<PAGE>
As filed with the Securities and Exchange Commission on December 27, 1995
Registration No. 2-98635
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
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Post-Effective Amendment No. 15 [ X ]
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and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 14 [ X ]
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(Check appropriate box or boxes.)
HERITAGE CASH TRUST
(Exact name of Registrant as specified in charter)
880 Carillon Parkway
St. Petersburg, FL 33716
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (813) 573-3800
STEPHEN G. HILL, PRESIDENT
880 Carillon Parkway
St. Petersburg, FL 33716
(Name and Address of Agent for Service)
Copy to:
CLIFFORD J. ALEXANDER, ESQ.
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
Washington, D.C. 20036
It is proposed that this filing will become effective on January 2, 1996
pursuant to paragraph (b) of Rule 485.
Registrant has filed a declaration pursuant to Rule 24f-2 under the
Investment Company Act of 1940, as amended, on or about October 27, 1995.
Page 1 of Pages
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Exhibit Index Appears on Page
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<PAGE>
HERITAGE CASH TRUST
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Prospectus
Statement of Additional Information
Part C of Form N-1A
Signature Page
Exhibits
<PAGE>
HERITAGE CASH TRUST
FORM N-1A CROSS-REFERENCE SHEET
PART A ITEM NO. PROSPECTUS CAPTION
--------------- ------------------
1. Cover Page Cover Page
2. Synopsis Total Fund Expenses
3. Condensed Financial Financial Highlights; Yield
4. General Description of Cover Page; About the Trust and
Registrant the Funds; Investment Objectives,
Policies and Risk Factors
5. Management of the Fund Management of the Funds; Portfolio
Transactions
5A. Management's Discussion Inapplicable
of Fund Performance
6. Capital Stock and Other Cover Page; About the Trust and
Securities the Funds; Differences Between A
Shares and C Shares; Management of
the Funds; Dividends and Other
Distributions; Taxes; Shareholder
Information
7. Purchase of Securities Net Asset Value; How to Buy
Being Offered Shares; Minimum Investment
Required/Accounts With Low
Balances; Investment Programs;
What Class A Shares Will Cost;
What Class C Shares Will Cost;
Distribution Plans
8. Redemption or Repurchase Minimum Investment Required/
Accounts With Low Balances; How to
Redeem Shares; Receiving Payment;
Exchange Privilege
9. Pending Legal proceedings Inapplicable
STATEMENT OF ADDITIONAL
PART B ITEM NO. INFORMATION CAPTION
--------------- -----------------------
10. Cover Page Cover Page
<PAGE>
11. Table of Contents Table of Contents
12. General Information General Information
and History
13. Investment Objectives Investment Information -
and Policies Investment Objectives and
Policies; Investment Limitations
14. Management of the Fund Management of the Funds
15. Control Persons and Inapplicable
Principal Holders of
Securities
16. Investment Advisory Management of the Funds;
and Other Services Investment Adviser and
Administrator; Subadviser;
Distribution of Shares;
Administration of the Funds
17. Brokerage Allocation Portfolio Transactions
18. Capital Stock and General Information; Fund
Other Securities Information; Potential Liability
19. Purchase, Redemption Net Asset Value; Investing in the
and Pricing of Funds; Redeeming Shares; Exchange
Securities Being Privilege
Offered
20. Tax Status Taxes
21. Underwriters Fund Information - Distribution of
Shares
22. Calculation of Calculating Yields
Performance Data
23. Financial Statements Financial Statements
PART C
Information required to be included in Part C is set forth under
the appropriate item, so numbered in Part C of this Registration
Statement.
<PAGE>
<PAGE> 1
[HERITAGE LOGO]
MONEY MARKET FUND
AND
MUNICIPAL MONEY MARKET FUND
Heritage Cash Trust is a mutual fund offering shares in two separate
investment portfolios, the Money Market Fund and the Municipal Money Market Fund
(each a "Fund" and collectively, the "Funds"). The Money Market Fund seeks to
achieve maximum current income consistent with stability of principal by
investing exclusively in money market instruments. The Municipal Money Market
Fund seeks to achieve maximum current income that is exempt from Federal income
tax consistent with stability of principal by investing exclusively in money
market instruments. Each Fund will seek to stabilize its share price at $1.00
per share. The Money Market Fund offers two classes of shares, Class A shares
and Class C shares. Class C shares may be acquired only through exchanges of
Class C shares of other Heritage Mutual Funds. The Municipal Money Market Fund
consists of a single class of shares, Class A shares.
AN INVESTMENT IN EITHER FUND IS NEITHER INSURED NOR GUARANTEED BY THE U.S.
GOVERNMENT AND THERE CAN BE NO GUARANTEE THAT THE $1.00 PER SHARE PRICE WILL BE
MAINTAINED.
This Prospectus contains information that should be read before investing
in either Fund and should be kept for future reference. A Statement of
Additional Information relating to the Funds dated January 2, 1996 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.
FUND 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
<PAGE> 2
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GENERAL INFORMATION................................................. 1
About the Trust and the Funds..................................... 1
Total Fund Expenses............................................... 1
Financial Highlights.............................................. 3
Differences Between A Shares and C Shares......................... 4
Investment Objectives, Policies and Risk Factors.................. 4
Net Asset Value................................................... 7
Yield............................................................. 7
INVESTING IN THE FUNDS.............................................. 8
How to Buy Shares................................................. 8
Minimum Investment Required/Accounts With Low Balances............ 9
Investment Programs............................................... 9
How to Redeem Shares.............................................. 10
Receiving Payment................................................. 11
Exchange Privilege................................................ 12
MANAGEMENT OF THE FUNDS............................................. 13
SHAREHOLDER AND ACCOUNT POLICIES.................................... 14
Dividends and Other Distributions................................. 14
Distribution Plans................................................ 15
Taxes............................................................. 15
Shareholder Information........................................... 16
</TABLE>
<PAGE> 3
GENERAL INFORMATION
ABOUT THE TRUST AND THE FUNDS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Heritage Cash 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 that offers shares in two
separate investment portfolios, the Money Market Fund and the Municipal Money
Market Fund, both of which are designed for individuals, institutions and
fiduciaries as a convenient means of accumulating an interest in a
professionally managed, diversified portfolio limited to money market
instruments maturing in 397 days or less. The Money Market Fund offers two
classes of shares, Class A shares ("A shares") and Class C shares ("C shares").
C shares may be acquired only through exchanges of C shares of another Heritage
open-end investment company that is advised or administered by Heritage Asset
Management, Inc. ("Heritage Mutual Fund"). The Municipal Money Market Fund
offers A shares only. Each Fund 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 Funds."
TOTAL FUND EXPENSES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shown below are all Class A operating expenses incurred by each Fund 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
of the Money Market Fund 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>
MUNICIPAL
MONEY MARKET
MONEY MARKET FUND FUND
CLASS A CLASS C CLASS A
------- ------- ------------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales load "charge" on purchases..................... None None None
Contingent deferred sales load ("CDSL") (as a
percentage of original purchase price or redemption
proceeds, as applicable)........................... None 1.00%(1) None
Wire redemption fee.................................. $5.00 $5.00 $ 5.00
ANNUAL FUND OPERATING EXPENSES
Management fee (after fee waivers)................... 0.47% 0.47% 0.50%
12b-1 Distribution fee............................... 0.15% 0.15% 0.15%
Other expenses....................................... 0.17% 0.17% 0.12%
----- ----- -------
Total Fund operating expenses (after fee waivers).... 0.79% 0.79% 0.77%
----- ----- -------
----- ----- -------
</TABLE>
- ---------------
(1) A CDSL will be imposed only on the redemption of C shares acquired through
an exchange of C shares of another Heritage Mutual Fund that did not satisfy
the one-year CDSL holding period. See "Exchange Privilege."
1
<PAGE> 4
The Funds' manager, Heritage Asset Management, Inc. (the "Manager"),
voluntarily will waive its fees and, if necessary, reimburse the Money Market
Fund to the extent that Class A and Class C annual operating expenses exceed
.79% of the average daily net assets attributable to that class for the fiscal
year ending August 31, 1996. In addition, the Manager will voluntarily waive its
fees and, if necessary, reimburse the Municipal Money Market Fund to the extent
that Class A annual operating expenses exceed .77% of the average daily net
assets for the fiscal year ending August 31, 1996. Absent fee waivers, the
management fee for each class of the Money Market Fund would have been .49%, and
total Fund operating expenses for each class would have been .81%. The Manager
did not waive its fees with respect to the Municipal Money Market Fund. To the
extent that the Manager waives or reimburses its fees with respect to one class,
it will do so with respect to the other class on a proportionate basis.
The impact of Fund 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 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Total Money Market Fund Operating Expenses -- A
shares......................................... $ 8 $25 $44 $ 98
Total Money Market Fund Operating Expenses -- C
shares......................................... $ 18 $25 $44 $ 98
Total Municipal Money Market Fund Operating
Expenses -- A shares........................... $ 8 $25 $43 $ 95
</TABLE>
The impact of Fund 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.
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Total Money Market Fund Operating Expenses -- A
shares......................................... $8 $25 $44 $ 98
Total Money Market Fund Operating Expenses -- C
shares......................................... $8 $25 $44 $ 98
Total Municipal Money Market Fund Operating
Expenses -- A shares........................... $8 $25 $43 $ 95
</TABLE>
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 Funds" and "Distribution Plans."
2
<PAGE> 5
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following table shows important financial information for an A share of
each Fund outstanding for the periods indicated, including net investment
income, dividends, 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 your Fund at
the telephone number on the front page of this prospectus. Financial highlights
are not presented for C shares of the Money Market Fund because no shares of
that class were outstanding for the periods indicated.
<TABLE>
<CAPTION>
MONEY MARKET FUND
CLASS A
---------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDED AUGUST 31,
---------------------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986+
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD........ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM
INVESTMENT
OPERATIONS:
Net investment
income(a)... 0.50(b) .029(b) .025(b) .038(b) .063 .077 .084 .065 .054(b) .050(b)
LESS
DISTRIBUTIONS:
Dividends from
net
investment
income and
net realized
gains (a)... (0.050) (.029) (.025) (.038) (.063) (.077) (.084) (.065) (.054) (.050)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE,
END OF
PERIOD........ $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN
%............. 5.00 2.87 2.48 3.77 6.27 7.73 8.38 6.46 5.43 5.05(d)
RATIOS TO
AVERAGE DAILY
NET ASSETS
(%)/SUPPLEMENTAL
DATA:
Operating
expenses,
net......... .79(b) .79(b) .78(b) .78(b) .79 .81 .90 .94 1.00(b) 1.00(b)(c)
Net investment
income...... 5.00(b) 2.87(b) 2.47(b) 3.75(b) 6.20 7.73 8.51 6.47 5.45(b) 6.56(b)(c)
Net assets at
end of
period
(millions)
($)......... 1,294 982 925 953 890 727 475 230 153 139
</TABLE>
- ---------------
+ For the period November 25, 1985 (commencement of operations) to August 31,
1986.
(a) Includes net realized gains (losses) which were ($.001), ($.001), $.001,
$.001, $.001, ($.001), $.001, $.001, ($.001) and less than $.003 per share,
respectively.
(b) Excludes management fees waived by the Manager in the amount of less than
$.001, $.001, $.001, $.001, $.001 and $.001 per share, respectively. The
operating expense ratios including such items would be .81%, .81%, .81%,
.78%, 1.01% and 1.12% (annualized), respectively.
(c) Annualized.
(d) Not annualized.
3
<PAGE> 6
MUNICIPAL MONEY MARKET FUND
CLASS A
<TABLE>
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,
---------------------------------------------------
1995 1994 1993 1992+
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD......................... $1.000 $1.000 $1.000 $1.000
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a)................................... .030 .019 .020 .005
LESS DISTRIBUTIONS:
Dividends from net investment income....................... (.030) (.019) (.020) (.005)
------ ------ ------
NET ASSET VALUE, END OF PERIOD............................... $1.000 $1.000 $1.000 $1.000
====== ====== ======
TOTAL RETURN %............................................... 3.04 1.90 2.02 .47(c)
RATIOS TO AVERAGE DAILY NET ASSETS (%)/SUPPLEMENTAL DATA:
Operating expenses, net.................................... .77 .77(a) .77(a) .77(a)(b)
Net investment income...................................... 3.05 1.89 1.98 2.32(b)
Net assets, end of period (millions) ($)................... 283 212 207 102
</TABLE>
- ---------------
+ For the period June 17, 1992 (commencement of operations) to August 31,
1992.
(a) Excludes management fees waived by the Manager in the amount of less than
$.001, $.001, $.001 and $.001 per share, respectively. The operating expense
ratios including such items would be .79%, .77%, .83% and 1.11%
(annualized), respectively.
(b) Annualized.
(c) Not annualized.
DIFFERENCES BETWEEN A SHARES AND C SHARES
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- --------------------------------------------------------------------------------
The primary difference between the A shares and the C shares of the Money
Market Fund lies in their ongoing expenses, including asset-based sales charges
in the form of distribution fees and the possible imposition of a contingent
deferred sales load ("CDSL") on C shares. C shares acquired through an exchange
from another Heritage Mutual Fund that were held for a period of less than one
year remain subject to the imposition of a CDSL of 1% upon their sale until the
combined holding period of such shares reaches one year. Each class is subject
to an annual Rule 12b-1 fee of .15% of average daily net assets. 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.
INVESTMENT OBJECTIVES, POLICIES AND RISK FACTORS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Money Market Fund's investment objective is to achieve maximum current
income consistent with stability of principal. The Municipal Money Market Fund's
investment objective is to achieve maximum current income exempt from Federal
income tax consistent with stability of principal. Each Fund pursues its
investment objective by investing in high quality securities with remaining
maturities of 397 days or less. The average dollar-weighted portfolio maturity
of money market instruments in each Fund's investment portfolio will be 90 days
or less. While there is no assurance that either Fund will achieve its
investment objective, each Fund will endeavor to do so by following the
investment policies described in this prospectus.
The following is a discussion of each Fund's principal investment
securities and practices, including the risks of investing in these securities
or engaging in these practices. For more detailed information about these
securities and Fund practices, see the SAI.
4
<PAGE> 7
MONEY MARKET FUND
The money market instruments in which the Money Market Fund may invest
include:
- - Commercial paper, including U.S. dollar-denominated commercial paper of
foreign issuers, and high quality short-term debt obligations, including
variable rate demand notes, that are rated in the highest rating category
(First Tier Securities) by at least two nationally recognized statistical
rating organizations ("NRSROs") (or by one if only one rating is assigned) and
in unrated securities determined by the Trust's Board of Trustees (the "Board
of Trustees" or the "Board") or the Manager to be of comparable quality. The
Fund also may invest up to 5% of its assets in securities receiving the second
highest rating (Second Tier Securities) or in unrated securities determined to
be of comparable quality. See "Appendix A -- Description of Securities
Ratings" in the SAI.
- - Marketable obligations issued or guaranteed by the U.S. Government, its
agencies or instrumentalities, including those obligations purchased on a
when-issued or delayed-delivery basis and repurchase agreements relating to
these obligations. These securities include securities issued and guaranteed
by the U.S. Government, such as U.S. Treasury bills, notes, and 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.
- - Instruments such as certificates of deposit, demand and time deposits, savings
shares and banker's acceptances of domestic banks and savings and loans that
have assets of at least $1 billion and capital, surplus, and undivided profits
of over $100 million as of the close of their most recent fiscal year, or
instruments that are insured by the Federal Deposit Insurance Corporation
("FDIC").
- - U.S. dollar-denominated certificates of deposit, time deposits, and banker's
acceptances of foreign branches of a domestic bank ("domestic Eurodollar
certificates") if such bank has assets of at least $1 billion and capital,
surplus, and undivided profits of over $100 million as of the close of its
most recent fiscal year.
- - U.S. dollar-denominated certificates of deposit, time deposits, and banker's
acceptances of foreign branches of a foreign bank ("foreign Eurodollar
certificates") if such bank has assets that are the equivalent of at least $2
billion as of the close of its most recent fiscal year.
- - U.S. dollar-denominated certificates of deposit, time deposits, and banker's
acceptances of U.S. branches of a foreign bank ("Yankee certificates") if such
bank has assets that are the equivalent of at least $2 billion as of the close
of its most recent fiscal year.
MUNICIPAL MONEY MARKET FUND
As a fundamental policy, the Municipal Money Market Fund normally will
invest at least 80% of its net assets in municipal securities, the interest on
which is, in the opinion of the issuer's bond counsel, exempt from Federal
income tax ("tax-exempt municipal securities") but which may or may not be an
item of tax preference for purposes of the Federal alternative minimum tax (the
"AMT"). Such interest may be subject to state and/or local income taxes. The
remaining portion of the Fund's investment portfolio may be invested in
short-term taxable investments. All of the Fund's investments must be determined
by the Board or, pursuant to authority delegated by the Board, by Alliance
Capital Management L.P. (the "Subadviser") to present minimum credit risks. The
instruments in which the Fund may invest include:
- - Municipal notes that generally are used to provide for short-term capital
needs and generally have maturities of one year or less. These include tax
anticipation and revenue anticipation notes that generally
5
<PAGE> 8
are issued in anticipation of various seasonal revenues, bond anticipation
notes and tax-exempt commercial paper.
- - Short-term municipal bonds, including general obligation bonds, that are
secured by the issuer's pledge of its faith, credit and taxing power for
payment of principal and interest, and revenue bonds, that generally are paid
from the revenues of a particular facility or a specific excise or other
source.
- - Variable rate obligations whose interest rates are adjusted either at
predesignated periodic intervals or whenever there is a change in the market
rate to which the security's interest rate is tied. Such adjustments minimize
changes in the market value of the obligation and, accordingly, enhance the
ability of the Fund to maintain a stable net asset value. Variable rate
securities may include participation interests in industrial development bonds
backed by letters of credit of FDIC member banks having total assets of more
than $1 billion. The letters of credit of any single bank will not apply to
variable rate obligations constituting more than 10% of the Fund's total
assets.
- - Taxable investments including obligations issued or guaranteed by the U.S.
Government, its agencies, or instrumentalities, high quality certificates of
deposit and bankers' acceptances, prime commercial paper and repurchase
agreements with respect to such obligations.
The Fund also may invest in stand-by commitments, which may involve certain
expenses and risks. Such commitments are not expected to comprise more than 5%
of its net assets. The Fund may commit up to 15% of its net assets to the
purchase of when-issued securities. The price of when-issued securities, which
generally is expressed in yield terms, is fixed at the time the commitment to
purchase is made, but delivery and payment for such securities take place at a
later time. Normally the settlement date occurs from within ten days to one
month after the purchase of the issue. The value of when-issued securities may
fluctuate prior to their settlement, thereby creating an unrealized gain or loss
to the Fund. The Fund also may invest in reverse repurchase agreements and may
lend portfolio securities.
All of the Fund's municipal securities at the time of purchase will be
rated within the two highest quality ratings of Moody's Investors Service, Inc.
(Aaa and Aa, MIG-1 and MIG-2, or VMIG-1 and VMIG-2) or Standard & Poor's (AAA
and AA, SP-1 and SP-2 or A-1 and A-2), or if unrated, judged by the Board or,
pursuant to authority delegated by the Board, by the Subadviser to be of
comparable quality. Securities also must meet credit standards applied by the
Subadviser. See "Appendix A -- Description of Securities Ratings" in the SAI.
Each Fund's investment objective is fundamental and may not be changed
without the vote of a majority of the outstanding voting securities of that
Fund, as defined in the Investment Company Act of 1940, as amended (the "1940
Act"). Except as otherwise stated, all policies of each Fund described in this
prospectus may be changed by the Board of Trustees without shareholder approval.
Each Fund also may engage in the following types of investments. The SAI
contains more detailed information about each Fund's investment policies and
risks.
REPURCHASE AGREEMENTS. Repurchase agreements are transactions in which a
Fund 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 a Fund if
the other party to the repurchase agreement becomes bankrupt, a Fund intends to
enter into repurchase agreements only with banks and dealers in transactions
6
<PAGE> 9
believed by the Manager or Subadviser to present minimal credit risks in
accordance with guidelines established by the Board of Trustees.
RISKS OF FOREIGN BANK INVESTMENTS. Investments in foreign bank
instruments, including instruments of foreign branches of domestic banks,
present certain additional risks. These risks include the impact of future
political and economic developments, the possible establishment of exchange
controls and/or the adoption of other governmental restrictions that might
affect adversely the payment of principal and interest on such instruments. In
addition, there may be less publicly available information about a foreign bank
than about a domestic bank. See the SAI for a further discussion of these risks.
SECTION 4(2) COMMERCIAL PAPER. Most commercial paper is exempt from
registration requirements imposed by federal securities laws. In addition, some
commercial paper that is not exempt can be purchased and sold without
registration in transactions not involving a public offering pursuant to Section
4(2) of the Securities Act of 1933, as amended (the "1933 Act"). The Funds'
investments in Section 4(2) commercial paper will be subject to their
nonfundamental 10% limitation on investments in illiquid securities, unless the
Section 4(2) commercial paper can be sold to qualified institutional buyers
("QIBs") under Rule 144A of the 1933 Act. As permitted by Rule 144A, the Board
has adopted guidelines and delegated the daily function of determining and
monitoring the liquidity of securities so purchased. Because it is not possible
to predict with assurance how the Rule 144A market will develop, the Board will
monitor the Funds' investments in Rule 144A securities, focusing on such factors
as liquidity and availability of information. This investment practice could
have the effect of increasing the level of illiquidity in the Funds to the
extent that QIBs become uninterested in purchasing such securities.
WHEN-ISSUED AND DELAYED-DELIVERY TRANSACTIONS. The Funds may purchase
short-term U.S. Government obligations on a when-issued or delayed-delivery
basis (arrangements in which the Fund purchases securities with payment and
delivery scheduled for a future time); however, the Funds only will engage in
these transactions for the purpose of acquiring portfolio securities consistent
with their investment objective and policies, and not for investment leverage.
Prior to settlement of these transactions, the market price of the purchased
securities may vary from the purchase price.
NET ASSET VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The net asset values of the Money Market Fund's A shares and C shares and
the net asset value of the Municipal Money Market Fund's A shares are calculated
by dividing the value of the total assets of each Fund attributable to that
class, less liabilities attributable to that class, by the number of shares of
that class outstanding. Shares are valued daily at 12:00 p.m. Eastern time
immediately after the daily declaration of dividends on each day the New York
Stock Exchange ("Exchange") is open. Each Fund will use its best efforts to
maintain its net asset value per share at $1.00 by valuing its portfolio
securities using the amortized cost method, adding other assets, subtracting
liabilities and dividing by the number of shares outstanding. A Fund, however,
cannot guarantee that its net asset value per share will always remain at $1.00.
For more information on the calculation of net asset value, see "Net Asset
Value" in the SAI.
YIELD
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
From time to time the Funds may advertise "yield" and "effective yield."
The Money Market Fund's yield is computed separately for A shares and C shares.
Both yield figures are based on historical earnings and
7
<PAGE> 10
are not intended to indicate future performance. The "yield" of a Fund refers to
the income generated by an investment in the Fund over a seven-day period. This
income is then "annualized." The "effective yield" is calculated similarly but,
when annualized, the income earned by an investment in the Fund is assumed to be
reinvested. The "effective yield" will be slightly higher than the "average
yield" because of the compounding effect of this assumed reinvestment.
The Municipal Money Market Fund also may advertise its "tax-equivalent
yield." The "tax-equivalent yield" represents the taxable yield a shareholder
would have to earn before Federal income tax to equal the Fund's tax-free yield.
See "Calculating Yields" in the SAI.
INVESTING IN THE FUNDS
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares of each Fund 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 Money Market Fund offers two classes of shares, A shares and C shares.
C shares may be acquired only through an exchange of C shares of another
Heritage Mutual Fund. See "Exchange Privileges." The Municipal Money Market Fund
offers and sells only A shares.
You may purchase A shares of a Fund directly by completing and signing the
Account Application found in this prospectus, and mailing it, along with your
payment, to Heritage Cash Trust - [name of the Fund], c/o Shareholder Services,
Heritage Asset Management, Inc., P.O. Box 33022, St. Petersburg, FL 33733.
A shares of a Fund also may be purchased through a registered
representative of the Distributor, a participating dealer or a participating
bank ("Representative") by placing an order for A shares with your
Representative, completing and signing the Representative's account application
and making your check payable to your Representative.
The Distributor and certain participating dealers have established
automatic purchase procedures ("Sweep Programs") for each Fund's shareholders
who maintain a brokerage account with them. Free credit cash balances ("credit
balances") arising from sales of securities for cash, redemptions of debt
securities, dividend and interest payments and funds received from customers may
be invested automatically in A shares on a daily basis. Additional information
regarding this privilege can be obtained from your Representative. For
shareholders participating in Sweep Programs, Fund accounts may be established
as a part of the participating dealer's new account procedure.
Shares of a Fund are sold at their net asset value next determined after an
order is received by the Manager, in its capacity as transfer agent, without a
sales load. Initial and subsequent orders will be considered to be received by
the Manager, in its capacity as transfer agent, after payment by check is
converted into Federal funds (a commercial bank's deposit with the Federal
Reserve Bank that can be transferred to another member bank on the same day)
normally two days after receiving the check. If payment is made by bank wire,
the order will be considered received immediately. However, such orders received
by the Manager after 12:00 p.m. Eastern time will not be invested until the next
business day. Each Fund reserves the right to reject any purchase request.
8
<PAGE> 11
Purchases of Fund shares by customers of a Representative using a Sweep
Program usually will be made on the next business day following the day that
credit balances are generated in the customer's brokerage account. However,
credit balances arising from funds placed in the customer's account by personal
check or purchase of Fund shares by personal check usually will not be invested
until the second business day following the day that the deposit is credited to
the customer's account. Due to the foregoing practices, the Representative may,
under certain circumstances, obtain Fderal funds prior to purchasing Fund shares
for its customers and may, as a result, realize some benefit because of the
delay in investing these funds.
Shares may be purchased with Federal funds 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 Fund, (2) your account number assigned by the Fund, and (3) 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 Funds" in the SAI.
MINIMUM INVESTMENT REQUIRED/ACCOUNTS WITH LOW BALANCES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Except as provided under "Investment Programs," the minimum initial
investment in each Fund is $1,000, and a minimum account balance of $1,000 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 Fund shares in any account if the account
balance falls below the required minimum value of $1,000, 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.
INVESTMENT PROGRAMS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A variety of automated investment options are available for the purchase of
each Fund's A 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 either Fund.
The draft is returned by your bank the same way a canceled check is returned.
9
<PAGE> 12
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 either Fund. 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 either Fund. 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, you
may elect to have a preset amount redeemed from that fund and exchanged into
the corresponding class of shares of either Fund. 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 either Fund 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 Employer Pension Plans ("SEPs") and
other retirement plan accounts. Generally, it will not be advantageous to hold
shares of the Municipal Money Market Fund in an IRA or 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.
An individual may make limited contributions to a Heritage IRA through the
purchase of shares of either Fund 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 retirement plans and from Section 403(b) annuity
plans. For more detailed information on the Heritage IRA, please contact the
Manager.
Shares of either Fund 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.
See "Investing in the Funds" in the SAI for more information on the above
programs.
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Redemptions of a Fund's shares can be made by:
CONTACTING YOUR REPRESENTATIVE. Your Representative will transmit an order
to either Fund for redemption by that Fund and may charge you for this service.
TELEPHONE REQUEST. You may redeem shares by placing a telephone request to
a Fund (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.
10
<PAGE> 13
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. Fund shares may be redeemed by sending a written request
for redemption to "Heritage Cash Trust - [name of the applicable Fund], 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 Fund 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
applicable Fund are redeemed to provide the amount of the periodic withdrawal
payment. The Manager reserves the right to cancel systematic withdrawals if
insufficient shares are available for two or more consecutive months.
REDEEMING BY CHECK. At your request, after receipt of a completed
signature card and good funds become available in the account, the Manager will
establish a checking account for redeeming Fund shares. With a Fund checking
account, shares may be redeemed simply by writing a check for $100 or more. The
redemption will be made at the net asset value next determined after the Manager
presents the check to the Fund. A check should not be written to close an
account. If you wish to redeem shares and have the proceeds available, a check
may be written on a Fund checking account and negotiated through a local bank
where you have an account. Canceled checks will be sent to you each month. All
checkwriting transactions are available to you at no charge, except as follows:
- - $15.00 charge for all attempted check redemptions in which the amount of the
check exceeds the available assets in your account; and
- - $15.00 charge for placing a stop payment order on a check.
Please contact the Manager or your Representative for further information,
or see "Redeeming Shares" in the SAI.
RECEIVING PAYMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If redemption of Fund shares is requested by contacting your
Representative, you normally will receive payment by check on the first business
day following the receipt of instructions. Redemption payments made by the
Manager to shareholders who have elected to redeem Fund shares by written
request normally are available to be mailed according to instructions within one
day following receipt of a valid redemption request.
11
<PAGE> 14
However, your right to redeem shares or receive payment therefrom may be
suspended or postponed at times when the Exchange is closed (other than
customary weekend and holiday closings) or during periods of emergency or other
periods as permitted by the Securities and Exchange Commission. 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.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
You may exchange some or all of your shares of each Fund 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. A sales load will be charged on the exchange of A shares of the
Fund for the A shares of a Heritage Mutual Fund equal to that charged on a
purchase of such Heritage Mutual Fund shares unless the Fund shares being
exchanged were themselves acquired by the exchange of other Heritage Mutual Fund
shares. A CDSL of 1% will be imposed on the redemption of C shares of the Money
Market Fund acquired through exchange of C shares of another Heritage Mutual
Fund if those shares were held for less than the required one-year CDSL holding
period. 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. 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 "How to Redeem Shares - Telephone Requests."
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. Telephone or telegram requests for an exchange received by
the Manager before 12:00 p.m. Eastern time will be effected on that day.
Requests for an exchange received after 12:00 p.m. will be effected on the
following business day. 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 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 information on this exchange privilege and for a
copy of any Heritage Mutual Fund prospectus, contact the Manager or your
Representative and see "Exchange Privilege" in the SAI.
12
<PAGE> 15
MANAGEMENT OF THE FUNDS
BOARD OF TRUSTEES
The business and affairs of each Fund are managed by or under the direction
of the Trust's Board of Trustees. The Trustees are responsible for managing the
Funds' business affairs and for exercising all the Funds' powers except those
reserved to the shareholders. A Trustee may be removed by the other Trustees or
a two-thirds vote of the outstanding Fund's shares.
INVESTMENT ADVISER, FUND ACCOUNTANT, ADMINISTRATOR AND TRANSFER AGENT
Heritage Asset Management, Inc. is the investment adviser, fund accountant,
administrator and transfer agent for each Fund. The Manager is responsible for
making investment decisions for the Money Market Fund and for reviewing and
establishing investment policies for each Fund as well as administering its
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 other
Heritage Mutual Funds with net assets totalling approximately $2.0 billion as of
October 31, 1995. The Manager's annual investment advisory and administration
fee is paid monthly by each Fund to the Manager and is based on its average
daily net assets as shown on the charts below. Each Fund pays the Manager
directly for fund accounting and transfer agent services.
