CAPITAL
APPRECIATION
TRUST
[GRAPHIC OMMITTED]
FROM OUR FAMILY TO YOURS: THE INTELLIGENT CREATION OF WEALTH
ANNUAL REPORT
AND INVESTMENT PERFORMANCE
REVIEW FOR THE YEAR ENDED
AUGUST 31, 2000
[LOGO]
--------------------
CAPITAL APPRECIATION
TRUST(TM)
--------------------
<PAGE>
October 6, 2000
Dear Shareholders:
I am pleased to provide you with the annual report for Heritage Capital
Appreciation Trust (the "Fund") for the fiscal year ended August 31, 2000. For
this period, your Fund had a total return of +29.55%, +28.75%, +28.76% for
Class A, Class B and Class C shares, respectively.*
The marketplace has experienced volatility throughout the last year, often
testing investors' resolve in long-term investing strategies and reiterating
the benefits of effectively allocating assets. The switch back and forth
between the higher performance of value- and growth-oriented stocks has been
especially evident during this period as follows:
<TABLE>
<CAPTION>
S & P 500 S & P 500
GROWTH VALUE
----------- ----------
<S> <C> <C>
3 Months Ended 11/30/99 +9.60% +.92%
3 Months Ended 2/29/00 +2.35% -5.82%
3 Months Ended 5/31/00 -.39% +10.03%
3 Months Ended 8/31/00 +9.24% +4.54%
</TABLE>
Throughout the year, your Fund has benefited from employing a successful
"growth at a reasonable price" investment style.
As noted in Herb Ehler's enclosed report, your Fund has ranked in the top 2% of
all large blend funds traced by Morningstar for the three years ended August
31, 2000. I'm also extremely pleased to report that your Fund has ranked in the
top decile for the past 10 years relative to its Morningstar peer group for
both its absolute and tax adjusted results.
With the strong performance of your Fund during the last year, we would like to
reiterate -- as we do each
year -- that investing is a marathon, not a sprint. With that in mind, I hope
you find the long-term performance results for your Fund (updated through
September 30, 2000) to be helpful. All returns are shown net of all expenses
and front- and back-end sales charges, as applicable.
<TABLE>
<CAPTION>
ENDED SEPTEMBER 30, 2000 CLASS A** CLASS B** CLASS C**
-------------------------- ----------- ----------- ------------
<S> <C> <C> <C>
One Year +19.47% +20.64% +24.65%
Three Year +24.43% N/A +26.70%
Five Year +25.16% N/A +25.67%
Ten Year +20.78% N/A N/A
Life of Class +15.86% +23.72% +25.52%
</TABLE>
Effective October 5, 2000, I have assumed the position of President of the
Heritage Capital Appreciation Trust replacing Brian Lee. I have served as a
member of the Heritage Board of Trustees since the inception of the Fund and
look forward to communicating with you in the future.
Thank you for your continuing investment in Heritage Capital Appreciation
Trust. Please call your financial advisor or Heritage at (800) 421-4184 if you
have any questions.
Sincerely,
/s/ RICHARD K. RIESS
--------------------
Richard K. Riess
President
----------
* These returns are calculated without the imposition of either front-end or
contingent deferred sales charges.
** Performance data quoted represents past performance. The investment return
and principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than the original cost.
Performance numbers reflect the current maximum front-end sales load for
Class A Shares of 4.75%. These numbers also reflect a contingent deferred
sales load (CDSL) on Class B Shares of 5% on redemptions made within the
first year of purchase, declining to 0% over six years. A 1% CDSL for Class
C Shares is charged on redemptions made within 12 months of purchase.
Inception was December 12, 1985 for Class A Shares, January 2, 1998 for
Class B Shares and April 3, 1995 for Class C Shares.
<PAGE>
October 9, 2000
Dear Fellow Shareholders:
The performance results for the Heritage Capital Appreciation Trust ("HCAT" or
the "Fund") for the fiscal year ended August 31, 2000 continued to be, what we
believe to be spectacular. As I discuss in the next paragraph, results won't
always be this outstanding, but it sure is great fun when they are! Our Fund's
Class A shares value was up 29.6%* compared to 16.3% for the Standard & Poor's
500 Composite Stock Price Index ("S&P 500"). For the three years ended August
31, 2000, our Fund's Class A shares were up at an annual rate of 28.3%* per
year compared to 20.4% for the S&P 500, and ranked(a) in the top 2% (based on a
quantitative measure of risk-adjusted returns) of the Morningstar Inc. Large
Blend peer group. For the periods ended August 31, 2000, HCAT received a five
star rating(b) from Morningstar Inc. for 5 years and a four star rating from
Morningstar for 3 years, and 10 years. These ratings are based on risk and
performance scores for the Fund compared to a universe of 2,375, 3,839 and 792
domestic equity funds, respectively.
Now for my usual words of caution regarding future returns. I have expressed
the same caution for the last two years and our Fund has performed well. So
bear with me because I feel I need to say it again. First, HCAT's performance
for the past one, three and five years has really been terrific on both an
absolute and relative basis (compared to both the S&P 500 and the Morningstar
peer group). Second, such performance is unlikely to occur again for quite some
time (I have been wrong in saying this for the last two years and hopefully, my
current prediction is equally wrong). We have a long way to go for performance
until next August 31, 2001, and we continue to work diligently on behalf of our
Fund.
