may be limited. Preferred stock has a preference over common stock
in the receipt of dividends and in any residual assets after payment to
creditors should the issuer be dissolved. Although the dividend is set at

- 5 -
<PAGE>

a fixed annual rate, in some circumstances it can be changed or omitted by
the issuer.

U.S. Government Securities. The Trust may invest in U.S.
Government securities, including a variety of securities that are issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements secured thereby. These securities include
securities issued and guaranteed by the U.S. Government, such as Treasury
bills, Treasury notes, and Treasury bonds; obligations backed by the "full
faith and credit" of the United States, such as Government National
Mortgage Association securities; obligations supported by the right of the
issuer to borrow from the U.S. Treasury, such as those of the Federal Home
Loan Banks; and obligations supported only by the credit of the issuer,
such as those of the Federal Intermediate Credit Banks.

Warrants. The Trust may purchase warrants, which are instruments
that permit the Trust to acquire, by subscription, the capital stock of a
corporation at a set price, regardless of the market price for such stock.
Warrants may be either perpetual or of limited duration. There is a
greater risk that warrants might drop in value at a faster rate than the
underlying stock. The Trust's investment in warrants is limited to 5% of
its total assets, of which no more than 2% may not be listed on the New
York or American Stock Exchange.

Industry Classifications
------------------------
For purposes of determining industry classifications, the Trust
relies upon classifications established by the Manager that are based upon
classifications contained in the Directory of Companies Filing Annual
Reports with the Securities and Exchange Commission ("SEC") and in the
Standard & Poor's Corporation Industry Classifications.

INVESTMENT LIMITATIONS
----------------------
In addition to the limits disclosed in "Investment Policies"
above and the investment limitations described in the prospectus, the
Trust is subject to the following investment limitations that are
fundamental policies of the Trust and may not be changed without the vote
of a majority of the outstanding voting securities of the Trust. Under
the Investment Company Act of 1940, as amended (the "1940 Act"), a "vote
of a majority of the outstanding voting securities" of the Trust means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Trust or (2) 67% or more of the shares present at a
shareholders meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.

Investing in Commodities, Minerals or Real Estate. The Trust may
not invest in commodities, commodity contracts, oil, gas or other mineral
programs, or real estate, except that it may purchase securities issued by
companies that invest in or sponsor such interests.

- 6 -
<PAGE>

Underwriting. The Trust may not underwrite the securities of
other issuers, except that the Trust may invest in securities that are not
readily marketable without registration under the 1933 Act (restricted
securities), if immediately after the making of such investment not more
than 5% of the value of the Trust's total assets (taken at cost) would be
so invested.

Loans. The Trust may not make loans, except to the extent that
the purchase of a portion of an issue of publicly distributed notes, bonds
or other evidences of indebtedness or deposits with banks and other
financial institutions may be considered loans. The Trust also may enter
into repurchase agreements as permitted under its investment policies.

Concentration of Investments. The Trust may not purchase
securities if as a result of such purchase more than 25% of the value of
its total assets would be invested in any one industry.

Issuing Senior Securities. The Trust may not issue senior
securities, except as permitted by its investment objective and policies
and investment limitations.

The Trust has adopted the following additional restrictions that,
together with certain limits described in the Trust's prospectus, are
nonfundamental policies and may be changed by the Board of Trustees
without shareholder approval in compliance with applicable law, regulation
or regulatory policy.

Investing in Illiquid Securities. The Trust may not purchase any
securities subject to restrictions on resale or purchase securities that
are not readily marketable if, as a result thereof, more than 10% of the
net assets of the Trust would be invested in such illiquid investments and
in repurchase agreements maturing in more than seven days.

Selling Short and Buying on Margin. The Trust may not sell any
securities short or purchase any securities on margin but may obtain such
short-term credits as may be necessary for clearance of purchases and
sales of securities.

Investing in Other Investment Companies. The Trust may not
invest in securities issued by other investment companies, except in
connection with a merger, consolidation, acquisition or reorganization or
by purchase in the open market of securities of closed-end investment
companies where no underwriter or dealer commission or profit, other than
a customary brokerage commission, is involved and only if immediately
thereafter not more than 5% of the Trust's total assets (taken at market
value) would be invested in such securities.

Investing in Issuers Whose Securities Are Owned by Officers of
the Trust. The Trust may not purchase or retain the securities of any
issuer if the officers and Trustees of the Trust or the Manager or
Subadvisers who own individually more than 1/2 of 1% of the issuer's
securities together own more than 5% of the issuer's securities.

- 7 -
<PAGE>

Option Writing. The Trust may not write put or call options.

Pledging. The Trust may not pledge any securities except that it
may pledge assets having a value of not more than 10% of its total assets
to secure permitted borrowing from banks.

Unseasoned Issuers. The Trust may not invest more than 5% of the
value of its total assets in securities of companies that, with their
predecessors, have been in continuous operations for less than three
years.

Except with respect to borrowing money, if a percentage
limitation is adhered to at the time of the investment, a later increase
or decrease in the percentage resulting from any change in value of net
assets will not result in a violation of such restriction.

NET ASSET VALUE
---------------
The net asset values of the A shares and C shares are determined
daily Monday through Friday, except for New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day, as of the close of regular trading on the New York
Stock Exchange (the "Exchange"). Net asset value for each class is
calculated by dividing the value of the total assets of the Trust
attributable to that class, less all liabilities (including accrued
expenses) attributable to that class, by the number of class shares
outstanding, the result being adjusted to the nearest whole cent. A
security listed or traded on the Exchange, or other domestic or foreign
stock exchanges, is valued at its last sales price on the principal
exchange on which it is traded prior to the time when assets are valued.
If no sale is reported at that time or the security is traded in the
over-the-counter market, the most recent bid price is used. Securities
and other assets for which market quotations are not readily available, or
for which market quotes are not deemed to be reliable, are valued at fair
value as determined in good faith by the Board of Trustees. Securities in
a foreign currency will be valued daily in U.S. dollars at the foreign
currency exchange rates prevailing at the time the Trust calculates the
daily net asset value of each class. Short-term investments having a
maturity of 60 days or less are valued at cost with accrued interest or
discount earned included in interest receivable.

The Trust is open for business on days on which the Exchange is
open (each a "Business Day"). Trading in securities on European and Far
Eastern securities exchanges and over-the-counter markets normally is
completed well before the Trust's close of business on each Business Day.
In addition, European or Far Eastern securities trading may not take place
on all Business Days. Furthermore, trading takes place in various foreign
capital markets on days that are not Business Days and on which the
Trust's net asset value is not calculated. Calculation of A shares and C
shares does not take place contemporaneously with the determination of the
prices of the majority of the portfolio securities used in such
calculation. The Trust calculates net asset value per share, and

- 8 -
<PAGE>

therefore effects sales and redemptions, as of the close of trading on the
Exchange each Business Day. If events materially affecting the value of
such securities occur between the time when their prices are determined
and the time when the Trust's net asset value is calculated, such
securities will be valued at fair value by methods as determined in good
faith by or under the direction of the Board of Trustees.

The Board of Trustees may suspend the right of redemption or
postpone payment for more than seven days at times (1) during which the
Exchange is closed other than for the customary weekend and holiday
closings, (2) during which trading on the Exchange is restricted as
determined by the SEC, (3) during which an emergency exists as a result of
which disposal by the Trust of securities owned by it is not reasonably
practicable or it is not reasonably practical for the Trust fairly to
determine the value of its net assets, or (4) for such other periods as
the SEC may by order permit for the protection of the holders of A shares
and C shares.

PERFORMANCE INFORMATION
-----------------------
The performance data for each class of the Trust quoted in
advertising and other promotional materials represents past performance
and is not intended to indicate future performance. The investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return quotes for each class used in the Trust's advertising
and promotional materials are calculated according to the following
formula:

P(1+T)n = ERV

where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypo-
thetical $1,000 payment made at the
beginning of the period at the end of
that period

In calculating the ending redeemable value for A shares, the
current maximum sales load of 4.75% is deducted from the initial $1,000
payment and all dividends and other distributions by the Trust are assumed
to have been reinvested at net asset value on the reinvestment dates
during the period. Based on this formula, the total return, or "T" in the
formula above, is computed by finding the average annual compounded rates
of return over the period that would equate the initial amount invested to
the ending redeemable value. The average annualized total returns for A
shares using this formula for the fiscal year ended August 31, 1995, the
five years ended August 31, 1995 and for the period December 12, 1985
(commencement of operations) through August 31, 1995 were 5.58%, 13.89%
and 10.72%, respectively. The actual total return would be higher for

- 9 -
<PAGE>

shareholders who paid a sales load of less than 4.75%. The average
annualized total return for C shares using this formula for the period
April 3, 1995 (commencement of operations for C shares) to August 31, 1995
was 21.47%.