MONEY MARKET FUND
<TABLE>
<CAPTION>
ADVISORY FEE
AS % OF AVERAGE
AVERAGE DAILY DAILY NET
NET ASSETS ASSETS
<S> <C>
- ---------------------------------------------------------
First $500 million...................... .500%
Second $500 million..................... .475%
Third $500 million...................... .450%
Fourth $500 million..................... .425%
Over $2 billion......................... .400%
</TABLE>
MUNICIPAL MONEY MARKET FUND
<TABLE>
<CAPTION>
ADVISORY FEE
AS % OF AVERAGE
AVERAGE DAILY DAILY NET
NET ASSETS ASSETS
<S> <C>
- ---------------------------------------------------------
First $250 million...................... .500%
Second $250 million..................... .475%
Third $250 million...................... .450%
Fourth $250 million..................... .425%
Over $1 billion......................... .400%
</TABLE>
The advisory fee may be reduced pursuant to regulations in various states
where Fund shares are qualified for sale which impose limitations on the annual
expense ratio of a Fund. The Manager reserves the right to discontinue any
voluntary waiver of its fees or reimbursement to a Fund in the future. The
Manager also may recover advisory fees waived in the two previous years if the
recovery does not cause a Fund to exceed applicable expense limitations. It
currently is not anticipated that the Manager will recover these fees. The
13
<PAGE> 16
Manager and the Distributor also are authorized to use the fees paid to them by
each Fund to compensate third parties who agree to provide administrative or
shareholder services to the Funds. The Manager, as transfer agent for the Funds,
maintains a share account for each shareholder.
SUBADVISER
The Manager has entered into an agreement with Alliance Capital Management
L.P. to provide investment advice and portfolio management services to the
Municipal Money Market Fund for a fee payable by the Manager equal to .125% of
the Fund's average daily net assets up to $100 million, .10% of average daily
net assets from $100 million to $250 million and .05% of average daily net
assets exceeding $250 million. Investment decisions for the Municipal Money
Market Fund are made by the Subadviser subject to review by the Manager and the
Board of Trustees. The Subadviser is a major international investment manager
supervising client accounts with assets totaling over $ billion as of October
31, 1995. The Subadviser serves its clients, primarily major corporate employee
benefit funds, public employee retirement systems, investment companies,
foundations and endowment funds, with a staff of more than employees
operating out of
domestic offices and the overseas offices of subsidiaries.
The Subadviser is a limited partnership whose general partner, Alliance
Capital Management Corporation, is a wholly-owned subsidiary of Equitable
Investment Corporation, which in turn is a wholly-owned subsidiary of The
Equitable Life Assurance Society of the United States ("Equitable"). ACMC, Inc.,
also a wholly-owned subsidiary of Equitable, owns approximately % of the
outstanding securities of the Subadviser. Equitable, one of the largest life
insurance companies in the United States, is a wholly-owned subsidiary of The
Equitable Companies Incorporated, a holding company controlled by AXA, a member
of a large French insurance group. AXA is indirectly controlled by a group of
French mutual insurance companies.
Fund purchases of portfolio securities are made from dealers, underwriters
and issuers; sales, if any, prior to maturity, are made to dealers and issuers.
The Funds normally will not incur any brokerage commission expense on such
transactions because money market instruments generally are traded on a "net"
basis with dealers acting as principal for their own accounts without a stated
commission. The Manager or, for the Municipal Money Market Fund, the Subadviser
will effect transactions with those dealers it believes provide the most
favorable prices and are capable of providing efficient executions. Subject to
those requirements, the Manager or Subadviser, as the case may be, may consider
sales of shares of the Funds (and, if permitted by law, of other funds for which
the Manager or Subadviser, as the case may be, is the adviser or subadviser) as
a factor in the selection of broker-dealers to execute portfolio transactions
for each Fund. See the SAI for a further discussion of portfolio transactions
and brokerage services.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS AND OTHER DISTRIBUTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dividends from net investment income are declared daily and paid monthly.
Each Fund's net investment income for Saturdays, Sundays and holidays is
declared as a dividend on the next business day. You receive the dividend
declared on the day following the date on which your shares are purchased. If
you withdraw the entire balance of your account, you will be paid all dividends
declared through the date of the withdrawal. Dividends are declared
automatically and issued in additional shares of each Fund unless you request
cash
14
<PAGE> 17
payments. You also may elect to have your dividends automatically invested in
any other Heritage Mutual Fund. Distributions of net short-term capital gain, if
any, normally are made once each year near calendar year-end, although such
distributions may be made more frequently in order to maintain each Fund's net
asset value at $1.00 per share. Distribution options can be changed at any time
by notifying the Manager in writing.
Dividends paid by the Money Market Fund 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.
DISTRIBUTION PLANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As compensation for services rendered and expenses borne by the Distributor
in connection with the distribution of each class of each Fund's shares and in
connection with personal services rendered to shareholders and the maintenance
of shareholder accounts, each Fund pays the Distributor a service fee of up to
0.15% of that Fund's average daily net assets attributable to that class of
shares. This fee is computed daily and paid monthly.
The above-referenced fees paid to the Distributor are made under
Distribution Plans (each a "Plan") 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 Fund's shares, including, but
not limited to, compensation 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,
SAIs 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 and/or banks who also will distribute shares of the Funds.
In addition, the Manager may elect to bear additional expenses incurred by the
Distributor and sales agents in providing such services.
If a Plan is terminated, the obligation of a Fund to make payments to the
Distributor pursuant to the Plan will cease and the Fund will not be required to
make any payment past the date the Plan terminates.
TAXES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each Fund intends to continue to qualify for treatment as a regulated
investment company under the Code so that it will be relieved of Federal income
tax on that part of its taxable net investment income and realized net capital
gains that is distributed to its shareholders. Dividends paid by the Money
Market Fund generally are taxable to its shareholders as ordinary income,
notwithstanding that these dividends are paid in additional Fund shares.
Distributions by the Municipal Money Market Fund that it designates as "exempt-
interest dividends" generally may be excluded from gross income by its
shareholders. Interest on indebtedness incurred or continued by a shareholder to
purchase or carry Municipal Money Market Fund shares is not deductible. You will
receive Federal income tax information regarding dividends after the end of each
year including, for the Municipal Money Market Fund, the amount of
exempt-interest dividends (and the portion thereof, if any, that is an item of
tax preference for purposes of the AMT) and the amount of any taxable dividends.
Each Fund is required to withhold 31% of all taxable dividends payable to
individuals and certain other non-corporate shareholders who do not provide the
Fund with a correct taxpayer identification number or who otherwise are subject
to backup withholding.
15
<PAGE> 18
The foregoing is only a summary of the important Federal income tax
considerations generally affecting the Funds and their shareholders. See the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You therefore are urged to
consult your tax adviser.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each share of a Fund gives the shareholder one vote in matters submitted to
shareholders for a vote, except that, in matters affecting only one Fund, only
shares of that Fund are entitled to vote. Both classes of shares of the Money
Market Fund 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 or a Fund'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.
16
<PAGE> 19
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.
<PAGE> 20
<TABLE>
<S> <C>
Heritage Cash Trust -----------------
P.O. Box 33022
St. Petersburg, FL 33733
- --------------------------------------- BULK RATE
U.S. POSTAGE
Address Change Requested PAID
MODERN MAILING
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
110M HAM003
</TABLE>
<PAGE> 21
[HERITAGE LOGO]
MONEY MARKET FUND
AND
MUNICIPAL MONEY MARKET FUND
PROSPECTUS
January 2, 1996
<PAGE>
HERITAGE CASH TRUST
MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
STATEMENT OF ADDITIONAL INFORMATION
This Statement of Additional Information ("SAI") dated January 2,
1996 should be read with the Prospectus of Heritage Cash Trust-Money
Market and Municipal Money Market Funds, 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 . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 1
Investment Objectives . . . . . . . . . . . . . . . . . . . . 1
Investment Policies . . . . . . . . . . . . . . . . . . . . . 1
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . . 7
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
CALCULATING YIELDS . . . . . . . . . . . . . . . . . . . . . . . . . . 12
INVESTING IN THE FUNDS . . . . . . . . . . . . . . . . . . . . . . . . 13
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . . 14
Telephone Transactions . . . . . . . . . . . . . . . . . . . . 15
Redemptions in Kind . . . . . . . . . . . . . . . . . . . . . 15
Receiving Payment . . . . . . . . . . . . . . . . . . . . . . 16
EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . . 16
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
TRUST INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Management of the Funds . . . . . . . . . . . . . . . . . . . 19
Investment Adviser and Administrator; Subadviser . . . . . . 23
Portfolio Transactions . . . . . . . . . . . . . . . . . . . . 26
Distribution of Shares . . . . . . . . . . . . . . . . . . . . 27
Administration of the Funds . . . . . . . . . . . . . . . . . 29
Potential Liability . . . . . . . . . . . . . . . . . . . . . 30
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
REPORT OF INDEPENDENT ACCOUNTANTS
Money Market Fund . . . . . . . . . . . . . . . . . . . . . A-5
Municipal Money Market Fund . . . . . . . . . . . . . . . . A-6
FINANCIAL STATEMENTS
Money Market Fund . . . . . . . . . . . . . . . . . . . . . A-7
Municipal Money Market Fund . . . . . . . . . . . . . . . . A-14
<PAGE>
GENERAL INFORMATION
-------------------
Heritage Cash Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated June 21,
1985. The Trust currently consists of two separate investment portfolios:
the Money Market Fund and the Municipal Money Market Fund (the "Municipal
Fund") (collectively the "Funds"). The Money Market Fund offers two
classes of shares, Class A shares that are not subject to any sales load
("A shares") and Class C shares offered subject to a contingent deferred
sales load ("CDSL") ("C shares"). C shares may be acquired only through
exchanges of C shares of other Heritage mutual funds for which Heritage
Asset Management, Inc. (the "Manager") serves as adviser or administrator
("Heritage Mutual Funds"). The Municipal Fund offers A shares only.
INVESTMENT INFORMATION
----------------------
Investment Objectives
---------------------
Each Fund's investment objective and certain investment policies
are described in the prospectus. The Funds also have adopted the
investment policies and restrictions described below.
Investment Policies
-------------------
Repurchase Agreements. Each Fund may enter into repurchase
agreements with domestic commercial banks and with registered broker-
dealers who are members of a national securities exchange or market makers
in U.S. Government securities. A Fund's repurchase agreements will
require that the underlying security at all times have a value at least
equal to the resale price. If the seller of a repurchase agreement
defaults, the Fund could realize a loss on the sale of the underlying
security to the extent that the proceeds of the sale are less than the
resale price provided in the agreement. In addition, even though the
Federal Bankruptcy Code provides protection for most repurchase
agreements, if the seller should be involved in insolvency proceedings, a
Fund may incur delays and costs in selling the underlying security or may
suffer a loss if the Fund is treated as an unsecured creditor and is
required to return the underlying security to the seller.
Reverse Repurchase Agreements. Each Fund may borrow by entering
into reverse repurchase agreements with the same parties with whom the
Fund may enter into repurchase agreements. Under a reverse repurchase
agreement, a Fund sells securities and agrees to repurchase them at a
mutually agreed upon price. At the time the Fund enters into a reverse
repurchase agreement, it will establish and maintain a segregated account
with an approved custodian containing liquid high grade securities, marked
to market daily, having a value not less than the repurchase price
(including accrued interest). Reverse repurchase agreements involve the
risk that the market value of securities retained in lieu of sale by the
Fund may decline below the price of the securities the Fund has sold but
is obliged to repurchase. In the event the buyer of securities under a
reverse repurchase agreement files for bankruptcy or becomes insolvent,
such buyer or its trustee or receiver may receive an extension of time to
determine whether to enforce the Fund's obligation to repurchase the
<PAGE>
securities and the Fund's use of the proceeds of the reverse repurchase
agreement effectively may be restricted pending such decisions. Reverse
repurchase agreements create leverage, a speculative factor, and will be
considered borrowings for the purpose of the Fund's limitation on
borrowing.
Section 4(2) Commercial Paper and Rule 144A. Each Fund may
invest in Section 4(2) commercial paper. Most commercial paper is exempt
from registration requirements imposed by federal securities laws. In
addition, some commercial paper that is not exempt can be purchased and
sold without registration in transactions not involving a public offering
pursuant to Section 4(2) of the Securities Act of 1933, as amended (the
"1933 Act"). The Manager or, for the Municipal Fund, Alliance Capital
Management L.P. (the "Subadviser"), considers legally restricted but
readily saleable Section 4(2) commercial paper to be liquid. The
Securities and Exchange Commission (the "SEC") staff, though, considers
such investments to be illiquid. Accordingly, until advised otherwise by
the staff, a Fund's investments in Section 4(2) commercial paper will be
subject to its limit on investments in illiquid securities, unless the
Section 4(2) commercial paper can be sold to qualified institutional
buyers ("QIBs") under Rule 144A of the 1933 Act (the "Rule"). Among other
conditions, the Rule requires that the Trust's Board of Trustees (the
"Board" or the "Board of Trustees") continuously determine, based on
trading markets for specific securities purchased in reliance on the Rule,
that such securities are liquid. As permitted by the Rule, the Board of
Trustees have adopted guidelines and delegated the daily function of
determining and monitoring the liquidity of securities so purchased.
Because it is not possible to predict with assurance how the Rule 144A
market will develop, the Board will monitor carefully the Funds'
investments in Rule 144A securities, focusing on such factors as liquidity
and availability of information. This investment practice could have the
effect of increasing the level of illiquidity in the Funds to the extent
that QIBs become uninterested in purchasing such securities.
Securities Loans. Each Fund may lend its securities. Securities
loans are made to broker-dealers or other financial institutions pursuant
to agreements requiring that loans be secured continuously by collateral
in cash or short-term debt obligations at least equal at all times to the
value of the securities lent. The borrower pays a Fund an amount equal to
any dividends or interest received on the securities lent. The Funds
retain all or a portion of the interest received on investments of the
cash collateral or receive a fee from the borrower. The Funds may call
such loans in order to sell the securities involved. In the event that a
Fund reinvests cash collateral, it is subject to the risk that both the
reinvested collateral and the loaned securities will decline in value. In
addition, in such event, it is possible that the securities loan may not
be collateralized fully.
When-Issued and Delayed-Delivery Transactions. Each Fund may
purchase and sell securities on a when-issued and delayed-delivery basis.
These transactions are made to secure what the Manager or, for the
Municipal Fund, the Subadviser considers to be advantageous prices or
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yields. Settlement dates may be a month or more after entering into these
transactions, and market values of the securities purchased may vary from
the purchase prices. No fees or other expenses, other than normal
transaction costs, are incurred. However, liquid assets of the Funds,
such as cash, U.S. Government securities or other liquid high-grade debt
obligations, which will be marked to market daily, sufficient to make
payment for the securities to be purchased, will be segregated by the
Funds' custodian on the Funds' records at the trade date and maintained
until the transaction settles. In when-issued and delayed-delivery
transactions, a Fund relies on the seller to complete the transaction.
The seller's failure to perform may cause a Fund to miss a price or yield
considered to be advantageous.
MONEY MARKET FUND
Eurodollar and Yankee Certificates. The Money Market Fund may
purchase certificates of deposit, time deposits and bankers' acceptances
issued by foreign branches of domestic banks ("domestic Eurodollar
certificates") and foreign banks ("foreign Eurodollar certificates") or by
domestic branches of foreign banks ("Yankee certificates"). As a result
of federal and state laws and regulations, domestic branches of domestic
banks generally are, among other things, required to maintain specified
levels of reserves and are subject to other supervision and regulation
designed to promote financial soundness.
Domestic and foreign Eurodollar certificates, such as
certificates of deposit and time deposits, may be general obligations of
the parent bank in addition to the issuing branch or may be limited by the
terms of a specific obligation and governmental regulation. Such
obligations may be subject to different risks than are those of domestic
banks or domestic branches of foreign banks. These risks include foreign
economic and political developments, foreign governmental restrictions
that may affect adversely payment of principal and interest on the
obligations, foreign exchange controls and foreign withholding and other
taxes on interest income. Foreign branches of foreign banks are not
necessarily subject to the same or similar regulatory requirements that
apply to domestic banks, such as mandatory reserve requirements, loan
limitations, and accounting, auditing and recordkeeping requirements. In
addition, less information may be publicly available about a foreign
branch of a domestic bank or a foreign bank than a domestic bank.
Yankee certificates may be general obligations of the parent bank
in addition to the issuing branch or may be limited by the terms of a
specific obligation and by federal and state regulation as well as
governmental action in the country in which the foreign bank has its head
office. The deposits of state-licensed domestic branches of foreign banks
may not be insured necessarily by the Federal Deposit Insurance
Corporation ("FDIC").
In view of the foregoing factors associated with the purchase of
domestic and foreign Eurodollar and Yankee certificates, the Money Market
Fund will evaluate carefully such investments on a case-by-case basis.
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<PAGE>
GNMA Certificates. The Money Market Fund may invest in
securities issued by the Government National Mortgage Association
("GNMA"), a wholly-owned U.S. Government corporation that guarantees the
timely payment of principal and interest. The market value and interest
yield of these instruments can vary due to market interest rate
fluctuations and early prepayments of underlying mortgages. These
securities represent ownership in a pool of federally insured mortgage
loans. The scheduled monthly interest and principal payments relating to
mortgages in the pool will be "passed through" to investors. GNMA
securities differ from conventional bonds in that principal is paid back
to the certificate holders over the life of the loan rather than at
maturity. As a result, the Money Market Fund will receive monthly
scheduled payments of principal and interest and may receive unscheduled
principal payments representing prepayments on the underlying mortgages.
Although GNMA securities may offer yields higher than those available from
other types of U.S. Government securities, GNMA securities may be less
effective than other types of securities as a means of "locking in"
attractive long-term rates because prepayment proceeds will be invested at
prevailing interest rates, that may be lower than the GNMA securities on
which the prepayments were made.
Industry Classifications. For purposes of determining industry
classifications, the Money Market Fund relies upon classifications
established by the Manager that are based upon classifications contained
in the Directory of Companies Filing Annual Reports with the SEC and in
the Standard & Poor's Corporation Industry Classifications.
MUNICIPAL FUND
Alternative Minimum Tax. The Municipal Fund may invest without
limit in tax-exempt municipal securities the interest on which is an item
of tax preference for purposes of the Federal alternative minimum tax
("AMT"). Such bonds ("AMT-Subject Bonds") have provided, and may continue
to provide, somewhat higher yields than other comparable municipal
securities. AMT-Subject Bonds generally are limited obligations of the
issuer, supported only by payments from private business entities that use
the facilities financed by the bonds (and the pledge, if any, of the real
and personal property so financed as security for such payment) and not by
the full faith and credit or taxing power of the state or any governmental
subdivision. It is not possible to provide specific details on each of
these obligations in which the Municipal Fund's assets may be invested.
Municipal Securities. The Municipal Fund invests primarily in
municipal securities. Yields on municipal securities are dependent on a
variety of factors, including the general condition of the money market
and of the municipal bond and municipal note markets, the size of a
particular offering, the maturity of the obligation and the rating of the
issue. Municipal securities with longer maturities tend to produce higher
yields and generally are subject to greater price movements than
obligations with shorter maturities. An increase in interest rates
generally will reduce the market value of portfolio investments, and a
decline in interest rates generally will increase the value of portfolio
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<PAGE>
investments. The achievement of the Municipal Fund's objectives is
dependent in part on the continuing ability of the issuers of municipal
securities in which the Municipal Fund invests to meet their obligations
for the payment of principal and interest when due. Municipal securities
have not been subject to registration with the SEC, although there have
been proposals that would require registration in the future. The
Municipal Fund generally will hold securities to maturity rather than
follow a practice of trading. However, the Municipal Fund may seek to
improve portfolio income by selling certain portfolio securities prior to
maturity in order to take advantage of yield disparities that occur in
securities markets. Obligations of issuers of municipal securities
are subject to the provisions of bankruptcy, insolvency and other laws
affecting the rights and remedies of creditors, such as the Federal
Bankruptcy Code. In addition, the obligations of such issuers may become
subject to laws enacted in the future by Congress or state legislatures or
referenda extending the time for payment of principal and/or interest or
imposing other constraints upon enforcement of such obligations or upon
the ability of municipalities to levy taxes. There also is the
possibility that, as a result of litigation or other conditions, the
ability of any issuer to pay, when due, the principal of and interest on
its municipal securities may be materially affected.
Standby Commitments. The Municipal Fund may purchase municipal
securities together with the right to resell them to the seller at an
agreed-upon price or yield within specified periods prior to their
maturity dates. Such a right to resell commonly is known as a "standby
commitment," and the aggregate price for securities with a standby
commitment may be higher than the price that otherwise would be paid. The
primary purpose of this practice is to permit the Municipal Fund to be as
fully invested as practicable in municipal securities while preserving the
necessary flexibility and liquidity to meet unanticipated redemptions. In
this regard, the Municipal Fund acquires standby commitments solely to
facilitate portfolio liquidity and does not exercise its rights thereunder
for trading purposes. Because the value of a standby commitment is
dependent on the ability of the standby commitment writer to meet its
obligation to repurchase, the Municipal Fund will enter into standby
commitment transactions only with municipal securities dealers that are
determined by the Subadviser to present minimal credit risks. The
acquisition of a standby commitment does not affect the valuation or
maturity of the underlying municipal securities that continue to be valued
in accordance with the amortized cost method. Standby commitments are
valued by the Municipal Fund at zero in determining net asset value. If
the Municipal Fund pays directly or indirectly for a standby commitment,
its cost is reflected as unrealized depreciation for the period during
which the commitment is held. Standby commitments do not affect the
average weighted maturity of the Municipal Fund's investment portfolio of
securities.
Taxable Securities. Although the Municipal Fund is, and expects
to be, invested primarily in municipal securities, it may elect to invest
up to 20% of its total assets in taxable money market securities when such
action is deemed to be in the best interests of shareholders. Such
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<PAGE>
taxable money market securities are limited to remaining maturities of 397
days or less at the time of investment, and the Municipal Fund's municipal
and taxable securities are maintained at a dollar-weighted average of 90
days or less. Taxable money securities purchased by the Municipal Fund
are limited to: marketable obligations of, or guaranteed by, the U.S.
Government, its agencies or instrumentalities; repurchase agreements
involving such securities; certificates of deposit, bankers' acceptances
and interest-bearing savings deposits of banks having total assets of more
than $1 billion and that are members of the FDIC; and commercial paper of
prime quality rated A-1 or higher by Standard & Poor's ("S&P") or Prime-1
by Moody's Investors Service, Inc. ("Moody's") or, if not rated, deemed by
the Board of Trustees or, pursuant to authority delegated by the Board, by
the Subadviser to be of equal quality.
Variable Rate Obligations. The interest rate payable on certain
"variable rate" municipal securities in which the Municipal Fund may
invest is not fixed and may fluctuate based upon changes in market rates.
The interest rate payable on a variable rate municipal security is
adjusted either at pre-designated periodic intervals or whenever there is
a change in the market rate to which the security's interest rate is tied.
Other features may include the right of the Municipal Fund to demand
prepayment of the principal amount of the obligation prior to its stated
maturity and the right of the issuer to prepay the principal amount prior
to maturity. The main benefit of a variable rate municipal security is
that the interest rate adjustment minimizes changes in the market value of
the obligation. As a result, the purchase of variable rate municipal
securities can enhance the ability of the Municipal Fund to maintain a
stable net asset value per share and to sell an obligation prior to
maturity at a price approximating the full principal amount.
The payment of principal and interest by issuers of certain
municipal securities may be guaranteed by letters of credit or other
credit facilities offered by banks or other financial institutions. Such
guarantees will be considered in determining whether a municipal security
meets the Municipal Fund's investment quality requirements. Variable rate
obligations purchased by the Municipal Fund may include participation
interests in variable rate industrial development bonds that are backed by
irrevocable letters of credit or guarantees of banks that meet the
criteria for banks described above in "Taxable Securities."
Purchase of a participation interest gives the Municipal Fund an
undivided interest in certain such bonds. The Municipal Fund can exercise
the right, on not more than 30 days' notice, to sell such an instrument
back to the bank from which it purchased the instrument and draw on the
letter of credit for all or any part of the principal amount of its
participation interest in the instrument, plus accrued interest, but will
do so only (1) as required to provide liquidity, (2) to maintain a high
quality investment portfolio, or (3) upon a default under the terms of the
demand instrument. Banks retain portions of the interest paid on such
variable rate industrial development bonds as their fees for servicing
such instruments and the issuance of related letters of credit and
repurchase commitments. The Municipal Fund will not purchase
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<PAGE>
participation interests in variable rate industrial development bonds
unless it receives an opinion of counsel or a ruling of the Internal
Revenue Service that interest earned from the bonds in which it holds
participation interests is exempt from Federal income tax. The Subadviser
will monitor the pricing, quality and liquidity of variable rate demand
obligations and participation interests therein held by the Municipal Fund
on the basis of published financial information, rating agency reports and
other research services to which the Subadviser may subscribe.
INVESTMENT LIMITATIONS
----------------------
In addition to the limits disclosed in "Investment Policies"
above and the investment limitations described in the prospectus, the
Funds are subject to the following investment limitations, that are
fundamental policies of the Funds and may not be changed without the vote
of a majority of the outstanding voting securities of the Funds. Under
the Investment Company Act of 1940, as amended (the "1940 Act"), a "vote
of a majority of the outstanding voting securities" of a Fund means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Fund 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.
Concentration. The Money Market Fund will not purchase money
market instruments if as a result of such purchase more than 25% of the
value of its total net assets would be invested in any one industry.
However, the Money Market Fund may invest up to 100% of its assets in
domestic bank obligations and obligations of the U.S. Government, its
agencies, and instrumentalities, provided that it may not invest more than
25% of its net assets in (1) domestic Eurodollar certificates, unless the
domestic parent would be unconditionally liable if its foreign branch
failed to make payments on such instruments, and (2) Yankee certificates,
unless the branch issuing such instrument is subject to the same
regulation as U.S. banks.
The Municipal Fund will not purchase instruments if as a result
of such purchase more than 25% of the value of its total net assets would
be invested in any one industry, provided that for purposes of this policy
(1) there is no limitation with respect to tax-exempt municipal securities
(including industrial development bonds), securities issued or guaranteed
by the U.S. Government, its agencies, and instrumentalities, certificates
of deposit, bankers' acceptances and interest-bearing savings deposits
issued by domestic banks, and (2) consumer finance companies, industrial
finance companies, and gas, electric, water and telephone utility
companies are each considered to be separate industries. For purposes of
this restriction, the Municipal Fund will regard the entity that has the
primary responsibility for making payment of principal and interest as the
issuer.
Investing in Commodities, Minerals or Real Estate. The Funds may
not invest in commodities, commodity contracts, oil, gas or other mineral
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<PAGE>
programs, or real estate, except that each may purchase money market
instruments issued by companies that invest in or sponsor such interests.
Underwriting. The Funds may not engage in the underwriting of
money market instruments issued by others except as a Fund may be deemed
to be an underwriter under the 1933 Act in connection with the purchase
and sale of portfolio securities.
Loans. The Funds may not engage in lending activities. However,
this policy does not apply to securities lending and repurchase
agreements. The Money Market Fund may not make secured loans of its
portfolio securities amounting to more than 25% of its total assets.
Issuing Senior Securities. The Money Market Fund may not issue
senior securities, except as permitted by the investment objective,
policies and investment limitations of the Fund. The Municipal Fund may
not issue senior securities. However, this policy does not apply to
investment policies otherwise permitted by the Municipal Fund, such as
making securities loans, borrowing money and engaging in repurchase
agreements and reverse repurchase agreements.
Borrowing Money. The Funds may not borrow money except as a
temporary measure for extraordinary or emergency purposes. A Fund may
enter into reverse repurchase agreements and otherwise borrow up to
one-third of the value of its total assets, including the amount borrowed,
in order to meet redemption requests without immediately selling portfolio
instruments. This latter practice is not for investment leverage but
solely to facilitate management of the portfolio by enabling a Fund to
meet redemption requests when the liquidation of portfolio instruments
would be inconvenient or disadvantageous. However, a Fund may not
purchase additional portfolio investments once borrowed funds exceed 5% of
total assets. When effecting reverse repurchase agreements, Fund assets
in an amount sufficient to make payment for the obligations to be
purchased will be segregated by the borrowing Fund's custodian and on the
Fund's records upon execution of the trade and maintained until the
transaction has been settled. During the period any reverse repurchase
agreements are outstanding, to the extent necessary to assure completion
of the reverse repurchase agreements, a Fund will restrict the purchase of
portfolio instruments to money market instruments maturing on or before
the expiration date of the reverse repurchase agreements. Interest paid
on borrowed funds will not be available for investment. Each Fund will
liquidate any such borrowings as soon as possible and may not purchase any
portfolio instruments while any borrowings are outstanding.
The Funds have adopted the following additional restrictions
that, together with certain limits described in the Funds' 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.
Selling Short and Buying on Margin. The Funds may not sell any
money market instruments short or purchase any money market instruments on
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<PAGE>
margin, but may obtain such short-term credits as may be necessary for
clearance of purchases and sales of money market instruments.
Investing in New Issuers. Neither Fund may invest more than 5%
of its total assets in securities of issuers that have records of less
than three years of continuous operation.
Acquiring Securities. The Funds may not acquire the voting
securities of any issuer, invest in securities for the purpose of
exercising control or management, or invest in securities issued by any
other investment company except as part of a merger, consolidation or
other acquisition, or as otherwise permitted by law.
Investing in Issuers Whose Securities Are Owned by Officers of
the Trust. The Funds may not purchase or retain the securities of any
issuer if the officers and Trustees of the Trust or the Manager who own
individually more than 1/2 of 1% of the issuer's securities together own
more than 5% of the issuer's securities.
Dealing in Puts and Calls. The Funds may not invest in puts,
calls, straddles, spreads or any combination thereof.
Pledging Securities. The Funds may not pledge any securities
except to secure permitted borrowings, and then only in amounts not to
exceed 10% of a Fund's total assets.
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
---------------
Each Fund determines its net investment income for dividend
purposes once each business day immediately prior to the determination of
net asset value. Each determination of net investment income includes all
accrued interest on portfolio investments of the Fund, less all accrued
expenses of the Fund. (A Fund will not have unrealized gains or losses so
long as it values its instruments by the amortized cost method.) Realized
gains and losses are reflected in a Fund's net asset value and are not
included in net investment income. All of a Fund's net investment income
is declared as dividends daily.