By the way, I also make similar comments when performance isn't quite so good.
So, let's all keep in mind that investing is a marathon, not a sprint.
Performance plays out over very long periods of time. Our Fund's performance in
future time periods may not be quite so good as in recent time periods. Of
course, I have no idea of when those future time periods might be. Let's all
hope they're many years away. But when our Fund's performance and the stock
market returns aren't quite so impressive, we should still feel comfortable
that our Fund owns what we believe to be good companies', leaders in their
industries in many cases, and with excellent management. Over the long-term, we
believe companies in our Fund's portfolio should be able to achieve increased
earnings, high returns on capital, and increased value. If so, over the
long-term, the stocks of these companies should produce reasonable returns.
During the twelve-months ended August 31, 2000, our Fund benefited from its
holdings in various growth industries including wireless telephone (+60.0%);
non- regulated electric utilities (+110.2%); cable TV and entertainment
(+46.2%); retail drug store chains (+42.4%); networking equipment (+96.1%);
internet/ online (+139.3%).
Our Fund had a significant underweighting in the technology sector. As you
know, the technology sector has been very strong for the past year and our
Fund's returns did not capture the benefit of the strong technology sector.
Even though we were underweighted in technology, our technology holdings
produced a return of 119.1%, far outperforming the S&P technology sector, which
returned 48.5%.
----------
* Calculated without the imposition of either front-end or contingent
deferred sales charge.
(a) Morningstar, Inc. performance rankings for the Heritage Capital
Appreciation Trust Class A Shares were based on a quantitative measure of
risk-adjusted returns. This measure calculated by Morningstar shows how
well a fund has balanced risk and return relative to other funds in the
same category. For the 1, 3, 5 and 10 years periods ended August 31, 2000,
HCAT has been ranked in the 17%, 2%, 4% and 9% in a universe of 945, 667,
391 and 134 large blend funds. The performance numbers used for the Fund
did not take into account front-end sales charges. Past performance is no
guarantee of future results.
(b) Morningstar, Inc. brings both performance and risk together into one
evaluation. These ratings are subject to change every month. The top 10%
of domestic equity funds receive five stars and the next 22.5% receive
four starts. The performance numbers used for the Fund did take into
account front-end sales charges. Past performance is no guarantee of
future results.
2
<PAGE>
Our Fund had six stocks which more than doubled in the past year (interestingly,
this was the same number of stocks which more than doubled in the Fund's prior
fiscal year). Most fortunately, one of our stocks, AES Corporation, doubled in
each of the last two years. In summary, the other five stocks were: Network
Solutions, the leader in domain name registrations for the internet (.com, .net,
.org) and a leader in the infrastructure of the Internet through its registry
services; Crown Castle, one of the largest owners of communications towers for
wireless communications (towers are needed to carry the wireless signals across
the land); Echostar Communications, one of two U.S. direct broadcast satellite
(DBS) television service companies, and better known as the DISH network (we
also own shares in the competitor GM Hughes Electronics, known for its Direct TV
service); Gem Star-TV Guide International, one of the leaders in interactive TV
and the owner of powerful patents in this emerging technology space; and Corning
Inc, a leader in fiber optic wire technology and production worldwide.
In my last letter to shareholders I commented on Harrah's Entertainment, one of
the slowest turtles in the portfolio for the six-months ended February 29, 2000.
During this time period Harrah's stock had declined 34% to $19 per share. We
reviewed our valuation of Harrah's which indicated the stock was undervalued at
$19 per share. We did not know when this turtle would begin to run faster. But
we did like and still do like the gaming business, and we believed that Harrah's
was one of the best in the business, and therefore, we were comfortable owning
this business for the long term. The good news is that Harrah's appreciated over
50% to $28.375 per share as of August 31, 2000. We still own the stock and
intend to hold it for the long term. Harrah's was clearly one of the turtles in
that well-known race with the hare.
I also mentioned that reviewing the Fund's portfolio last March, I identified a
number of turtles which I believed had a reasonable chance in catching the
famous hare. As a refresher, the turtles were Fannie Mae, Freddie Mac, Cendant,
Wrigley, Starwood, and Ambac. A common theme weaving through the turtles is that
they were not "new economy" stocks. But unlike most new economy stocks, the
turtles are producing tons of cash flow. Five of these turtles have not only
caught up with the hare, but have left the hare in the dust. Cendant remains the
only turtle in the bunch which is still trailing the hare.
So you may ask what are the turtles in the portfolio today. Certainly the
portfolio has a number of turtles, but I just don't know which ones will begin
to run faster, nor when they will begin to run faster. But I also know that a
few of them won't make it to the finish line in a reasonable period of time, and
therefore may be sold as we balance corporate fundamentals versus our expected
return on the stock. Some of the turtles today are Clear Channel Communications,
Liberty Media, McDonalds, Sprint PCS, Sabre Holdings, Valassis Communications
and Westwood One. Actually there are more turtles than this but I am embarrassed
to list them all.