In connection with communicating its total return to current or
prospective shareholders, the Trust also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services
or to other unmanaged indexes that may assume reinvestment of dividends
but generally do not reflect deductions for administrative and management
costs. In addition, the Trust may from time to time include in
advertising and promotional materials total return figures that are not
calculated according to the formula set forth above for each class of
shares. For example, in comparing the Trust's aggregate total return with
data published by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc. or with such market indices as the Dow Jones Industrial
Average and the Standard & Poor's 500 Composite Stock Price Index, the
Trust calculates its cumulative total return for each class for the
specified periods of time by assuming an investment of $10,000 in shares
of that class and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Percentage
increases are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder by the
beginning value. The Trust does not, for these purposes, deduct from the
initial value invested any amount representing front-end sales loads
charged on A shares or CDSLs charged on C shares.

The A shares cumulative returns using this formula for the one
year and five years ended August 31, 1995, and for the period December 12,
1985 (commencement of operations) to August 31, 1995 were 10.85%, 101.23%
and 182.58%, respectively. The C shares cumulative return using this
formula for the period April 3, 1995 (commencement of operations for C
shares) to August 31, 1995 was 9.31%. By not annualizing the performance
and excluding the effect of the front-end sales load on A shares and the
CDSL on C shares, total return calculated in this manner simply will
reflect the increase in net asset value per share over a period of time,
adjusted for dividends and other distributions. Calculating total return
without taking into account the front-end sales load or CDSL results in a
higher rate of return than calculating total return net of the sales load.

INVESTING IN THE TRUST
----------------------
A shares and C shares are sold at their next determined net asset
value on Business Days. The procedures for purchasing shares of the Trust
are explained in the Trust's prospectus under "Investing in the Trust."

Alternative Purchase Plans
--------------------------
A shares are sold at their next determined net asset value plus a
front-end sales load on days the Exchange is open for business. C shares
are sold at their next determined net asset value on days the Exchange is
open for business, subject to a 1% CDSL if the investor redeems such

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<PAGE>

shares within one year. The Manager, as the Trust's transfer agent, will
establish an account with the Trust and will transfer funds to State
Street Bank and Trust Company (the "Custodian"). Normally, orders will be
accepted upon receipt of funds and will be executed at the net asset value
determined as of the close of regular trading on the Exchange on that day
plus any applicable sales load. See "Alternative Purchase Plans" in the
prospectus. The Trust reserves the right to reject any order for Trust
shares. The Trust's distributor, Raymond James & Associates, Inc. ("RJA"
or the "Distributor"), has agreed that it will hold the Trust harmless in
the event of loss as a result of cancellation of trades in Trust shares by
the Distributor, its affiliates or its customers.

Class A Purchases at Net Asset Value
------------------------------------
Cities, counties, states or instrumentalities and their
departments, authorities or agencies are able to purchase A shares at net
asset value as long as certain conditions are met: the governmental
entity is prohibited by applicable investment laws, codes or regulations
from paying a sales load in connection with the purchase of shares of a
registered investment company; the governmental entity has determined that
such A shares are a legally permissible investment; and any relevant
minimum purchase amounts are met.

In the instance of discretionary fiduciary assets or trusts, or
Class A purchases by a governmental entity through a registered broker-
dealer with which the Distributor has a dealer agreement, the Manager may
make a payment out of its own resources to the Distributor, who may
reallow the payment to the selling broker-dealer. However, the
Distributor and the selling broker-dealer may be required to reimburse the
Manager for these payments if investors redeem A shares within specified
periods.

Class A Combined Purchase Privilege (Right of Accumulation)
-----------------------------------------------------------
Certain investors may qualify for the Class A sales load
reductions indicated in the sales load schedule in the prospectus by
combining purchases of A shares into a single "purchase," if the resulting
purchase totals at least $25,000. The term "purchase" refers to a single
purchase by an individual, or to concurrent purchases that, in the
aggregate, are at least equal to the prescribed amounts, by an individual,
his spouse and their children under the age of 21 years purchasing A
shares for his or their own account; a single purchase by a trustee or
other fiduciary purchasing A shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved; or a
single purchase for the employee benefit plans of a single employer. The
term "purchase" also includes purchases by a "company," as the term is
defined in the 1940 Act, but does not include purchases by any such
company that has not been in existence for at least six months or that has
no purpose other than the purchase of A shares or shares of other
registered investment companies at a discount; provided, however, that it
shall not include purchases by any group of individuals whose sole

- 11 -
<PAGE>

organizational nexus is that the participants therein are credit card
holders of a company, policy holders of an insurance company, customers of
either a bank or broker-dealer, or clients of an investment adviser.

The applicable A sales load will be based on the total of:

(i) the investor's current purchase;

(ii) the net asset value (at the close of business on
the previous day) of (a) all A shares held by the investor and
(b) all A shares of any other Heritage mutual fund advised by the
Manager ("Heritage Mutual Fund") held by the investor and
purchased at a time when A shares of such other fund were
distributed subject to a sales load (including Heritage Cash
Trust shares acquired by exchange); and

(iii) the net asset value of all A shares described in
paragraph (ii) owned by another shareholder eligible to combine
his purchase with that of the investor into a single "purchase."

A shares of Heritage Income Trust-Intermediate Government Fund
purchased from February 1, 1992 through July 31, 1992, without payment of
a sales load will be deemed to fall under the provisions of paragraph (ii)
as if they had been distributed without being subject to a sales load,
unless those shares were acquired through an exchange of other shares that
were subject to a sales load.

Class A Statement of Intention
------------------------------
Investors also may obtain the reduced sales loads shown in the
Trust's prospectus by means of a written Statement of Intention, which
expresses the investor's intention to invest not less than $25,000 within
a period of 13 months in A shares of the Trust or any other Heritage
Mutual Fund. Each purchase of A shares under a Statement of Intention
will be made at the public offering price or prices applicable at the time
of such purchase to a single transaction of the dollar amount indicated in
the Statement. At the investor's option, a Statement of Intention may
include purchases of A shares of the Trust or any other Heritage Mutual
Fund made not more than 90 days prior to the date that the investor signs
a Statement of Intention. However, the 13-month period during which the
Statement is in effect will begin on the date of the earliest purchase to
be included.

The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum initial
investment under a Statement of Intention is 5% of such amount. A shares
purchased with the first 5% of such amount will be held in escrow (while
remaining registered in the name of the investor) to secure payment of the
higher sales load applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrowed A shares will be
involuntarily redeemed to pay the additional sales load, if necessary.
When the full amount indicated has been purchased, the escrow will be

- 12 -
<PAGE>

released. To the extent an investor purchases more than the dollar amount
indicated on the Statement of Intention and qualifies for a further
reduced sales load, the sales load will be adjusted for the entire amount
purchased at the end of the 13-month period. The difference in sales load
will be used to purchase additional A shares of the Trust, subject to the
rate of sales load applicable to the actual amount of the aggregate
purchases. An investor may amend his/her Statement of Intention to
increase the indicated dollar amount and begin a new 13-month period. In
that case, all investments subsequent to the amendment will be made at the
sales load in effect for the higher amount. The escrow procedures
discussed above will apply.

REDEEMING SHARES
----------------
The methods of redemption are described in the section of the
prospectus entitled "How to Redeem Shares."

Systematic Withdrawal Plan
--------------------------
Shareholders may elect to make systematic withdrawals from a
Trust account of a minimum of $50 on a periodic basis. The amounts paid
each period are obtained by redeeming sufficient shares from an account to
provide the withdrawal amount specified. The Systematic Withdrawal Plan
currently is not available for shares held in an Individual Retirement
Account, Section 403(b) annuity plan, defined contribution plan,
Simplified Employee Pension Plan or other retirement plans, unless the
shareholder establishes to the Manager's satisfaction that withdrawals
from such an account may be made without imposition of a penalty.
Shareholders may change the amount to be paid without charge not more than
once a year by written notice to the Distributor or the Manager.

Redemptions will be made at net asset value determined as of the
close of regular trading on the Exchange on the 10th day of each month or
the 10th day of the last month of each period, whichever is applicable.
Systematic withdrawals of C shares, if made within one year of the date of
purchase, will be charged a CDSL of 1%. If the Exchange is not open for
business on that day, the shares will be redeemed at net asset value
determined as of the close of regular trading on the Exchange on the
preceding Business Day, minus any applicable CDSL for C shares. The check
for the withdrawal payment usually will be mailed on the next business day
following redemption. If a shareholder elects to participate in the
Systematic Withdrawal Plan, dividends and other distributions on all
shares in the account must be reinvested automatically in Trust shares. A
shareholder may terminate the Systematic Withdrawal Plan at any time
without charge or penalty by giving written notice to the Manager or the
Distributor. The Trust and its transfer agent and Distributor also
reserve the right to modify or terminate the Systematic Withdrawal Plan at
any time.