Net asset value for a share of each class of the Money Market
Fund and for an A share of the Municipal Fund is determined daily at 12:00
p.m. Eastern time immediately after the daily declaration of dividends,
Monday through Friday, except for the following New York Stock Exchange
(the "Exchange") holidays: New Year's Day, Presidents' Day, Good Friday,
Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas
Day. Each Fund will seek to stabilize the net asset value per share of
its class(es) at $1.00 by use of the amortized cost method of valuation,
which the Board of Trustees has determined is the best method for
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<PAGE>
determining the value of portfolio instruments. Under this method,
portfolio instruments are valued at the acquisition cost as adjusted for
amortization of premiums or accumulation of discounts rather than at
current market value. The Board of Trustees periodically assess the
continued use of this valuation method and, if necessary, will consider
valuing Fund assets at their fair value as determined in good faith by the
Board of Trustees.
A Fund's use of the amortized cost method of valuing portfolio
instruments depends on its compliance with Rule 2a-7 under the 1940 Act
("Rule 2a-7"). Rule 2a-7 requires the Board to establish procedures
reasonably designed to stabilize the net asset value per share as computed
for purposes of distribution and redemption. The Board's procedures
include monitoring the relationship between the amortized cost value per
share and a net asset value per share based upon available indications of
market value. The Board of Trustees will decide what, if any, steps
should be taken if there is a difference of more than .5% between the two
methods. The Board of Trustees will take any steps they consider
appropriate (such as redemption in kind or shortening the average
portfolio maturity) to minimize any material dilution or other unfair
results arising from differences between the two methods of determining
net asset value.
Rule 2a-7 requires that a Fund limit its investments to
instruments that, in the opinion of the Board of Trustees, present minimal
credit risk and are of high quality as determined by any major rating
agency. If the instruments are not rated, the Board must determine that
they are of comparable quality. The Rule also requires a Fund to maintain
a dollar-weighted average portfolio maturity (not more than 90 days)
appropriate to the objective of maintaining a stable net asset value. In
addition, no instrument with a remaining maturity of more than 397 days
can be purchased by a Fund. For these purposes, each Fund treats variable
rate securities as maturing on the date of their next scheduled rate
adjustment and instruments purchased subject to repurchase agreements as
maturing as of the date that the repurchase is to be made. Should the
disposition of a portfolio security result in a Fund's dollar-weighted
average portfolio maturity of more than 90 days, the Fund will invest its
available cash to reduce the average maturity to 90 days or less as soon
as possible.
It is the Funds' usual practice to hold portfolio securities to
maturity and realize the instruments' stated full value, unless the
Manager or, in the case of the Municipal Fund, the Subadviser, determines
that sale or other disposition is appropriate in light of a Fund's
investment objective. Under the amortized cost method of valuation,
neither the amount of daily income nor the net asset value is affected by
any unrealized appreciation or depreciation of the portfolio.
In periods of declining interest rates the indicated daily yield
on shares of a Fund, computed by dividing the annualized daily income on
the Fund's portfolio by the net asset value as computed above, may tend to
be higher than a similar computation made by using a method of valuation
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based upon market prices and estimates. In periods of rising interest
rates, the daily yield on shares of a Fund computed the same way may tend
to be lower than a similar computation made by using a method of
calculation based upon market prices and estimates.
CALCULATING YIELDS
------------------
Each class of a Fund computes its current and effective yield
quotations and A shares of the Municipal Fund calculates its tax-
equivalent yield using standardized methods required by the SEC. Each
class of a Fund from time to time advertises (1) its current yield based
on a recently ended seven-day period, computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one share at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from that
shareholder account, dividing the difference by the value of the account
at the beginning of the base period to obtain the base period return, and
then multiplying the base return by (365/7), with the resulting yield
figure carried to at least the nearest hundredth of one percent, and
(2) its effective yield based on the same seven-day period by compounding
the base period and by adding 1, raising the sum to a power equal to
(365/7), and subtracting 1 from the result, according to the following
formula:
365/7
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1) ]-1
For the seven-day period ended August 3l, 1995, the A shares of
the Money Market Fund's current and effective yields were 5.00% and 5.12%,
respectively. There were no C shares of the Money Market Fund outstanding
during the above-referenced time period.
The Municipal Fund from time to time advertises its Class A tax-
equivalent yield and tax-equivalent effective yield, also based on a
recently ended seven-day period. These quotations are calculated by
dividing that portion of the Municipal Fund's yield (or effective yield,
as the case may be) that is tax-exempt by 1 minus a stated income tax rate
and adding the product to that portion, if any, of the Municipal Fund's
yield that is not tax-exempt, according to the following formula:
E
TAX-EQUIVALENT YIELD = (----) + t
1-p
where E = the portion of yield that is tax-exempt, p = stated income tax
rate, and t = the portion of yield that is taxable.
For the seven-day period ended August 31, 1995, the A shares of
the Municipal Fund's current, effective and tax-equivalent (assuming the
maximum Federal income tax rate of 39.6%) yields were 2.97%, 3.01% and
4.98%, respectively.
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Yield may fluctuate daily and does not provide a basis for
determining future yields. Because the yield of a Fund fluctuates, it
cannot be compared with yield on savings accounts or other investment
alternatives that provide an agreed-to or guaranteed fixed yield for a
stated period of time. However, yield information may be useful to an
investor considering temporary investments in money market instruments.
In comparing the yield of one money market fund to another, consideration
should be given to each fund's investment policies, including the types of
investments made, the average maturity of the portfolio securities and
whether there are any special account charges that may reduce the yield.
A Fund's class performance data quoted in advertising and other
promotional materials ("Performance Advertisements") represents past
performance and is not intended to predict or indicate future results.
The return on an investment in a class will fluctuate. In Performance
Advertisements, a class may compare its taxable and tax-equivalent yields
with data published by Lipper Analytical Services, Inc. for money market
funds ("Lipper"), CDA Investment Technologies, Inc. ("CDA"),
IBC/Donoghue's Money Market Fund Report ("Donoghue"), Wiesenberger
Investment Companies Service ("Wiesenberger") or Investment Company Data
Inc. ("ICD"). A Fund also may refer in such materials to mutual fund
performance rankings and other data, such as comparative asset, expense
and fee levels, published by Lipper, CDA, Donoghue, Wiesenberger or ICD.
Performance Advertisements also may refer to discussions of the Fund and
comparative mutual fund data and ratings reported in independent
periodicals, including The Wall Street Journal, Money Magazine, Forbes,
Business Week, Financial World, Barron's, Fortune, and The New York Times.
INVESTING IN THE FUNDS
----------------------
A shares and C shares are sold at their next determined net asset
value after an order is received, without a front-end sales load. The
procedures for purchasing each class of shares of each Fund is explained
in the prospectus under "How to Buy Shares." For customers of Raymond
James & Associates, Inc. ("RJA" or the "Distributor") or its affiliates,
credit balances will be invested automatically. Credit balances arising
from deposits made prior to the daily cashiering deadline (which varies
according to branch location of the customer's account) will be credited
to the brokerage account on the day of receipt. Deposits made after the
daily cashiering deadline of the Distributor's office in which the deposit
is made will be credited to the brokerage account on the next business day
following the day of deposit.
REDEEMING SHARES
----------------
The methods of redemption are described in the section of the
prospectus entitled "How to Redeem Shares."
- 12 -
<PAGE>
Systematic Withdrawal Plan
--------------------------
Shareholders may elect to make systematic withdrawals from a Fund
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. Since the amounts of the
withdrawals are selected by the shareholder, they are not necessarily
related to the dividends paid by the Fund. Accordingly, periodic
withdrawals may exceed dividends and may result in a depletion of the
shareholder's original investment in the Fund. The Systematic Withdrawal
Plan may be amended or terminated at any time by the shareholder or the
Fund on notice and, in any event, will be terminated when all shares owned
by the shareholder and available for the Systematic Withdrawal Plan have
been redeemed. For the shareholder's protection any change of payee must
be in writing. A shareholder's Systematic Withdrawal Plan also will be
terminated if the Fund is notified of his or her death. Accounts using
the Systematic Withdrawal Plan are subject to the minimum balance
requirements. See "Minimum Investment Required/Accounts with Low
Balances" in the prospectus. 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.
Systematic withdrawals of C shares, if acquired by exchange of C
shares of another Heritage Mutual Fund will be charged a CDSL of 1% if the
C shares of that other Heritage Mutual Fund were held for less than one
year. Redemptions will be made at net asset value determined as of 12:00
p.m. Eastern time on the 10th day of each month or the 10th day of the
last month of each period, whichever is applicable, if the Exchange is
open for business on that day. If the Exchange is not open for business
on that day, the shares will be redeemed at net asset value determined as
of 12:00 p.m. Eastern time 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 on all shares in the account must be automatically reinvested in
Fund 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. Each Fund, the Manager as transfer agent, and
the 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. If the periodic withdrawals exceed reinvested dividends,
the amount of the original investment may be correspondingly reduced.
A Fund will not knowingly accept purchase orders from
shareholders for additional shares if they maintain a Systematic
Withdrawal Plan unless the purchase is equal to at least one year's
- 13 -
<PAGE>
scheduled withdrawals. In addition, a shareholder who maintains such a
Plan may not make periodic investments under a Fund's Automatic Investment
Plan.
Telephone Transactions
----------------------
Shareholders may redeem shares by placing a telephone request to
either Fund. 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
-------------------
Each Fund is obligated to redeem shares for any shareholder for
cash during any 90-day period up to $250,000 or 1% of the Fund'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, a Fund will pay all or a portion of the remainder of the redemption
in portfolio instruments, valued in the same way as the Fund 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 and selling them before their
maturity could receive less than the redemption value thereof and could
incur certain transaction costs.
Receiving Payment
-----------------
If a request for redemption is received by a Fund in good order
(as described below) before 12:00 p.m. Eastern time on a day on which the
Exchange is open for business, the shares will be redeemed at the net
asset value per share determined at 12:00 p.m. Eastern time, minus any
applicable CDSL for C shares. Requests for redemption received by the
Fund after 12:00 p.m. Eastern time will be executed at the net asset value
determined as of 12:00 p.m. Eastern time on the next trading day on the
Exchange, minus any applicable CDSL for C shares.
Payment for shares redeemed by a Fund normally will be made on
the business day after redemption was made. If the shares to be redeemed
have been recently purchased by personal check, the Fund 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.
- 14 -
<PAGE>
The proceeds of a redemption may be more or less than the original cost of
Fund shares.
If shares of a Fund are redeemed by a shareholder through the
Distributor, a participating dealer or participating bank
("Representative"), 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 will be executed on the next trading day. Payment for
shares redeemed normally will be made by the Fund to the Distributor or a
Representative by the third day after the day the redemption request was
made, provided that certificates for shares have been delivered in proper
form for transfer to the Fund or, if no certificates have been issued, a
written request signed by the shareholder has been provided to the
Distributor or a Representative 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 Fund shares can be directed to the
Distributor, a Representative or to the Manager.
EXCHANGE PRIVILEGE
------------------
Shareholders who have held Money Market Fund 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.
Exchanges of A shares that have not been subject to a front-end sales load
will be subject to a sales load upon exchange. Exchanges of C shares for
C shares of any other Heritage Mutual Fund subject to a CDSL will be
subject to a CDSL if they are redeemed within the first year. 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 prospectus and below.
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."
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
- 15 -
<PAGE>
telegram to Heritage Asset Management, Inc., attention: Shareholder
Services. Telephone or telegram requests for an exchange received by a
Fund before 12:00 p.m. Eastern time will be effected at 12:00 p.m. Eastern
time 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
-----
Each Fund is treated for tax purposes as a separate corporation.
In order to continue to qualify for the favorable tax treatment afforded
to a regulated investment company ("RIC") under the Internal Revenue Code
of 1986, as amended (the "Code"), a Fund must distribute annually to its
shareholders at least 90% of its investment company taxable income
(generally, taxable net investment income and net short-term capital gain,
if any) plus, in the case of the Municipal Fund, its net interest income
excludable from gross income under section 103(a) of the Code, and must
meet several additional requirements. With respect to each Fund, these
requirements include the following: (1) the Fund 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 other income derived with respect to its
business of investing in securities; (2) the Fund must derive less than
30% of its gross income each taxable year from the sale or other
disposition of securities held for less than three months; (3) at the
close of each quarter of the Fund'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 Fund's total assets;
and (4) at the close of each quarter of the Fund'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.
Dividends paid by the Municipal Fund will qualify as "exempt-
interest dividends" and thus will be excludable from gross income by its
shareholders, if that Fund satisfies the additional requirement that, at
the close of each quarter of its taxable year, at least 50% of the value
of its total assets consists of securities the interest on which is
excludable from gross income under section 103(a); the Municipal Fund
intends to continue to satisfy this requirement. The aggregate amount
designated for any year by the Municipal Fund as exempt-interest dividends
may not exceed its excludable interest for the year over certain amounts
disallowed as deductions.
Tax-exempt interest attributable to certain private activity
bonds ("PABs") (including, in the case of a RIC receiving interest on such
bonds, a proportionate part of the exempt-interest dividends paid by that
RIC) is subject to the AMT. Exempt-interest dividends received by a
corporate shareholder also may be indirectly subject to that AMT without
- 16 -
<PAGE>
regard to whether the Municipal Fund's tax-exempt interest was
attributable to such bonds.
Entities or persons who are "substantial users" (or persons
related to "substantial users") of facilities financed by PABs or
industrial development bonds ("IDBs") should consult their tax advisers
before purchasing shares of the Municipal Fund because, for users of
certain of these facilities, the interest on such bonds is not exempt from
Federal income tax. For these purposes, the term "substantial user" is
defined generally to include a "non-exempt person" who regularly uses in
trade or business a part of a facility financed from the proceeds of PABs
or IDBs.
Up to 85% of social security and railroad retirement benefits may
be included in taxable income for recipients whose adjusted gross income
(including income from tax-exempt sources such as the Municipal Fund) plus
50% of their benefits exceeds certain base amounts. Exempt-interest
dividends from the Municipal Fund still are tax-exempt to the extent
described above; they are only included in the calculation of whether a
recipient's income exceeds the established amounts.
If the Municipal Fund invests in any instruments that generate
taxable income, under the circumstances described in the Prospectus, the
portion of any dividend attributable to the interest earned thereon will
be taxable to that Fund's shareholders as ordinary income to the extent of
its earnings and profits, and only the remaining portion will qualify as
an exempt-interest dividend. Moreover, if the Municipal Fund realizes
capital gain as a result of market transactions, any distribution of that
gain will be taxable to its shareholders. There also may be collateral
Federal income tax consequences regarding the receipt of tax-exempt divi-
dends by shareholders such as S corporations, financial institutions, and
property and casualty insurance companies. A shareholder falling into any
of these categories should consult its tax adviser concerning its
investment in shares of the Municipal Fund. The exemption of certain
interest income for Federal income tax purposes does not necessarily
result in exemption thereof under the income or other tax laws of any
state or local taxing authority. A shareholder may be exempt from state
and local taxes on distributions of interest income derived from
obligations of the state and/or municipalities of the state in which he or
she is a resident, but generally will be taxed on income derived from
obligations of other jurisdictions.
Each Fund will be subject to a nondeductible 4% excise tax to the
extent it fails to distribute by the end of any calendar year
substantially all of its ordinary (taxable) 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.
Each Fund is required to withhold 31% of any taxable dividends
payable to individuals and certain other noncorporate shareholders who do
not provide the Fund with correct taxpayer identification numbers or
otherwise are subject to backup withholding.
- 17 -
<PAGE>
Shareholders (except for qualified retirement plans and accounts
and other tax-exempt investors in the Money Market Fund) will be subject
to Federal income tax on taxable dividends whether received as cash or in
additional Fund shares. No portion of any dividend paid by either Fund is
eligible for the dividends-received deduction available to corporations.
Because each Fund invests primarily for income and normally holds
portfolio instruments to maturity, neither Fund is expected to realize
long-term capital gains. Shareholders should consult their own tax
advisers regarding the status of their investment in either Fund under
state and local tax laws.
TRUST INFORMATION
-----------------
Management of the Funds
-----------------------
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
or the Manager.
<TABLE>
<CAPTION>
Position with Principal Occupation
Name the Trust During Past Five Years
---- ------------- ----------------------
<S> <C> <C>
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
- 18 -
<PAGE>
Position with Principal Occupation
Name the Trust During Past Five Years
---- ------------- ----------------------
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 Information Services, Inc. since 1994 and of
Chicago InfoVest Corporation (information services to
444 Merchandise Mart the insurance and auto industries and consumer
Chicago, IL 60654 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 since August 1987 and Lykes Professor of
Florida Banking and Finance since August 1986 at
College of Business University of South Florida.
Administration
Tampa, FL 33620
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.
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.
1800 Massachusetts Ave.
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.
1800 Massachusetts Ave. Secretary
Washington, DC 20036
</TABLE>
* These Trustees are "interested persons" as defined in section
2(a)(19) of the 1940 Act.
- 19 -
<PAGE>
The Trustees and officers of the Trust, as a group, own less than
1% of the Funds' 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.
Compensation Table
<TABLE>
<CAPTION>
Total Compensation
Pension or From the Trust and
Aggregate Retirement Benefits Estimated Annual the Heritage Family
Name of Person, Compensation From Accrued as Part of Benefits Upon of Funds Paid
Position the Trust the Trust's Expenses Retirement to Trustees
--------------- ----------------- ------------------ -------------- ---------------------
<S> <C> <C> <C> <C>
Donald W. Burton, Trustee $1,554 $0 $0 $14,000
C. Andrew Graham, Trustee $1,776 $0 $0 $16,000
David M. Phillips, Trustee $1,554 $0 $0 $14,000
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>
- 20 -
<PAGE>
Investment Adviser and Administrator; Subadviser
------------------------------------------------
The Funds' 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
customers 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, as amended April 22, 1992,
between the Trust, on behalf of the Money Market Fund and the Municipal
Fund, the Manager provides each Fund with investment advice and portfolio
management services as well as administers the Fund's noninvestment
affairs.
The Manager also is obligated to furnish the Funds with office
space, administrative, and certain other services as well as executive and
other personnel necessary for the operation of the Funds. 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 Funds pay all of
their other expenses that are not assumed by the Manager. The Funds also
are liable for such nonrecurring expenses as may arise, including
litigation to which the Funds may be a party. The Funds also may have an
obligation to indemnify Trustees of the Trust and its officers with
respect to any such litigation.
The Advisory Agreement was approved by the Board of Trustees
(including all of the Trustees who are not "interested persons" of the
Manager, as defined under the 1940 Act) and by the shareholders of each
Fund in compliance with the 1940 Act. The 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 or the applicable Fund, and by (2) the
majority vote of either the full Board of Trustees or the vote of a
majority of the outstanding shares of each Fund. The Agreement automati-
cally terminates on assignment, and is terminable on not more than 60
days' written notice by a Fund to the Manager. In addition, the Advisory
Agreement may be terminated on not less than 60 days' written notice by
the Manager to a Fund. In the event the Manager ceases to be the manager
of a Fund or the Distributor ceases to be principal distributor of Fund
shares, the right of a Fund to use the identifying name of "Heritage" may
be withdrawn.
The Manager shall not be liable to either Fund 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 the Manager by the Advisory Agreement or for any
loss that may be sustained in the purchase, holding or sale of any
security.
- 21 -
<PAGE>
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 Funds."
Advisory and Administration Fee. The annual investment advisory
and administration fee paid monthly by each Fund to the Manager is based
on each Fund's average daily net assets as listed in the prospectus.
The Manager has voluntarily agreed to waive management fees to
the extent that the Money Market Fund Class A and Class C expenses exceed
.79% of the average daily net assets attributable to that class for this
fiscal year. The Manager also has agreed to waive its fees for A shares
of the Municipal Fund to the extent that expenses exceed .77% of the
average daily net assets attributable to that class for this fiscal year.
For the three fiscal years ended August 31, 1993, 1994 and 1995, the
Manager earned from the Money Market Fund $4,522,090 (before waiving
$193,112 of its fees), $4,775,851 (before waiving $207,108 of its fees)
and $5,436,551 (before waiving $244,977 of its fees), respectively. The
Municipal Fund paid the Manager for the fiscal years ended August 31,
1993, 1994 and 1995, fees of $817,314 (before waiving $106,464 of its
fees), $1,229,072 (before waiving $6,473 of its fees) and $1,226,671
(before waiving $40,432 of its fees), respectively.
Class Specific Expenses. The Money Market Fund may determine to
allocate certain of its expenses (in addition to distribution fees) to the
specific classes of the Money Market Fund'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 Fund'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 Fund for its expenses over
the limitation. If the Fund's monthly projected operating expenses exceed
applicable state expense limitations, the investment advisory fee paid
will be reduced monthly by the amount of the excess, subject to an annual
adjustment. 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 Funds may have to cease offering their
shares for sale in such states until the expense ratio declines. Any fees
waived by the Manager can be recovered by it from the applicable Fund when
such recovery would not cause the Fund to exceed its expense limits. The
most restrictive current state expense limit is 2.5% of a Fund'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.
Investment Subadviser. Alliance Capital Management L.P. has been
retained, under an investment subadvisory agreement (the "Subadvisory
Agreement") dated April 22, 1992 with the Manager, as the Municipal Fund's
investment subadviser. The Subadviser is a limited partnership whose sole
general partner is Alliance Capital Management Corporation, which is a
- 22 -
<PAGE>
wholly-owned subsidiary of The Equitable Life Assurance Society of the
United States ("Equitable"). ACMC, Inc., also a wholly-owned subsidiary
of Equitable, owns approximately 55% of the outstanding securities of the
Subadviser.
The Subadvisory Agreement will continue in force if its
continuance is approved at least annually 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 Trust or the Subadviser, 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 Municipal Fund. The Subadvisory
Agreement automatically terminates on assignment, and is terminable (1) on
not more than 60 days' written notice by the Trust to the Manager and
Subadviser, (2) on not less than 60 days' written notice by the Manager to
the Subadviser, and (3) on not less than 90 days' notice by the Subadviser
to the Manager.
The Subadviser shall not be liable to the Trust, the Manager or
any shareholder for anything done or omitted by them, except acts or
omissions involving willful misfeasance, bad faith, negligence or reckless
disregard of the duties imposed upon the Subadviser by the Subadvisory
Agreement.
Portfolio Transactions
----------------------
Most purchases and sales of portfolio investments will be with
the issuer or with major dealers in money market instruments acting as
principal. Thus, the Funds do not expect to pay significant brokerage
commissions. In underwritten offerings, the price paid by the Fund
includes a disclosed, fixed commission or discount retained by the
underwriter. There generally is no stated commission in the case of
securities purchased from or sold to dealers, but the prices of such
securities usually include an undisclosed dealer's mark-up or mark-down.
The Manager or Subadviser will place all orders for the purchase and sale
of portfolio securities for the Funds and will buy and sell securities for
the Funds through a substantial number of brokers and dealers. In doing
so, the Manager or the Subadviser will use its best efforts to obtain for
the Funds the most favorable price and execution available, except to the
extent it may be permitted to pay higher brokerage commissions as
described below. Best execution, however, does not mean that a Fund
necessarily will be paying the lowest price or spread available. Rather
the Manager or Subadviser also will take into account such factors as size
of the transaction, the nature of the market for the security, the amount
of commission, the timing of the transaction taking into account market
prices and trends, the reputation, experience and financial stability of
the broker-dealer involved and the quality of service rendered by the
broker-dealer in other transactions.
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.
- 23 -
<PAGE>
Consistent with the policy of most favorable price and execution, the
Manager or Subadviser may give consideration to research, statistical and
other services furnished by brokers or dealers. In addition, the Manager
or Subadviser 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 Manager or Subadviser
determines in good faith that such commission or spread is reasonable in
relation to the value of brokerage and research services provided. Such
research and analysis may be useful to the Manager or Subadviser in
connection with services to clients other than the Fund.
In transactions in which brokerage commissions are involved
(which are expected to be few, if any), as permitted by Section 28(e) of
the Securities Exchange Act of 1934, as amended (the "1934 Act") the
Manager or Subadviser may cause the Funds to pay a broker-dealer who
provides "brokerage and research services" (as defined in the 1934 Act) to
the Manager or Subadviser an amount of disclosed commission for effecting
a securities transaction for a Fund in excess of the commission that
another broker-dealer would have charged for effecting that transaction if
the Manager or Subadviser determines in good faith that such amount of
commission is reasonable in relation to the brokerage and research
services. The Manager's and Subadviser's authority to cause the Funds to
pay any such greater commissions is subject to such policies as the Board
of Trustees may adopt from time to time.
Consistent with the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. and subject to seeking the most
favorable price and execution available and such other policies as the
Board of Trustees may determine, the Manager or Subadviser may consider
sales of shares of the Funds (and, if permitted by law, of other Heritage
Mutual Funds) as a factor in the selection of broker-dealers to execute
portfolio transactions for the Fund.
Distribution of Shares
----------------------
The Distributor and Representative with whom the Distributor has
entered into dealer agreements offer shares of the Funds as agents on a
best efforts basis and are not obligated to sell any specific amount of
shares. Pursuant to its Distribution Agreements with the Funds, the
Distributor bears the cost of making information about the Funds 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 Funds pay
the cost of registering and qualifying their shares under state and
federal securities laws and typesetting of their prospectuses and
printing and distributing prospectuses to existing shareholders.
As compensation for the services provided and expenses borne by
the Distributor pursuant to a Distribution Agreement, each class of each
Fund will pay the Distributor a distribution fee in accordance with the
Distribution Plan described below. The distribution fee is accrued daily
- 24 -
<PAGE>
and paid monthly, and currently is equal on an annual basis to .15% of
average daily net assets of each class of each Fund. For the fiscal year
ended August 31, 1995, these fees amounted to $1,687,221 for the A shares
of Money Market Fund and $368,392 for A shares of the Municipal Fund.
There were no C shares of the Money Market Fund outstanding during these
periods. All of these fees were used by the Funds for payments to
underwriters.
In reporting amounts expended for the Money Market Fund under the
Distribution Plan 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 Money Market Fund 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 Distribution Plan (the "Plan") on behalf
of each class of each Fund that, among other things, permits each Fund to
pay the Distributor the monthly distribution fee out of its net assets.
The Plan was approved by the initial shareholder of each Fund 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 Plan will benefit the Fund
and its shareholders by enabling the Funds to increase their assets and
thereby realize economies of scale and its diversification goals. The
Plan also was approved by the initial shareholder of each Fund.
Each Plan 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 Funds. 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 of a Fund requires
shareholder approval of that class.
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
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
- 25 -
<PAGE>
the entire Board of Trustees cast in person at a meeting called for that
purpose.
Administration of the Funds
---------------------------
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
Funds; furnish office space and equipment; oversee the activities of the
Subadviser 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 Funds.
The Manager also is the dividend paying and shareholder servicing
agent for the Funds and performs fund accounting services for each Fund.
Each Fund 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 $1,054,321, $1,234,112 and $1,437,554, respectively, from
the Money Market Fund and $46,473, $77,830 and $96,963, respectively, from
the Municipal Fund 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 $14,211 and $35,932, respectively, from each Fund 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 Funds' 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, are the independent accountants
for the Funds. The Financial Statements and Financial Highlights of the
Funds that appear in this Statement of Additional Information have been
audited by Coopers & Lybrand L.L.P. and included herein in reliance upon
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
- 26 -
<PAGE>
the Trust or its Board of 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
shareholder. 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.
- 27 -
<PAGE>
APPENDIX A
----------
DESCRIPTION OF SECURITIES RATINGS
---------------------------------
Commercial Paper
----------------
Moody's. Moody's Investors Service, Inc. evaluates the salient
features that affect a commercial paper issuer's financial and competitive
position. Its appraisal includes, but is not limited to, the review of
such factors as: quality of management, industry strengths and risks,
vulnerability to business cycles, competitive position, liquidity
measurements, debt structure, operating trends and access to capital
markets. Differing degrees of weight are applied to these factors as
deemed appropriate for individual situations.
Commercial paper issuers rated "Prime-1" are judged to be of the
best quality. Their short-term debt obligations carry the smallest degree
of investment risk. Margins of support for current indebtedness are large
or stable with cash flow and asset protection well assured. Current
liquidity provides ample coverage of near-term liabilities and unused
alternative financing arrangements are generally available. While
protection elements may change over the intermediate or long term, such
changes are most unlikely to impair the fundamentally strong position of
short-term obligations. Issuers in the commercial paper market rated
"Prime-2" are of high quality. Protection for short-term note holders is
issued with liquidity and value of current assets as well as cash
generation in sound relationship to current indebtedness. They are rated
lower than the best commercial paper issuers because margins of protection
may not be as large or because fluctuations of protective elements over
the near or intermediate term may be of greater amplitude. Temporary
increases in relative short and overall debt load may occur. Alternate
means of financing remain assured.
Standard & Poor's. Standard & Poor's describes its highest ("A")
rating for commercial paper as follows, with the numbers 1, 2, and 3 being
used to denote relative strength within the "A" classification. Liquidity
ratios are adequate to meet cash requirements. Long-term senior debt
rating should be "A" or better; in some instances "BBB" credits may be
allowed if other factors outweigh the "BBB." The issuer should have
access to at least two additional channels of borrowing. Basic earnings
and cash flow should have an upward trend, with allowances made for
unusual circumstances. Typically, the issuer's industry should be well
established and the issuer should have a strong position within its
industry. The reliability and quality of management should be
unquestioned.
A-1
<PAGE>
Corporate Debt
--------------
Moody's. Moody's Investors Service, Inc. describes its
investment grade highest ratings for corporate bonds as follows: Bonds
that are rated Aaa are judged to be of the best quality. They carry the
smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally
stable margin and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities or
fluctuation of protective elements may be of greater amplitude or there
may be other elements present that make the long-term risk appear somewhat
larger than in Aaa securities.
Standard & Poor's. Standard & Poor's describes its investment
grade ratings for corporate bonds as follows: Ratings of AAA are the
highest assigned by Standard & Poor's to debt obligations and indicate an
extremely strong capacity to pay principal and interest. Bonds rated AA
also qualify as high quality obligations. Capacity to pay principal and
interest is very strong, and in the majority of instances they differ from
AAA issues only in small degree.
DESCRIPTION OF MUNICIPAL SECURITIES
-----------------------------------
Municipal Notes generally are used to provide for short-term
capital needs and usually have maturities of one year or less. They
include the following:
Project Notes, which carry a U.S. Government guarantee, are
issued by public bodies ("local issuing agencies") created under
the laws of a state, territory, or U.S. possession. They have
maturities that range up to one year from the date of issuance.
Project Notes are backed by an agreement between the local
issuing agency and the Federal Department of Housing and Urban
Development. These Notes provide financing for a wide range of
financial assistance programs for housing, redevelopment, and
related needs (such as low-income housing programs and renewal
programs).
Tax Anticipation Notes are issued to finance working capital
needs of municipalities. Generally, they are issued in
anticipation of, and are payable from, seasonal tax revenues, such
as income, sales, use and business taxes.
Revenue Anticipation Notes are issued in expectation of receipt
of other types of revenues, such as Federal revenues available
under the Federal Revenue Sharing Programs.
Bond Anticipation Notes are issued to provide interim
financing until long-term financing can be arranged. In
A-2
<PAGE>
most cases, the long-term bonds then provide the money
for the repayment of the Notes.