Our Fund's portfolio continues to emphasize broadcasting, communications
services, communications equipment, and entertainment, and we continue to invest
in the strong franchises within these industries. We believe that these sectors
of the economy should continue to prosper as the economy grows during the next
decade. We remain long-term bullish on America and the stock market. Over a long
time horizon, stocks have produced excellent results compared to inflation and
most other investment alternatives.
Sincerely,
/s/ HERBERT E. EHLERS
---------------------
Herbert E. Ehlers
Managing Director
Goldman Sachs Co.
Chief Investment Officer
Growth Equity Strategy
Goldman Sachs Asset Management
3
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
SINCE SEPTEMBER 1, 1990 OF HERITAGE CAPITAL APPRECIATION TRUST
CLASS A SHARES
[GRAPHIC OMITTED]
AVERAGE ANNUAL TOTAL RETURNS*
1 YEAR: 23.40% 5 YEARS: 26.10%
10 YEARS: 20.43%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$9,525 $11,595 $12,845 $16,149 $17,291 $19,168 $21,621 $28,889 $35,085 $49,531 $64,165
SEPT-90 AUG-91 AUG-92 AUG-93 AUG-94 AUG-95 AUG-96 AUG-97 AUG-98 AUG-99 AUG-00
________ HERITAGE CAPITAL APPRECIATION TRUST $64,163
- - - - STANDARD & POORS 500 COMPOSITE STOCK PRICE INDEX $59,346
........ VALUE LINE INDEX (GEOM.) $20,853
------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE CAPITAL APPRECIATION TRUST
CLASS B SHARES ON JANUARY 2, 1998
[GRAPHIC OMITTED]
AVERAGE ANNUAL TOTAL RETURNS*
1 YEAR: 24.75%
10 YEARS: 20.43%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
0 9.61% 4.33% -10.07% 20.14% 7.87% 7.38% 0.80% 13.55% 5.93% -4.80% 9.05%
JAN-98 FEB-98 MAY-98 AUG-98 NOV-98 FEB-99 MAY-99 AUG-99 NOV-99 FEB-00 MAY-00 AUG-00
________ HERITAGE CAPITAL APPRECIATION TRUST $18,273
------- WITHOUT A 3% CONTINGENT DEFERRED SALES LOAD $18,573
- - - - STANDARD & POORS 500 COMPOSTE STOCK PRICE INDEX $16,203
........ VALUE LINE INDEX (GEOM.) $9,583
---------------------------------------------------------------------------------------------------
</TABLE>
The Value Line Index does not include reinvestment of dividends.
----------------
* Average annual total returns for Heritage Capital Appreciation Trust are
calculated in conformance with item 21 of Form N-1A, which assumes the
maximum sales load of 4.75% for Class A Shares, a contingent deferred sales
load for Class B Shares (4% for the one year period and 3% for the life of
Class B Shares) and reinvestment of dividends for both Class A and B Shares.
Performance presented represents historical data. The investment return and
principal value of an investment will fluctuate so that an investor's
shares, when redeemed, may be worth more or less than their original cost.
The Fund's past performance is not indicative of future performance and
should be considered in light of the Fund's investment policy and
objectives, the characteristics and quality of its portfolio securities, and
the periods selected.
4
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE CAPITAL APPRECIATION TRUST
CLASS C SHARES ON APRIL 3,1995
[GRAPHIC OMITTED]
AVERAGE ANNUAL TOTAL RETURNS*
1 YEAR: 28.76% 5 YEAR: 26.59%
LIFE OF CLASS C SHARES: 26.38%
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$10,000 $10,931 $12,158 $12,261 $14,048 $16,296 $20,977 $19,672 $25,497 $27,598 $33,679 $35,535
APR-95 AUG-95 FEB-96 AUG-96 FEB-97 AUG-97 FEB-98 AUG-98 FEB-99 AUG-99 FEB-00 AUG-00
________ HERITAGE CAPITAL APPRECIATION TRUST $35,535
- - - - STANDARD & POORS 500 COMPOSTE STOCK PRICE INDEX $33,320
........ VALUE LINE INDEX (GEOM.) $14,911
---------------------------------------------------------------------------------------------------------------------
</TABLE>
The Value Line Index does not include reinvestment of dividends.
----------------
* Average annual returns for Heritage Capital Appreciation Trust Class C Shares
are calculated in conformance with item 21 of Form N-1A, which assumes
reinvestment of dividends for Class C Shares. Performance presented
represents historical data. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. The Fund's past performance
is not indicative of future performance and should be considered in light of
the Fund's investment policy and objectives, the characteristics and quality
of its portfolio securities, and the periods selected.
CALENDAR YEAR RETURNS FOR CLASS A SHARES OF
HERITAGE CAPITAL APPRECIATION TRUST
[GRAPHIC OMITTED]
35.06 9.71 18.41 -2.37 20.27 18.90 42.72 34.18 40.39 0.25
1991 1992 1993 1994 1995 1996 1997 1998 1999 AUG-00
These returns are calculated without the imposition of front-end sales charges.
Past performance is no guarantee of future results.