Withdrawal payments are treated as a sale of shares rather than
as a dividend or a capital gain distribution. These payments are taxable
to the extent that the total amount of the payments exceeds the tax basis

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<PAGE>

of the shares sold. If the periodic withdrawals exceed reinvested
dividends and other distributions, the amount of the original investment
may be correspondingly reduced.

Ordinarily, a shareholder should not purchase additional A shares
if maintaining a Systematic Withdrawal Plan of A shares because the
shareholder may incur tax liabilities in connection with such purchases
and withdrawals. The Trust will not knowingly accept purchase orders from
shareholders for additional A shares if they maintain a Systematic
Withdrawal Plan unless the purchase is equal to at least one year's
scheduled withdrawals. In addition, a shareholder who maintains such a
Plan may not make periodic investments under the Trust's Automatic Invest-
ment Plan.

Telephone Transactions
----------------------
Shareholders may redeem shares by placing a telephone request to
the Trust. The Trust, Manager, Distributor and their Trustees, directors,
officers and employees are not liable for any loss arising out of
telephone instructions they reasonably believe are authentic. In acting
upon telephone instructions, these parties use procedures that are
reasonably designed to ensure that such instructions are genuine, such as
(1) obtaining some or all of the following information: account number,
name(s) and social security number registered to the account, and personal
identification; (2) recording all telephone transactions; and (3) sending
written confirmation of each transaction to the registered owner. If the
Trust, Manager, Distributor and their Trustees, directors, officers and
employees do not follow reasonable procedures, some or all of them may be
liable for any such losses.

Redemptions in Kind
-------------------
The Trust is obligated to redeem shares for any shareholder for
cash during any 90-day period up to $250,000 or 1% of the Trust's net
asset value, whichever is less. Any redemption beyond this amount also
will be in cash unless the Board of Trustees determine that further cash
payments will have a material adverse effect on remaining shareholders.
In such a case, the Trust will pay all or a portion of the remainder of
the redemption in portfolio instruments, valued in the same way as the
Trust determines net asset value. The portfolio instruments will be
selected in a manner that the Board of Trustees deem fair and equitable.
A redemption in kind is not as liquid as a cash redemption. If a
redemption is made in kind, a shareholder receiving portfolio instruments
could receive less than the redemption value thereof and could incur
certain transaction costs.

Receiving Payment
-----------------
If a request for redemption is received by the Trust in good
order (as described in the prospectus) before the close of regular trading
on the Exchange, the shares will be redeemed at the net asset value per
share determined at such close, minus any applicable CDSL for C shares.

- 14 -
<PAGE>

Requests for redemption received by the Trust after the close of regular
trading on the Exchange will be executed at the net asset value determined
as of such close on the next trading day, minus any applicable CDSL for C
shares.

If shares of the Trust are redeemed by a shareholder through the
Distributor or a participating dealer, the redemption is settled with the
shareholder as an ordinary transaction. If a request for redemption is
received before the close of regular trading on the Exchange, shares will
be redeemed at the net asset value per share determined on that day, minus
any applicable CDSL for C shares. Requests for redemption received after
the close of regular trading on the Exchange will be executed on the next
trading day. Payment for shares redeemed normally will be made by the
Trust to the Distributor or a participating dealer by the third business
day after the day the redemption request was made, provided that
certificates for shares have been delivered in proper form for transfer to
the Trust or, if no certificates have been issued, a written request
signed by the shareholder has been provided to the Distributor or a
participating dealer prior to settlement date.

Other supporting legal documents may be required from
corporations or other organizations, fiduciaries or persons other than the
shareholder of record making the request for redemption. Questions
concerning the redemption of Trust shares can be directed to registered
representatives of the Distributor or a participating dealer, or to the
Manager.

EXCHANGE PRIVILEGE
------------------
Shareholders who have held Trust shares for at least 30 days may
exchange some or all of their A shares or C shares for corresponding
classes of shares of any other Heritage Mutual Fund. All exchanges will
be based on the respective net asset values of the Heritage Mutual Funds
involved. An exchange is effected through the redemption of the shares
tendered for exchange and the purchase of shares being acquired at their
respective net asset values as next determined following receipt by the
Heritage Mutual Fund whose shares are being exchanged of (1) proper
instructions and all necessary supporting documents as described in such
fund's prospectus, or (2) a telephone request for such exchange in
accordance with the procedures set forth in the Trust's prospectus and
below.

A shares of Heritage Income Trust-Limited Maturity Government
Fund ("Limited Maturity Government") purchased from February 1, 1992
through July 31, 1992, without payment of an initial sales load may be
exchanged into A shares of the Trust without payment of any sales load.
Effective February 1, 1996, Limited Maturity Government will change its
name to Intermediate Government. A shares of Limited Maturity Government
purchased after July 31, 1992 without an initial sales load will be
subject to a sales load when exchanged into A shares of the Trust, unless
those shares were acquired through an exchange of other shares that were
subject to an initial sales load.

- 15 -
<PAGE>

Shares acquired pursuant to a telephone request for exchange will
be held under the same account registration as the shares redeemed through
such exchange. For a discussion of limitation of liability of certain
entities, see "Telephone Transactions" above.

Telephone exchanges can be effected by calling the Manager at
800-421-4184 or by calling a registered representative of the Distributor,
a participating dealer or participating bank ("Representative"). In the
event that a shareholder or his Representative is unable to reach the
Manager by telephone, a telephone exchange can be effected by sending a
telegram to Heritage Asset Management, Inc., attention: Shareholder
Services. Telephone or telegram requests for an exchange received by the
Trust before the close of regular trading on the Exchange will be effected
at the close of regular trading on that day. Requests for an exchange
received after the close of regular trading will be effected on the
Exchange's next trading day. Due to the volume of calls or other unusual
circumstances, telephone exchanges may be difficult to implement during
certain time periods.

TAXES
-----
In order to qualify for the favorable tax treatment as a
regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended, the Trust must distribute annually to its shareholders
at least 90% of its investment company taxable income (generally
consisting of net investment income, net short-term capital gain and net
gains from certain foreign currency transactions) ("Distribution
Requirement") and must meet several additional requirements. These
requirements include the following: (1) the Trust must derive at least 90%
of its gross income each taxable year from dividends, interest, payments
with respect to securities loans and gains from the sale or other
disposition of securities or foreign currencies, or other income
(including gains from forward contracts) derived with respect to its
business of investing in securities or those currencies ("Income
Requirement"); (2) the Trust must derive less than 30% of its gross income
each taxable year from the sale or other disposition of securities, or
foreign currencies or forward contracts thereon that are not directly
related to the Trust's principal business of investing in securities, that
are held for less than three months ("Short-Short Limitation"); (3) at the
close of each quarter of the Trust's taxable year, at least 50% of the
value of its total assets must be represented by cash and cash items, U.S.
Government securities, securities of other RICs, and other securities,
with those other securities limited, in respect of any one issuer, to an
amount that does not exceed 5% of the value of the Trust's total assets
and that does not represent more than 10% of the issuer's outstanding
voting securities; and (4) at the close of each quarter of the Trust's
taxable year, not more than 25% of the value of its total assets may be
invested in securities (other than U.S. Government securities or the
securities of other RICs) of any one issuer.

The Trust will be subject to a nondeductible 4% excise tax
("Excise Tax") to the extent it fails to distribute by the end of any

- 16 -
<PAGE>

calendar year substantially all of its ordinary income for that year and
its capital gain net income for the one-year period ending on October 31
of that year, plus certain other amounts.

A redemption of Trust shares will result in a taxable gain or
loss to the redeeming shareholder, depending on whether the redemption
proceeds are more or less than the shareholder's adjusted basis for the
redeemed shares (which normally includes any sales load paid on A shares).
An exchange of Trust shares for shares of another Heritage Mutual Fund
generally will have similar tax consequences. However, special rules
apply when a shareholder disposes of Trust shares through a redemption or
exchange within 90 days after purchase thereof and subsequently reacquires
shares of the Trust or acquires shares of another Heritage Mutual Fund
without paying a sales load due to the 30-day reinstatement or exchange
privilege. In these cases, any gain on the disposition of the original
Trust shares will be increased, or loss decreased, by the amount of the
sales load paid when those shares were acquired, and that amount will
increase the adjusted basis of the shares subsequently acquired. In
addition, if Trust shares are purchased (whether pursuant to the
reinstatement privilege or otherwise) within 30 days before or after
redeeming a portion of that loss will not be deductible and will increase
the basis of the newly purchased shares.

If Trust shares are sold at a loss after being held for six
months or less, the loss will be treated as long-term, instead of
short-term, capital loss to the extent of any capital gain distributions
received on those shares. Investors also should be aware that if shares
are purchased shortly before the record date for a dividend or other
distribution, the shareholder will pay full price for the shares and
receive some portion of the price back as a taxable distribution.

Dividends and interest received by the Trust may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however, and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign
investors.