Construction Loan Notes are sold to provide construction
financing. After successful completion and acceptance, many
projects receive permanent financing through the Federal Housing
Administration under the Federal National Mortgage Association or
the Government National Mortgage Association.
Tax-Exempt Commercial Paper is a short-term obligation with a
stated maturity of 365 days or less. It is issued by agencies of
state and local governments to finance seasonal working capital
needs or as short-term financing in anticipation of longer-term
financing.
Municipal Bonds, which meet longer-term capital needs and
generally have maturities of more than one year when issued, have
three principal classifications:
General Obligation Bonds are issued by such entities as states,
counties, cities, towns, and regional districts. The proceeds of
these obligations are used to fund a wide range of public
projects, including construction or improvement of schools,
highways and roads, and water and sewer systems. The basic
security behind General Obligation Bonds is the issuer's pledge
of its full faith and credit and taxing power for the payment of
principal and interest. The taxes that can be levied for the
payment of debt service may be limited or unlimited as to the
rate or amount of special assessments.
Revenue Bonds generally are secured by the net revenues derived
from a particular facility, group of facilities, or, in some
cases, the proceeds of a special excise or other specific revenue
source. Revenue Bonds are issued to finance a wide variety of
capital projects including electric, gas, water and sewer
systems; highways, bridges, and tunnels; port and airport
facilities; colleges and universities; and hospitals. Many of
these Bonds provide additional security in the form of a debt
service reserve fund to be used to make principal and interest
payments. Housing authorities have a wide range of security,
including partially or fully insured mortgages, rent subsidized
and/or collateralized mortgages, and/or the net revenues from
housing or other public projects. Some authorities provide
further security in the form of a state's ability (without
obligation) to make up deficiencies in the debt service reserve
fund.
Industrial Development Bonds are considered municipal bonds if
the interest paid thereon is exempt from Federal income tax and
are issued by or on behalf of public authorities to raise money
to finance various privately operated facilities for business and
manufacturing, housing, sports, and pollution control. These
Bonds are also used to finance public facilities such as
airports, mass transit systems, ports, and parking. The payment
of the principal and interest on such Bonds is dependent solely
A-3
<PAGE>
on the ability of the facility's user to meet its financial
obligations and the pledge, if any, of real and personal property
as security for such payment.
DESCRIPTION OF MUNICIPAL SECURITIES RATINGS
-------------------------------------------
Moody's
-------
Municipal Bonds that are rated Aaa by Moody's are judged to be of
the best quality. They carry the smallest degree of investment risk and
are generally referred to as "gilt edge." Interest payments are protected
by a large or by an exceptionally stable margin and principal is secure.
While the various protective elements are likely to change, such changes
as can be visualized are most unlikely to impair the fundamentally strong
position of such issues. Bonds rated Aa are judged to be of high quality
by all standards. Together with the Aaa group they comprise what are
generally known as high-grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities or fluctuation of protective elements may be of greater
amplitude or there may be other elements present that make long-term risks
appear somewhat larger than in Aaa securities.
Municipal Notes. Moody's ratings for state and municipal notes
and other short-term obligations are designated Moody's Investment Grade
("MIG") and for variable rate demand obligations are designated Variable
Moody's Investment Grade ("VMIG"). This distinction is in recognition of
the differences between short-term credit risk and long-term credit risk.
Notes bearing the designation MIG-1 or VMIG-1 are of the best quality,
enjoying strong protection from established cash flows for their servicing
or from established and broad-based access to the market for refinancing,
or both. Notes bearing the designation MIG-2 or VMIG-2 are judged to be
of high quality, with margins of protection ample although not so large as
in the preceding group.
Standard & Poor's
-----------------
Municipal Bonds rated AAA by S&P are the highest grade
obligations. This rating indicates an extremely strong capacity to pay
principal and interest. Bonds rated AA also qualify as high-quality debt
obligations. Capacity to pay principal and interest is very strong, and
in the majority of instances they differ from AAA issues only in small
degree.
Municipal Notes. Municipal notes with maturities of three years
or less are usually given note ratings (designated SP-1, -2, or -3) by S&P
to distinguish more clearly the credit quality of notes as compared to
bonds. Notes rated SP-1 have a very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming
safety characteristics are given the designation SP-1+.
A-4
<PAGE>
<PAGE> 1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Cash Trust-Money Market Fund:
We have audited the accompanying statement of net assets of Heritage Cash
Trust-Money Market Fund 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 nine years in the period then ended and for the period November 25,
1985 (commencement of operations) to August 31, 1986. 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. 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 Cash Trust-Money Market Fund 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 nine years in the period then ended and for the period November 25, 1985
(commencement of operations) to August 31, 1986 in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand
------------------------------------
Boston, Massachusetts
October 12, 1995
9
<PAGE> 2
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Cash Trust-Municipal Money Market Fund:
We have audited the accompanying statement of net assets of Heritage Cash
Trust-Municipal Money Market Fund 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 three years in the period then ended and for the
period June 17, 1992 (commencement of operations) to August 31, 1992. 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. 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 Cash Trust-Municipal Money Market Fund 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 three years in the period then ended and for the period June 17,
1992 (commencement of operations) to August 31, 1992 in conformity with
generally accepted accounting principles.
/s/ Coopers & Lybrand
Boston, Massachusetts
October 12, 1995
- --------------------------------------------------------------------------------
TAX INFORMATION
- --------------------------------------------------------------------------------
Of the dividends paid from net investment income for the year ended August
31, 1995, 100% were exempt interest dividends which are tax exempt for purposes
of regular federal income tax, and a portion were exempt interest dividends
which may be subject to the federal alternative minimum tax. Please consult a
tax adviser if you have questions about federal or state income tax laws, or on
how to prepare your tax return.
11
<PAGE> 3
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
REPURCHASE AGREEMENT--3.2% VALUE
- --------------------------------------------------------------------------------------------------------- --------------
<S> <C>
Repurchase Agreement with State Street Bank and Trust Company, dated August 31, 1995, @ 5.75%, to be
repurchased at $41,476,624 on September 1, 1995, (collateralized by $34,290,000 United States Treasury
Notes, 8.875%, due August 15, 2017 with a market value of $42,563,744 including interest) (cost
$41,470,000)............................................................................................. $ 41,470,000
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE(S)
- ------------------------ -----------------
<C> <S> <C> <C>
COMMERCIAL PAPER--85.0%
DOMESTIC--70.9%
BEVERAGES--4.6%
$ 50,000,000 The Coca-Cola Company, 5.62%-5.65%............................ 10/13/95-12/04/95 49,449,267
10,000,000 PepsiCo, Inc., 5.70%.......................................... 09/07/95 9,990,500
--------------
59,439,767
--------------
CHEMICALS--4.6%
50,000,000 Dupont (E.I.) De Nemours & Company, 5.66%-5.92%............... 09/20/95-09/22/95 49,839,506
10,000,000 Monsanto Company, 5.68%....................................... 09/06/95 9,992,111
--------------
59,831,617
--------------
COMPUTER/OFFICE EQUIPMENT--1.0%
2,500,000 Hewlett-Packard Company, 5.58%................................ 10/03/95 2,487,600
10,000,000 Xerox Credit Corporation, 5.73%............................... 10/05/95 9,945,883
--------------
12,433,483
--------------
CORPORATE FINANCE--11.5%
50,000,000 Ciesco, L.P., 5.67%-5.68%..................................... 10/11/95-11/14/95 49,490,928
50,000,000 Corporate Asset Funding Corporation, 5.64%-5.87%.............. 09/11/95-11/03/95 49,711,359
50,000,000 General Electric Capital Corporation, 5.68%-5.72%............. 09/06/95-11/24/95 49,791,430
--------------
148,993,717
--------------
DRUGS--5.7%
5,300,000 Abbott Laboratories, 5.82%.................................... 10/17/95 5,260,583
30,000,000 Lilly (Eli) & Company, 5.63%.................................. 10/12/95 29,807,813
21,000,000 Pfizer, Inc., 5.70%........................................... 09/29/95 20,906,900
18,158,000 Schering Corporation, 5.63%-5.88%............................. 10/04/95-11/02/95 18,045,761
--------------
74,021,057
--------------
ELECTRONICS--4.2%
5,000,000 Emerson Electric Company, 5.68%............................... 09/18/95 4,986,589
50,000,000 Motorola Credit Corporation, 5.69%-5.71%...................... 09/28/95-10/06/95 49,763,385
--------------
54,749,974
--------------
FOOD--8.0%
50,000,000 Cargill, Inc., 5.65%-5.68%.................................... 09/11/95-11/16/95 49,553,561
19,000,000 Campbell Soup Company, 5.68%-5.88%............................ 11/03/95-11/07/95 18,801,107
20,500,000 Heinz (H.J.) Company, 5.72%................................... 09/05/95-09/29/95 20,460,278
15,000,000 Kellogg Company, 5.83%........................................ 11/17/95 14,812,954
--------------
103,627,900
--------------
GRAPHIC ARTS PRINTING--0.2%
2,600,000 Donnelley (R.R.) & Sons Company, 5.73%........................ 09/20/95 2,592,137
--------------
HOUSEHOLD PRODUCTS--6.6%
35,000,000 The Kimberly-Clark Corporation, 5.63%......................... 09/21/95 34,890,528
50,000,000 The Procter & Gamble Company, 5.62%-5.92%..................... 09/07/95-11/20/95 49,816,860
--------------
84,707,388
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE(S) VALUE
- ------------------------ ----------------- --------------
<C> <S> <C> <C>
OIL & GAS--10.8%
$ 40,000,000 Amoco Company, 5.63%.......................................... 09/01/95 $ 40,000,000
50,000,000 Chevron Oil Finance Company, 5.71%............................ 09/05/95 49,968,278
50,000,000 Shell Oil Company, 5.63%...................................... 10/13/95 49,671,583
--------------
139,639,861
--------------
PUBLISHING--0.5%
7,000,000 McGraw-Hill, Inc., 5.68%...................................... 10/10/95 6,956,927
--------------
RETAIL--4.9%
10,000,000 Albertson's, Inc., 5.70%...................................... 09/05/95 9,993,667
20,000,000 Penney (J.C.) Funding Corporation, 5.72%...................... 09/22/95-10/06/95 19,911,022
33,000,000 Wal-Mart Stores, Inc., 5.68%.................................. 09/06/95 32,974,196
--------------
62,878,885
--------------
TELECOMMUNICATIONS--8.3%
50,000,000 AT&T Corporation, 5.60%-5.72%................................. 09/01/95-02/02/96 49,811,825
10,000,000 Bell Atlantic Network Funding, 5.68%.......................... 09/28/95 9,957,400
3,000,000 Southwestern Bell Capital Corporation, 5.68%.................. 10/03/95 2,984,853
45,000,000 Southwestern Bell Telephone Company, 5.66%.................... 10/31/95 44,575,500
--------------
107,329,578
--------------
Total Domestic Commercial Paper............................... 917,202,291
--------------
FOREIGN-14.1%(B)
CORPORATE FINANCE--4.4%
21,400,000 The Canadian Wheat Board, 5.55%-5.67%......................... 10/12/95-02/27/96 21,050,426
27,000,000 Province of Alberta, 5.61%-5.87%.............................. 09/12/95-01/12/96 26,663,312
9,100,000 Province of British Columbia, 5.60%-5.80%..................... 11/20/95-02/05/96 8,965,411
--------------
56,679,149
--------------
DRUGS--1.5%
20,000,000 SmithKline Beecham Corporation, 5.48%......................... 11/22/95 19,750,356
--------------
FOOD--5.0%
24,500,000 Nestle Capital Corporation, 5.68%-5.92%....................... 09/15/95-11/08/95 24,273,316
40,490,000 Unilever Capital Corporation, 5.63%-5.78%..................... 09/22/95-11/21/95 40,102,262
--------------
64,375,578
--------------
ELECTRONICS--0.1%
2,000,000 Siemens Corporation, 5.70%.................................... 09/07/95 1,998,100
--------------
UTILITIES--3.1%
40,000,000 Ontario Hydro, 5.72%-5.87%.................................... 09/01/95-09/08/95 39,989,990
--------------
Total Foreign Commercial Paper................................ 182,793,173
--------------
Total Commercial Paper (cost $1,099,995,464).................. 1,099,995,464
--------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE(S) VALUE
- ------------------------ ----------------- --------------
<C> <S> <C> <C>
CORPORATE NOTES--0.8%
Navistar Financial Corporation, Owner Trust, 1995-A, A-1,
$ 7,822,338 5.90%......................................................... 05/20/96 $ 7,823,232
3,000,000 Mobil Oil Corporation, 6.75%.................................. 10/01/95 3,001,749
--------------
Total Corporate Notes (cost $10,824,981)...................... 10,824,981
--------------
U.S. GOVERNMENT AND AGENCY SECURITIES--13.2%
21,381,469 Agency for International Development - Jamaica, 6.33%(d)...... 03/30/19 21,381,469
11,815,000 Agency for International Development - Sri-Lanka, 6.08%(d).... 06/15/12 11,883,727
50,000,000 Federal Home Loan Bank, 5.44%-6.53%........................... 09/26/95-02/15/96 49,588,489
48,500,000 Federal Home Loan Mortgage Corporation, 5.79%-6.01%........... 10/03/95-05/13/96 48,299,171
30,000,000 Federal National Mortgage Association, 5.50%-5.97%............ 12/12/95-06/12/96 29,825,690
10,000,000 U.S. Treasury Note, 4.625%.................................... 02/15/96 9,939,176
--------------
Total U.S. Government and Agency Securities
(cost $170,917,722)......................................... 170,917,722
--------------
TOTAL INVESTMENTS (cost $1,323,208,167)(c), 102.3%(a).................................... 1,323,208,167
OTHER ASSETS AND LIABILITIES, net, (2.3%)(a)............................................. (29,468,446)
--------------
NET ASSETS (net asset value, offering and redemption price of $1.00 per share divided by
1,294,009,037 shares outstanding), consisting of paid-in-capital net of accumulated net
realized loss of $269,316, 100.00%..................................................... $1,293,739,721
==============
</TABLE>
- ---------------
(a) Percentages are based on net assets.
(b) U.S. dollar denominated.
(c) The aggregate identified cost for federal income tax purposes is the same.
(d) Floating rate notes, which reset on a weekly basis.
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Interest................................................................................. $65,182,402
Expenses (Notes 1 and 4):
Management fee......................................................................... $5,436,551
Distribution fee....................................................................... 1,687,221
Shareholder servicing.................................................................. 1,437,554
Custodian/Fund accounting fees......................................................... 128,072
Amortization of state registration expenses............................................ 124,628
Reports to shareholders................................................................ 117,471
Federal registration fees.............................................................. 88,595
Professional fees...................................................................... 47,085
Insurance.............................................................................. 27,832
Trustees' fees and expenses............................................................ 9,923
Other.................................................................................. 26,059
----------
Total expenses before waiver..................................................... 9,130,991
Fees waived by Manager (Note 4).......................................................... (244,972) 8,886,019
---------- -----------
Net investment income.................................................................... 56,296,383
Realized Loss on Investments
Net realized loss from investment transactions........................................... (269,316)
-----------
Net increase in net assets resulting from operations..................................... $56,027,067
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
AUGUST 31, 1995 AUGUST 31, 1994
--------------- ---------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income.......................................................... $ 56,296,383 $ 28,081,361
Net realized loss from investment transactions................................. (269,316 ) (15,719)
--------------- ---------------
Net increase in net assets resulting from operations............................. 56,027,067 28,065,642
Distributions to shareholders from net investment income ($.050 and $.029 per
share, respectively)........................................................... (56,296,383 ) (28,065,642)
Increase in net assets from Fund share transactions (Note 2)..................... 312,390,427 56,392,416
--------------- ---------------
Increase in net assets........................................................... 312,121,111 56,392,416
Net assets, beginning of year.................................................... 981,618,610 925,226,194
--------------- ---------------
Net assets, end of year.......................................................... $1,293,739,721 $ 981,618,610
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,
----------------------------------------------------------------------------------------------
1995 1994 1993 1992 1991 1990 1989 1988 1987 1986+
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF
PERIOD.............. $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment
income (a)........ .050(b) .029(b) .025(b) .038(b) .063 .077 .084 .065 .054(b) .050(b)
LESS DISTRIBUTIONS:
Dividends from net
investment income
and net realized
gains (a)......... (.050) (.029) (.025) (.038) (.063) (.077) (.084) (.065) (.054) (.050)
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END
OF PERIOD........... $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000 $1.000
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN %........ 5.00 2.87 2.48 3.77 6.27 7.73 8.38 6.46 5.43 5.05(d)
RATIOS TO AVERAGE
DAILY NET ASSETS
(%)/SUPPLEMENTAL
DATA:
Operating expenses,
net............... .79(b) .79(b) .78(b) .78(b) .79 .81 .90 .94 1.00(b) 1.00(b)
Net investment
income............ 5.00(b) 2.87(b) 2.47(b) 3.75(b) 6.20 7.73 8.51 6.47 5.45(b) 6.56(b)
Net assets, end
of period
($ millions)...... 1,294 982 925 953 890 727 475 230 153 139
</TABLE>
- ---------
+ For the period November 25, 1985 (commencement of operations) to August 31,
1986.
(a) Includes net realized gains (losses) which were ($.001), ($.001), $.001,
$.001, $.001, ($.001), $.001, $.001, ($.001) and less than $.003 per share,
respectively.
(b) Excludes management fees waived by the Manager in the amount of less than
$.001, $.001, $.001, $.001, $.001 and $.001 per share, respectively. The
operating expense ratios including such items would be .81%, .81%, .81%,
.78%, 1.01% and 1.12% (annualized), respectively.
(c) Annualized.
(d) Not annualized.
6
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Cash Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified,
open-end management investment company consisting of two separate
investment portfolios, the Money Market Fund (the "Fund") and the
Municipal Money Market Fund. The Fund is designed for investors who wish
to participate in a supervised portfolio of debt securities with
remaining maturities of not more than 397 days. The Fund offers two
classes of shares, Class A and Class C Shares. Class C Shares may be
acquired only through exchanges of Class C Shares of other Heritage
Mutual Funds. At August 31, 1995, there were no Class C Shares
outstanding. 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 uses the amortized cost method of security
valuation (as set forth in Rule 2a-7 under the Investment Company Act of
1940, as amended). The amortized cost of an instrument is determined by
valuing it at cost at the time of purchase and thereafter
accreting/amortizing any purchase discount/premium at a constant rate
until maturity, regardless of the effect of fluctuating interest rates
on the market value of the instrument.
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 is treated as a single corporate taxpayer
as provided for in The Tax Reform Act of 1986, as amended. 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. As of August 31, 1995, the Fund has net tax
basis capital loss carryforwards of $9,682 and $6,037 which may be
applied to any net taxable gains until their expiration dates in 2001
and 2002, respectively. In addition the Fund has post-October losses
that the Fund has deferred in the amount of $269,316.
Distribution of Income and Gains: Distributions from net investment
income and net realized gains available for distribution are declared
daily and paid monthly. The Fund uses the identified cost method for
determining realized gain or loss on investment transactions for both
financial and federal income tax reporting purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
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 transactions are recorded on a trade date basis which
is generally the same as settlement date. Interest income is recorded on
the accrual basis.
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 shares of the Fund during the years ended August 31, 1995 and 1994,
at a constant net asset value of $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
---------------------------------------
AUGUST 31, 1995 AUGUST 31, 1994
----------------- ---------------
<S> <C> <C>
Shares sold.......................................................... 4,788,622,703 4,409,461,564
Shares issued in reinvestment of distributions....................... 55,467,958 27,661,751
Shares redeemed...................................................... (4,531,700,234) (4,380,730,899 )
----------------- ---------------
Net increase....................................................... 312,390,427 56,392,416
Shares outstanding:
Beginning of year.................................................. 981,618,610 925,226,194
----------------- ---------------
End of year........................................................ 1,294,009,037 981,618,610
================= ==============
</TABLE>
7
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 3: PURCHASES, SALES AND MATURITIES OF SECURITIES. For the year ended
August 31, 1995, purchases, sales and maturities of short-term
investment securities excluding repurchase agreements aggregated
$10,019,437,155, $56,386,369 and $9,694,617,000, respectively. Purchases
and sales of U.S. government obligations aggregated $9,897,656 and
$25,782,143, respectively.
Note 4: MANAGEMENT, 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 for investment advice, portfolio management services
(including the placement of brokerage orders), and certain compliance
and administrative services a fee equal to an annual rate of 0.50% of
the first $500,000,000 of the Fund's average daily net assets, 0.475% of
the next $500,000,000, 0.45% of the next $500,000,000, 0.425% of the
next $500,000,000, and 0.40% of any excess over $2,000,000,000 of such
net assets, computed daily and payable monthly. The annual effective
management fee rate after fee waivers for the year ended August 31, 1995
was .46%. The amount payable to the Manager as of August 31, 1995 was
$295,047. The agreement also provides for a reduction in such fees in
any year to the extent that operating expenses of the Fund exceed
applicable state expense limitations. For the period January 2, 1992 to
December 31, 1992, the Manager voluntarily agreed to waive its fees and,
if necessary, reimburse the Fund to the extent that the Fund's annual
operating expenses exceeded .77%, on an annual basis, of the Fund's
average daily net assets. Effective January 1, 1993, this voluntary
expense limitation was changed to .79%, on an annual basis, of the
Fund's average daily net assets. Under these arrangements, management
fees of $244,972 ($.0002 per share) were waived during the year ended
August 31, 1995. If total Fund expenses fall below the expense
limitation agreed to by the Manager before the end of the year ending
August 31, 1997, the Fund may be required to pay the Manager a portion
or all of the waived management fee. In addition, the Fund may be
required to pay the Manager a portion or all of the management fee
waived ($207,108) in the prior year ended August 31, 1994 if total Fund
expenses fall below the annual expense limitation before the end of the
year ending August 31, 1996.
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 $255,000. In addition, the Manager performs Fund
Accounting services for the Fund and charged $35,932 during the current
year of which $6,000 was payable as of August 31, 1995.
Pursuant to a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund pays Raymond James
& Associates, Inc. (the "Distributor") a fee equal to 0.15% of average
daily net assets for the services it provides in connection with the
promotion and distribution of Fund shares. Such fee is accrued daily and
payable monthly. The amount payable to the Distributor as of August 31,
1995 was $169,255. The Manager, Distributor, Fund Accountant and
Shareholder Servicing Agent are all wholly-owned subsidiaries of Raymond
James Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Capital
Appreciation 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 or its affiliates
(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.
8
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE VALUE
- -------------- ------------- ------------
<C> <S> <C> <C>
ALABAMA--8.4%
$ 5,500,000 Alabama Health and Education Financing Authority, 3.50%(b)
Hospital Revenue Bond
Daughters of Charity, Providence Hospital, Series 84......................... 06/01/14 $ 5,500,000
10,000,000 Jefferson County, 3.65%(b)
Sewer Revenue Bond, Series 95A
LOC: Bayerische Landesbank................................................... 09/01/25 10,000,000
8,300,000 City of McIntosh, 3.75%(b)
Pollution Control Revenue Bond,
Ciba-Geigy Corporation Project, Series 90, AMT
LOC: Union Bank of Switzerland............................................... 07/01/04 8,300,000
------------
23,800,000
------------
ARIZONA--2.0%
5,800,000 Pima County Industrial Development Authority, 3.65%(b)
Pollution Control Revenue Bond
Tucson Electric, Series 82A
LOC: Bank of America......................................................... 07/01/22 5,800,000
------------
ARKANSAS--10.5%
5,000,000 Arkansas Student Loan, 3.65%(b)
Series 93B-2, AMT
GIC: Bayerische Landesbank................................................... 06/01/10 5,000,000
1,100,000 Arkansas Student Loan, 3.65%(b)
Series 93B-4, AMT
GIC: Bayerische Landesbank................................................... 06/01/10 1,100,000
18,000,000 Clark County, 3.75%(b)
Solid Waste Revenue Bond
Reynolds Metals Project, Series 92, AMT
LOC: Trust Company Bank...................................................... 08/01/22 18,000,000
5,600,000 City of Jacksonville, 3.75%(b)
Industrial Development Revenue Bond
Regalware, Inc. Project, Series 85
LOC: NBD Corporation......................................................... 08/01/15 5,600,000
------------
29,700,000
------------
CALIFORNIA--3.6%
5,000,000 Los Angeles County GO, 4.50%
Tax and Revenue Anticipation Note, Series 95
LOC: (c)..................................................................... 07/01/96 5,027,978
5,000,000 San Bernandino County GO, 4.50%
Tax and Revenue Anticipation Note, Series 95
LOC: (d)..................................................................... 07/05/96 5,022,254
------------
10,050,232
------------
COLORADO--6.5%
12,700,000 Colorado Housing Finance Authority, 3.70%(b)
Multi Family Housing Revenue Bond
Central Park Project, Series 85
LOC: Chemical Bank........................................................... 05/01/97 12,700,000
5,600,000 Colorado Student Obligation Authority, 3.55%(b)
Student Loan Revenue Bond, Series 89A, AMT
LOC: Student Loan Marketing Association...................................... 03/01/24 5,600,000
------------
18,300,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE VALUE
- -------------- ------------- ------------
<C> <S> <C> <C>
GEORGIA--1.0%
$2,750,000 Cobb County, 3.75%(b)
Industrial Development Revenue Bond
Amoena Corporation Project, Series 92, AMT
LOC: Bayerische Hypobank..................................................... 01/01/07 $ 2,750,000
------------
IDAHO--1.4%
4,000,000 Idaho GO, 4.50%
Tax Anticipation Note, Series 95............................................. 06/27/96 4,022,118
------------
ILLINOIS--0.9%
2,530,000 Illinois Development Finance Authority, 3.60%(b)
Multi Family Housing Revenue Bond
River Oaks Project, Series 88, AMT
LOC: Swiss Bank.............................................................. 12/15/19 2,530,000
------------
INDIANA--6.3%
1,945,000 City of Columbus, 3.80%(b)
Economic Development Revenue Bond
Columbus Container, Series 89A, AMT
LOC: Bank One, Columbus...................................................... 01/01/00 1,945,000
4,350,000 City of Crawfordsville, 3.75%(b)
Industrial Development Revenue Bond
Precision Plastics of Indiana, Series 92
LOC: Northern Trust Company.................................................. 06/01/07 4,350,000
2,000,000 City of Indianapolis, 3.90%(b)
Industrial Development Revenue Bond
Altec Industries, Inc. Project, Series 89, AMT
LOC: First National Bank of Atlanta.......................................... 12/01/04 2,000,000
5,000,000 City of Portage, 3.80%(b)
Multi Family Housing Revenue Bond
Pedcor Investment Apartment Project, Series 95A, AMT
LOC: Federal Home Loan Bank.................................................. 08/01/30 5,000,000
4,600,000 City of Westfield, 4.15%(b)
Industrial Development Revenue Bond
PL Porter Project, Series 89, AMT
LOC: Bank of America......................................................... 12/01/09 4,600,000
------------
17,895,000
------------
KENTUCKY--1.8%
5,000,000 City of Louisville, 3.70%(b)
Airport Revenue Bond
Louisville Airport, Series 89B, AMT
LOC: National City Bank of Louisville........................................ 02/01/19 5,000,000
------------
LOUISIANA--1.7%
3,900,000 St. Charles Parish, 3.65%(b)
Shell Oil Company Project, Series 92A, AMT................................... 10/01/22 3,900,000
1,000,000 St. Charles Parish, 3.65%(b)
Shell Oil Company Project, Series 93, AMT.................................... 09/01/23 1,000,000
------------
4,900,000
------------
MAINE--0.6%
1,700,000 City of Bath GO, 4.375%
Bond Anticipation Note, Series 95A........................................... 06/27/96 1,704,989
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE VALUE
- -------------- ------------- ------------
<C> <S> <C> <C>
MICHIGAN--2.4%
$6,900,000 Michigan Higher Education, AMBAC, 3.55%(b)
Student Loan Revenue Bond, Series X11-B
BPA: Kredietbank............................................................. 10/01/13 $ 6,900,000
------------
MISSOURI--0.7%
2,000,000 City of St. Joseph, 3.90%(b)
Industrial Development Revenue Bond
Altec Industries, Inc., Series 89, AMT
LOC: First National Bank of Atlanta.......................................... 11/01/04 2,000,000
------------
MISSISSIPPI--1.1%
3,000,000 City of Olive Branch, 3.80%(b)
Industrial Development Revenue Bond
United Healthcare, Series 86, AMT
LOC: First Union Bank of North Carolina...................................... 11/01/11 3,000,000
------------
NEBRASKA--0.8%
2,200,000 Nebraska Higher Education, 3.65%(b)
Student Loan Revenue Bond, Series 88C, AMT
LOC: Student Loan Marketing Association...................................... 08/01/18 2,200,000
------------
NEW HAMPSHIRE--9.0%
19,000,000 New Hampshire Business Finance Authority, 3.75%(b)
Pollution Control Revenue Bond
Public Service Company of New Hampshire, Series 92D, AMT
LOC: Barclays Bank........................................................... 05/01/21 19,000,000
5,000,000 New Hampshire Housing Finance Authority, 3.75%(b)
Multi Family Housing Revenue Bond
Fairways Project, Series 94, AMT
LOC: General Electric Credit Corporation..................................... 01/01/24 5,000,000
1,600,000 New Hampshire Industrial Development Authority, 3.75%(b)
Pollution Control Revenue Bond
Connecticut Light & Power, Series 88, AMT
LOC: Union Bank of Switzerland............................................... 08/01/18 1,600,000
------------
25,600,000
------------
NEW MEXICO--3.2%
9,000,000 New Mexico Education Assistance Fund, 3.60%(b)
Student Loan Revenue Bond, Series 92
BPA: Internationale Nederlanden.............................................. 04/01/05 9,000,000
------------
NEVADA--2.8%
8,000,000 Clark County, 3.65%(b)
Industrial Development Revenue Bond
Nevada Cogeneration, Association 2, Series 92, AMT
LOC: Swiss Bank.............................................................. 12/01/22 8,000,000
------------
OHIO--1.4%
4,000,000 Ohio Air Authority, 3.70%(b)
Pollution Control Revenue Bond
JMG Funding Partnership, Series 94B, AMT
LOC: Societe Generale........................................................ 04/01/28 4,000,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 13
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE VALUE
- -------------- ------------- ------------
<C> <S> <C> <C>
OKLAHOMA--3.5%
$2,500,000 Oklahoma Industrial Authority, 4.20%(b)
Industrial Development Revenue Bond
Farley Candy Project, Series 94
LOC: Toronto Dominion........................................................ 05/01/19 $ 2,500,000
7,500,000 Optima Municipal Authority, 3.75%(b)
Industrial Development Revenue Bond
Seaboard Project, Series 94, AMT
LOC: Trust Company Bank...................................................... 09/01/19 7,500,000
------------
10,000,000
------------
PENNSYLVANIA--1.3%
3,700,000 Pennsylvania Higher Education, 3.75%(b)
Student Loan Revenue Bond, Series 88C, AMT
LOC: Student Loan Marketing Association...................................... 07/01/18 3,700,000
------------
RHODE ISLAND--2.5%
5,000,000 Rhode Island Port Authority, 3.60%(b)
Electric Revenue Bond
Newport Electric Corporation, Series 94
LOC: Canadian Imperial....................................................... 09/01/11 5,000,000
2,000,000 Rhode Island Higher Education, 3.65%(b)
Student Loan Revenue Bond, Series 95-1, AMT
LOC: National Westminister................................................... 07/01/19 2,000,000
------------
7,000,000
------------
TEXAS--11.9%
6,500,000 Capital Health Facilities Development, 3.55%(b)
Lake Travis Project, Series 86, AMT
LOC: Credit Suisse........................................................... 12/01/16 6,500,000
6,900,000 City of Galveston, 3.75%(b)
Industrial Development Revenue Bond
Mitchell Project, Series 93A, AMT
LOC: National Westminister................................................... 09/01/13 6,900,000
3,200,000 City of Gulf Coast, 3.70%(b)
Solid Waste Revenue Bond
CITGO Petroleum Corporation, Series 94, AMT
LOC: Wachovia Bank & Trust................................................... 04/01/26 3,200,000
1,000,000 City of Gulf Coast, 3.65%(b)
Port Facility
Amoco Oil Company, Series 93, AMT............................................ 04/08/28 1,000,000
5,000,000 Harris County GO, 4.25%
Tax Anticipation Note, Series 95............................................. 02/28/96 5,016,127
4,500,000 North Texas Higher Education, 3.75%(b)
Student Loan Revenue Bond, Series 90A, AMT
LOC: Student Loan Marketing Association...................................... 04/01/20 4,500,000
6,600,000 Panhandle Plains, 3.55%(b)
Student Loan Revenue Bond, Series 95A, AMT
LOC: Student Loan Marketing Association...................................... 06/01/25 6,600,000
------------
33,716,127
------------
VIRGINIA--1.6%
4,500,000 City of Richmond Housing Authority, 3.90%(b)
Housing-Tobacco Row, Series 89B-5, AMT
GIC: Westdeutsche Landesbank................................................. 10/01/24 4,500,000
------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 14
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
STATEMENT OF NET ASSETS
AUGUST 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL FINAL
AMOUNT MATURITY DATE VALUE
- -------------- ------------- ------------
<C> <S> <C> <C>
WISCONSIN--3.4%
$5,000,000 Wisconsin State GO, 4.50%
Operating Note, Series 95.................................................... 06/17/96 $ 5,028,482
4,600,000 Wisconsin Health and Education Financing Authority, 3.50%(b)
Hospital Revenue Bond
Daughters of Charity, St. Mary's Hospital, Series 92......................... 11/01/22 4,600,000
------------
9,628,482
------------
WEST VIRGINIA--8.6%
12,500,000 Grant County, 3.75%(b)
Industrial Development Revenue Bond
NB Partners LTD, Series 88B, AMT
LOC: Bank of America......................................................... 12/01/16 12,500,000
4,000,000 Marion County, 3.75%(b)
Resource Recovery Revenue Bond
Grant Town Cogen Project, Series 92, AMT
LOC: National Westminister................................................... 10/01/17 4,000,000
4,400,000 Marion County, 3.80%(b)
Resource Recovery Revenue Bond
Grant Town Cogen Project, Series 91B, AMT
LOC: National Westminister................................................... 10/01/17 4,400,000
3,400,000 Marion County, 3.80%(b)
Resource Recovery Revenue Bond
Grant Town Cogen Project, Series 90D, AMT
LOC: National Westminister................................................... 10/01/17 3,400,000
------------
24,300,000
------------
TOTAL INVESTMENTS (cost $279,996,948)(e), 98.9%(a)............................................. 279,996,948
OTHER ASSETS AND LIABILITIES, net, 1.1%(a)..................................................... 3,012,791
------------
NET ASSETS (net asset value, offering and redemption price of $1.00 per share divided by
283,076,115 shares outstanding) consisting of paid-in-capital net of accumulated realized loss $283,009,739
of $66,376, 100.00%........................................................................... ============
</TABLE>
- ---------------
(a) Percentages are based on net assets.