5
<PAGE>
--------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
AUGUST 31, 2000
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -----
COMMON STOCKS--96.6% (a)
------------------------
BANKS--2.7%
-----------
82,200 State Street Corporation ........... $ 9,679,050
-----------
BEVERAGES--0.6%
---------------
52,000 PepsiCo, Inc. ...................... 2,216,500
-----------
BROADCASTING--12.9%
-------------------
135,000 Cablevision Systems
Corporation, Class "A" * ........... 9,078,750
99,349 Clear Channel Communications
Inc. * ............................. 7,190,384
420,650 Infinity Broadcasting
Corporation, Class "A" * ........... 15,932,119
113,640 Univision Communications,
Inc. Class "A" * ................... 5,014,365
140,399 Viacom, Inc. Class "B" * ........... 9,450,608
-----------
46,666,226
-----------
COMMUNICATION SERVICES--16.8%
-----------------------------
415,000 Crown Castle International
Corporation * ...................... 14,395,313
414,400 Echostar Communications
Corporation, Class "A"* ............ 20,202,000
55,000 Gemstar-TV Guide
International, Inc. * .............. 4,963,750
267,000 General Motors Corporation,
Class "H" .......................... 8,844,375
113,400 Sprint Corporation
(PCS Group) * ...................... 5,691,263
88,000 Vodafone Group PLC,
Sponsored ADR ...................... 3,602,500
81,500 WorldCom, Inc. * ................... 2,974,750
-----------
60,673,951
-----------
COMMUNICATIONS EQUIPMENT--3.8%
------------------------------
17,930 Corning, Inc. ...................... 5,879,919
52,000 Nortel Networks Corporation ........ 4,241,250
59,000 QUALCOMM, Inc. * ................... 3,532,625
-----------
13,653,794
-----------
COMPUTER SYSTEMS DESIGN--2.5%
-----------------------------
142,000 First Data Corporation ............. 6,771,625
130,000 S1 Corporation * ................... 2,266,875
-----------
9,038,500
-----------
ELECTRONIC EQUIPMENT--0.8%
--------------------------
145,500 Energizer Holdings, Inc. * ......... 2,873,625
-----------
ENTERTAINMENT--16.8%
--------------------
780,000 AT&T - Liberty Media Group,
Class "A" * ........................ 16,672,500
915,000 Harrah's Entertainment,
Inc. * ............................. 25,963,125
151,000 Time Warner, Inc. .................. 12,910,500
184,000 Westwood One, Inc. * ............... 5,117,500
-----------
60,663,625
-----------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
-------------------------
FINANCIAL INSTITUTIONS--7.5%
----------------------------
214,000 Fannie Mae ......................... 11,502,500
265,000 Freddie Mac ........................ 11,163,125
127,000 MBNA Corporation ................... 4,484,687
-----------
27,150,312
-----------
FOOD--0.4%
----------
20,400 Wm. Wrigley Jr. Company ............ 1,510,875
-----------
HOTELS, MOTELS & INNS--2.1%
---------------------------
41,400 Marriott International, Inc.,
Class "A" .......................... 1,635,300
190,000 Starwood Hotels & Resorts
Worldwide Inc. ..................... 6,080,000
-----------
7,715,300
-----------
INFORMATION RETRIEVAL SERVICES--1.1%
------------------------------------
65,000 Checkfree Corporation * ............ 3,367,812
45,000 Travelocity.com Inc. * ............. 618,750
-----------
3,986,562
-----------
INSURANCE--1.3%
---------------
75,000 AMBAC Financial Group, Inc. ........ 4,846,875
-----------
MISCELLANEOUS SERVICES--1.0%
----------------------------
276,000 Cendant Corporation * .............. 3,639,750
-----------
PHARMACEUTICAL--8.0%
--------------------
156,500 Bristol-Myers Squibb Company ....... 8,294,500
415,800 Pfizer, Inc. ....................... 17,983,350
61,000 Schering-Plough Corporation ........ 2,447,625
-----------
28,725,475
-----------
PRINTING & PUBLISHING--4.6%
---------------------------
178,000 A.H. Belo Corporation,
Class "A" .......................... 3,404,250
46,000 Gannett Company .................... 2,604,750
91,000 New York Times Company,
Class "A" .......................... 3,566,062
250,000 Valassis Communications, Inc. ...... 7,218,750
-----------
16,793,812
-----------
PROFESSIONAL SERVICES--0.3%
---------------------------
26,020 DoubleClick Inc. * ................. 1,058,689
-----------
RESTAURANTS--1.2%
-----------------
139,880 McDonald's Corporation ............. 4,178,915
-----------
RETAIL STORES--1.5%
-------------------
166,000 Walgreen Company ................... 5,457,250
-----------
SECURITY DEALERS--2.6%
----------------------
244,000 Charles Schwab Corporation ......... 9,317,750
-----------
SOFTWARE--2.7%
--------------
48,350 VeriSign, Inc. * ................... 9,615,606
-----------
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
--------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
INVESTMENT PORTFOLIO
AUGUST 31, 2000
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
-------------------------
UTILITIES--5.4%
--------------
303,600 AES Corporation ................ $ 19,354,500
------------
Total Common Stocks (cost $245,074,515) 348,816,942
REPURCHASE AGREEMENT--3.5%(A)
-----------------------------
Repurchase Agreement with State Street
Bank and Trust Company, dated
August 31, 2000 @ 6.48% to be
repurchased at $12,574,263 on
September 1, 2000, collateralized by
$13,445,000 United States Treasury Bonds,
5.50% due August 15, 2028, (market value
$12,842,715 including interest)
(cost $12,572,000)........................... 12,572,000
------------
Total Investment Portfolio
(cost $257,646,515)(b), 100.1%(a)........... 361,388,942
Other Assets and Liabilities, net, (0.1%)(a) (78,993)
------------
Net Assets, 100.0% ......................... $361,309,949
============
----------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax
purposes is substantially the same. Market value includes
net unrealized appreciation of $103,742,427 which
consists of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over
tax cost of $119,547,318 and aggregate gross unrealized
depreciation for all securities in which there is an excess
of tax cost over market value of $15,804,891.