The Trust may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general,
meets either of the following tests: (1) at least 75% of its gross income
is passive or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income. Under certain circumstances,
the Trust will be subject to Federal income tax on a portion of any
"excess distribution" received on stock it holds in a PFIC or of any gain
on disposition of the stock (collectively "PFIC income"), plus interest
thereon, even if the Trust distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be
included in the Trust's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.

- 17 -
<PAGE>

If the Trust invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Trust would be required to include in income each year its
pro rata share of the qualified electing fund's annual ordinary earnings
and net capital gain (the excess of net long-term capital gain over net
short-term capital loss) -- which most likely would have to be distributed
to satisfy the Distribution Requirement and avoid imposition of the Excise
Tax -- even if those earnings and gain were not received by the Trust. In
most instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.

Pursuant to proposed regulations, open-end RICs, such as the
Trust, would be entitled to elect to "mark-to-market" their stock in
certain PFICs. "Marking-to-market," in this context, means recognizing as
gain for each taxable year the excess, as of the end of that year, of the
fair market value of a PFIC's stock over the adjusted basis in that stock
(including mark-to-market gain for each prior year for which an election
was in effect).

The use of hedging strategies, such as purchasing and selling
futures contracts and entering into forward contracts, involves complex
rules that will determine for income tax purposes the character and timing
of recognition of the gains and losses the Trust realizes in connection
therewith. Gains from the disposition of foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and
gains from forward contracts derived by the Trust with respect to its
business of investing in securities or foreign currencies, will qualify as
permissible income under the Income Requirement. However, income from the
disposition of foreign currencies, and forward contracts thereon, that are
not directly related to the Trust's principal business of investing in
securities will be subject to the Short-Short Limitation if they are held
for less than three months.

Investors are advised to consult their own tax advisers regarding
the status of an investment in the Trust under state and local tax laws.

TRUST INFORMATION
-----------------
Management of the Trust
-----------------------
Trustees and Officers. Trustees and officers are listed below
with their addresses, principal occupations and present positions,
including any affiliation with Raymond James Financial, Inc. ("RJF"), RJA,
the Manager (also referred to herein as "Heritage"), and Eagle.

- 18 -
<PAGE>

Position with Principal Occupation
Name the Trust During Past Five Years
---- -------------- ----------------------

Thomas A. James* Trustee Chairman of the Board since 1986 and Chief
880 Carillon Parkway Executive Officer since 1969 of RJF; Chairman
St. Petersburg, FL 33716 of the Board of RJA since 1986; Chairman of
the Board of Eagle Asset Management, Inc.
("Eagle") since 1984 and Chief Executive
Officer of Eagle since July 1994.

Richard K. Riess* Trustee President of Eagle, January 1995 to present,
880 Carillon Parkway Chief Operating Officer, July 1988 to present,
St. Petersburg, FL 33716 Executive Vice President, July 1988-December
1993; President of Heritage Mutual Funds, June
1985-November 1991.

Donald W. Burton Trustee President of South Atlantic Capital
614 W. Bay Street Corporation (venture capital) since October
Suite 200 1981.
Tampa, FL 33606

C. Andrew Graham Trustee Vice President of Financial Designs Ltd. since
Financial Designs, Ltd. 1992; Executive Vice President of the Madison
1775 Sherman Street Group, Inc., October 1991-1992; Principal of
Suite 1900 First Denver Financial Corporation (investment
Denver, CO 80203 banking) since 1987.

David M. Phillips Trustee Chairman and Chief Executive Officer of CCC
World Trade Center Chicago Information Services, Inc. since 1994 and of
444 Merchandise Mart InfoVest Corporation (information services to
Chicago, IL 60654 the insurance and auto industries and consumer
households) since October 1982.

Eric Stattin Trustee Litigation Consultant/Expert Witness and
2587 Fairway Village Drive private investor since February 1988.
Park City, UT 84060

James L. Pappas Trustee Dean of College of Business Administration
University of South Florida since August 1987 and Lykes Professor of
College of Business Administration Banking and Finance since August 1986 at
Tampa, FL 33620 University of South Florida.

Stephen G. Hill President Chief Executive Officer and President of the
880 Carillon Parkway Manager since April 1989 and Director since
St. Petersburg, FL 33716 December 31, 1994.

- 19 -
<PAGE>

Position with Principal Occupation
Name the Trust During Past Five Years
---- -------------- ----------------------

Donald H. Glassman Treasurer Treasurer of the Manager since May 1989;
880 Carillon Parkway Treasurer of Heritage Mutual Funds since May
St. Petersburg, FL 33716 1989.

Clifford J. Alexander Secretary Partner, Kirkpatrick & Lockhart LLP (law
1800 Massachusetts Ave., N.W. firm).
Washington, DC 20036

Patricia Schneider Assistant Compliance Administrator of the Manager.
880 Carillon Parkway Secretary
St. Petersburg, FL 33716

Robert J. Zutz Assistant Partner, Kirkpatrick & Lockhart LLP (law
1800 Massachusetts Ave., N.W. Secretary firm).
Washington, DC 20036

</TABLE>

* These Trustees are "interested persons" as defined in section
2(a)(19) of the 1940 Act.

The Trustees and officers of the Trust, as a group, own less than
1% of the Trust's shares outstanding. The Trust's Declaration of Trust
provides that the Trustees will not be liable for errors of judgment or
mistakes of fact or law. However, they are not protected against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their office.

The Trust currently pays Trustees who are not "interested
persons" of the Trust $1,333.33 annually and $333.33 per meeting of the
Board of Trustees. Trustees also are reimbursed for any expenses incurred
in attending meetings. Because the Manager performs substantially all of
the services necessary for the operation of the Trust, the Trust requires
no employees. No officer, director or employee of the Manager receives
any compensation from the Trust for acting as a director or officer. The
following table shows the compensation earned by each Trustee for the
fiscal year ended August 31, 1995.

- 20 -
<PAGE>

Compensation Table

Pension or Total Compensation
Aggregate Retirement Benefits From the Trust and
Compensation Accrued as Part of Estimated Annual the Heritage Family
Name of Person, From the Trust the Trust's Benefits Upon of Funds Paid to
Position Expenses Retirement Trustees
--------------- -------------- ------------------- --------------- --------------------

Donald W. Burton, $1,554 $0 $0 $14,000
Trustee

C. Andrew Graham, $1,776 $0 $0 $16,000
Trustee

David M. Phillips, $1,554 $0 $0 $14,000
Trustee

Eric Stattin, $1,776 $0 $0 $16,000
Trustee

James L. Pappas, $1,776 $0 $0 $16,000
Trustee

Richard K. Riess, $0 $0 $0 $0
Trustee

Thomas A. James, $0 $0 $0 $0
Trustee

</TABLE>

Investment Adviser and Administrator; Subadvisers
-------------------------------------------------
The Trust's investment adviser and administrator, Heritage Asset
Management, Inc., was organized as a Florida corporation in 1985. All the
capital stock of the Manager is owned by RJF. RJF is a holding company
that, through its subsidiaries, is engaged primarily in providing custom-
ers with a wide variety of financial services in connection with
securities, limited partnerships, options, investment banking and related
fields.

Under an Investment Advisory and Administration Agreement
("Advisory Agreement") dated November 13, 1985, between the Trust and the
Manager and subject to the control and direction of the Board of Trustees,
the Manager is responsible for reviewing and establishing investment

- 21 -
<PAGE>

policies for the Trust as well as administering the Trust's noninvestment
affairs. Under separate Subadvisory Agreements, Eagle Asset Management,
Inc. ("Eagle") and Liberty Asset Management, subject to direction by the
Manager and Board of Trustees, may provide investment advice and portfolio
management services to the Trust for a fee payable by the Manager. The
Manager has chosen not to allocate assets to Eagle at this time.

The Manager also is obligated to furnish the Trust with office
space, administrative, and certain other services as well as executive and
other personnel necessary for the operation of the Trust. The Manager and
its affiliates also pay all the compensation of Trustees of the Trust who
are employees of the Manager and its affiliates. The Trust pays all its
other expenses that are not assumed by the Manager. The Trust also is
liable for such nonrecurring expenses as may arise, including litigation
to which the Trust may be a party. The Trust also may have an obligation
to indemnify its Trustees and officers with respect to any such
litigation.