(b) Floating rate notes are securities which are generally payable on demand
within seven calendar days. Put bonds are securities which can be put back
to the issuer or remarketer either at the option of the holder, at a
specified date, or within a specified time period known at the time of
purchase. For these securities, the demand period and the remaining period
to put date, respectively, are used when calculating the weighted average
maturity of the portfolio.
(c) Credit enhancement provided by (all equally weighted): Bank of America,
Credit Suisse, Morgan Guaranty Trust Co., Swiss Bank, Union Bank of
Switzerland, Westdeutsche Landesbank.
(d) Credit enhancement provided by (all equally weighted): Banque Nationale De
Paris, Bank of Nova Scotia, Toronto Dominion.
(e) The aggregate identified cost for federal income tax purposes is the same.
AMBAC -- American Municipal Bond Assurance Corporation.
AMT -- Securities subject to Alternative Minimum Tax.
BPA -- Bond purchase agreement provided by noted institution.
GIC -- Credit enhancement provided by guaranteed investment contract with noted
institution.
GO -- General Obligation.
LOC -- Credit enhancement provided by letter of credit issued by noted
institution.
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 15
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED AUGUST 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Interest.................................................................................. $9,370,040
Expenses (Notes 1 and 4):
Management fee.......................................................................... $1,226,671
Distribution fee........................................................................ 368,392
Shareholder servicing................................................................... 96,963
Amortization of state registration expenses............................................. 81,311
Custodian/Fund accounting fees.......................................................... 61,825
Professional fees....................................................................... 44,775
Federal registration fees............................................................... 16,175
Trustees' fees and expenses............................................................. 9,573
Amortization of organization expenses................................................... 9,252
Insurance............................................................................... 6,727
Reports to shareholders................................................................. 2,759
Other................................................................................... 7,086
----------
Total expenses before waiver...................................................... 1,931,509
Fees waived by Manager (Note 4)........................................................... (40,432) 1,891,077
---------- ----------
Net investment income..................................................................... 7,478,963
Realized Loss on Investments
Net realized loss from investment transactions............................................ (46,523)
----------
Net increase in net assets resulting from operations...................................... $7,432,440
==========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
AUGUST 31, 1995 AUGUST 31, 1994
--------------- ---------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income.......................................................... $ 7,478,963 $ 4,645,067
Net realized loss from investment transactions................................. (46,523) (2,029)
--------------- ---------------
Net increase in net assets resulting from operations............................. 7,432,440 4,643,038
Distributions to shareholders from net investment income ($.030 and $.019 per
share, respectively)........................................................... (7,478,963) (4,645,067)
Increase in net assets from Fund share transactions (Note 2)..................... 70,589,200 5,251,853
--------------- ---------------
Increase in net assets........................................................... 70,542,677 5,249,824
Net assets, beginning of year.................................................... 212,467,062 207,217,238
--------------- ---------------
Net assets, end of year.......................................................... $ 283,009,739 $ 212,467,062
============== ==============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 16
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
FOR THE YEARS ENDED AUGUST 31,
--------------------------------
1995 1994 1993 1992+
------ ------ ------ ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD:.................... $1.000 $1.000 $1.000 $1.000
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a)............................... .030 .019 .020 .005
LESS DISTRIBUTIONS:
Dividends from net investment income................... (.030) (.019) (.020) (.005)
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD:.......................... $1.000 $1.000 $1.000 $1.000
====== ====== ====== ======
TOTAL RETURN %........................................... 3.04 1.90 2.02 .47(c)
RATIOS TO AVERAGE DAILY NET ASSETS(%)/SUPPLEMENTAL DATA:
Operating expenses, net(a)............................. .77 .77 .77 .77(b)
Net investment income.................................. 3.05 1.89 1.98 2.32(b)
Net assets, end of period ($ millions)................. 283 212 207 102
</TABLE>
- ---------------
+ For the period June 17, 1992 (commencement of operations) to August 31, 1992.
(a) Excludes management fees waived by the Manager in the amount of less than
$.001, $.001, $.001 and $.001, per share, respectively. The operating
expense ratios including such items would be .79%, .77%, .83% and 1.11%
(annualized), respectively.
(b) Annualized.
(c) Not annualized.
8
<PAGE> 17
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Cash Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a no-load, diversified,
open-end management investment company consisting of two separate
investment portfolios, the Municipal Money Market Fund (the "Fund") and
the Money Market Fund. The Fund is designed for investors who wish to
participate in a supervised portfolio of federally tax-exempt debt
securities with remaining maturities of not more than 397 days. 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 uses the amortized cost method of security
valuation (as set forth in Rule 2a-7 under the Investment Company Act of
1940, as amended). The amortized cost of an instrument is determined by
valuing it at cost at the time of purchase and thereafter
accreting/amortizing any purchase discount/premium at a constant rate
until maturity, regardless of the effect of fluctuating interest rates
on the market value of the instrument.
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 is treated as a single corporate taxpayer
as provided for in the Tax Reform Act of 1986, as amended. 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. As of August 31, 1995, the Fund has net tax
basis capital loss carryforwards of $17,824 and $2,029, which may be
applied against any realized net taxable gains until their expiration
dates in 2001 and 2002, respectively. In addition, the Fund has
post-October losses that the Fund has deferred in the amount of $46,523.
Distribution of Income and Gains: Distributions from net investment
income and net realized gains available for distribution are declared
daily and paid monthly. The Fund uses the identified cost method for
determining realized gain or loss on investments for both financial and
federal income tax reporting purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Organization Expenses: Expenses incurred in connection with the
formation of the Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.
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 transactions are recorded on a trade date basis which
is generally the same as settlement date. Interest income is recorded on
the accrual basis.
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 shares of the Fund during the years ended August 31, 1995 and 1994,
at a constant net asset value of $1.00 per share, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
AUGUST 31, 1995 AUGUST 31, 1994
--------------- ---------------
<S> <C> <C>
Shares sold............................................................ 1,085,052,629 1,243,994,047
Shares issued in reinvestment of distributions......................... 7,350,654 4,609,272
Shares redeemed........................................................ (1,021,814,083) (1,243,351,466)
-------------- --------------
Net increase......................................................... 70,589,200 5,251,853
Shares outstanding:
Beginning of year.................................................... 212,486,915 207,235,062
-------------- --------------
End of year.......................................................... 283,076,115 212,486,915
============== ==============
</TABLE>
9
<PAGE> 18
- --------------------------------------------------------------------------------
HERITAGE CASH TRUST -- MUNICIPAL MONEY MARKET FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 3: PURCHASES, SALES AND MATURITIES OF SECURITIES. For the year ended
August 31, 1995, purchases, sales and maturities of short-term
investment securities aggregated $615,213,037, $491,667,045 and
$55,880,000, 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 for investment advice, portfolio management
services (including the placement of brokerage orders), and certain
compliance and administrative services a fee equal to an annual rate of
0.50% of the first $500,000,000 of the Fund's average daily net assets,
0.475% of the next $500,000,000, 0.45% of the next $500,000,000, 0.425%
of the next $500,000,000, and 0.40% of any excess over $2,000,000,000 of
such net assets, computed daily and payable monthly. Effective February
27, 1995, the Manager agreed to waive management fees so that the fee
does not exceed the following levels, as a percentage of average daily
net assets: .50% of the first $250,000,000, .475% of the next
$250,000,000, .45% of the next $250,000,000, .425% of the next
$250,000,000 and .40% on assets over $1 billion of such net assets. The
annual effective management fee rate after fee waivers, for the year
ended August 31, 1995 was .50%. The amount payable to the Manager as of
August 31, 1995 was $77,839. The agreement also provides for a reduction
in such fees in any year to the extent that operating expenses of the
Fund exceed applicable state expense limitations. Since inception, the
Manager has voluntarily agreed to waive its fee and, if necessary,
reimburse the Fund to the extent that Fund operating expenses exceed
.77%, on an annual basis, of the Fund's average daily net assets. This
agreement is more restrictive than any state expense limitation. Under
the agreement, management fees of $40,432 ($.00002 per share) were
waived in the year ended August 31, 1995. If total Fund expenses fall
below the expense limitation agreed to by the Manager before the end of
the year ending August 31, 1997, the Fund may be required to pay the
Manager a portion or all of the waived management fee. In addition, the
Fund may be required to pay the Manager a portion or all of the
management fee waived ($6,473) in the prior year ended August 31, 1994
if total Fund expenses fall below the annual expense limitation before
the end of the year ending August 31, 1996.
The Manager has entered into an agreement with Alliance Capital
Management L.P. (the "Subadviser") to provide investment advice and
portfolio management services, including placement of brokerage orders,
to the Fund for a fee payable by the Manager equal to an annual rate of
.125% of average daily net assets on assets up to $100 million, .10% of
average daily net assets on assets from $100 million to $250 million, and
.05% on average daily net assets exceeding $250 million.
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 $16,600. In addition, the Manager performs Fund
accounting services for the Fund and charged $35,932 during the current
year of which $6,000 was payable as of August 31, 1995.
Pursuant to a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund pays Raymond James &
Associates, Inc. (the "Distributor") a fee equal to 0.15% of average
daily net assets for the services it provides in connection with the
promotion and distribution of Fund shares. Such fee is accrued daily and
payable monthly. The amount payable to the Distributor as of August 31,
1995 was $35,673. The Manager, Distributor, Fund Accountant and
Shareholder Servicing Agent are all wholly-owned subsidiaries of Raymond
James Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Capital
Appreciation 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 or its affiliates
(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.
10
<PAGE>
HERITAGE CASH TRUST
-------------------
PART C. OTHER INFORMATION
--------------------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights - Class A Shares of the
Money Market Fund for the period November 25,
1985 to August 31, 1986 and each of the nine
years ended August 31, 1995; Class C Shares of
the Money Market Fund for the period April 3,
1995 (commencement of operations of Class C
Shares) to August 31, 1995
Included in Part B of the Registration Statement on
behalf of the Money Market Fund and the Municipal Money
Market Fund:
Statement of Net Assets - August 31, 1995
Statement of Operations - for the year ended
August 31, 1995
Statement of Changes in Net Assets for the years
ended August 31, 1995 and August 31,
1994
Notes to Financial Statements
Report of Coopers & Lybrand L.L.P., Independent
Accountants, dated October 12, 1995
(b) Exhibits:
(1) Declaration of Trust (filed herewith)
(2) (a) Bylaws (filed herewith)
(b) Amended and Restated Bylaws (filed
herewith)
(3) Voting trust agreement -- none
(4) (a)(i) Specimen security for the Money Market
Fund Class A**
(a)(ii) Specimen security for the Money Market
Fund Class C**
(b) Specimen security for the Municipal
Money Market Fund Class A**
<PAGE>
(5) (a)(i) Investment Advisory and Administration
Agreement for the Money Market Fund
(filed herewith)
(a)(ii) Investment Advisory and Administration
Agreement for the Municipal Money Market
Fund**
(b) Investment Subadvisory Agreement for the
Municipal Money Market Fund (filed
herewith)
(6) Distribution Agreement (filed herewith)
(7) Bonus, profit sharing or pension plans -- none
(8) Custodian Agreement (filed herewith)
(9) (a) Transfer Agency and Service Agreement
(filed herewith)
(b) Fund Accounting and Pricing Service
Agreement (filed herewith)
(10) Opinion and consent of counsel*
(11) Accountants' consent (filed herewith)
(12) Financial statements omitted from prospectus --
none
(13) Letter of investment intent (filed herewith)
(14) Prototype retirement plan**
(15) (a) Class A Plan pursuant to Rule 12b-1
(filed herewith)
(b) Class C Plan pursuant to Rule 12b-1
(filed herewith)
(16) Performance Computation Schedule (filed herewith)
(17) (a) Financial Data Schedule Relating to
Money Market Fund (filed herewith)
(b) Financial Data Schedule Relating to
Municipal Money Market Fund (filed
herewith)
(18) Plan pursuant to Rule 18f-3 -- none
-------------------------
C-2
<PAGE>
* Incorporated by reference to the Trust's Rule 24f-2 Notice, filed
previously on October 27, 1995.
** To be filed by subsequent amendment.
Item 25. Persons Controlled by or under
Common Control with Registrant
------------------------------
None.
Item 26. Number of Holders of Securities
-------------------------------
Number of Record Holders
Title of Class November 30, 1995
-------------- ------------------------
Shares of Beneficial Interest
Money Market Fund
Class A Shares 154,339
Class C Shares 0
Municipal Money Market Fund 9,243
Item 27. Indemnification
---------------
Article XI, Section 2 of the Trust's Declaration of Trust
provides that:
(a) Subject to the exceptions and limitations contained in
paragraph (b) below:
(i) every person who is, or has been, a Trustee or
officer of the Trust (hereinafter referred to as "Covered Person") shall
be indemnified by the Trust to the fullest extent permitted by law against
liability and against all expenses reasonably incurred or paid by him in
connection with any claim, action, suit or proceeding in which he becomes
involved as a party or otherwise by virtue of his being or having been a
Trustee or officer and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened while
in office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
C-3
<PAGE>
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office or (B) not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has
been a determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office, (A) by the court or
other body approving the settlement; (B) by at least a majority of those
Trustees who are neither interested persons of the Trust nor are parties
to the matter based upon a review of readily available facts (as opposed
to a full trial-type inquiry); or (C) by written opinion of independent
legal counsel based upon a review of readily available facts (as opposed
to a full trial-type inquiry); provided, however, that any Shareholder
may, by appropriate legal proceedings, challenge any such determination by
the Trustees, or by independent counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable,
shall not be exclusive of or affect any other rights to which any Covered
Person may now or hereafter be entitled, shall continue as to a person who
has ceased to be such Trustee or officer and shall inure to the benefit of
the heirs, executors and administrators of such a person. Nothing
contained herein shall affect any rights to indemnification to which Trust
personnel, other than Trustees and officers, and other persons may be
entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit, or proceeding of the
character described in paragraph (a) of this Section 2 may be paid by the
Trust from time to time prior to final disposition thereof upon receipt of
an undertaking by or on behalf of such Covered Person that such amount
will be paid over by him to the Trust if it is ultimately determined that
he is not entitled to indemnification under this Section 2; provided,
however, that:
(i) such Covered Person shall have provided
appropriate security for such undertaking,
(ii) the Trust is insured against losses arising out
of any such advance payments or
(iii) either a majority of the Trustees who are neither
interested persons of the Trust nor parties to the matter, or independent
legal counsel in a written opinion, shall have determined, based upon a
review of readily available facts (as opposed to a trial-type inquiry or
full investigation), that there is reason to believe that such Covered
Person will be found entitled to indemnification under this Section 2.
C-4
<PAGE>
Paragraph 8 of the Investment Advisory and Administration
Agreement ("Advisory Agreement") between the Trust and Heritage Asset
Management, Inc. ("Heritage") provides that Heritage shall not be liable
for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which this Advisory Agreement
relates except a loss resulting from the willful misfeasance, bad faith or
gross negligence on its part in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Advisory
Agreement. Any person, even though also an officer, partner, employee, or
agent of Heritage, who may be or become an officer, director, employee or
agent of the Trust shall be deemed, when rendering services to the Trust
or acting in any business of the Trust, to be rendering such services to
or acting solely for the Trust and not as an officer, partner, employee,
or agent or one under the control or direction of Heritage even though
paid by it.
Paragraph 9 of the Subadvisory Agreement ("Subadvisory
Agreement") between the Manager and Alliance Capital Management, L.P.
("Alliance") provides that, in the absence of willful misfeasance, bad
faith or gross negligence on the part of Alliance, or reckless disregard
of its obligations and duties thereunder, Alliance shall not be subject to
any liability to the Trust, or to any shareholder of the Trust, for any
act or omission in the course of, or connected with, rendering services
thereunder.
Paragraph 7 of the Distribution Agreement ("Distribution
Agreement") between the Trust and Raymond James and Associates, Inc.
("Raymond James") provides as follows, the Trust agrees to indemnify,
defend and hold harmless Raymond James, its several officers and
directors, and any person who controls Raymond James within the meaning of
Section 15 of the 1933 Act from and against any and all claims, demands,
liabilities and expenses (including the cost of investigating or defending
such claims, demands or liabilities and any counsel fees incurred in
connection therewith) which Raymond James, its officers or Trustees, or
any such controlling person may incur under the 1933 Act or under common
law or otherwise arising out of or based upon any alleged untrue statement
of a material fact contained in the Registration Statement, Prospectus or
Statement of Additional Information or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not
misleading, provided that in no event shall anything contained in this
Distribution Agreement be construed so as to protect Raymond James against
any liability to the Trust or its shareholders to which Raymond James
would otherwise be subject by reason of willful misfeasance, bad faith, or
gross negligence in the performance of its duties, or by reason of its
reckless disregard of its obligations and duties under this Distribution
Agreement.
Item 28. I. Business and Other Connections of Investment
Adviser
-------------------------------------------------
Heritage is a Florida corporation that offers investment
management services and is a registered investment adviser. Information
as to the officers and directors of Heritage is included in its current
C-5
<PAGE>
Form ADV filed with the Securities and Exchange Commission and is
incorporated by reference herein.
II. Business and Other Connections of Subadviser for
the Municipal Money Market Fund
------------------------------------------------
Alliance, a Delaware limited partnership and registered
investment adviser with principal offices at 1345 Avenue of the Americas,
New York, New York 10105, has been retained under an investment advisory
agreement. Alliance is engaged primarily in the investment advisory
business. Information as to the officers and directors of Alliance
Capital Management L.P. is included in its current Form ADV filed with the
SEC and is incorporated by reference herein.
Item 29. Principal Underwriter
---------------------
(a) Raymond James is the principal underwriter for each of
the following investment companies: Heritage Cash Trust, Heritage Capital
Appreciation Trust, Heritage Income-Growth Trust and Heritage Income
Trust.
(b) The directors and officers of the Registrant's principal
underwriter are:
C-6
<PAGE>
Positions & Offices Position
Name with Underwriter with Registrant
---- ------------------- ---------------
Thomas A. James Chief Executive Officer, Trustee
Director
Robert F. Shuck Executive Vice None
President, Director
Thomas S. Franke President, Chief Operating None
Officer, Director
Lynn Pippenger Secretary/Treasurer, None
Chief Financial Officer,
Director
Dennis Zank Executive Vice President None
of Operations and
Administration, Director
Item 30. Location of Accounts and Records
--------------------------------
The books and other documents required by Rule 31a-1 under the
Investment Company Act of 1940 are maintained in the physical possession
of the Trust's Custodian through February 28, 1994, except that Heritage
maintains some or all of the records required by Rule 31a-1(b)(1), (2),
(5), (6), (8), (9), (10) and (11). Since March 1, 1994, all required
records are maintained by Heritage.
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
Not applicable.
C-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, and the Investment Company Act of 1940, as amended, the
Registrant certifies that it meets all of the requirements for
effectiveness of this amendment to its Registration Statement pursuant to
Rule 485(b) under the Securities Act of 1933 and has duly caused this
Post-Effective Amendment No. 15 to its Registration Statement on Form N-1A
to be signed on its behalf by the undersigned, thereunto duly authorized,
in the City of St. Petersburg and the State of Florida, on the 27th day of
December, 1995. No other material event requiring prospectus disclosure
has occurred since the latest of the three dates specified in Rule
485(b)(2).
HERITAGE CASH TRUST
By: /s/ Stephen G. Hill
--------------------------
Stephen G. Hill, President
Attest:
/s/ Donald H. Glassman
-----------------------------
Donald H. Glassman, Treasurer
Pursuant to the requirements of the Securities Act of 1933, as
amended, this Post-Effective Amendment No. 15 to the Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Stephen G. Hill President December 27, 1995
------------------------
Stephen G. Hill
/s/ Richard K. Riess* Trustee December 27, 1995
------------------------
Richard K. Riess
/s/ Thomas A. James* Trustee December 27, 1995
------------------------
Thomas A. James
/s/ C. Andrew Graham* Trustee December 27, 1995
------------------------
C. Andrew Graham
/s/ David M. Phillips* Trustee December 27, 1995
------------------------
David M. Phillips
/s/ James L. Pappas* Trustee December 27, 1995
------------------------
James L. Pappas
<PAGE>
/s/ Donald W. Burton* Trustee December 27, 1995
------------------------
Donald W. Burton
/s/ Eric Stattin* Trustee December 27, 1995
------------------------
Eric Stattin
/s/ Donald H. Glassman Treasurer December 27, 1995
------------------------
Donald H. Glassman
*By /s/ Donald H. Glassman
----------------------
Donald H. Glassman, Attorney-In-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description Page
-------------- ----------- ----
1 Declaration of Trust (filed herewith)
2 (a) Bylaws (filed herewith)
(b) Amended and Restated Bylaws
(filed herewith)
3 Voting trust agreement -- none
4 (a)(i) Specimen security for the Money
Market Fund Class A**
(a)(ii) Specimen security for the Money
Market Fund Class C**
(b) Specimen security for the
Municipal Money Market Fund
Class A**
5 (a)(i) Investment Advisory and Administration Agreement
for the Money Market Fund (filed herewith)
(a)(ii) Investment Advisory and Administration
Agreement for the Municipal Money Market
Fund**
(b) Investment Subadvisory Agreement
for the Municipal Money Market
Fund (filed herewith)
6 Distribution Agreement (filed herewith)
7 Bonus, profit sharing or pension
plans -- none
8 Custodian Agreement (filed herewith)
9 (a) Transfer Agency and Service Agreement
(filed herewith)
(b) Fund Accounting and Pricing
Service Agreement (filed
herewith)
10 Opinion and consent of counsel*
11 Accountants' consent (filed herewith)
<PAGE>
12 Financial statements omitted from
prospectus -- none
13 Letter of investment intent
(filed herewith)
14 Prototype retirement plan**
15 (a) Class A Plan pursuant to Rule
12b-1 (filed herewith)
(b) Class C Plan pursuant to Rule 12b-1
(filed herewith)
16 Performance Computation Schedule (filed
herewith)
17 (a) Financial Data Schedule Relating to
Money Market Fund (filed herewith)
(b) Financial Data Schedule Relating to
Municipal Money Market Fund (filed
herewith)
18 Plan pursuant to Rule 18f-3 -- none
-------------------------
* Incorporated by reference to the Trust's Rule 24f-2 Notice, filed
previously October 27, 1995.
** To be filed by subsequent amendment.
-2-
<PAGE>
<PAGE>
DECLARATION OF TRUST
DATED June 21, 1985
DECLARATION OF TRUST, made June 21, 1985 by Thomas A. James and
Richard K. Riess (the "Trustees").
NOW, THEREFORE, the Trustees declare that all money and property
contributed to the trust fund hereunder shall be held and managed in Trust
under this Declaration of Trust as herein set forth below.
ARTICLE I
---------
NAME AND DEFINITIONS
--------------------
NAME
----
Section 1. This Trust shall be known as "Heritage Cash Trust."
DEFINITIONS
-----------
Section 2. Wherever used herein, unless otherwise required by
the context or specifically provided:
(a) The terms "Affiliated Person," "Assignment,"
"Commission," "Interested Person," "Majority Shareholder Vote"
(the 67% or 50% requirement of the third sentence of Section
2(a)(42) of the 1940 Act, whichever may be applicable) and
"Principal Underwriter" shall have the meanings given them in the
1940 Act, as amended from time to time;
(b) The "Trust" refers to Heritaqe Cash Trust;
(c) "Net Asset Value" means the net asset value of the
Trust determined in the manner provided in Article X, Section 3:
(d) "Shareholder" means a record owner of Shares of the
Trust;
(e) The "Trustees" refers to the individual trustees in
their capacity as trustees hereunder of the Trust and their
successor or successors for the time being in office as such
trustee or trustees;
(f) "Shares" means the equal proportionate transferable
units of interest into which the beneficial interest of the Trust
shall be divided from time to time, and includes fractions of
<PAGE>
shares as well as whole shares consistent with the requirements
of federal and/or other securities laws; and
(g) The "1940 Act" refers to the Investment Company Act
of 1940, as amended from time to time.
ARTICLE II
----------
PURPOSE OF TRUST
----------------
The purpose of this Trust is to provide investors a continuous
source of managed investment in securities.
ARTICLE III
-----------
BENEFICIAL INTEREST
-------------------
SHARES OF BENEFICIAL INTEREST
-----------------------------
Section 1. The beneficial interest in the Trust shall be divided
into such transferable Shares as the Trustees shall from time to time
create and establish. The number of Shares is unlimited and each Share
shall be without par value and shall be fully paid and nonassessable. The
Trustees shall have full power and authority, in their sole discretion and
without obtaining any prior authorization or vote of the Shareholders of
the Trust to create and establish (and to change in any manner) Shares
with such preferences, voting powers, rights and privileges as the
Trustees may from time to time determine, to divide or combine the Shares
into a greater or lesser number, and to take such other action with
respect to the Shares as the Trustees may deem desirable.
OWNERSHIP OF SHARES
-------------------
Section 2. The ownership of Shares shall be recorded in the
books of the Trust. The Trustees may make such rules as they consider
appropriate for the transfer of Shares and similar matters. The record
books of the Trust shall be conclusive as to who are the holders of Shares
and as to the number of Shares held from time to time by each Shareholder.
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<PAGE>
INVESTMENT IN THE TRUST
-----------------------
Section 3. The Trustees shall accept investments in the Trust
from such persons and on such terms as they may from time to time
authorize. Such investments may be in the form of cash or securities in
which the Trust is authorized to invest, valued as provided in Article X,
Section 3. After the date of the initial contribution of capital, the
number of Shares to represent the initial contribution may in the
Trustees' discretion be considered as outstanding and the amount received
by the Trustees on account of the contribution shall be treated as an
asset of the Trust. Subsequent investments in the Trust shall be credited
to each Shareholder's account in the form of full Shares at the Net Asset
Value per Share next determined after the investment is received;
provided, however, that the Trustees may, in their sole discretion: (a)
impose a sales charge upon investments in the Trust and (b) issue
fractional Shares.
ASSETS AND LIABILITIES OF THE TRUST
-----------------------------------
Section 4. All consideration received by the Trust for the issue
or sale of Shares, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds
thereof, including any proceeds derived from the sale, exchange or
liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall be
referred to as "assets belonging to" the Trust and shall be held by the
Trustees in Trust for the benefit of the Shareholders. The Trust's assets
shall be charged with its liabilities. Any creditor of the Trust may look
only to the assets of the Trust to satisfy such creditor's debt.
NO PREEMPTIVE RIGHTS
--------------------
Section 5. Shareholders shall have no preemptive or other right
to subscribe to any additional Shares or other securities issued by the
Trust or the Trustees.
LIMITATION ON PERSONAL LIABILITY
--------------------------------
Section 6. The Trustees shall have no power to bind any
Shareholder personally or to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay by way of subscription
for any Shares or otherwise. Every note, bond, contract or other
undertaking issued by or on behalf of the Trust or the Trustees relating
to the Trust shall include a recitation limiting the obligation
represented thereby to the Trust and its assets (but the omission of such
a recitation shall not operate to bind any Shareholder).