ADR American Depository Receipt
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
--------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
STATEMENT OF ASSETS AND LIABILITIES
AUGUST 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
------
Investments, at market value (identified cost $245,074,515) (Note 1) ..................... $ 348,816,942
Repurchase agreement (identified cost $12,572,000) (Note 1) .............................. 12,572,000
Cash ..................................................................................... 626
Receivables:
Fund shares sold ........................................................................ 883,708
Dividends and interest .................................................................. 85,341
Deferred state qualification expenses (Note 1) ........................................... 12,018
Prepaid insurance (Note 1) ............................................................... 9,384
-------------
Total Assets .......................................................................... 362,380,019
LIABILITIES
-----------
Payables (Note 4):
Fund shares redeemed .................................................................... $555,489
Accrued management fee .................................................................. 226,680
Accrued distribution fee ................................................................ 163,242
Other accrued expenses .................................................................. 124,659
--------
Total Liabilities ..................................................................... 1,070,070
-------------
Net assets, at market value .............................................................. $ 361,309,949
=============
NET ASSETS
----------
Net assets consist of:
Paid-in capital ......................................................................... $ 226,042,638
Accumulated net realized gain ........................................................... 31,524,884
Net unrealized appreciation on investments .............................................. 103,742,427
-------------
Net assets, at market value .............................................................. $ 361,309,949
=============
CLASS A SHARES
--------------
Net asset value and redemption price per share ($244,376,016 divided by 7,541,177 shares
of
beneficial interest outstanding, no par value) (Notes 1 and 2) .......................... $ 32.41
=============
Maximum offering price per share (100/95.25 of $32.41 ) .................................. $ 34.03
=============
CLASS B SHARES
--------------
Net asset value, offering price and redemption price per share ($43,055,904 divided by
1,379,869 shares of beneficial interest outstanding, no par value) (Notes 1 and 2) ...... $ 31.20
=============
CLASS C SHARES
--------------
Net asset value, offering price and redemption price per share ($73,878,029 divided by
2,368,641 shares of beneficial interest outstanding, no par value) (Notes 1 and 2) ...... $ 31.19
=============
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
--------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INVESTMENT INCOME
-----------------
<S> <C> <C>
Income:
Dividends ......................................................... $ 1,351,041
Interest .......................................................... 764,121
------------
Total income .................................................... 2,115,162
Expenses (Notes 1 and 4):
Management fee .................................................... $2,316,092
Distribution fee (Class A Shares) ................................. 738,068
Distribution fee (Class B Shares) ................................. 325,881
Distribution fee (Class C Shares) ................................. 580,044
Shareholder servicing fees ........................................ 180,690
Custodian/Fund accounting fees .................................... 85,702
State qualification expenses ...................................... 66,520
Professional fees ................................................. 54,709
Reports to shareholders ........................................... 27,662
Federal registration fees ......................................... 22,881
Trustees' fees and expenses ....................................... 8,770
Insurance.. ....................................................... 5,712
Other ............................................................. 3,029
----------
Total expenses .................................................. 4,415,760
------------
Net investment loss ................................................ (2,300,598)
------------
REALIZED AND UNREALIZED GAIN ON INVESTMENT
------------------------------------------
Net realized gain from investment transactions ..................... 34,957,373
Net unrealized appreciation of investments during the year ......... 37,699,767
------------
Net gain on investments ......................................... 72,657,140
------------
Net increase in net assets resulting from operations ............... $ 70,356,542
============
</TABLE>
--------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
AUGUST 31, 2000 AUGUST 31, 1999
--------------- ---------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment loss ......................................................... $ (2,300,598) $ (1,063,237)
Net realized gain from investment transactions .............................. 34,957,373 23,111,162
Net unrealized appreciation of investments during the year .................. 37,699,767 31,487,745
------------- ------------
Net increase in net assets resulting from operations ........................ 70,356,542 53,535,670
Distributions to shareholders from:
Net realized gains Class A Shares, ($2.62 and $1.32 per share, respectively). (16,827,988) (6,989,221)