The Advisory Agreement and the Subadvisory Agreements each were
approved by the Board of Trustees of the Trust (including all of the
Trustees who are not "interested persons" of the Manager or Subadvisers,
as defined under the 1940 Act) and by the shareholders of the Trust in
compliance with the 1940 Act. Each Agreement will continue in force for a
period of two years unless its continuance is approved at least annually
thereafter by (1) a vote, cast in person at a meeting called for that
purpose, of a majority of those Trustees who are not "interested persons"
of the Manager, Subadvisers or the Trust, and by (2) the majority vote of
either the full Board of Trustees or the vote of a majority of the
outstanding shares of the Trust. The Advisory and Subadvisory Agreements
each automatically terminates on assignment, and each is terminable on not
more than 60 days' written notice by the Trust to either party. In
addition, the Advisory Agreement may be terminated on not less than 60
days' written notice by the Manager to the Trust and the Subadvisory
Agreement may be terminated on not less than 60 days' written notice by
the Manager or 90 days' written notice by the Subadvisers. Under the
terms of the Advisory Agreement, the Manager automatically becomes
responsible for the obligations of the Subadvisers upon termination of the
Subadvisory Agreement. In the event the Manager ceases to be the manager
of the Trust or the Distributor ceases to be principal distributor of
Trust shares, the right of the Trust to use the identifying name of
"Heritage" may be withdrawn.

The Manager and the Subadvisers shall not be liable to the Trust
or any shareholder for anything done or omitted by them, except acts or
omissions involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties imposed upon them by their agreements
with the Trust or for any losses that may be sustained in the purchase,
holding or sale of any security.

All of the officers of the Trust except for Messrs. Alexander and
Zutz are officers or directors of the Manager. These relationships are
described under "Management of the Trust."

- 22 -
<PAGE>

Advisory and Administration Fee. The annual investment advisory
fee paid monthly by the Trust to the Manager is based on the Trust's
average daily net assets as listed in the prospectus.

The Manager has voluntarily agreed to waive management fees to
the extent that total annual operating expenses attributable to A shares
exceed 2.0% of the average daily net assets or to the extent that total
annual operating expenses attributable to C shares exceed 2.5%. To the
extent that the Manager waives its fees for one class, it will waive its
fees for the other class on a proportionate basis. The Manager has
entered into an agreement with the Subadvisers to provide investment
advice and portfolio management services to the Trust for an annual fee
paid by the Manager equal to 50% of the fees payable to the Manager by the
Trust, without regard to any reduction in fees actually paid to the
Manager as a result of expense limitations. For the three fiscal years
ended August 31, 1993, 1994 and 1995, the Manager earned $698,597,
$748,946 and $711,510 (of which $174,649, $187,791 and $177,878 was
waived), respectively, and paid the Subadvisers $261,979, $280,978 and
$221,041, respectively.

Class-Specific Expenses. The Trust may determine to allocate
certain of its expenses (in addition to distribution fees) to the specific
classes of the Trust's shares to which those expenses are attributable.

State Expense Limitations. Certain states have established
expense limitations for investment companies whose shares are registered
for sale in that state. If the Trust's operating expenses (including the
investment advisory fee, but not including distribution fees, brokerage
commissions, interest, taxes and extraordinary expenses) exceed state
expense limits, the Manager will reimburse the Trust for its expenses over
the limitation. If the Trust's monthly projected operating expenses
exceed applicable state expense limitations, the investment advisory fee
paid will be reduced on a monthly basis by the amount of the excess,
unless waivers of the expense limitations are obtained by the Trust. If
applicable state expense limitations are exceeded, the amount to be
reimbursed by the Manager will be limited to the amount of the investment
advisory fee and the Trust may have to cease offering its shares for sale
in such states until the expense ratio declines. Any fees waived by the
Manager can be recovered by it from the Trust when such recovery would not
cause the Trust to exceed its expense limits. The most restrictive
current state expense limit is 2.5% of the Trust's first $30 million in
average net assets, 2.0% of the next $70 million in average net assets and
1.5% of all excess average net assets.

Brokerage Practices -
-----------------
While the Trust generally purchases securities for long-term
capital gains, it may engage in short-term transactions under various
market conditions to a greater extent than certain other mutual funds with
similar investment objectives. Thus, the turnover rate may vary greatly
from year to year or during periods within a year. The portfolio turnover
rate is computed by dividing the lesser of purchases or sales of

- 23 -
<PAGE>

securities for the period by the average value of portfolio securities for
that period. The Trust's annualized portfolio turnover rate was 65% and
66% for the fiscal years ended August 31, 1994 and 1995, respectively.

The Subadvisers are responsible for the execution of the Trust's
portfolio transactions and must seek the most favorable price and
execution for such transactions. Best execution, however, does not mean
that the Trust necessarily will be paying the lowest commission or spread
available. Rather, the Trust also will take into account such factors as
size of the order, difficulty of execution, efficiency of the executing
broker's facilities, and any risk assumed by the executing broker.

It is a common practice in the investment advisory business for
advisers of investment companies and other institutional investors to
receive research, statistical and quotation services from broker-dealers
who execute portfolio transactions for the clients of such advisers.
Consistent with the policy of most favorable price and execution, the
Subadvisers may give consideration to research, statistical and other
services furnished by brokers or dealers. In addition, the Subadvisers
may place orders with brokers who provide supplemental investment and
market research and securities and economic analysis and may pay to these
brokers a higher brokerage commission or spread than may be charged by
other brokers, provided that the Subadvisers determine in good faith that
such commission is reasonable in relation to the value of brokerage and
research services provided. Such research and analysis may be useful to
the Subadvisers in connection with services to clients other than the
Trust.

The Trust may use the Trust's Distributor as broker for agency
transactions in listed and over-the-counter securities at commission rates
and under circumstances consistent with the policy of best execution.
Commissions paid to the Distributor will not exceed "usual and customary
brokerage commissions." Rule l7e-1 under the 1940 Act defines "usual and
customary" commissions to include amounts that are "reasonable and fair
compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions
involving similar securities being purchased or sold on a securities
exchange during a comparable period of time."

The Subadvisers also may select other brokers to execute
portfolio transactions. In the over-the-counter market, the Trust
generally deals with primary market-makers unless a more favorable
execution can otherwise be obtained.

Aggregate brokerage commissions paid by the Trust for the three
fiscal years ended August 31, 1993, 1994 and 1995 amounted to $120,084,
$108,520 and $125,563, respectively. Those commissions were paid on
brokerage transactions worth $76,663,761, $69,736,476 and $84,219,558,
respectively. Aggregate brokerage commissions paid by the Trust to the
Distributor, an affiliated broker-dealer, amounted to $38,345, $0 and
$3,090, respectively, for the fiscal years ended August 31, 1993, 1994 and
1995 or 31.9%, 0% and 2.5%, respectively, of the aggregate commissions

- 24 -
<PAGE>

paid. These commissions were paid on aggregate brokerage transactions of
$19,969,221 (or 26.0%), $0 (or 0%) and $1,911,784 (or 2.3%), respectively,
of the total aggregate brokerage transactions.

The Trust may not buy securities from, or sell securities to, the
Distributor as principal. However, the Board of Trustees has adopted
procedures in conformity with Rule l0f-3 under the 1940 Act whereby the
Trust may purchase securities that are offered in underwritings in which
the Distributor is a participant. The Board of Trustees will consider the
possibilities of seeking to recapture for the benefit of the Trust
expenses of certain portfolio transactions, such as underwriting
commissions and tender offer solicitation fees, by conducting such
portfolio transactions through affiliated entities, including the
Distributor, but only to the extent such recapture would be permissible
under applicable regulations, including the rules of the National
Association of Securities Dealers, Inc. and other self-regulatory
organizations.

Pursuant to Section 11(a) of the Securities Exchange Act of 1934,
as amended, the Trust expressly consented to the Distributor executing
transactions on an exchange on the Trust's behalf.

Distribution of Shares
----------------------
The Distributor and Representatives with whom the Distributor has
entered into dealer agreements offer shares of the Trust as agents on a
best efforts basis and are not obligated to sell any specific amount of
shares. Pursuant to its Distribution Agreement with the Trust with
respect to A shares and C shares, the Distributor bears the cost of making
information about the Trust available through advertising, sales
literature and other means, the cost of printing and mailing prospectuses
to persons other than shareholders, and salaries and other expenses
relating to selling efforts. The Distributor also pays service fees to
dealers for providing personal services to Class A and C shareholders and
for maintaining shareholder accounts. The Trust pays the cost of
registering and qualifying its shares under state and federal securities
laws and typesetting of its prospectuses and printing and distributing
prospectuses to existing shareholders.

As compensation for the services provided and expenses borne by
the Distributor pursuant to the Distribution Agreement with respect to A
shares, the Trust pays the Distributor the sales load described in the
prospectus and a 12b-1 fee in accordance with the Class A Plan described
below. The distribution fee is accrued daily and paid monthly, and the
Trust may pay an amount up to .50% of the average daily net assets
attributable to A shares. The Trust currently pays the Distributor a fee
of up to 0.25% on A shares purchased prior to April 3, 1995. For the
fiscal year ended August 31, 1995, these fees amounted to $354,505, all of
which was paid to the Distributor.