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<PAGE>
ARTICLE IV
----------
THE TRUSTEES
------------
MANAGEMENT OF THE TRUST
-----------------------
Section 1. The business and affairs of the Trust shall be
managed by the Trustees, and they shall have all powers necessary and
desirable to carry out that responsibility.
ELECTION: INITIAL TRUSTEES
--------------------------
Section 2. On a date fixed by the Trustees, the Shareholders
shall elect not less than three Trustees. A Trustee shall not be required
to be a Shareholder of the Trust. The initial Trustees shall be Thomas A.
James and Richard K. Riess and such other individuals as the Board of
Trustees shall appoint pursuant to Section 4 of Article IV.
TERM OF OFFICE OF TRUSTEES
--------------------------
Section 3. The Trustees shall hold office during the lifetime of
this Trust, and until its termination as hereinafter provided, except: (a)
that any Trustee may resign his trust by written instrument signed by him
and delivered to the other Trustees, which shall take effect upon such
delivery or upon such later date as is specified therein; (b) that any
Trustee may be removed at any time by written instrument, signed by at
least two-thirds of the number of Trustees prior to such removal,
specifying the date when such removal shall become effective; (c) that any
Trustee who requests in writing to be retired or who has become
incapacitated by illness or injury may be retired by written instrument
signed by a majority of the other Trustees, specifying the date of his
retirement; and (d) a Trustee may be removed at any Special Meeting of the
Trust by a vote of two-thirds of the outstanding Shares.
RESIGNATION AND APPOINTMENT OF TRUSTEES
---------------------------------------
Section 4. In case of the declination, death, resignation,
retirement, removal, incapacity, or inability of any of the Trustees, or
in case a vacancy shall, by reason of an increase in number, or for any
other reason, exist, the remaining Trustees shall fill such vacancy by
appointing such other person as they in their discretion shall see fit
consistent with the limitations under the 1940 Act. Such appointment
shall be evidenced by a written instrument signed by a majority of the
Trustees in office or by recording in the records of the Trust, whereupon
the appointment shall take effect. Within three months of such
appointment the Trustees shall cause notice of such appointment to be
- 4 -
<PAGE>
mailed to each Shareholder at his address as recorded on the books of the
Trust. An appointment of a Trustee may be made by the Trustees then in
office and notice thereof mailed to Shareholders as aforesaid in
anticipation of a vacancy to occur by reason of retirement, resignation or
increase in number of Trustees effective at a later date, provided that
said appointment shall become effective only at or after the effective
date of said retirement, resignation or increase in number of Trustees.
As soon as any Trustee so appointed shall have accepted this trust, the
trust estate shall vest in the new Trustee or Trustees, together with the
continuing Trustees, without any further act or conveyance, and he shall
be deemed a Trustee hereunder. The power of appointment is subject to the
provisions of Section 16(a) of the 1940 Act.
TEMPORARY ABSENCE OF TRUSTEE
----------------------------
Section 5. Any Trustee may, by power of attorney, delegate his
power for a period not exceeding six months at any one time to any other
Trustee or Trustees, provided that in no case shall less than two Trustees
personally exercise the other powers hereunder except as herein otherwise
expressly provided.
NUMBER OF TRUSTEES
------------------
Section 6. The number of Trustees, not less than three (3) nor
more than twelve (12), serving hereunder at any time shall be determined
by the Trustees themselves.
Whenever a vacancy in the Board of Trustees shall occur, until
such vacancy is filled, or while any Trustee is absent from the
Commonwealth of Massachusetts or, if not a domiciliary of Massachusetts,
is absent from his state of domicile, or is physically or mentally
incapacitated by reason of disease or otherwise, the other Trustees shall
have all the powers hereunder and the certificate of the other Trustees of
such vacancy, absence or incapacity, shall be conclusive, provided,
however, that no vacancy shall remain unfilled for a period longer than
six calendar months.
EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE
-----------------------------------------------
Section 7. The death, declination, resignation, retirement,
removal, incapacity, or inability of the Trustees, or any one of them,
shall not operate to annul the Trust or to revoke any existing agency
created pursuant to the terms of this Declaration of Trust.
OWNERSHIP OF TRUST ASSETS
-------------------------
Section 8. The assets of the Trust shall be held separate and
apart from any assets now or hereafter held in any capacity other than as
- 5 -
<PAGE>
Trustee hereunder by the Trustees or any successor Trustees. All of the
assets of the Trust shall at all times be considered as vested in the
Trustees. No Shareholder shall be deemed to have a severable ownership in
any individual asset of the Trust or any right of partition or possession
thereof, but each Shareholder shall have a proportionate undivided
beneficial interest in the Trust.
ARTICLE V
---------
POWERS OF THE TRUSTEES
----------------------
POWERS
------
Section 1. The Trustees in all instances shall act as
principals, and are and shall be free from the control of the
Shareholders. The Trustees shall have full power and authority to do any
and all acts and to make and execute any and all contracts and instruments
that they may consider necessary or appropriate in connection with the
management of the Trust. The Trustees shall not in any way be bound or
limited by present or future laws or customs in regard to trust
investments, but shall have full authority and power to make any and all
investments which they, in their uncontrolled discretion, shall deem
proper to accomplish the purpose of this Trust. Subject to any applicable
limitation in the Declaration of Trust or the Bylaws of the Trust, the
Trustees shall have power and authority:
(a) To invest and reinvest cash and other property, and
to hold cash or other property uninvested, without in any event
being bound or limited by any present or future law or custom in
regard to investments by Trustees, and to sell, exchange, lend,
pledge, mortgage, hypothecate, write options on and lease any or
all of the assets of the Trust.
(b) To adopt Bylaws not inconsistent with this
Declaration of Trust providing for the conduct of the business of
the Trust and to amend and repeal them to the extent that the
rights of amendment and repeal are not reserved to Shareholders.
(c) To elect and remove such officers and appoint and
terminate such agents as they consider appropriate.
(d) To employ a bank or trust company as Custodian of any
assets of the Trust subject to any conditions set forth in this
Declaration of Trust or in the Bylaws, if any.
(e) To retain a transfer agent and Shareholder servicing
agent, or both.
- 6 -
<PAGE>
(f) To provide for the distribution of interests of the
Trust either through a principal underwriter in the manner
hereinafter provided for or by the Trust itself, or both.
(g) To set record dates in the manner hereinafter
provided for.
(h) To delegate such authority as they consider desirable
to any officers of the Trust and to any agent, Custodian or
underwriter.
(i) To sell or exchange any or all of the assets of the
Trust, subject to the provisions of Article XII, Section 4(b)
hereof.
(j) To vote or give assent, or exercise any rights of
ownership, with respect to stock or other securities or property,
and to execute and deliver powers of attorney to such person or
persons as the Trustees shall deem proper, granting to such
person or persons such power and discretion with relation to
securities or property as the Trustees shall deem proper.
(k) To exercise powers and rights of subscription or
otherwise which in any manner arise out of ownership of
securities.
(l) To hold any security or property in a form not
indicating any trust, whether in bearer, unregistered or other
negotiable form; or in its own name or in the name of a Custodian
or a nominee or nominees, subject in whichever case to proper
safeguards according to the usual practice of Massachusetts trust
companies or investment companies.
(m) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or
concern, any security of which is held in the Trust; to consent
to any contract, lease, mortgage, purchase, or sale of property
by such corporation or concern, and to pay calls or subscriptions
with respect to any security held in the Trust.
(n) To compromise, arbitrate, or otherwise adjust claims
in favor of or against the Trust or any matter in controversy
including, but not limited to, claims for taxes.
(o) To make distributions of income and of capital gains
to Shareholders in the manner hereinafter provided for.
(p) To borrow money from a bank for temporary or
emergency purposes and not for investment purposes. The Trustees
shall not pledge, mortgage or hypothecate the assets of the Trust
except that, to secure borrowings, the Trustees may pledge
securities.
- 7 -
<PAGE>
(q) To establish, from time to time, a minimum total
investment for Shareholders, and to require redemption of the
Shares of any Shareholders whose investment is less than such
minimum upon giving notice to such Shareholder.
No one dealing with the Trustees shall be under any obligation to
make any inquiry concerning the authority of the Trustees, or to see to
the application of any payments made or property transferred to the
Trustees or upon their order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
-------------------------------------
Section 2. Subject only to the general limitations herein
contained as to the sale and purchase of Trust Shares and any restrictions
that may be contained in the Bylaws:
(a) Any Trustee, officer or other agent of the Trust may
acquire, own and dispose of Shares to the same extent as if he
were not a Trustee, officer or agent;
(b) The Trustees may issue and sell or cause to be issued
and sold Shares to (and buy such Shares from) any such person or
firm or company in which such person is interested.
ACTION BY THE TRUSTEES
----------------------
Section 3. The Trustees shall act by majority vote at a meeting
duly called or by unanimous written consent without a meeting or by
telephone consent provided a quorum of Trustees participate in any such
telephonic meeting, unless the 1940 Act requires that a particular action
be taken only at a meeting of the Trustees. At any meeting of the
Trustees, a majority of the Trustees shall constitute a quorum. Meetings
of the Trustees may be called orally or in writing by the Chairman of the
Trustees or by any two other Trustees. Notice of the time, date and place
of all meetings of the Trustees shall be given to each Trustee as provided
in the Bylaws.
Notice need not be given to any Trustee who attends the meeting
without objecting to the lack of notice or who executes a written waiver
of notice with respect to the meeting. Subject to the requirements of the
1940 Act, the Trustees by majority vote may delegate to any one of their
number the authority to approve particular matters or take particular
actions on behalf of the Trust.
CHAIRMAN OF THE TRUSTEES
------------------------
Section 4. The Trustees may appoint one of their number to be
Chairman of the Board of Trustees and to perform such duties as the
Trustees may designate.
- 8 -
<PAGE>
ARTICLE VI
----------
EXPENSES OF THE TRUST
---------------------
TRUSTEE REIMBURSEMENT
---------------------
Section 1. Subject to the provisions of Article III, Section 4,
the Trustees shall be reimbursed from the Trust estate or the assets
belonging to the Trust for their expenses and disbursements, including,
without limitation, fees and expenses of Trustees who are not Interested
Persons of the Trust, interest expenses, taxes, fees and commissions of
every kind, expenses of pricing Trust portfolio securities, expenses of
issue, repurchase and redemption of Shares including expenses attributable
to a program of periodic repurchases or redemptions, expenses of
registering and qualifying the Trust and its Shares under federal and
state laws and regulations, charges of Custodians, transfer agents, and
registrars, expenses of preparing and setting up in type Prospectuses and
Statements of Additional Information, expenses of printing and
distributing prospectuses sent to existing Shareholders, auditing and
legal expenses, reports to Shareholders, expenses of meetings of
Shareholders and proxy solicitations therefor, insurance expense,
association membership dues and for such non-recurring items as may arise,
including litigation to which the Trust is a party, and for all losses and
liabilities by them incurred in administering the Trust, and for the
payment of such expenses, disbursements, losses and liabilities the
Trustees shall have a lien on the assets belonging to the Trust prior to
any rights or interests of the Shareholders thereto. This section shall
not preclude the Trust from directly paying any of the aforementioned fees
and expenses.
ARTICLE VII
-----------
INVESTMENT ADVISER, PRINCIPAL UNDERWRITER AND TRANSFER AGENT
------------------------------------------------------------
INVESTMENT ADVISER
------------------
Section 1. Subject to a Majority Shareholder Vote, the Trustees
may in their discretion from time to time enter into an investment
advisory or management agreement(s) with respect to the Trust whereby the
other party(ies) to such agreement(s) shall undertake to furnish the
Trustees such management, investment advisory, statistical and research
facilities and services and such other facilities and services, if any,
and all upon such terms and conditions as the Trustees may in their
discretion determine. Notwithstanding any provisions of this Declaration
of Trust, the Trustees may authorize the investment adviser(s) (subject to
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<PAGE>
such general or specific instructions as the Trustees may from time to
time adopt) to effect purchases, sales or exchanges of portfolio
securities and other investment instruments of the Trust on behalf of the
Trustees or may authorize any officer, agent, or Trustee to effect such
purchases, sales or exchanges pursuant to recommendations of the
investment adviser (and all without further action by the Trustees). Any
such purchases, sales and exchanges shall be deemed to have been
authorized by all of the Trustees.
The Trustees may, subject to applicable requirements of the 1940
Act, including those relating to Shareholder approval, authorize the
investment adviser to employ one or more subadvisers from time to time to
perform such of the acts and services of the investment adviser, and upon
such terms and conditions, as may be agreed upon between the investment
adviser and subadviser.
PRINCIPAL UNDERWRITER
---------------------
Section 2. The Trustees may in their discretion from time to
time enter into an agreement(s) providing for the sale of the Shares,
whereby the Trust may either agree to sell the Shares to the other party
to the agreement or appoint such other party its sales agent for such
Shares. In either case, the agreement shall be on such terms and
conditions as may be prescribed in the Bylaws, if any, and such further
terms and conditions as the Trustees may in their discretion determine to
be not inconsistent with the provisions of this Article VII, or of the
Bylaws, if any, and such agreement may also provide for the repurchase or
sale of Shares by such other party as principal or as agent of the Trust.
TRANSFER AGENT
--------------
Section 3. The Trustees may in their discretion from time to
time enter into a transfer agency and Shareholder service agreement
whereby the other party shall undertake to furnish the Trustees with
transfer agency and Shareholder services. The agreement shall be on such
terms and conditions as the Trustees may in their discretion determine are
not inconsistent with the provisions of this Declaration of Trust or of
the Bylaws, if any. Such services may be provided by one or more entities.
PARTIES TO CONTRACT
-------------------
Section 4. Any agreement of the character described in Sections
1, 2 and 3 of this Article VII or in Article IX hereof may be entered into
with any corporation, firm, partnership, trust or association, although
one or more of the Trustees or officers of the Trust may be an officer,
director, trustee, shareholder, or member of such other party to the
agreement, and no such agreement shall be invalidated or rendered voidable
by reason of the existence of any relationship, nor shall any person
holding such relationship be liable merely by reason of such relationship
- 10 -
<PAGE>
for any loss or expense to the Trust under or by reason of said agreement
or accountable for any profit realized directly or indirectly therefrom,
provided that the agreement when entered into was reasonable and fair and
not inconsistent with the provisions of this Article VII or the Bylaws, if
any. The same person (including a firm, corporation, partnership, trust,
or association) may be the other party to agreements entered into pursuant
to Sections 1, 2 and 3 above or Article IX, and any individual may be
financially interested or otherwise affiliated with persons who are
parties to any or all of the agreements mentioned in this Section 4.
PROVISIONS AND AMENDMENTS
-------------------------
Section 5. Any contract entered into pursuant to Sections 1 and
2 of this Article VII shall be consistent with and subject to the
requirements of Section 15 of the 1940 Act (including any amendments
thereof or other applicable Act of Congress hereafter enacted) with
respect to its continuance in effect, its termination, and the method of
authorization and approval of such agreement or renewal thereof, and no
amendment to any agreement, entered into pursuant to Section 1 shall be
effective unless assented to by a Majority Shareholder Vote.
ARTICLE VIII
------------
SHAREHOLDERS' VOTING POWERS AND MEETINGS
----------------------------------------
VOTING POWERS
-------------
Section 1. The Shareholders shall have power to vote: (i) for
the election of Trustees as provided in Article IV, Section 2, (ii) for
the removal of Trustees as provided in Article IV, Section 3(d), (iii)
with respect to any investment advisory or management contract as provided
in Article VII, Section 1, (iv) with respect to the amendment of this
Declaration of Trust as provided in Article XII, Section 7, (v) to the
same extent as the shareholders of a Massachusetts business corporation,
as to whether or not a court action, proceeding or claim should be brought
or maintained derivatively or as a class action on behalf of the Trust or
the Shareholders, and (vi) with respect to such additional matters
relating to the Trust as may be required or authorized by law, by this
Declaration of Trust, or the Bylaws of the Trust, if any, or any
registration of the Trust with the Securities and Exchange Commission (the
"Commission") or any state, as the Trustees may consider desirable. On
any matter submitted to a vote of the Shareholders, each whole Share shall
be entitled to one vote as to any matter on which it is entitled to vote,
and each fractional Share shall be entitled to a proportionate fractional
vote. There shall be no cumulative voting in the election of Trustees.
Shares may be voted in person or by proxy. Until Shares are issued, the
Trustees may exercise all rights of Shareholders and may take any action
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<PAGE>
required or permitted by law, this Declaration of Trust or any Bylaws of
the Trust to be taken by Shareholders.
MEETINGS
--------
Section 2. The first Shareholders' meeting shall be held at the
principal office of the Trust or such other place as the Trustees may
designate. Special meetings of the Shareholders may be called by the
Trustees. Special meetings also shall be called by the Trustees for the
purpose of removing one or more Trustees upon the written request for such
a meeting by Shareholders owning at least one-tenth of the outstanding
Shares entitled to vote. Whenever ten or more Shareholders meeting the
qualifications set forth in Section 16(c) of the 1940 Act, as the same may
be amended from time to time, seek the opportunity of furnishing materials
to the other Shareholders with a view to obtaining signatures on such a
request for a meeting, the Trustees shall comply with the provisions of
said Section 16(c) with respect to providing such Shareholders access to
the list of the Shareholders of record of the Trust or the mailing of such
materials to such Shareholders of record. Shareholders shall be entitled
to at least 15 days' notice of any meeting.
QUORUM AND REQUIRED VOTE
------------------------
Section 3. A majority of Shares entitled to vote in person or by
proxy shall constitute a quorum for the transaction of business at a
Shareholders' meeting. Any lesser number shall be sufficient for
adjournments. Any adjourned session or sessions may be held, within a
reasonable time after the date set for the original meeting, without the
necessity of further notice. Except when a larger vote is required by any
provision of this Declaration of Trust, the Bylaws or law, a majority of
the Shares voted in person or by proxy shall decide any questions and a
plurality shall elect a Trustee.
ARTICLE IX
----------
CUSTODIAN
---------
APPOINTMENT AND DUTIES
----------------------
Section 1. The Trustees shall at all times employ a bank or
trust company having capital, surplus and undivided profits of at least
two million dollars ($2,000,000) as Custodian on such basis of
compensation as may be agreed upon between the Trustees and the Custodian.
The Custodian shall have authority as agent for the Trust, but subject to
such restrictions, limitations and other requirements, if any, as may be
contained in the Bylaws of the Trust:
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<PAGE>
(a) to hold the securities owned by the Trust and deliver
the same upon written order;
(b) to receive and receipt for any moneys due to the
Trust and deposit the same in its own banking department or
elsewhere as the Trustees may direct; and
(c) to disburse such funds upon orders or vouchers.
Section 2. In addition, the Trust may also employ such Custodian
as its agent:
(a) to keep the books and accounts of the Trust and
furnish clerical and accounting services; and
(b) to compute, if authorized to do so by the Trustees,
the Trust's Net Asset Value in accordance with the provisions
hereof.
All of the Custodian's duties shall be for such compensation as may be
aqreed upon between the Trustees and the Custodian.
If so directed by a Majority Shareholder Vote, the Custodian
shall deliver and pay over all property of the Trust held by it as
specified in such vote.
EMPLOYMENT OF SUB-CUSTODIAN
---------------------------
Section 3. The Trustees may also authorize the Custodian to
employ one or more sub-Custodians from time to time to perform such of the
acts and services of the Custodian, and upon such terms and conditions, as
may be agreed upon between the Custodian and such sub-Custodian and
approved by the Trustees, provided that in every case such sub-Custodian
shall be a bank or trust company orqanized under the laws of the United
States or one of the states thereof and having capital, surplus and
undivided profits of at least two million dollars ($2,000,000) or such
other person as may be permitted by the Commission, or otherwise in
accordance with the 1940 Act as from time to time amended.
CENTRAL CERTIFICATE SYSTEM
--------------------------
Section 4. Subject to such rules, regulations and orders as the
Commission may adopt, the Trustees may direct the Custodian to deposit all
or any part of the securities owned by the Trust in a system for the
central handling of securities established by a national securities
exchange or a national securities association registered with the
Commission under the Securities Exchange Act of 1934, as amended, or such
other person as may be permitted by the Commission, or otherwise in ac-
cordance with the 1940 Act as from time to time amended, pursuant to which
system all securities of any particular class of any issuer deposited
within the system are treated as fungible and may be transferred or
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<PAGE>
pledged by bookkeeping entry without physical delivery of such securities,
provided that all such deposits shall be subject to withdrawal only upon
the order of the Trust.
ARTICLE X
---------
DISTRIBUTIONS AND REDEMPTIONS
-----------------------------
DISTRIBUTIONS
-------------
Section 1.
(a) The Trustees may from time to time declare and pay
dividends. The amount of such dividends and the payment of them
shall be wholly in the discretion of the Trustees.
(b) The Trustees shall have power, to the fullest extent
permitted by the laws of Massachusetts, at any time to declare
and cause to be paid dividends on Shares from Trust assets, which
dividends, at the election of the Trustees, may be paid daily or
otherwise pursuant to a standing resolution or resolutions
adopted only once or with such frequency as the Trustees may
determine, and may be payable in Shares at the election of each
Shareholder.
(c) Anything in this instrument to the contrary
notwithstanding, the Trustees may at any time declare and
distribute pro rata among the Shareholders a "stock dividend."
REDEMPTIONS
-----------
Section 2. In case any Shareholder of record desires to dispose
of his Shares, he may deposit at the office of the transfer agent or other
authorized agent of the Trust a written request or such other form of
request as the Trustees may from time to time authorize, requesting that
the Trust purchase the Shares in accordance with this Section 2, and the
Shareholder so requesting shall be entitled to require the Trust to pur-
chase, and the Trust or the principal underwriter of the Trust shall
purchase, his said Shares, but only at the Net Asset Value thereof (as
described in Section 3 hereof). The Trust shall make payment for any such
Shares to be redeemed, as aforesaid, in cash to the extent required by
federal law and securities from Trust assests and payment for such Shares
shall be made by the Trust or the principal underwriter to the Shareholder
of record within seven (7) days after the date upon which the request is
effective.
- 14 -
<PAGE>
DETERMINATION OF NET ASSET VALUE AND VALUATION OF PORTFOLIO ASSETS
------------------------------------------------------------------
Section 3. The term "Net Asset Value" shall mean that amount by
which the assets of the Trust exceed its liabilities, all as determined by
or under the direction of the Trustees. Such value shall be determined on
such days and at such times as the Trustees may determine. Such
determination shall be made with respect to securities for which market
quotations are readily available, at the market value of such securities,
and with respect to other securities and assets, at the fair value as
determined in good faith by the Trustees, provided, however, that the
Trustees, without Shareholder approval, may alter the method of appraising
portfolio securities insofar as permitted under the 1940 Act and the
rules, regulations and interpretations thereof promulgated or issued by
the Commission or insofar as permitted by any Order of the Commission.
The Trustees may delegate any powers and duties under this Section 3 with
respect to appraisal of assets and liabilities. At any time the Trustees
may cause the value per Share last determined to be determined again in
similar manner and may fix the time when such redetermined value shall
become effective.
SUSPENSION OF THE RIGHT OF REDEMPTION
-------------------------------------
Section 4. The Trustees may declare a suspension of the right of
redemption or postpone the date of payment as permitted under the 1940
Act. Such suspension shall take effect at such time as the Trustees shall
specify but not later than the close of business on the business day next
following the declaration of suspension, and thereafter there shall be no
right of redemption or payment until the Trustees shall declare the
suspension at an end. In the case of a suspension of the right of
redemption, a Shareholder may either withdraw his request for redemption
or receive payment based on the Net Asset Value per Share existing after
the termination of the suspension.
ARTICLE XI
----------
LIMITATION OF LIABILITY AND INDEMNIFICATION
-------------------------------------------
LIMITATION OF LIABILITY
-----------------------
Section 1. Provided they have exercised reasonable care and have
acted under the reasonable belief that their actions are in the best
interest of the Trust, the Trustees shall not be responsible for or liable
in any event for neglect or wrongdoing of them or any officer, agent,
employee or investment adviser of the Trust, but nothing contained herein
shall protect any Trustee against any liability to which he would
- 15 -
<PAGE>
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office.
INDEMNIFICATION
---------------
Section 2.
(a) Subject to the exceptions and limitations contained
in Section (b) below:
(i) every person who is, or has been, a Trustee
or officer of the Trust (hereinafter referred to as
"Covered Person") shall be indemnified by the Trust to
the fullest extent permitted by law against liability and
against all expenses reasonably incurred or paid by him
in connection with any claim, action, suit or proceeding
in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee or officer
and against amounts paid or incurred by him in the
settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or
proceedings (civil, criminal or other, including
appeals), actual or threatened while in office or
thereafter, and the words "liability" and "expenses"
shall include, without limitation, attorneys' fees,
costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be
liable to the Trust or its Shareholders by reason of
willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct
of his office or (B) not to have acted in good faith in
the reasonable belief that his action was in the best
interest of the Trust; or
(ii) in the event of a settlement, unless there
has been a determination that such Trustee or officer did
not engage in willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved
in the conduct of his office, (A) by the court or other
body approving the settlement; (B) by at least a majority
of those Trustees who are neither interested persons of
the Trust nor are parties to the matter based upon a
- 16 -
<PAGE>
review of readily available facts (as opposed to a full
trial-type inquiry); or (C) by written opinion of
independent legal counsel based upon a review of readily
available facts (as opposed to a full trial-type
inquiry); provided, however, that any Shareholder may, by
appropriate legal proceedings, challenge any such
determination by the Trustees, or by independent counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be
severable, shall not be exclusive of or affect any other rights
to which any Covered Person may now or hereafter be entitled,
shall continue as to a person who has ceased to be such Trustee
or officer and shall inure to the benefit of the heirs, executors
and administrators of such a person. Nothing contained herein
shall affect any rights to indemnification to which Trust per-
sonnel, other than Trustees and officers, and other persons may
be entitled by contract or otherwise under law.
(d) Expenses in connection with the preparation and
presentation of a defense to any claim, action, suit or
proceeding of the character described in paragraph (a) of this
Section 2 may be paid by the Trust from time to time prior to
final disposition thereof upon receipt of an undertaking by or on
behalf of such Covered Person that such amount will be paid over
by him to the Trust if it is ultimately determined that he is not
entitled to indemnification under this Section 2; provided,
however, that:
(a) such Covered Person shall have provided appropriate
security for such undertaking,
(b) the Trust is insured against losses arising out of
any such advance payments or
(c) either a majority of the Trustees who are neither
interested persons of the Trust nor parties to the matter, or
independent legal counsel in a written opinion, shall have
determined, based upon a review of readily available facts (as
opposed to a trial-type inquiry or full investigation), that
there is reason to believe that such Covered Person will be found
entitled to indemnification under this Section 2.
SHAREHOLDERS
------------
Section 3. In case any Shareholder or former Shareholder of the
Trust shall be held to be personally liable solely by reason of his being
or having been a Shareholder and not because of his acts or omissions or
for some other reason, the Shareholder or former Shareholder (or his
heirs, executors, administrators or other legal representatives or in the
case of a corporation or other entity, its corporate or other general
- 17 -
<PAGE>
successor) shall be entitled out of the Trust assets to be held harmless
from and indemnified against all loss and expense arising from such
liability. The Trust shall, upon request by the Shareholder, assume the
defense of any claim made against the Shareholder for any act or
obligation of the Trust and satisfy any judgment thereon.
ARTICLE XII
-----------
MISCELLANEOUS
-------------
TRUST NOT A PARTNERSHIP
-----------------------
Section 1. It is hereby expressly declared that a trust and not
a partnership is created hereby. No Trustee hereunder shall have any
power to bind personally either the Trust's officers or any Shareholder.
All persons extending credit to, contracting with or having any claim
against the Trust or the Trustees shall look only to the assets of the
Trust for payment under such credit, contract or claim; and neither the
Shareholders nor the Trustees, nor any of their agents, whether past,
present or future, shall be personally liable therefor. Nothing in this
Declaration of Trust shall protect a Trustee against any liability to
which the Trustee would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee hereunder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
-------------------------------------------------------------
Section 2. The exercise by the Trustees of their powers and
discretion hereunder in good faith and with reasonable care under the
circumstances then prevailing, shall be binding upon everyone interested.
Subject to the provisions of Section 1 of this Article XII and to Article
XI, the Trustees shall not be liable for errors of judgment or mistakes of
fact or law. The Trustees may take advice of counsel or other experts
with respect to the meaning and operation of this Declaration of Trust,
and subject to the provisions of Section 1 of this Article XII and to
Article XI, shall be under no liability for any act or omission in
accordance with such advice or for failing to follow such advice. The
Trustees shall not be required to give any bond as such, nor any surety if
a bond is obtained.
ESTABLISHMENT OF RECORD DATES
-----------------------------
Section 3. The Trustees may close the stock transfer books of
the Trust for a period not exceeding 60 days preceding the date of any
meeting of Shareholders, or the date for the payment of any dividends, or
the date for the allotment of rights, or the date when any change or
- 18 -
<PAGE>
conversion or exchange of Shares shall go into effect, or in lieu of
closing the stock transfer books as aforesaid, the Trustees may fix in
advance a date, not exceeding 60 days preceding the date of any meeting of
Shareholders, or the date for payment of any dividend, or the date for the
allotment of rights, or the date when any change or conversion or exchange
of Shares shall go into effect, as a record date for the determination of
the Shareholders entitled to notice of, and to vote at, any such meeting,
or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such
change, conversion or exchange of Shares, and in such case such
Shareholders and only such Shareholders as shall be Shareholders of record
on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, or to receive payment of such dividend, or to receive such
allotment or rights, or to exercise such rights, as the case may be, not-
withstanding any transfer of any Shares on the books of the Trust after
any such record date fixed as aforesaid.
TERMINATION OF TRUST
--------------------
Section 4.
(a) This Trust shall continue without limitation of time
but subject to the provisions of sub-section (b) of this Section
4.
(b) Subject to a Majority Shareholder Vote, the Trustees
may:
(i) sell and convey the assets of the Trust to
another trust, partnership, association or corporation
organized under the laws of any state which is a
diversified open-end management investment company as
defined in the 1940 Act, for adequate consideration which
may include the assumption of all outstanding
obligations, taxes and other liabilities, accrued or
contingent, of the Trust and which may include shares of
beneficial interest or stock of such trust, partnership,
association or corporation; or
(ii) at any time sell and convert into money all
of the assets of the Trust.
Upon making provision for the payment of all such
liabilities in either (i) or (ii), by such assumption or
otherwise, the Trustees shall distribute the remaining proceeds
or assets (as the case may be) ratably among the Shareholders.
(c) Upon completion of the distribution of the
remaining assets as provided in subsection (b), the Trust shall
terminate and the Trustees shall be discharged of any and all
- 19 -
<PAGE>
further liabilities and duties hereunder and the right, title and
interest of all parties shall be canceled and discharged.