Net realized gains Class B Shares, ($2.62 and $1.32 per share, respectively). (2,297,541) (477,834)
Net realized gains Class C Shares, ($2.62 and $1.32 per share, respectively). (4,038,865) (983,407)
Increase in net assets from Fund share transactions (Note 2) ................. 89,744,810 57,959,964
------------- ------------
Increase in net assets ....................................................... 136,936,958 103,045,172
Net assets, beginning of year ................................................ 224,372,991 121,327,819
------------- ------------
Net assets, end of year ...................................................... $ 361,309,949 $224,372,991
============= ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
--------------------------------------------------------------------------------
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,
-----------------------------------------------------------
2000 1999 1998 1997 1996
-------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .......... .... $ 27.18 $ 20.34 $ 18.60 $ 15.58 $ 15.53
-------- -------- -------- -------- ---------
Income from Investment Operations:
Net investment loss (a) ......................... ( 0.16) ( 0.10) ( 0.07) ( 0.06) 0.00 (b)
Net realized and unrealized gain on
investments .................................... 8.01 8.26 3.94 4.85 1.81
-------- -------- -------- -------- ---------
Total from Investment Operations ................ 7.85 8.16 3.87 4.79 1.81
-------- -------- -------- -------- ---------
Less Distributions:
Dividends from net investment income ............ -- -- -- -- ( 0.04)
Distributions from net realized gains ........... ( 2.62) ( 1.32) ( 2.13) ( 1.77) ( 1.72)
-------- -------- -------- -------- ---------
Total Distributions ............................. ( 2.62) ( 1.32) ( 2.13) ( 1.77) ( 1.76)
-------- -------- -------- -------- ---------
Net asset value, end of year ..................... $ 32.41 $ 27.18 $ 20.34 $ 18.60 $ 15.58
======== ======== ======== ======== =========
Total Return (%) (c) ............................. 29.55 41.18 21.45 33.61 12.79
Ratios (%)/ Supplemental Data:
Operating expenses, net, to average daily net
assets ......................................... 1.24 1.29 1.41 1.48 1.54
Net investment income (loss) to average daily
net assets (a) ................................. ( .55) ( .45) ( .34) ( .30) ( .02)
Portfolio turnover rate ......................... 48 44 25 42 54
Net assets, end of year ($ millions) ............ 244 169 104 81 70
<CAPTION>
CLASS B SHARES
-------------------------------------
FOR THE YEARS ENDED
AUGUST 31,
-------------------------------------
2000 1999 1998(+)
-------- -------- ----------
<S> <C> <C> <C>
Net asset value, beginning of year .......... .... $ 26.40 $ 19.91 $ 19.36
-------- -------- ----------
Income from Investment Operations:
Net investment loss (a) ......................... (0.29) (0.19) (0.06)
Net realized and unrealized gain on
investments .................................... 7.71 8.00 0.61
-------- -------- ----------
Total from Investment Operations ................ 7.42 7.81 0.55
-------- -------- ----------
Less Distributions:
Dividends from net investment income ............ -- -- --
Distributions from net realized gains ........... (2.62) (1.32) --
-------- -------- ----------
Total Distributions ............................. (2.62) (1.32) --
-------- -------- ----------
Net asset value, end of year ..................... $ 31.20 $ 26.40 $ 19.91
======== ======== ==========
Total Return (%) (c) ............................. 28.75 40.27 2.84 (d)
Ratios (%)/ Supplemental Data:
Operating expenses, net, to average daily net
assets ......................................... 1.90 1.92 2.01 (e)
Net investment income (loss) to average daily
net assets (a) ................................. (1.21) (1.10) (.86)(e)
Portfolio turnover rate ......................... 48 44 25
Net assets, end of year ($ millions) ............ 43 20 5
<CAPTION>
CLASS C SHARES
-------------------------------------------------------------
FOR THE YEARS ENDED
AUGUST 31,
-------------------------------------------------------------
2000 1999 1998 1997 1996
-------- -------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year .......... .... $ 26.39 $ 19.90 $ 18.34 $ 15.46 $ 15.50
-------- -------- -------- -------- ----------
Income from Investment Operations:
Net investment loss (a) ......................... (0.29) (0.19) (0.09) (0.13) 9 0.03)(b)
Net realized and unrealized gain on
investments .................................... 7.71 8.00 3.78 4.78 1.75
-------- -------- -------- -------- ----------
Total from Investment Operations ................ 7.42 7.81 3.69 4.65 1.72
-------- -------- -------- -------- ----------
Less Distributions:
Dividends from net investment income ............ -- -- -- -- (0.04)
Distributions from net realized gains ........... (2.62) (1.32) (2.13) (1.77) (1.72)
-------- -------- -------- -------- ----------
Total Distributions ............................. (2.62) (1.32) (2.13) (1.77) (1.76)
-------- -------- -------- -------- ----------
Net asset value, end of year ..................... $ 31.19 $ 26.39 $ 19.90 $ 18.34 $ 15.46
======== ======== ======== ======== ==========
Total Return (%) (c) ............................. 28.76 40.29 20.72 32.91 12.16
Ratios (%)/ Supplemental Data:
Operating expenses, net, to average daily net
assets ......................................... 1.90 1.92 2.00 2.04 2.05
Net investment income (loss) to average daily
net assets (a) ................................. (1.21) (1.10) (.90) (.88) (.57)
Portfolio turnover rate ......................... 48 44 25 42 54
Net assets, end of year ($ millions) ............ 74 35 12 3 1.0
</TABLE>
-------
(+) For the period January 2, 1998 (commencement of Class B Shares) to August
31, 1998.