As compensation for the services provided and expenses borne by
the Distributor pursuant to the Distribution Agreement with respect to C

- 25 -
<PAGE>

shares, the Trust pays the Distributor a 12b-1 fee in accordance with the
Class C Plan described below. The fee is accrued daily and paid monthly,
and currently is equal on an annual basis of an amount up to .75% of
average daily net assets. The service fee is accrued daily and paid
monthly, and currently is equal on an annual basis of an amount up to .25%
of average daily net assets. For the fiscal period April 3, 1995
(commencement of offering of C shares) to August 31, 1995, these fees
amount to $981, all of which was paid to the Distributor.

In reporting amounts expended under the Plans to the Board of
Trustees, the Distributor will allocate expenses attributable to the sale
of A shares and C shares to the applicable class based on the ratio of
sales of shares of that class to the sales of all Trust shares. The fees
paid by one class of shares will not be used to subsidize the sale of any
other class of shares.

The Trust has adopted a Class A Distribution Plan (the "Class A
Plan") which, among other things, permits it to pay the Distributor the
above-described fee out of its net assets to finance activity that is
intended to result in the sale and retention of A shares. As required by
Rule 12b-1 under the 1940 act, the Class A Plan was approved by the
shareholders of the Trust and the Board of Trustees, including a majority
of the Trustees who are not interested persons of the Trust (as defined in
the 1940 Act) and who have no direct or indirect financial interest in the
operation of the Plan or the Distribution Agreement (the "Independent
Trustees") after determining that there is a reasonable likelihood that
the Trust and its Class A shareholders will benefit from the Class A Plan.

The Trust also has adopted a Class C Distribution Plan (the
"Class C Plan") which, among other things, permits it to pay the
Distributor the above-described fee out of its net assets to finance
activity that is intended to result in the sale and retention of C shares.
The Class C Plan was approved by the Board of Trustees, including a
majority of the Independent Trustees after determining that there is a
reasonable likelihood that the Trust and its Class C shareholders will
benefit from the Class C Plan.

The Class A Plan and the Class C Plan each may be terminated by
vote of a majority of the Independent Trustees or by vote of a majority of
the outstanding voting securities of the Trust. The Board of Trustees
review quarterly a written report of Plan costs and the purposes for which
such costs have been incurred. A Plan may be amended by vote of the Board
of Trustees, including a majority of the Independent Trustees cast in
person at a meeting called for such purpose. Any change in a Plan that
would materially increase the distribution cost to a class requires the
approval of that class of shareholders.

The Distribution Agreement may be terminated at any time on 60
days' written notice without payment of any penalty by either party. The
Trust may effect such termination by vote of a majority of the outstanding
voting securities of the Trust or by vote of a majority of the Independent
Trustees. For so long as either the Class A Plan or the Class C Plan is

- 26 -
<PAGE>

in effect, selection and nomination of the Independent Trustees shall be
committed to the discretion of such disinterested persons.

The Distribution Agreement and each of the above-referenced Plans
will continue in effect for successive one-year periods, provided that
each such continuance is specifically approved (1) by the vote of a
majority of the Independent Trustees and (2) by the vote of a majority of
the entire Board of Trustees cast in person at a meeting called for that
purpose.

For the fiscal years ended August 31, 1993, 1994 and 1995, the
Distributor received $154,821, $157,275 and $82,837, respectively, as
compensation for the sale of A shares, of which it retained $21,500,
$27,316 and $11,855, respectively.

Administration of the Trust
---------------------------
Administrative, Fund Accounting and Transfer Agent Services. The
Manager, subject to the control of the Board of Trustees, will manage,
supervise and conduct the administrative and business affairs of the
Trust; furnish office space and equipment; oversee the activities of the
Subadvisers and Custodian; and pay all salaries, fees and expenses of
officers and Trustees of the Trust who are affiliated with the Manager.
The Manager also will provide certain shareholder servicing activities for
customers of the Trust.

The Manager also is the fund accountant and transfer and dividend
disbursing agent for the Trust. The Trust pays the Manager the Manager's
cost plus ten percent for its services as fund accountant and transfer and
dividend disbursing agent. For the three fiscal years ended August 31,
1993, 1994 and 1995, the Manager earned $41,886, $57,272 and $59,519,
respectively, from the Trust for its services as transfer agent. For the
period March 1, 1994 (commencement of Manager's engagement as fund
accountant) to August 31, 1994 and the fiscal year ended August 31, 1995,
the Manager earned $13,511 and $32,742, respectively, from the Trust for
its services as fund accountant.

Custodian. State Street Bank and Trust Company, P.O. Box 1912,
Boston, Massachusetts 02105, serves as custodian of the Trust's assets and
provides portfolio accounting and certain other services.

Legal Counsel. Kirkpatrick & Lockhart LLP of 1800 Massachusetts
Avenue, N.W., Washington, D.C. 20036, serves as counsel to the Trust.
Schifino & Fleischer, P.A. of 1 Tampa City Center, Suite 2700, Tampa,
Florida 33602, serves as counsel to the Distributor and the Manager.

Independent Accountants. Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts 02109, is the independent accountant
for the Trust. The Financial Statements and Financial Highlights of the
Trust which appear in this Statement of Additional Information have been
audited by Coopers & Lybrand L.L.P. and included herein in reliance upon

- 27 -
<PAGE>

the report of said firm of accountants, which is given upon its authority
as an expert in accounting and auditing.

Potential Liability
-------------------
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for obligations of the Trust.
To protect its shareholders, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of its shareholders
for acts or obligations of the Trust. These documents require notice of
this disclaimer to be given in each agreement, obligation or instrument
the Trust or its Trustees enter into or sign. In the unlikely event a
shareholder is held personally liable for the Trust's obligations, the
Trust is required to use its property to protect or compensate the share-
holder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will
occur only if the Trust itself cannot meet its obligations to indemnify
shareholders and pay judgments against them.

- 28 -
<PAGE>

APPENDIX A

COMMERCIAL PAPER RATINGS

The rating services' descriptions of commercial paper ratings in which the
Trust may invest are:

Description of Moody's Investors Service, Inc. Commercial Paper Ratings
-----------------------------------------------------------------------

Prime-1. Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability will often be evidenced by many of the following
characteristics: leading market positions in well-established industries;
high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal
cash generation; well established access to a range of financial markets
and assured sources of alternate liquidity.

Prime-2. Issuers (or supporting institutions) rated Prime-2 (P-2) have a
strong ability for repayment of senior short-term debt obligations. This
will normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, may
be more subject to
variation. Capitalization characteristics, while still appropriate, may
be more affected by external conditions. Ample alternate liquidity is
maintained.

Description of Standard & Poor's Commercial Paper Ratings
---------------------------------------------------------

A-1. This designation indicates that the degree of safety regarding
timely payment is very strong. Those issues determined to possess
extremely strong characteristics are denoted with a plus sign (+)
designation.

A-2. Capacity for timely payment of issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."

A-1
<PAGE>
<PAGE> 1

- --------------------------------------------------------------------------------

REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------

To the Shareholders and Board of Trustees of
Heritage Capital Appreciation Trust:

We have audited the accompanying statement of assets and liabilities of
Heritage Capital Appreciation Trust, including the investment portfolio, as of
August 31, 1995, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
August 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Heritage Capital Appreciation Trust as of August 31, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.

/s/ Coopers & Lybrand

Boston, Massachusetts
October 12, 1995

15
<PAGE> 2

- --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
AUGUST 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C>
REPURCHASE AGREEMENT--8.1%
- -------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated August 31, 1995, @ 5.75%, to be
repurchased at $5,940,949 on September 1, 1995, (collateralized by $4,915,000 United States Treasury
Notes, 8.875%, due August 15, 2017, with a market value of $6,100,927, including interest)(cost
$5,940,000)........................................................................................... $ 5,940,000
-----------
</TABLE>

<TABLE>
<CAPTION>
SHARES
- -------------
<C> <S> <C>
COMMON STOCK--86.7%
- --------------------
BANKING--1.8%
- -------------
6,000 Crestar Financial Corporation....................................................... 338,250
5,000 Integra Financial Corporation....................................................... 280,625
20,000 MBNA Corporation.................................................................... 710,000
-----------
1,328,875
-----------
BROADCASTING--11.9%
- ------------------
80,000 Bell Cablemedia PLC, ADR*........................................................... 1,520,000
13,500 Capital Cities/ABC, Inc. ........................................................... 1,552,500
50,000 Comcast UK Cable Partners, Class "A"*............................................... 784,375
84,000 Gaylord Entertainment Company, Class "A"............................................ 2,331,000
25,000 Liberty Media Group, Class "A"*..................................................... 664,063
100,000 Tele-Communications, Inc., Class "A"*............................................... 1,850,000
-----------
8,701,938
-----------
CONGLOMERATES/DIVERSIFIED--1.9%
- ----------------------------
42,000 Corning, Inc. ...................................................................... 1,370,250
-----------
COSMETICS--1.3%
- --------------
14,000 Avon Products, Inc. ................................................................ 988,750
-----------
ELECTRONICS--4.9%
- ---------------
25,000 AVX Corporation*.................................................................... 793,750
27,500 Duracell International, Inc. ....................................................... 1,227,187
30,000 Reuters Holdings PLC, ADR........................................................... 1,571,250
-----------
3,592,187
-----------
FILMED ENTERTAINMENT--2.2%
- ------------------------
38,000 Time Warner, Inc. .................................................................. 1,600,750
-----------
FINANCE--12.8%
- -------------
41,500 AMBAC, Inc. ........................................................................ 1,753,375
45,000 Federal Home Loan Mortgage Corporation.............................................. 2,891,250
30,000 Federal National Mortgage Association............................................... 2,861,250
15,000 First Data Corporation.............................................................. 875,625
19,000 Student Loan Marketing Association.................................................. 1,028,375
-----------
9,409,875
-----------
FOOD SERVING--1.9%
- -----------------
45,000 IHOP Corporation*................................................................... 1,153,125
50,000 TPI Enterprises, Inc.*.............................................................. 225,000
-----------
1,378,125
-----------
GLASS PRODUCTS--2.5%
- -------------------
80,000 Libbey, Inc. ....................................................................... 1,820,000
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