FILING OF COPIES, REFERENCES, HEADINGS
--------------------------------------
Section 5. The original or a copy of this instrument and of each
declaration of trust supplemental hereto shall be kept at the office of
the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each supplemental declaration of trust shall be filed by
the Trustees with the Secretary of the Commonwealth of Massachusetts and
the Boston City Clerk, as well as any other governmental office where such
filing may from time to time be required. Anyone dealing with the Trust
may rely on a certificate by an officer or Trustee of the Trust as to
whether or not any such supplemental declarations of trust have been made
and as to any matters in connection with the Trust hereunder, and with the
same effect as if it were the original, may rely on a copy certified by an
officer or Trustee of the Trust to be a copy of this instrument or of any
such supplemental declaration of trust. In this instrument or in any such
supplemental declaration of trust, references to this instrument, and the
expressions "herein," "hereof" and "hereunder," shall be deemed to refer
to this instrument as amended or affected by any such supplemental
declaration of trust. Headings are placed herein for convenience of
reference only and in case of any conflict, the text of this instrument,
rather than the headings, shall control. This instrument may be executed
in any number of counterparts each of which shall be deemed an original.
APPLICABLE LAW
--------------
Section 6. The trust set forth in this instrument is made in the
Commonwealth of Massachusetts, and it is created under and is to be
governed by and construed and administered according to the laws of said
Commonwealth. The Trust shall be of the type commonly called a
Massachusetts business trust, and without limiting the provisions hereof,
the Trust may exercise all powers which are ordinarily exercised by such a
Trust.
AMENDMENTS
----------
Section 7. If authorized by votes of the Trustees and a Majority
Shareholder Vote, or by any larger vote which may be required by
applicable law or this Declaration of Trust in any particular case, the
Trustees shall amend or otherwise supplement this instrument, by making a
declaration of trust supplemental hereto, which thereafter shall form a
part hereof. Amendments having the purpose of changing the name of the
Trust or of supplying any omission, curing any ambiguity or curing,
correcting or supplementing any defective or inconsistent provision
contained herein shall not require authorization by Shareholder vote.
- 20 -
<PAGE>
Copies of the supplemental declaration of trust shall be filed as
specified in Section 5 of this Article XII.
FISCAL YEAR
-----------
Section 8. The fiscal year of the Trust shall end on a specified
date as set forth in the Bylaws, provided, however, that the Trustees may,
without Shareholder approval, change the fiscal year of the Trust.
USE OF THE WORD "HERITAGE"
--------------------------
Section 9. Raymond, James & Associates, Inc. ("Raymond, James")
has consented to the use by the Trust of the identifying word "Heritage."
Such consent is conditioned upon the employment of RJ Fund Management,
Inc. as investment adviser. As between the Trust and itself, Raymond,
James controls the use of the name of the Trust insofar as such name
contains the identifying word "Heritage." Raymond, James may from time to
time use the identifying word "Heritage" in other connections and for
other purposes, including, without limitation, in the name of other
investment companies, corporations or businesses which it may manage,
advise, sponsor or own or in which it may have a financial interest.
Raymond, James may require the Trust to cease using the identifying word
"Heritage" in the name of the Trust if the Trust ceases to employ RJ Fund
Management, Inc. or another subsidiary or affiliate of Raymond, James as
investment adviser.
- 21 -
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the initial
Trustees of the Trust, have executed this instrument this 20th day of
June, 1985.
STATE OF FLORIDA
COUNTY OF PINELLAS
I, the undersigned authority,
hereby certify that the foregoing
is a true and correct copy of the /s/ Thomas A. James
instrument presented to by ----------------------------
Thomas A. James as the original Thomas A. James
of such instrument. 1400 66th Street North
St. Petersburg, FL 33710
WITNESS my hand and official seal,
this 20th day of
June A.D., 1985.
/s/ Sharry L. Mauney
---------------------------------
STATE OF FLORIDA
COUNTY OF PINELLAS
I, the undersigned authority,
hereby certify that the foregoing
is a true and correct copy of the
instrument presented to me by /s/ Richard K. Riess
Richard K. Riess as the original ----------------------------
of such instrument. Richard K. Riess
1400 66th Street North
St. Petersburg, FL 33710
WITNESS my hand and official seal,
this 20th day of
June A.D., 1985.
/s/ Sharry L. Mauney
---------------------------------
Notary Public, State of Florida at Large
My Commission Expires January 22, 1988
Resident Agent:
James E. Howard, Esquire
Kirkpatrick & Lockhart
One Boston Place - Suite 3210
Boston, MA 02108
(617) 973-5400
- 22 -
<PAGE>
<PAGE>
BYLAWS
OF
HERITAGE CASH TRUST
ARTICLE I
---------
OFFICERS AND THEIR ELECTION
---------------------------
OFFICERS
--------
Section 1. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may from
time to time elect. It shall not be necessary for any Trustee or other
officer to be a holder of shares in the Trust.
ELECTION OF OFFICERS
--------------------
Section 2. The Treasurer and Secretary shall be chosen annually
by the Trustees. The President shall be chosen annually by and from the
Trustees.
Two or more offices may be held by a single person except the
offices of President and Secretary. The officers shall hold office until
their successors are chosen and qualified.
RESIGNATIONS AND REMOVALS
-------------------------
Section 3. Any officer of the Trust may resign by filing a
written resignation with the President or with the Trustees or with the
Secretary, which shall take effect on being so filed at such time as may
be therein specified. The Trustees may at any meeting remove any officer.
ARTICLE II
----------
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
------------------------------------------
TRUSTEES
--------
Section 1. The business and affairs of the Trust shall be
managed by the Trustees, and they shall have all powers necessary and
desirable to carry out their responsibilities, so far as such powers are
not inconsistent with the laws of the Commonwealth of Massachusetts, the
Declaration of Trust, or with these Bylaws.
<PAGE>
EXECUTIVE AND OTHER COMMITTEES
------------------------------
Section 2. The Trustees may elect from their own number an
executive committee to consist of not less than three nor more than five
members, which shall have the power and duty to conduct the current and
ordinary business of the Trust, including the purchase and sale of
securities, while the Trustees are not in session, and such other powers
and duties as the Trustees may from time to time delegate to such
committee. The Trustees may also elect from their own number other
committees from time to time. The number composing such committees and
the powers conferred upon the same are to be determined by vote of the
Trustees.
CHAIRMAN OF THE TRUSTEES
------------------------
Section 3. The Trustees may, but need not, appoint from among
their number a Chairman. He shall perform such duties as the Trustees may
from time to time designate.
PRESIDENT
---------
Section 4. The President shall be the chief executive officer
of the Trust and, subject to the Trustees, shall have general supervision
over the business and policies of the Trust. When present, he shall
preside at all meetings of the shareholders and the Trustees and he may,
subject to the approval of the Trustees, appoint a Trustee to preside at
such meetings in his absence. The President shall perform such duties
additional to all of the foregoing as the Trustees may from time to time
designate.
TREASURER
---------
Section 5. The Treasurer shall be the principal financial and
accounting officer of the Trust. He or she shall deliver all funds and
securities of the Trust which may come into his or her hands to such bank
or trust company as the Trustees shall employ as Custodian in accordance
with Article IX of the Declaration of Trust. He or she shall have the
custody of the seal of the Trust. He or she shall make annual reports
regarding the business and condition of the Trust, which reports shall be
preserved in Trust records, and he or she shall furnish such other reports
regarding the business and condition of the Trust as the Trustees may from
time to time require. The Treasurer shall perform such additional duties
as the Trustees may from time to time designate.
SECRETARY
---------
Section 6. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at
- 2 -
<PAGE>
their respective meetings. The Secretary shall perform such additional
duties as the Trustees may from time to time designate.
VICE PRESIDENT
--------------
Section 7. Any Vice President of the Trust shall perform such
duties as the Trustees may from time to time designate.
ASSISTANT TREASURER
-------------------
Section 8. The Assistant Treasurer of the Trust shall perform
such duties as the Trustees may from time to time designate.
ARTICLE III
-----------
SHAREHOLDERS' MEETINGS
----------------------
SPECIAL MEETINGS
----------------
Section 1. A special meeting of the Shareholders shall be called
by the Secretary whenever (i) ordered by the Trustees or (ii) requested,
for the purpose of removing a Trustee from office, in writing by the
holder or holders of at least 10% of the outstanding Shares entitled to
vote. If the Secretary, when so ordered or requested, refuses or neglects
for more than two days to call such special meeting, the Trustees or the
Shareholders so requesting may, in the name of the Secretary, call the
meeting by giving notice thereof in the manner required when notice is
given by the Secretary.
NOTICES
-------
Section 2. Except as above provided, notice of any special
meeting of the Shareholders shall be given by the notification of such
meeting at least 15 days before the meeting to such address as may be
registered with the Trust by the Shareholder.
PLACE OF MEETING
----------------
Section 3. All special meetings of the Shareholders shall be
held at the principal place of business of the Trust in St. Petersburg,
Florida or at such other place in the United States as the Trustees may
designate.
- 3 -
<PAGE>
ARTICLE IV
----------
TRUSTEES' MEETINGS
------------------
SPECIAL MEETINGS
----------------
Section 1. Special meetings of the Trustees shall be called by
the Secretary at the written request of the President, the Treasurer, or
any two Trustees and if the Secretary, when so requested, refuses or fails
for more than 24 hours to call such meeting, the President, the Treasurer,
or such two Trustees may, in the name of the Secretary, call such meeting
by giving due notice in the manner required when notice is given by the
Secretary.
REGULAR MEETINGS
----------------
Section 2. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from
time to time determine, provided that any Trustee who is absent when such
determination is made shall be given notice of the determination.
QUORUM
------
Section 3. A majority of the Trustees shall constitute a quorum
for the transaction of business.
NOTICE
------
Section 4. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the Secretary to each Trustee
orally or by mail, hand delivery or telegram. A notice may be mailed,
postage prepaid, addressed to him at his address as registered on the
books of the Trust or, if not so registered, at his last known address at
least three days before the meeting or delivered to him at least two days
before the meeting, provided orally by telephone at least 24 hours before
the meeting or sent to him at least 24 hours before the meeting by prepaid
telegram, addressed to him at his said registered address, if any, or if
he has no such registered address, at his last known address.
PLACE OF MEETING
----------------
Section 5. All special meetings of the Trustees shall be held at
the principal place of business of the Trustees in St. Petersburg, Florida
or such other place in the United States as the person or persons
requesting said meeting to be called may designate, but any meeting may
adjourn to any other place.
- 4 -
<PAGE>
SPECIAL ACTION
--------------
Section 6. When all the Trustees shall be present at any
meeting, however called or wherever held, or shall assent to the holding
of the meeting without notice, or after the meeting shall sign a written
assent thereto on the record of such meeting, the acts of such meeting
shall be valid as if such meeting had been regularly held.
ACTION BY CONSENT
-----------------
Section 7. Any action by the Trustees may be taken without a
meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meeting, or by telephone consent
provided a quorum of Trustees participate in any such telephone meeting.
Such consent shall be treated as a vote of the Trustees for all purposes.
ARTICLE V
---------
SHARES OF BENEFICIAL INTEREST
-----------------------------
BENEFICIAL INTEREST
-------------------
Section 1. The beneficial interest in the Trust shall at all
times be divided into an unlimited number of transferable Shares without
par value, each of which shall represent an equal proportional interest in
the class with each other Share of the class outstanding, none having
priority or preference over another.
TRANSFER OF SHARES
------------------
Section 2. The Shares of the Trust shall be transferable, so as
to affect the rights of the Trust, only by transfer recorded on the books
of the Trust, in person or by attorney.
EQUITABLE INTEREST NOT RECOGNIZED
---------------------------------
Section 3. The Trust shall be entitled to treat the holder of
record of any Share or Shares of stock as the holder in fact thereof, and
shall not be bound to recognize any equitable or other claim or interest
in such Share or Shares on the part of any other person except as may be
otherwise expressly provided by law.
- 5 -
<PAGE>
ARTICLE VI
----------
INSPECTION OF BOOKS
-------------------
The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be
open to the inspection of the Shareholders; and no Shareholder shall have
any right to inspect any account or book or document of the Trust except
as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
ARTICLE VII
-----------
CUSTODIAN
---------
The Custodian employed by the Trust pursuant to Article IX of the
Declaration of Trust shall be required to enter into an agreement with the
Trust which shall contain in substance the following provisions:
(a) The Trust will cause all securities and funds owned
by the Trust to be delivered or paid to the Custodian.
(b) The Custodian will receive and receipt for any
moneys due to the Trust and deposit the same in its own banking
department and in such other banking institutions, if any, as the
Custodian and Trustees may approve. The Custodian shall have the
sole power to draw upon any such account.
(c) The Custodian shall release and deliver securities
owned by the Trust in the following cases only:
(i) Upon the sale of such securities for the
account of the Trust and receipt of payment therefor;
(ii) To the issuer thereof or its agent when
such securities are called, redeemed, retired or oth-
erwise become payable; provided that in any such case,
the cash is to be delivered to the Custodian;
(iii) To the issuer thereof or its agency for
transfer into the name of the Trust, the Custodian or a
nominee of either, or for exchange for a different number
of bonds or certificates representing the same aggregate
face amount or number of units; provided that in any such
case the new securities are to be delivered to the
Custodian;
- 6 -
<PAGE>
(iv) To the broker selling the same for examina-
tion, in accord with the "street delivery" custom;
(v) For exchange or conversion pursuant to any
plan of merger, consolidation, recapitalization, re-
organization or readjustment of the securities or the
issuer of such securities or pursuant to provisions of
any deposit agreement; provided that, in any such case,
the new securities and cash, if any, are to be delivered
to the Custodian;
(vi) In the case of warrants, rights, or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender
of interim receipts or temporary securities for
definitive securities;
(vii) To any pledgee by way of pledge or
hypothecation to secure any loan, but only within the
limits permitted to the Trust by Article V, Section l(p)
of the Declaration of Trust.
(viii) For deposit in a system for the central
handling of securities.
(d) The Custodian shall pay out moneys of the Trust only
upon the purchase of securities for the account of the Trust and
the delivery in due course of such securities to the Custodian,
or in connection with the conversion, exchange or surrender of
securities owned by the Trust as set forth in (c), or for the
repurchase of Shares issued by the Trust or for the making of any
disbursements authorized by the Trustees pursuant to the Dec-
laration of Trust or these Bylaws, or for the payment of any
expense or liability incurred by the Trust; provided that, in
every case where payment is made by the Custodian in advance of
receipt of the securities purchased, the Custodian shall be
absolutely liable to the Trust for such securities to the same
extent as if the securities had been received by the Custodian.
(e) The Custodian shall make deliveries of securities
and payments of cash only upon written instructions signed or
initialed by such officer or officers or other agent or agents of
the Trust as may be authorized to sign or initial such
instructions by resolution of the Trustees; it being understood
that the Trustees may from time to time authorize a different
person or persons to sign or initial instructions for different
purposes.
The agreement between the Trust and the Custodian may contain any
such other provisions not inconsistent with the provisions of Article IX
of the Declaration of Trust or with these Bylaws as the Trustees may
approve.
- 7 -
<PAGE>
Such agreement shall be terminable by either party upon written
notice to the other within such time not exceeding 60 days as may be
specified in the agreement; provided, however, that upon termination of
the agreement or inability of the Custodian to continue to serve, the
Custodian shall, upon written notice of appointment of another bank or
trust company as custodian, deliver and pay over to such successor
custodian all securities and money held by it for account of the Trust.
In such case, the Trustees shall promptly appoint a successor custodian,
but in the event that no successor custodian can be found having the
required qualifications and willing to serve, it shall be the duty of the
Trustees to call as promptly as possible a special meeting of the
Shareholders to determine whether the Trust shall function without a
custodian or shall be liquidated. If so directed by vote of the holders
of a majority of the outstanding shares, the Custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
Such agreement shall also provide that, pending appointment of a
successor custodian or a vote of the Shareholders specifying some other
disposition of the funds and property, the Custodian shall not deliver
funds and property of the Trust to the Trust, but may deliver them to a
bank or trust company doing business in St. Petersburg, Florida of its own
selection have an aggregate capital, surplus and undivided profits, as
shown by its last published report, of not less than $2,000,000 as the
property of the Trust to be held under terms similar to those on which
they were held by the retiring custodian.
Any sub-custodian employed by the Custodian pursuant to
authorization to do so granted by the Trust pursuant to Article IX of the
Declaration of Trust shall be required to enter into an agreement with the
Custodian containing in substance the same provisions as those described
in paragraphs (a) through (e) above, except that any agreement with a
sub-custodian performing its duties outside the United States and its
territories and possessions may omit or limit any of such conditions,
provided that any such omission or limitation shall be expressly approved
by a majority of the Trustees of the Trust.
ARTICLE VIII
------------
SEAL
----
The seal of the Trust shall be circular in form bearing the
inscription:
"HERITAGE CASH TRUST -- 1985"
- 8 -
<PAGE>
ARTICLE IX
----------
FISCAL YEAR
-----------
The fiscal year of the Trust shall be the period of twelve months
ending on the ___ day of______________________ in each calendar year.
ARTICLE X
---------
AMENDMENTS
----------
These Bylaws may be amended at any meeting of the Trustees of the
Trust by a majority vote; provided, however, that any amendment which
changes or affects the provisions of Article VII, Article X, or Article
XII shall be approved by vote of a majority of the outstanding shares of
the Trust entitled to vote.
ARTICLE XI
----------
DISTRIBUTION ARRANGEMENTS
-------------------------
Any agreement entered into for the sale of Shares of the Trust
pursuant to Article VII, Section 2 of the Declaration of Trust shall
require the other party thereto (the "Distributor"), whether acting as
principal or as agent, to use all reasonable efforts consistent with the
other business of the Distributor to secure purchasers for the Shares.
Such agreement shall require the Distributor to bear all expenses (a) of
printing and distributing any Prospectus, Statement of Additional
Information or reports prepared for its use in connection with the
offering of Shares for sale to the public, other than the expenses of
preparing, setting up in type, printing and distributing (i) Prospectuses
and Statements of Additional Information used in connection with the
registration and qualification of Shares under the Securities Act of 1933
or various state laws, (ii) any report or other communication to share-
holders of the Trust in their capacity as such and (iii) Prospectuses and
Statements of Additional Information sent to existing Shareholders and (b)
any other literature used by it in connection with such offering and (c)
advertising in connection with such offering.
- 9 -
<PAGE>
ARTICLE XII
-----------
REPORTS TO SHAREHOLDERS
-----------------------
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the transactions of the Trust
including financial statements which shall be certified at least annually
by independent public accountants.
- 10 -
<PAGE>
<PAGE>
AMENDED BY-LAWS
of
HERITAGE CASH TRUST
TABLE OF CONTENTS
Page
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Officers and Their Election . . . . . . . . . . . . . . . . . . . . . 1
Section 1: Officers . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2: Election of Officers . . . . . . . . . . . . . . . . . 1
Section 3: Resignations and Removals . . . . . . . . . . . . . . . 1
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Powers and Duties of Officers and Trustees . . . . . . . . . . . . . 1
Section 1: Trustees . . . . . . . . . . . . . . . . . . . . . . . 1
Section 2: Executive and Other Committees . . . . . . . . . . . . 1
Section 3: Chairman of The Trustees . . . . . . . . . . . . . . . 2
Section 4: President . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5: Treasurer . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6: Secretary . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7: Vice President . . . . . . . . . . . . . . . . . . . . 2
Section 8: Assistant Treasurer . . . . . . . . . . . . . . . . . . 3
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Shareholders' Meetings . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1: Special Meetings . . . . . . . . . . . . . . . . . . . 3
Section 2: Notice of Meeting . . . . . . . . . . . . . . . . . . . 3
Section 3: Place of Meeting . . . . . . . . . . . . . . . . . . . 3
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Trustees' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1: Special Meetings . . . . . . . . . . . . . . . . . . . 3
Section 2: Regular Meetings . . . . . . . . . . . . . . . . . . . 4
Section 3: Quorum . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 4: Notices of Meeting . . . . . . . . . . . . . . . . . . 4
Section 5: Place of Meeting . . . . . . . . . . . . . . . . . . . 4
Section 6: Special Action . . . . . . . . . . . . . . . . . . . . 4
Section 7: Action by Consent . . . . . . . . . . . . . . . . . . . 4
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Shares of Beneficial Interest . . . . . . . . . . . . . . . . . . . . 5
Section 1: Beneficial Interest . . . . . . . . . . . . . . . . . . 5
Section 2: Transfer of Shares . . . . . . . . . . . . . . . . . . 5
Section 3: Equitable Interest Not Recognized . . . . . . . . . . . 5
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Inspection of Books . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
- i -
<PAGE>
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Distribution Arrangements . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . 9
- ii -
<PAGE>
AMENDED BY-LAWS
of
HERITAGE CASH TRUST
ARTICLE I
OFFICERS AND THEIR ELECTION
---------------------------
Officers
--------
Section 1. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may from
time to time in their discretion appoint or elect. It shall not be
necessary for any Trustee or other officer to be a holder of shares in the
Trust.
Election of Officers
--------------------
Section 2. The President, Treasurer and Secretary shall be
chosen annually by the Trustees. Two or more offices may be held by a
single person except the offices of President and Secretary. The officers
shall hold office until their successors are chosen and qualified.
Resignations and Removals
-------------------------
Section 3. Any officer of the Trust may resign by filing a
written resignation with the President, the Trustees or the Secretary,
which resignation shall take effect on being so filed at such time as may
be therein specified. The Trustees may at any meeting remove any officer
by a majority vote of the voting Trustees.
ARTICLE II
POWERS AND DUTIES OF OFFICERS AND TRUSTEES
------------------------------------------
Trustees
--------
Section 1. The business and affairs of the Trust shall be
managed by the Trustees, and they shall have all powers necessary and
desirable to carry out their responsibilities, so far as such powers are
not inconsistent with the laws of the Commonwealth of Massachusetts, the
Declaration of Trust, or with these By-laws.
Executive And Other Committees
------------------------------
Section 2. The Trustees may elect from their own number an
executive committee to consist of not less than three nor more than five
members, which shall have the power and duty to conduct the current and
<PAGE>
ordinary business of the Trust, including the purchase and sale of
securities, while the Trustees are not in session, and such other powers
and duties as the Trustees may from time to time delegate to such
committee. The Trustees may also elect from their own number other
committees from time to time. The number composing such committees and
the powers conferred upon the same are to be determined by vote of the
Trustees.
Chairman Of The Trustees
------------------------
Section 3. The Trustees may, but need not, appoint from among
their number a Chairman. He shall perform such duties as the Trustees may
from time to time designate.
President
---------
Section 4. The President shall be the chief executive officer of
the Trust and, subject to the Trustees, shall have general supervision
over the business and policies of the Trust. When present, he shall
preside at all meetings of the Shareholders and the Trustees, and he may,
subject to the approval of the Trustees, appoint a Trustee to preside at
such meetings in his absence. The President shall perform such duties
additional to all of the foregoing as the Trustees may from time to time
designate.
Treasurer
---------
Section 5. The Treasurer shall be the principal financial and
accounting officer of the Trust. He or she shall deliver all funds and
securities of the Trust which may come into his or her hands to such bank
or trust company as the Trustees shall employ as Custodian in accordance
with Article IX of the Declaration of Trust. He or she shall have the
custody of the seal of the Trust. He or she shall make annual reports
regarding the business and condition of the Trust, which reports shall be
preserved in Trust records, and he or she shall furnish such other reports
regarding the business and condition of the Trust as the Trustees may from
time to time require. The Treasurer shall perform such additional duties
as the Trustees may from time to time designate.
Secretary
---------
Section 6. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at
their respective meetings. The Secretary shall perform such additional
duties as the Trustees may from time to time designate.
- 2 -
<PAGE>
Vice President
--------------
Section 7. Any Vice President of the Trust shall perform such
duties as the Trustees may from time to time designate.
Assistant Treasurer
-------------------
Section 8. Any Assistant Treasurer of the Trust shall perform
such duties as the Trustees may from time to time designate.
ARTICLE III
SHAREHOLDERS' MEETINGS
----------------------
Special Meetings
----------------
Section 1. A special meeting of the Shareholders of the Trust
shall be called by the Secretary whenever (i) ordered by the Trustees or
(ii) requested, for the purpose of removing a Trustee from office, in
writing by the holder or holders of at least 10% of the outstanding Shares
of the Trust entitled to vote. If the Secretary, when so ordered or
requested, refuses or neglects for more than 30 days to call such special
meeting, the Trustees or the Shareholders so requesting may, in the name
of the Secretary, call the meeting by giving notice thereof in the manner
required when notice is given by the Secretary.
Notice of Meeting
-----------------
Section 2. Except as above provided, notice of any special
meeting of the Shareholders shall be given by the notification of such
meeting at least 15 days before the meeting to such address as may be
registered with the Trust by the Shareholder.
Place of Meeting
----------------
Section 3. All special meetings of the Shareholders shall be
held at the principal place of business of the Trust in St. Petersburg,
Florida, or at such other place in the United States as the Trustees may
designate.
- 3 -
<PAGE>
ARTICLE IV
TRUSTEES' MEETINGS
------------------
Special Meetings
----------------
Section 1. Special meetings of the Trustees shall be called by
the Secretary at the written request of the President, the Treasurer, or
any two Trustees, and if the Secretary, when so requested, refuses or
fails for more than 24 hours to call such meeting, the President, the
Treasurer, or such two Trustees may, in the name of the Secretary, call
such meeting by giving due notice in the manner required when notice is to
be given by the Secretary.
Regular Meetings
----------------
Section 2. Regular meetings of the Trustees may be held without
call or notice at such places and at such times as the Trustees may from
time to time determine, provided that any Trustee who is absent when such
determination is made shall be given notice of the determination.
Quorum
------
Section 3. A majority of the Trustees shall constitute a quorum
for the transaction of business.
Notices of Meeting
------------------
Section 4. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the Secretary to each Trustee
orally or by mail, hand delivery or telegram. Such notice may be mailed,
postage prepaid, addressed to him at his
address as registered on the books of the Trust or, if not so registered,
at his last known address at least three days before the meeting or
delivered to him at least two days before the meeting, provided orally by
telephone at least 24 hours before the meeting or sent to him at least 24
hours before the meeting, by prepaid telegram addressed to him at said
registered address, if any, or if he has no such registered address, at
his last known address.
Place of Meeting
----------------
Section 5. All special meetings of the Trustees shall be held at
the principal place of business of the Trustees in St. Petersburg, Florida
or such other place in the United States as the person or persons
- 4 -
<PAGE>
requesting said meeting to be called may designate, but any meeting may
adjourn to any other place.
Special Action
--------------
Section 6. When all the Trustees shall be present at any
meeting, however called or wherever held, or shall assent to the holding
of the meeting without notice, or after the meeting shall sign a written
assent thereto on the record of such meeting, the acts of such meeting
shall be valid as if such meeting had been regularly held.
Action By Consent
-----------------
Section 7. Any action by the Trustees may be taken without a
meeting if a written consent thereto is signed by all the Trustees and
filed with the records of the Trustees' meeting, or by telephone consent
provided a quorum of Trustees participate in any such telephone meeting.
Such consent shall be treated as a vote of the Trustees for all purposes.
ARTICLE V
SHARES OF BENEFICIAL INTEREST
-----------------------------
Beneficial Interest
-------------------
Section 1. The beneficial interest in the Trust shall at all
times be divided into an unlimited number of transferable Shares without
par value, each of which shall represent an equal proportionate interest
in the class with each other Share of the class outstanding, none having
priority or preference over another.
Transfer Of Shares
------------------
Section 2. The Shares of the Trust shall be transferable, so as
to affect the rights of the Trust, only by transfer recorded on the books
of the Trust, in person or by attorney.
Equitable Interest Not Recognized
---------------------------------
Section 3. The Trust shall be entitled to treat the holder of
record of any Share or Shares of stock as the holder in fact thereof, and
shall not be bound to recognize any equitable or other claim or interest
in such Share or Shares on the part of any other person except as may be
otherwise expressly provided by law.
- 5 -
<PAGE>
ARTICLE VI
INSPECTION OF BOOKS
-------------------
The Trustees shall from time to time determine whether and to
what extent, and at what times and places, and under what conditions and
regulations the accounts and books of the Trust or any of them shall be
open to the inspection of the Shareholders; and no Shareholder shall have
any right to inspect any account or book or document of the Trust except
as conferred by law or otherwise by the Trustees or by resolution of the
Shareholders.
ARTICLE VII
CUSTODIAN
-----------
The Custodian employed by the Trust pursuant to Article IX of the
Declaration of Trust shall be required to enter into an agreement with the
Trust which shall contain in substance the following provisions:
(a) The Trust will cause all securities and funds owned by the
Trust to be delivered or paid to the Custodian.
(b) The Custodian will receive and receipt for any moneys due to
the Trust and deposit the same in its own banking department and in such
other banking institutions, if any, as the Custodian and Trustees may
approve. The Custodian shall have the sole power to draw upon any such
account.
(c) The Custodian shall release and deliver securities owned by
the Trust in the following cases only:
(i) Upon the sale of such securities for the account of
the Trust and receipt of payment therefor;
(ii) To the issuer thereof or its agent when such
securities are called, redeemed, retired or otherwise
become payable; provided that in any such case, the cash
is to be delivered to the Custodian;
(iii) To the issuer thereof or its agency for transfer
into the name of the Trust, the Custodian or a nominee of
either, or for exchange for a different number of bonds
or certificates representing the same aggregate face
amount or number or units; provided that in any such case
the new securities are to be delivered to the Custodian;
(iv) To the broker selling the same for examination,
in accord with the "street delivery" custom;
- 6 -
<PAGE>
(v) For exchange or conversion pursuant to any plan of
merger, consolidation, recapitalization, reorganization
or readjustment of the securities or the issuer of such
securities or pursuant to provisions of any deposit
agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the
Custodian;
(vi) In the case of warrants, rights, or similar
securities, the surrender thereof in the exercise of such
warrants, rights or similar securities or the surrender
of interim receipts or temporary securities for
definitive securities;
(vii) To any pledgee by way of pledge or hypothecation
to secure any loan, but only within the limits permitted
to the Trust by Article V, Section 1(p) of the
Declaration of Trust; and
(viii) For deposit in a system for the central handling
of securities.
(d) The Custodian shall pay out moneys of the Trust only upon
the purchase of securities for the account of the Trust and the delivery
in due course of such securities to the Custodian, or in connection with
the conversion, exchange or surrender of securities owned by the Trust as
set forth in (c), or for the repurchase of Shares issued by the Trust or
for the making of any disbursements authorized by the Trustees pursuant to
the Declaration of T rust or the By-Laws, or for the payment of any
expense or liability incurred by the Trust; provided that, in every case
where payment is made by the Custodian in advance of receipt of the
securities purchased, the Custodian shall be absolutely labile to the
Trust for such securities to the same extent as if the securities had been
received by the Custodian.