(a) Excludes management fees waived by the Manager in the amount of less than
$0.04 and $0.04 per Class A and C Shares, respectively, for the year ended
August 31, 1996. The operating expense ratios including such items would
have been 1.87% and 2.30% for Class A and C Shares, respectively, for the
year ended August 31, 1996.
(b) Amounts calculated prior to reclassification of $23,981. The effect of such
reclassification would have no effect on net investment income for Class A
Shares and would have resulted in an increase in net investment income of
$0.10 for Class C shares.
(c) Does not reflect the imposition of a sales charge.
(d) Not annualized.
(e) Annualized.
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
--------------------------------------------------------------------------------
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 seeks
to achieve its objective by investing primarily in common stocks
selected for their potential to achieve capital appreciation over the
long term. The Fund currently issues Class A, Class B 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.
Additionally, for investments greater than $1 million, those Class A
Shares may be subject to a maximum contingent deferred sales charge of
1% upon redemptions made in less than 18 months of purchase. Class B
Shares are sold subject to a maximum contingent deferred sales charge
of 5% of the lower of net asset value or purchase price payable upon
any redemption made, declining over a six year period. Class C Shares
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 made in less than one year of purchase. The preparation of
financial statements in accordance with accounting principles
generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates. The
following is a summary of significant accounting policies:
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 or the
Nasdaq Stock Market. 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 amortized cost,
which 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. Repurchase agreements involve the risk that the seller
will fail to repurchase the security, as agreed. In that case, the
Fund will bear the risk of market value fluctuations until the
security can be sold and may encounter delays and incur costs in
liquidating the security. In the event of bankruptcy or insolvency of
the seller, delays and costs are incurred.
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 investment for both financial and federal
income tax reporting purposes.
STATE QUALIFICATION EXPENSES: State qualification fees are amortized
based either on the time period covered by the qualification or as
related shares are sold, whichever is appropriate for each state.
EXPENSES: The Fund is charged for those expenses which are directly
attributable to it, such as management fees, custodian fees,
distribution fees, etc., while other expenses such as insurance
expense, are allocated proportionately among the Heritage Funds.
Expenses of the Fund are allocated to each class of shares based upon
their relative percentage of net assets. All expenses that are
directly attributable to a specific class of shares, such as
distribution fees, are charged directly to that class.
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: For purposes of these financial statements, investment security
transactions are accounted for on a trade date basis. Dividend income
and distributions to shareholders are recorded on the ex-dividend
date. Interest income is recorded on the accrual basis.
11
<PAGE>
--------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
--------------------------------------------------------------------------------
Note 2: Fund Shares. At August 31, 2000, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Class A, B and C Shares of the Fund during the year
ended August 31, 2000, were as follows:
<TABLE>
<CAPTION>
CLASS A SHARES
----------------------------
SHARES AMOUNT
---------- --------------
<S> <C> <C>
For the Year Ended August 31, 2000
Shares sold ...................... 2,317,913 $ 72,183,080
Shares issued on reinvestment
of distributions ................ 534,810 16,204,747
Shares redeemed .................. (1,532,763) (47,694,838)
---------- --------------
Net increase ..................... 1,319,960 $ 40,692,989
==============
Shares outstanding:
Beginning of year ............... 6,221,217
----------
End of year ..................... 7,541,177
==========
<CAPTION>
CLASS B SHARES CLASS C SHARES
------------------------- -----------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ---------------
<S> <C> <C> <C> <C>
For the Year Ended August 31, 2000
Shares sold ...................... 691,765 $ 20,522,815 1,248,513 $ 37,264,144
Shares issued on reinvestment
of distributions ................ 74,587 2,185,391 134,326 3,934,392
Shares redeemed .................. (149,122) (4,456,054) (346,912) (10,398,867)
-------- ------------ --------- --------------
Net increase ..................... 617,230 $ 18,252,152 1,035,927 $ 30,799,669
============ ==============
Shares outstanding:
Beginning of year ............... 762,639 1,332,714
-------- ---------
End of year ..................... 1,379,869 2,368,641
========= =========
</TABLE>
Transactions in Class A, B and C Shares of the Fund during the year ended
August 31, 1999, were as follows:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS B SHARES CLASS C SHARES
-------------------------- ------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- -------- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
For the Year Ended August 31, 1999
Shares sold ...................... 1,525,107 $ 38,812,480 521,926 $ 13,082,756 906,945 $ 22,504,638
Shares issued on reinvestment
of distributions ................ 292,671 6,833,858 20,394 464,787 41,940 955,395
Shares redeemed .................. (698,608) (17,804,722) (54,591) (1,425,258) (224,397) (5,463,970)
--------- ------------- ------- ------------ -------- ------------
Net increase ..................... 1,119,170 $ 27,841,616 487,729 $ 12,122,285 724,488 $ 17,996,063
============= ============ ============
Shares outstanding:
Beginning of year ............... 5,102,047 274,910 608,226
--------- ------- --------
End of year ..................... 6,221,217 762,639 1,332,714
========= ======= =========
</TABLE>
Note 3: Purchases and Sales of Securities. For the year ended August 31, 2000,
purchases and sales of investment securities (excluding repurchase
agreements and short-term obligations) aggregated $205,344,088 and
$141,923,818, respectively.