7
<PAGE> 3

- --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------- -----------
<C> <S> <C>
HEALTH CARE CENTERS--1.8%
- -----------------------
40,000 Beverly Enterprises, Inc.*.......................................................... $ 530,000
50,000 Tenet Healthcare Corporation*....................................................... 793,750
-----------
1,323,750
-----------
HOTELS/MOTELS--1.7%
- ------------------
35,000 Marriott International, Inc. ....................................................... 1,242,500
-----------
INSURANCE--0.9%
- -------------
50,000 Western National Corporation........................................................ 625,000
-----------
LAND DEVELOPMENT--1.4%
- ----------------------
50,000 Rouse Company*...................................................................... 1,056,250
-----------
LEISURE/AMUSEMENT--5.1%
- -----------------------
32,000 Circus Circus Enterprises, Inc.*.................................................... 1,048,000
40,000 Harrah's Entertainment, Inc.*....................................................... 1,275,000
10,000 Hasbro, Inc. ....................................................................... 323,750
32,500 Mirage Resorts, Inc.*............................................................... 1,117,188
-----------
3,763,938
-----------
MEDICAL EQUIPMENT/SUPPLY--2.7%
- -----------------------------
110,000 Amsco International, Inc.*.......................................................... 1,966,250
-----------
PHARMACEUTICALS--0.6%
- -------------------
6,000 Pharmacia Aktiebolag, ADR........................................................... 165,750
7,000 Upjohn Company...................................................................... 296,625
-----------
462,375
-----------
POLLUTION CONTROL--2.0%
- ---------------------
45,000 Wheelabrator Technologies, Inc. .................................................... 703,125
25,000 WMX Technologies, Inc. ............................................................. 734,375
-----------
1,437,500
-----------
PUBLISHING--8.7%
- ---------------
18,000 A.H. Belo Corporation, Class "A".................................................... 632,250
30,000 Gannett Company..................................................................... 1,605,000
48,000 The E.W. Scripps Company, Class "A"................................................. 1,614,000
20,000 Tribune Company..................................................................... 1,340,000
80,000 Valassis Communications, Inc.*...................................................... 1,190,000
-----------
6,381,250
-----------
REAL ESTATE INVESTMENT TRUST--0.7%
- ------------------------------
30,000 Manufactured Home Communities, Inc.................................................. 487,500
-----------
SERVICES--2.6%
- ------------
55,000 Service Corporation International................................................... 1,925,000
-----------
TELECOMMUNICATIONS--12.2%
- ------------------------
50,000 AT&T Corporation.................................................................... 2,825,000
80,000 Airtouch Communications, Inc.*...................................................... 2,600,000
50,000 Telephone & Data Systems, Inc. ..................................................... 2,050,000
35,000 Vodafone Group PLC, Sponsored ADR................................................... 1,465,625
-----------
8,940,625
-----------
TOBACCO--2.3%
- -------------
60,000 RJR Nabisco Holdings Corporation.................................................... 1,710,000
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

8
<PAGE> 4

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------- -----------
<C> <S> <C>
UTILITIES--2.8%
- ------------
70,000 AES Corporation*.................................................................... $ 1,295,000
35,000 Sithe Energies, Inc.*............................................................... 315,000
20,000 UGI Corporation..................................................................... 427,500
-----------
2,037,500
-----------
Total common stocks (cost $49,029,500)............................................................. 63,550,188
-----------
CONVERTIBLE PREFERRED STOCK--3.7%
- -----------------------------
CELLULAR COMMUNICATIONS
- ---------------------
50,000 Cellular Communications, Inc., Class "A"*........................................... 2,725,000
-----------
Total convertible preferred stock (cost $1,563,283)................................................ 2,725,000
-----------
DEBT EXCHANGEABLE FOR COMMON STOCK (DECS)--1.4%
- ------------------------------------------------
DATA PROCESSING
- --------------
20,000 American Express Company, 6.25%, maturing 10/15/96.................................. 987,500
-----------
Total DECS (cost $735,000)......................................................................... 987,500
-----------
TOTAL INVESTMENT PORTFOLIO (cost $57,267,783)(b), 99.9%(a)......................................... 73,202,688
OTHER ASSETS AND LIABILITIES, NET, 0.1%(a)......................................................... 77,636
-----------
NET ASSETS 100.0%.................................................................................. $73,280,324
==========
</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
$57,276,021. Market value includes net unrealized appreciation of
$15,926,667, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$16,613,493 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $686,826.
ADR--American Depository Receipt

The accompanying notes are an integral part of the financial statements.

9
<PAGE> 5

- --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Assets
Investments, at market value (identified cost $51,327,783) (Note 1)......................... $67,262,688
Repurchase agreement (identified cost $5,940,000) (Note 1).................................. 5,940,000
Cash........................................................................................ 1,778
Receivables:
Investments sold.......................................................................... 112,228
Fund shares sold.......................................................................... 59,381
Dividends and interest.................................................................... 78,403
Deferred state registration expenses (Note 1)............................................... 14,543
Prepaid insurance........................................................................... 4,319
-----------
Total assets........................................................................ 73,473,340
Liabilities
Payables (Note 4):
Investments purchased..................................................................... $30,870
Fund shares redeemed...................................................................... 24,093
Accrued management fee.................................................................... 44,428
Accrued distribution fee.................................................................. 30,971
Accrued professional fees................................................................. 26,903
Other accrued expenses.................................................................... 35,751
-------
Total liabilities................................................................... 193,016
-----------
Net assets, at market value................................................................. $73,280,324
===========
Net Assets
Net assets consist of:
Undistributed net investment income....................................................... $ 202,995
Net unrealized appreciation on investments................................................ 15,934,905
Accumulated net realized gain............................................................. 5,514,345
Paid-in capital........................................................................... 51,628,079
-----------
Net assets, at market value................................................................. $73,280,324
===========
Class A Shares
Net asset value and redemption price per share ($72,837,320 divided by 4,690,175 shares of
beneficial interest outstanding, no par value) (Note 2)................................... $15.53
===========
Maximum offering price per share (100/95.25 of $15.53)...................................... $16.30
===========
Class C Shares
Net asset value, offering price and redemption price per share ($443,004 divided by 28,578
shares of beneficial interest outstanding, no par value) (Notes 1 and 2).................. $15.50
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

10
<PAGE> 6

- --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------

<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends.............................................................................. $ 900,342
Interest............................................................................... 597,661
-----------
Total income..................................................................... 1,498,003
Expenses (Notes 1 and 4):
Management fee......................................................................... $ 711,510
Distribution fee....................................................................... 355,486
Professional fees...................................................................... 83,632
Shareholder servicing.................................................................. 59,519
Custodian/Fund accounting fees......................................................... 50,331
Amortization of state registration expenses............................................ 33,606
Reports to shareholders................................................................ 16,583
Trustees' fees and expenses............................................................ 9,223
Insurance.............................................................................. 7,600
Other.................................................................................. 2,155
----------
Total expenses before waiver..................................................... 1,329,645
Fees waived by Manager (Note 4)........................................................ (177,878) 1,151,767
---------- -----------
Net investment income.................................................................... 346,236
-----------
Realized and Unrealized Gain on Investments
Net realized gain from investment transactions........................................... 6,822,883
Net increase in unrealized appreciation of investments during the year................... 127,074
-----------
Net gain on investments.......................................................... 6,949,957
-----------
Net increase in net assets resulting from operations..................................... $ 7,296,193
===========
</TABLE>

- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
AUGUST 31, 1995 AUGUST 31, 1994
--------------- ---------------
<S> <C> <C>
Decrease in net assets:
Operations:
Net investment income........................................................ $ 346,236 $ 115,326
Net realized gain from investment transactions............................... 6,822,883 6,641,529
Net increase (decrease) in unrealized appreciation of investments during the
year....................................................................... 127,074 (1,517,671)
------------- -------------
Net increase in net assets resulting from operations......................... 7,296,193 5,239,184
Distributions to shareholders from:
Net investment income, Class A Shares, ($.06 and $.03 per share,
respectively).............................................................. (258,567) (158,881)
Net realized gains, Class A Shares, ($1.16 and $1.36 per share,
respectively).............................................................. (5,533,950) (6,632,397)
Increase (decrease) in net assets from Fund share transactions (Note 2)........ (2,600,669) 648,126
------------- -------------
Decrease in net assets......................................................... (1,096,993) (903,968)
Net assets, beginning of year.................................................. 74,377,317 75,281,285
------------- -------------
Net assets, end of year (including undistributed net investment income of
$202,995 and $115,326, respectively)......................................... $73,280,324 $74,377,317
============= =============
</TABLE>

The accompanying notes are an integral part of the financial statements.