Note 4: Management, Subadvisory, Distribution, Shareholder Servicing Agent,
Fund Accounting 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 .75% of the Fund's average daily net
assets, computed daily and payable monthly. Pursuant to a contract
agreement dated January 3, 2000, the Manager has agreed to waive its
fees and, if necessary, reimburse the Fund to the extent that Class A
annual operating expenses exceed 1.40% of the Class A Share average
daily net assets and to the extent that the Class B and Class C annual
operating expenses each exceed 2.15% of that classes' average daily
net assets for the fiscal year ending August 31, 2000. No fees were
waived and no expenses were reimbursed for the fiscal year ending
August 31, 2000.
The Manager entered into an agreement with Goldman Sachs Asset
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. For the
fiscal year ending August 31, 2000 the subadviser earned $772,031,
which was paid by the Manager.
From December 12, 1985 (commencement of operations) through February
26, 1995, Eagle Asset Management, Inc, a wholly owned subsidiary of
Raymond James Financial, Inc., was the sole 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, Shareholder Servicing Agent
and Fund Accountant for the Fund. The Manager charged $180,690 for
Dividend Paying and Shareholder Servicing and $54,001 for Fund
Accounting services of which $37,000 and $9,000 was payable as of
August 31, 2000, respectively.
12
<PAGE>
--------------------------------------------------------------------------------
HERITAGE CAPITAL APPRECIATION TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
--------------------------------------------------------------------------------
Raymond James & Associates, Inc. (the "Distributor") has advised the
Fund that it received $71,152 in front-end sales charges for Class A
Shares, $12,246 in contingent deferred sales charges also for Class A
Shares, $75,225 in contingent deferred sales charges for Class B
Shares and $19,884 in contingent deferred sales charges for Class C
Shares for the fiscal year ending August 31, 2000. From these fees,
the Distributor paid commissions to salespersons and incurred other
distribution costs.
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 the Distributor a fee of up to .50% of the
average daily net assets for Class A Shares. The Class B and C Shares
Distribution Plan provides for payments at an annual rate of up to
1.00% of the average daily net assets. Such fees are accrued daily and
payable monthly. Class B Shares will convert to Class A Shares eight
years after the end of the calendar month in which the shareholder's
order to purchase was accepted. 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 and Heritage
Series Trust, investment companies that are also advised by the
Manager or its affiliates (collectively referred to as the Heritage
Mutual Funds). Each Trustee of the Heritage Mutual Funds who is not an
employee of the Manager or an employee of an affiliate of the Manager
receives an annual fee of $8,666 and an additional fee of $3,250 for
each combined quarterly meeting of the Heritage Mutual Funds attended.
Trustees' fees and expenses are paid equally by each portfolio in the
Heritage Mutual Funds.
Note 5: Federal Income Taxes. For the year ended August 31, 2000, to reflect
reclassification arising from permanent book/tax differences
attributable to the net operating loss, the Fund credited accumulated
net investment loss and charged accumulated net realized gain for
$2,300,598.
13
<PAGE>
--------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
--------------------------------------------------------------------------------
To the Board of Trustees and Shareholders of
Heritage Capital Appreciation Trust
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Heritage Capital Appreciation
Trust (the "Fund") at August 31, 2000, 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
presented, in conformity with accounting principles generally accepted in the
United States of America. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with auditing standards generally accepted
in the United States of America, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at August
31, 2000 by correspondence with the custodian, provide a reasonable basis for
our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
------------------------------
PricewaterhouseCoopers LLP
Tampa, Florida
October 6, 2000
--------------------------------------------------------------------------------
2000 FEDERAL INCOME TAX NOTICE
(UNAUDITED)
--------------------------------------------------------------------------------
During the year ended August 31, 2000, the Fund paid to shareholders
$20,229,803 or $2.29 per share from long-term capital gains.
14
<PAGE>
HERITAGE FAMILY OF FUNDS(TM)
FROM OUR FAMILY TO YOURS: THE INTELLIGENT CREATION OF WEALTH.
HERITAGE MONEY MARKET FUNDS
CASH TRUST MONEY MARKET
CASH TRUST MUNICIPAL MONEY MARKET
HERITAGE BOND FUNDS
HIGH YIELD
INTERMEDIATE GOVERNMENT
HERITAGE STOCK FUNDS
AGGRESSIVE GROWTH
CAPITAL APPRECIATION
EAGLE INTERNATIONAL
GROWTH EQUITY
INCOME-GROWTH
MID CAP
SMALL CAP
TECHNOLOGY
VALUE EQUITY
We are pleased that many of you are also investors in these funds. For more
information and a prospectus for any of these mutual funds, please contact your
financial advisor. Please read the prospectus carefully before you invest in any
of the funds.
This report is for the information of shareholders of Heritage Capital
Appreciation Trust. It may also be used as sales literature when preceded or
accompanied by a prospectus.
(C) 2000 HERITAGE ASSET MANAGEMENT, INC.
18M
AR5331 CA 10/00
[LOGO] HERITAGE CAPITAL APPRECIATION TRUST
P.O. BOX 33022
ST. PETERSBURG, FL 33733
--------------------------------------------------------------------------------
ADDRESS SERVICE REQUESTED