11
<PAGE> 7

- --------------------------------------------------------------------------------
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>
CLASS A SHARES
FOR THE YEARS ENDED AUGUST 31,
--------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- -------- -------- -------- -------- -------- --------
<S> <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
-------- -------- -------- -------- -------- -------- -------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)...................... 0.08(a) 0.02(a) 0.03(a) 0.15(a) 0.28(a) 0.29(b) 0.14(b) 0.08(a)
Net realized and unrealized
gain (loss) on
investments................. 1.37 1.05 3.29 1.19 1.97 (2.82) 3.77 (1.39)
-------- -------- -------- -------- -------- -------- -------- --------
Total from Investment
Operations.................. 1.45 1.07 3.32 1.34 2.25 (2.53) 3.91 (1.31)
-------- -------- -------- -------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income...................... (0.06) (0.03) (0.07) (0.25) (0.32) (0.19) (0.06) (0.11)
Distributions from net
realized gains.............. (1.16) (1.36) (1.27) -- -- (1.14) (0.11) (1.15)
-------- -------- -------- -------- -------- -------- -------- --------
Total Distributions........... (1.22) (1.39) (1.34) (0.25) (0.32) (1.33) (0.17) (1.26)
-------- -------- -------- -------- -------- -------- -------- --------
NET ASSET VALUE, END OF
PERIOD........................ $ 15.53 $ 15.30 $ 15.62 $ 13.64 $ 12.55 $ 10.62 $ 14.48 $ 10.74
======== ======== ======== ======== ======== ======== ======== ========
TOTAL RETURN(%)(E)............. 10.85 7.07 25.72 10.78 21.73 (18.73) 36.88 (8.75)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to
average daily net assets.... 1.62(a) 1.55(a) 1.56(a) 1.66(a) 1.86(a) 1.96(b) 2.00(b) 2.00(a)
Net investment income (loss)
to average daily net
assets...................... .49 .15 .24 1.09 2.38 2.54 1.19 .62
Portfolio turnover rate....... 66 65 55 57 80 45 60 103
Net assets, end of period ($
millions)................... 73 74 75 65 63 58 62 43

<CAPTION>
CLASS C
SHARES
-----------
1987 1986+ 1995++
-------- -------- -----------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD........................ $ 11.52 $ 9.70 $ 14.18
-------- -------- -----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)...................... 0.08(b) 0.07(a) (0.01)(a)
Net realized and unrealized
gain (loss) on
investments................. 1.80 1.75 1.33
-------- -------- -----------
Total from Investment
Operations.................. 1.88 1.82 1.32
-------- -------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment
income...................... (0.05) -- --
Distributions from net
realized gains.............. (0.04) -- --
-------- -------- -----------
Total Distributions........... (0.09) -- --
-------- -------- -----------
NET ASSET VALUE, END OF
PERIOD........................ $ 13.31 $ 11.52 $ 15.50
======== ======== ===========
TOTAL RETURN(%)(E)............. 16.49 18.76(d) 9.31(d)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to
average daily net assets.... 2.00(b) 2.00(a)(c) 2.17(a)(c)
Net investment income (loss)
to average daily net
assets...................... .74 1.40(c) (0.33)(c)
Portfolio turnover rate....... 48 21(c) 66
Net assets, end of period ($
millions)................... 55 40 .4
</TABLE>

- ---------------

+ For the period December 12, 1985 (commencement of operations) to August 31,
1986.
++ For the period April 3, 1995 (commencement of Class C Shares) to August 31,
1995.
(a) Excludes management fees waived by the Manager in the amount of less than
$0.04, $0.04, $0.04, $0.03, $0.01, $0.01 and $0.02 per Class A Share,
respectively. The operating expense ratios including such items would be
1.87%, 1.81%, 1.81%, 1.84%, 1.87%, 2.06% and 2.31% (annualized) for Class A
Shares, respectively. Excludes management fees waived by the Manager in the
amount of less than $0.04 per Class C Share. The operating expense ratio
including such items would be 2.42% (annualized) for Class C Shares.
(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.

12
<PAGE> 8

- --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------

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 Fund currently
issues Class A and Class C Shares. Class A Shares are sold subject to a
maximum sales charge of 4.75% of the amount invested payable at the time
of purchase. Class C Shares which were offered to shareholders beginning
April 3, 1995 are sold subject to a contingent deferred sales charge of
1% of the lower of net asset value or purchase price payable upon any
redemptions within one year after purchase. 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 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. Of the $6,641,529 of realized gains for the year ended August
31, 1994 the Fund has designated $2,726,444 as net long-term capital
gains on a tax basis paid in 1995.

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.

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.

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. Expenses of the Fund are allocated to each class of
shares based upon their relative percentage of current net assets of
dividend eligible shares. All expenses that are directly attributable to
a specific class of shares, such as distribution fees, are allocated to
that class.

Note 2: FUND SHARES. At August 31, 1995, there was an unlimited number of shares
of beneficial interest of no par value authorized.

Transactions in Class A Shares of the Fund during the years ended August
31, 1995 and 1994, were as follows:

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-------------------------------------------------------------
AUGUST 31, 1995 AUGUST 31, 1994
--------------------------- ---------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
--------------------------------------------------- ---------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold........................................ 315,129 $ 4,487,563 2,079,461 $ 32,311,244
Shares issued on reinvestment of distributions..... 428,528 5,682,169 448,374 6,680,774
Shares redeemed.................................... (913,985) (13,189,775) (2,487,289) (38,343,892)
---------- ------------ ---------- ------------
Net increase (decrease)............................ (170,328) $ (3,020,043) 40,546 $ 648,126
=========== ===========
Shares outstanding:
Beginning of year................................ 4,860,503 4,819,957
---------- ----------
End of year...................................... 4,690,175 4,860,503
========= =========
</TABLE>

13
<PAGE> 9

- --------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------

Transactions for Class C Shares of the Fund from April 3, 1995
(commencement of Class C Shares) to August 31, 1995 were as follows:

<TABLE>
<CAPTION>
CLASS C SHARES SHARES AMOUNT
---------------------------------------------------------------------------------------- ------ --------
<S> <C> <C>
Shares sold............................................................................. 29,005 $425,638
Shares redeemed......................................................................... (427) (6,264)
------ --------
Net increase............................................................................ 28,578 $419,374
========
Shares outstanding:
Beginning of period................................................................... --
------
End of period......................................................................... 28,578
======
</TABLE>

Note 3: PURCHASES AND SALES OF SECURITIES. For the year ended August 31, 1995,
purchases and sales of investment securities (excluding repurchase
agreements and short-term obligations) aggregated $39,863,365 and
$44,356,193, respectively.

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 year ended August 31, 1995
amounted to $177,878 ($.03770 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., a wholly-owned subsidiary of Raymond James
Financial, Inc., was subadviser to the Fund. Although, Eagle remains a
subadviser to the Fund, 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
August 31, 1995 was $9,000. In addition, the Manager performs Fund
Accounting services and charged $32,742 during the current year of which
$5,400 was payable as of August 31, 1995.

Pursuant to the Class A Distribution Plan adopted in accordance with
Rule 12b-1 of the Investment Company Act of 1940, as amended, the Fund
is authorized to pay Raymond James & Associates, Inc. (the
"Distributor") a service fee of up to .50% of the average daily net
assets for Class A Shares purchased on or before March 31, 1995. The
Fund may pay the Distributor .25% for Class A Shares purchased after
March 31, 1995. The Class C Distribution Plan provides for payments at
an annual rate of up to 1.00% of the average daily net assets. The
Distributor, on Class C Shares, may retain the first 12 months
distribution fee for reimbursement of amounts paid to the broker/dealer
at the time of purchase. Such fees are accrued daily and payable
monthly. During the period $354,505 and $981 were paid for distribution
fees for Class A Shares and Class C Shares, respectively. The Manager,
Distributor, Fund Accountant and 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.

<PAGE>