(e) The Custodian shall make deliveries of securities and
payments of cash only upon written instructions signed or initialed by
such officer or officers or other agent or agents of the Trust as may be
authorized to sign or initial such instructions by resolution of the
Trustees; it being understood that the Trustees may from time to time
authorize a different person or persons to sign or initial instructions
for different purposes.
The agreement between the Trust and the Custodian may contain any
such other provisions not inconsistent with the provisions of Article XI
or the Declaration of Trust or with these By-Laws as the Trustees may
approve.
Such agreement shall be terminable by either party upon written
notice to the other within such time not exceeding 60 days as may be
specified in the agreement; provided, however, that upon termination of
the agreement or inability of the Custodian to continue to serve, the
- 7 -
<PAGE>
Custodian shall, upon written notice of appointment of another bank or
trust company as custodian, deliver and pay over to such successor
custodian all securities and money held by it for account of the Trust.
In such case, the Trustees shall promptly appoint a successor custodian,
but in the event that no successor custodian can be found having the
required qualifications and willing to serve, it shall be the duty of the
Trustees to call as promptly as possible a special meeting of the
Shareholders to determine whether the Trust shall functions without a
custodian or shall be liquidated. If so directed by vote of the holders
of a majority of the outstanding shares, the Custodian shall deliver and
pay over all property of the Trust held by it as specified in such vote.
Such agreement shall also provide that, pending appointment of a
successor custodian or a vote of the Shareholders specifying some other
disposition of the funds and property, the Custodian shall not deliver
funds and property of the Trust to the Trust, but may deliver them to a
bank or trust company doing business in St. Petersburg, Florida of its own
selection having an aggregate capital, surplus and undivided profits, as
shown by its last published report, of not less than $2,000,000 as the
property of the Trust to be held under terms similar to those on which
they were held by the retiring custodian.
Any sub-custodian employed by the Custodian pursuant to
authorization to do so granted by the Trust pursuant to Article IX of the
Declaration of Trust shall be required to enter into an agreement with the
Custodian containing in substance the same provision as those described in
paragraphs (a) through (e) above, except that any agreement with a sub-
custodian performing its duties outside the United States and its
territories and possessions may omit or limit any of such conditions,
provided that any such omission or limitation shall be expressly approved
by a majority of the Trustees of the Trust.
ARTICLE VIII
SEAL
------------
The seal of the Trust shall be circular in form bearing the
inscription:
"HERITAGE CASH TRUST -- 1985"
ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of the Trust shall be the period of twelve months
ending on the day of in each calendar year.
- 8 -
<PAGE>
ARTICLE X
AMENDMENTS
----------
These By-Laws may be amended at any meeting of the Trustees of
the Trust by a majority vote, provided, however, that any amendment which
changes or affects the provisions of Article VII, Article X, or Article
XII shall be approved by a vote of a majority of the outstanding shares of
the Trust entitled to vote.
ARTICLE XI
DISTRIBUTION ARRANGEMENTS
-------------------------
Any agreement entered into for the sale of Shares of the Trust
pursuant to Article VII, Section 2 of the Declaration of Trust shall
require the other party thereto (the "Distributor"), whether acting as
principal or as agent, to use all reasonable efforts consistent with the
other business of the Distributor to secure purchasers for the Shares.
Such agreement shall require the Distributor to bear all expenses (a) of
printing and distributing any Prospectus, Statement of Additional
Information or reports prepared for its use in connection with the
offering of Shares for sale to the public, other than the expenses of
preparing, setting up in type, printing and distributing (i) Prospectuses
and Statements of Additional Information used in connection with the
registration and qualification of Shares under the Securities Act of 1933
or various state laws, (ii) any report or other communication to
shareholders of the Trust in their capacity as such and (iii) Prospectuses
and Statements of Additional Information sent to existing Shareholders and
(b) any other literature used by it in connection with such offering and
(c) advertising in connection with such offering.
ARTICLE XII
REPORTS TO SHAREHOLDERS
-----------------------
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the transactions of the Trust
including financial statements which shall be certified at least annually
by independent public accountants.
Dated: June 21, 1985, as amended and restated on
May 18, 1993
- 9 -
<PAGE>
<PAGE>
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
Agreement made as of November 22, 1985 between Heritage Cash
Trust, a Massachusetts business trust ("Trust"), and RJ Fund Management,
Inc. ("Manager").
WHEREAS, the Trust is engaged in business as an open-end,
diversified management investment company and is so registered under the
Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Trust desires to retain the Manager as investment
adviser and administrator to furnish administrative, investment advisory
and portfolio management services to the Trust and the Manager is willing
to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. APPOINTMENT. The Trust hereby appoints RJ Fund Management,
Inc. as investment adviser and administrator of the Trust for the period
and on the terms set forth in this Agreement. RJ Fund Management, Inc.
accepts such appointment and agrees to render the services herein set
forth for the compensation herein provided. In all matters relating to
the performance of this Agreement, the Manager will act in conformity with
the Declaration of Trust, Bylaws and current Prospectus and Statement of
Additional Information of the Trust and with the instructions and
directions of the Trust's Board of Trustees and will conform to and comply
with the requirements of the 1940 Act and all other applicable federal or
state laws and regulations.
2. DUTIES AS INVESTMENT ADVISER. Subject to the supervision of
the Trust's Board of Trustees, the Manager will provide a continuous
investment program for the Trust's portfolio, including investment
research and management with respect to all securities, investments and
cash equivalents in the portfolio. The Manager will determine from time
to time what securities and other investments will be purchased, retained
or sold by the Trust. The Manager will provide the services under this
Agreement in accordance with the Trust's investment objective, policies
and restrictions as stated in the Trust's current Prospectus and Statement
of Additional Information ("Prospectus").
The Manager will place orders pursuant to its investment
determinations for the Trust either directly with the issuer or through
any brokers or dealers. In the selection of brokers or dealers and the
placement of orders for the purchase and sale of portfolio investments for
the Trust, the Manager shall use its best efforts to obtain for the Trust
the most favorable price and execution available, except to the extent
that it may be permitted to pay higher brokerage commissions for brokerage
and research services as described below. In using its best efforts to
obtain the most favorable price and execution available, the Manager,
bearing in mind the Trust's best interests at all times, shall consider
all factors it deems relevant, including by way of illustration, price,
<PAGE>
the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into
account market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of service
rendered by the broker or dealer in other transactions. Subject to such
policies as the Trustees of the Trust may determine, the Manager shall not
be deemed to have acted unlawfully or to have breached any duty created by
this Agreement or otherwise solely by reason of its having caused the
Trust to pay a broker or dealer that provides brokerage and research
services to the Manager an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction if the
Manager determines in good faith that such amount of commission is
reasonable in relation to the value of the brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the Manager's overall responsibilities with
respect to the Trust and to other clients of the Manager as to which the
Manager exercises investment discretion. In no instance will portfolio
securities be purchased from or sold to the Manager or any affiliated per-
son of the Manager. The Trust agrees that any entity or person associated
with the Manager which is a member of a national securities exchange is
authorized to effect any transaction on such exchange for the account of
the Trust which is permitted by Section ll(a) of the Securities Exchange
Act of 1934 and Rule lla2-2(T) thereunder, and the Trust has consented to
the retention of compensation for such transactions in accordance with
Rule lla2-2(T)(a)(2)(iv).
The Manager will provide the Board of Trustees of the Trust on a
regular basis with economic and investment analyses and reports and make
available to the Board upon request any economic, statistical and
investment services normally available to institutional or other customers
of the Manager.
Any of the foregoing functions specified in this Paragraph 2 may
be delegated by the Manager, at the Manager's expense, to the Putnam
Management Company, Inc. or another appropriate party, subject to such
approval by the Board of Trustees and shareholders as may be required by
the 1940 Act. The Manager shall oversee the performance of delegated
functions by any such party and shall furnish to the Trust quarterly
evaluations and analyses concerning the performance of delegated
responsibilities by these parties.
3. DUTIES AS ADMINISTRATOR. The Manager will assist in
administering the Trust's affairs subject to the supervision of the
Trust's Board of Trustees and the following understandings:
(a) The Manager will supervise all aspects of the
Trust's operation except as hereinafter set forth provided,
however, that nothing herein contained shall be deemed to relieve
or deprive the Board of Trustees of the Trust of its
responsibility for and control of the conduct of the Trust's
affairs.
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(b) The Manager will investigate and, with appropriate
approval by the Trust's Board of Trustees, select necessary
service companies to conduct certain operations of the Trust,
including the Trust's custodian, transfer agent, dividend
disbursing agent, accountant and attorney.
(c) The Manager will provide the Trust with such ad-
ministrative and clerical services as are deemed necessary or
advisable by the Trust's Board of Trustees, including the
maintenance of certain of the Trust's books and records which are
not maintained by the Trust's Custodian or Subadviser.
(d) The Manager will arrange, but not pay, for the
periodic updating of Prospectuses and supplements thereto, proxy
material, tax returns and reports to the Trust's shareholders and
the Securities and Exchange Commission.
(e) The Manager will provide the Trust with, or obtain
for it, adequate office space and all necessary office equipment
and services, including telephone service, heat, utilities,
stationery supplies and similar items.
(f) The Manager will make itself available to receive
and will transmit purchase and redemption requests to the Trust's
transfer agent as promptly as practicable and will hold itself
available to respond to shareholder
4. SERVICES NOT EXCLUSIVE. The services furnished by the
Manager hereunder are not to be deemed exclusive and the Manager shall be
free to furnish similar services to others so long as its services under
this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Manager hereby agrees that all records
which it maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Manager further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Trust will
bear all expenses not specifically assumed by the Manager incurred in its
operations and the offering of shares. That is, the Trust will pay (a)
brokerage commissions relating to securities purchased or sold by the
Trust or any losses incurred in connection therewith; (b) fees payable to
and expenses incurred on behalf of the Trust by the Manager; (c) expenses
of organizing the Trust, (d) filing fees and expenses relating to the
registration and qualification of the Trust's shares under federal or
state securities laws and maintaining such registrations and
qualifications; (e) distribution fees; (f) fees and salaries payable to
the Trust's directors and officers who are not officers or employees of
the Manager or interested persons (as defined in the 1940 Act) of any
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<PAGE>
investment adviser or underwriter of the Trust; (g) taxes (including any
income or franchise taxes) and governmental fees; (h) costs of any
liability, uncollectible items of deposit and other insurance or fidelity
bonds; (i) any costs, expenses or losses arising out of any liability of
or claim for damage or other relief asserted against the Trust for
violation of any law; (j) legal, accounting and auditing expenses,
including legal fees of special counsel for the independent directors; (k)
charges of custodians, transfer agents and other agents; (1) costs of
preparing share certificates; (m) expenses of setting in type and printing
prospectuses and supplements thereto for existing shareholders, reports
and statements to shareholders and proxy material; (n) any extraordinary
expenses (including fees and disbursements of counsel) incurred by the
Trust; and (o) fees and other expenses incurred in connection with
membership in investment company organizations.
The Trust may pay directly any expense incurred by it in its normal
operations and, if any such payment is consented to by the Manager and
acknowledged as otherwise payable by the Manager pursuant to this
Agreement, the Trust may reduce the fee payable to the Manager pursuant to
paragraph 7 hereof by such amount. To the extent that such deductions
exceed the fee payable to the Manager on any monthly payment date, such
excess shall be carried forward and deducted in the same manner from the
fee payable on succeeding monthly payment dates.
In addition, if the expenses borne by the Trust in any fiscal year
exceed the applicable expense limitations imposed by the securities
regulations of any state in which shares are registered or qualified for
sale to the public, the Manager will reimburse the Trust for any excess up
to the amount of the fee payable to it during that fiscal year pursuant to
paragraph 7 hereof.
7. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement, effective from the date of this
Agreement, the Trust will pay the Manager a fee, computed daily and paid
monthly, at the following annual rates as percentages of the Trust's
average daily net assets:
Advisory Fee as %
of Average Daily
Average Daily Net Assets Net Assets
------------------------ -----------------
First $500 million . . . . . . . . . . . .500%
Second $500 million . . . . . . . . . . .475%
Third $500 million . . . . . . . . . . . .450%
Fourth $500 million .425%
Over $2 billion . . . . . . . . . . . . .400%
8. LIMITATION OF LIABILITY OF THE MANAGER. The Manager
shall not be liable for any error of judgment or mistake of law or for any
loss suffered by the Trust in connection with the matters to which this
Agreement relate except a loss resulting from the willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
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Agreement. Any person, even though also an officer, partner, employee, or
agent of the Manager, who may be or become an officer, director, employee
or agent of the Trust shall be deemed, when rendering services to the
Trust or acting in any business of the Trust, to be rendering such
services to or acting solely for the Trust and not as an officer, partner,
employee, or agent or one under the control or direction of the Manager
even though paid by it.
9. DURATION AND TERMINATION. This Agreement shall become
effective upon its execution, and shall remain in full force and effect
continuously thereafter otherwise until terminated as follows:
(a) The Trust may at any time terminate this Agreement
by providing not more than 60 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager; or
(b) If (i) the Trustees of the Trust or the shareholders
by the affirmative vote of a majority of the outstanding shares
of the Trust, and (ii) a majority of the Trustees of the Trust
who are not interested persons of the Trust or of the Manager or
of the Subadviser, by vote cast in person at a meeting called for
the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then
this Agreement shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of
the Trust for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein,
the Manager may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder; or
(c) The manager may at any time terminate this Agreement
by not less than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Trust.
Action by the Trust under paragraph (a) above may be taken either
(i) by vote of majority of its Trustees, or (ii) by the affirmative vote
of a majority of the outstanding shares of the Trust.
This Agreement will automatically and immediately terminate in
the event of its assignment. Termination of this Agreement pursuant to
this Section 9 shall be without the payment of any penalty. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such
terms have in the 1940 Act.)
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
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change, waiver, discharge or termination is sought, and no amendment of
this Agreement shall be effective until approved by vote of the holders of
a majority of the Trust's outstanding voting securities.
11. NAME OF TRUST. The Trust may use the name "Heritage" or
"Heritage Cash Trust" only for so long as this Agreement or any extension,
renewal or amendment hereof remains in effect, including any similar
agreement with any organization which shall have succeeded to the business
of the Manager. At such time as such an agreement shall no longer be in
effect, the Trust will (to the extent that it lawfully can) cease to use
any name derived from Heritage Cash Trust, Raymond, James & Associates,
Inc. or RJ Fund Management, Inc. or any successor organization.
12. MISCELLANEOUS. The captions in this Agreement are included
for convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or effect.
If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their
respective successors.
IN WITNESS WHEREOF, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
Dated: November 22, 1985
Attest: HERITAGE CASH TRUST
By: /s/ Marilyn G. Ract By: /s/ Richard K. Riess
-------------------------- ---------------------------
Attest: RJ FUND MANAGEMENT, INC.
By: /s/ Jennifer A. Tash By: /s/ Jeffrey P. Julien
-------------------------- ---------------------------
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<PAGE>
<PAGE>
SUBADVISORY AGREEMENT
Subadvisory Agreement executed as of November 21, 1985 between RJ
Fund Management, Inc., a Florida corporation (the "Manager"), and The
Putnam Management Company, Inc., a Delaware corporation (the
"Subadviser").
Witnesseth:
That in connection with the mutual covenants herein contained, it
is agreed as follows:
1. SERVICES TO BE RENDERED BY SUBADVISER TO THE TRUST
(a) Subject always to the control of the Trustees and Manager
of Heritage Cash Trust (the "Trust"), a Massachusetts business trust, the
Subadviser, at its expense, will furnish continuously an investment
program for the Trust. The Subadviser will make investment decisions on
behalf of the Trust and place all orders for the purchase and sale of
portfolio securities. In the performance of its duties, the Subadviser
will comply with the provisions of this Agreement and the Trust's
Declaration of Trust, Bylaws and Registration Statement as from time to
time amended, any relevant undertakings provided to State securities
regulators, and the stated investment objective, policies and restrictions
of the Trust, and will use its best efforts to safeguard and promote the
welfare of the Trust, and to comply with other policies which the Trustees
or the Manager, as the case may be, may from time to time determine, and
shall exercise the same care and diligence as are expected of the
Trustees. The Subadviser shall make its officers and employees, including
portfolio managers and research analysts, available to the Trustees and
Manager from time to time at reasonable times to review investment
policies of the Trust and to consult with the Trustees and Manager
regarding the investment affairs of the Trust and economic, statistical
and investment matters relevant to the Subadviser's duties hereunder, in
each case of the sort typically provided by the Subadviser to investment
company clients with objectives and policies comparable to those of the
Trust.
(b) The Subadviser, at its expense, will furnish (i) all
necessary investment and management facilities, including salaries of
personnel, required for it to execute its duties faithfully and (ii)
administrative facilities, including bookkeeping, clerical personnel and
equipment necessary for the efficient conduct of the investment affairs of
the Trust (excluding determination of net asset value and shareholder ac-
counting services).
(c) The Subadviser, at its expense, also will provide the
Manager with compliance reports relating to the Trust's investment
operations of the type that the Subadviser generally prepares for its
<PAGE>
investment company clients including, but not limited to, (i) quarterly
reports relating to guidelines and standards of review for repurchase
agreements, (ii) monthly reports relating to the Trust's amortized cost
procedures (including the relationship of the dollar weighted average ma-
turity of the portfolio to market conditions, actions taken to prevent
deviations of the market-based price per Trust share and the amortized
cost price per Trust share and actions taken if the rating of a portfolio
instrument was reduced below the Trust's standard for investment) and
portfolio strategies employed, and (iii) weekly reports which monitor
investment restrictions and other guidelines of the prospectus.
(d) In the selection of brokers or dealers and the placement
of orders for the purchase and sale of portfolio investments for the
Trust, the Subadviser shall use its best efforts to obtain for the Trust
the most favorable price and execution available, except to the extent it
may be permitted to pay higher brokerage commissions for brokerage and
research services as described below. In using its best efforts to obtain
the most favorable price and execution available, the Subadviser, bearing
in mind the Trust's best interests at all times, shall consider all
factors it deems relevant, including by way of illustration, price, the
size of the transaction, the nature of the market for the security, the
amount of the commission, the timing of the transaction taking into
account market prices and trends, the reputation, experience and financial
stability of the broker or dealer involved and the quality of service
rendered by the broker or dealer in other transactions. Subject to such
policies as the Trustees of the Trust may determine, the Subadviser shall
not be deemed to have acted unlawfully or to have breached any duty
created by this Agreement or otherwise solely by reason of its having
caused the Trust to pay a broker or dealer that provides brokerage and
research services to the Subadviser an amount of commission for effecting
a portfolio investment transaction in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction
if the Subadviser determines in good faith that such amount of commission
is reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of either that
particular transaction or the Subadviser's overall responsibilities with
respect to the Trust and to the Trust and to other clients of the
Subadviser as to which the Subadviser exercises investment discretion. As
provided in the Investment Advisory and Administration Agreement between
the Manager and the Trust referred to in Section 4 below, the Trust agrees
that any entity or person associated with the Manager which is a member of
a national securities exchange is authorized to effect any transaction on
such exchange for the account of the Trust which is permitted by Section
11(a) of the Securities Exchange Act of 1934, as amended (the "1934 Act"),
and Rule 11a2-2(T) thereunder, and the Trust has consented to the
retention of compensation for such transactions in accordance with Rule
11a2-2(T)(a)(2)(iv).
(e) The Subadviser shall not be obligated to pay any expenses
of or for the Trust not expressly assumed by the Subadviser pursuant to
this Section 1 and 2.
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<PAGE>
2. BOOKS AND RECORDS
In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940, as amended (the "1940 Act"), the
Subadviser agrees that all records it maintains for the Trust are the
property of the Trust and further agrees to surrender promptly to the
Trust or Manager any such records upon the Trust's or Manager's request.
The Subadviser further agrees to maintain for the Trust the records the
Trust is required to maintain under Rule 31a-l(b)(3), (5), (6), (7), (9)
and (10), and those records required by Rule 31a-l(b)(l) pertaining to the
purchases and sales of securities, but excluding records in connection
with the sales and redemptions of the Trust's own securities. The
Subadviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records it maintains for the Trust.
3. OTHER AGREEMENTS
It is understood that any of the shareholders, Trustees, officers
and employees of the Trust may be a shareholder, director, officer or
employee of, or be otherwise interested in the Subadviser and in any
person controlled by or under common control with the Subadviser, and that
the Subadviser and any person controlled by or under common control with
the Subadviser may have an interest in the Trust. It is also understood
that the Subadviser and persons controlled by or under common control with
the Subadviser have and may have advisory, management service or other
contracts with other organizations and persons, and may have other
interests and businesses; provided, however, that neither the Subadviser
nor any of its investment adviser affiliates operating under the Putnam
name shall undertake to act as investment adviser or subadviser for any
other registered investment company offered to the general public that is
not sponsored by the Subadviser or an affiliate of the Subadviser (other
than such arrangement as may exist on the date of this Subadvisory
Agreement) except upon not less than 60 days' notice in writing to the
Manager and the Trust.
4. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUBADVISER
The Manager will pay to the Subadviser as compensation for the
Subadviser's services rendered and for the expenses borne by the
Subadviser pursuant to Section 1 and 2, a fee computed and paid monthly at
an annual rate equal to 45% of fees payable by the Trust to the Manager
under the Investment Advisory and Administration Agreement between the
Manager and the Trust on the first $150 million in Trust assets and 30% of
fees payable on assets over $150 million. Such fee shall be paid by the
Manager and not by the Trust without regard to any reduction in the fees
paid to the Manager under the Investment Advisory and Administration
Agreement between the Manager and the Trust as a result of any statutory
or regulatory or voluntary limitation on investment company expenses.
Such fee shall be payable for each month within 10 business days after the
end of such month. If the Subadviser shall serve for less than the whole
of a month, the foregoing compensation shall be prorated.
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<PAGE>
5. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENT OF THIS AGREEMENT
This Agreement shall automatically terminate, without the payment
of any penalty, in the event of its assignment or in the event that the
Investment Advisory and Administration Agreement between the Manager and
the Trust shall have terminated for any reason; and this Agreement shall
not be amended unless such amendment be approved at a meeting by the
affirmative vote of a majority of the outstanding shares of the Trust, and
by the vote, cast in person at a meeting called for the purpose of voting
on such approval, of a majority of the Trustees of the Trust who are not
interested persons of the Trust or of the Manager or of the Subadviser.
6. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective upon its execution, and
shall remain in full force and effect continuously thereafter (unless
terminated automatically as set forth in Section 5) until terminated as
follows:
(a) The Trust may at any time terminate this Agreement
by providing not more than 60 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager and
the Subadviser; or
(b) If (i) the Trustees of the Trust or the shareholders
by the affirmative vote of a majority of the outstanding shares
of the Trust, and (ii) a majority of the Trustees of the Trust
who are not interested persons of the Trust or of the Manager or
of the Subadviser, by vote cast in person at a meeting called for
the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then
this Agreement shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that if the
continuance of this Agreement is submitted to the shareholders of
the Trust for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder; or
(c) The Manager may at any time terminate this Agreement
by not less than 60 days' written notice delivered or mailed by
registered mail, postage prepaid, to the Subadviser, and the
Subadviser may at any time terminate this Agreement by not less
than 90 days' written notice delivered or mailed by registered
mail, postage prepaid, to the Manager.
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Action by the Trust under (a) above may be taken either (i) by
vote of a majority of its Trustees, or (ii) by the affirmative vote of a
majority of the outstanding Shares of the Trust.
Termination of this Agreement pursuant to this Section 6 shall be
without the payment of any penalty. Upon termination of this Agreement,
the duties of the Manager delegated to the Subadviser under this Agreement
automatically revert to the Manager.
7. CERTAIN INFORMATION
The Subadviser shall promptly notify the Manager in writing of
the occurrence of any of the following events:
(a) the Subadviser shall fail to be registered as an
investment adviser under the 1940 Act, as amended from time to
time, and under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or otherwise
have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board or body, involving the affairs of the Trust;
(c) the Subadviser shall cease to be a direct or
indirect wholly owned subsidiary of Marsh & McLennan Companies,
Inc.;
(d) the President or Executive Vice President of the
Subadviser or the portfolio manager of the Trust shall have
changed; or
(e) any other occurrence that might affect the ability
of the Subadviser to provide the services provided for under this
Agreement.
8. CERTAIN DEFINITIONS
For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding Shares" means the affirmative vote, at a duly
called and held meeting of shareholders, of the lesser of: (a) the holders
of 67% or more of the Shares present (in person or by proxy) and entitled
to vote at such meeting if the holders of more than 50% of the Shares
entitled to vote at such meeting are present in person or by proxy, or (b)
the holders of more than 50% of Shares entitled to vote at such meeting.
For the purposes of this Agreement, the terms "affiliated
person," "control," "interested person" and "assignment" shall have their
respective meanings defined in the 1940 Act and the rules and regulations
thereunder subject, however, to such exemptions as may be granted by the
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<PAGE>
Securities and Exchange Commission under said Act; the term "specifically
approve at least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder; and the term
"brokerage and research services" shall have the meaning given in the 1934
Act and the rules and regulations thereunder.
9. NONLIABILITY OF SUBADVISER
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Subadviser, or reckless disregard of its
obligations and duties hereunder, the Subadviser shall not be subject to
any liability to the Trust, or to any shareholder of the Trust, for any
act or omission in the course of, or connected with, rendering services
hereunder.
10. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS
A copy of the Declaration of Trust of the Trust is on file with
the Secretary of the Commonwealth of Massachusetts, and notice is hereby
given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders
individually but are binding only upon the assets and property of the
Trust.
IN WITNESS WHEREOF, RJ Fund Management, Inc. and The Putnam
Management Company, Inc. have each caused this instrument to be signed in
duplicate on its behalf by its duly authorized representative, all as of
the day and year first above written.
Dated: November 21, 1985
Attest: RJ FUND MANAGEMENT, INC.
By: /s/ Jennifer A. Tash By: /s/ Richard K. Riess
-------------------------- -----------------------------------
Attest: THE PUTNAM MANAGEMENT COMPANY, INC.
By: /s/ Secretary By: /s/ D. Walsh
-------------------------- -----------------------------------
Executive Vice Pres.
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<PAGE>
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT, made this 22nd day of November,
1985, by and between Heritage Cash Trust, a Massachusetts business trust
(the "Trust") and Raymond, James & Associates, Inc. ("Raymond, James").
WHEREAS, the Trust is registered as an open-end, diversified
investment company under the Investment Company Act of 1940 (the "1940
Act") and has registered its shares of beneficial interest (the "Shares")
for sale to the public under the Securities Act of 1933 (the "1933 Act")
and various state securities laws; and
WHEREAS, the Trust wishes to retain Raymond, James as the Trust's
Distributor in connection with the offering and sale of the Shares and to
furnish certain other services to the Trust as specified in this
Agreement; and
WHEREAS, this Agreement has been approved by a vote of the
Trust's Board of Trustees and certain disinterested Trustees in conformity
with Paragraph (b)(2) of Rule 12b-1 under the 1940 Act; and
WHEREAS, Raymond, James is willing to act as Distributor and to
furnish such services on the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. The Trust hereby appoints Raymond, James as Distributor in
connection with the offering and sale of the Shares. The Trust authorizes
Raymond, James, as exclusive agent for the Trust, subject to applicable
federal and state law and the Declaration of Trust, Bylaws and current
Prospectus and Statement of Additional Information of the Trust: (a) to
promote the Trust; (b) to solicit orders for the purchase of the Shares
subject to such terms and conditions as the Trust may specify; and (c) to
accept orders for the purchase of the Shares on behalf of the Trust.
Raymond, James shall offer the Shares on an agency or "best efforts" basis
under which the Trust shall only issue such Shares as are actually sold.
2. The public offering price of the Shares shall be the net
asset value per share (as determined by the Trust) of the outstanding
Shares of the Trust. The net asset value of the Trust shall be calculated
by the amortized cost method pursuant to Rule 2a-7 under the 1940 Act for
so long as the Trust shall meet the conditions of that rule. The Trust
shall make available to Raymond, James a statement of each computation of
net asset value and of the details entering into such computation.
3. As compensation for the services performed and the expenses
assumed by Raymond, James under this Agreement including, but not limited
to, any commissions paid for sales of Shares, the Trust shall pay Raymond,
James, as promptly as possible after the last day of each month, a fee,
accrued daily, of .15% per annum of the Trust's average daily net assets.
The first payment of the fee shall be made as promptly as possible at the
<PAGE>
end of the month next succeeding the effective date of this Agreement and
shall constitute a full payment of the fee due Raymond, James for all
services prior to that date. If this Agreement is terminated as of any
date not the last day of a month, such fee shall be paid as promptly as
possible after such date of termination, shall be based on the average
daily net assets of the Trust in that period from the beginning of such
month to such date of termination, and shall be that proportion of such
average daily net assets as the number of days in such period bears to the
number of days in such month. Each such payment shall be accompanied by a
report of the Trust prepared either by the Trust or by State Street Bank
and Trust Company that shall show the amount properly payable to Raymond,
James under this Agreement and the detailed computation thereof.
4. As used in this Agreement, the term "Registration Statement"
shall mean the Registration Statement most recently filed by the Trust
with the Securities and Exchange Commission and effective under the 1933
Act, as such Registration Statement is amended by any amendments thereto
at the time in effect, and the terms "Prospectus" and "Statement of
Additional Information" shall mean the current form of Prospectus and
Statement of Additional Information filed by the Trust as part of the
Registration Statement.
5. Raymond, James shall finance activity which is intended to
result in the sale and retention of Trust shares including, but not
limited to, 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,
preparation and distribution of advertising material and sales literature
and payments to dealers whose customers purchase Trust shares. In
connection with such sales and offers of sale, the Trust shall not be
responsible in any way for any other information, statements or
representations given or made by Raymond, James or its representatives or
agents, except such statements or representations as are contained in the
Prospectus, Statement of Additional Information or in information
furnished in writing to Raymond, James by the Trust. Except as
specifically provided in this Agreement, the Trust shall bear none of the
expenses of Raymond, James in connection with its offer and sale of the
Shares.
6. The Trust agrees, at its own expense, to register the Shares
with the Securities and Exchange Commission, state and other regulatory
bodies, and to prepare and file from time to time such Prospectuses,
amendments, reports and other documents as may be necessary to maintain
the Registration Statement. The Trust shall bear all expenses related to
preparing and typesetting such Prospectuses and other materials required
by law and such other expenses, including printing and mailing expenses,
related to the Trust's communications with persons who are shareholders of
the Trust.
7. The Trust agrees to indemnify, defend and hold harmless
Raymond, James, its several officers and directors, and any person who
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controls Raymond, James within the meaning of Section 15 of the 1933 Act
from and against any and all claims, demands, liabilities and expenses
(including the cost of investigating or defending such claims, demands or
liabilities and any counsel fees incurred in connection therewith) which
Raymond, James, its officers or Trustees, or any such controlling person
may incur under the 1933 Act or under common law or otherwise arising out
of or based upon any alleged untrue statement of a material fact contained
in the Registration Statement, Prospectus or Statement of Additional
Information or arising out of or based upon any alleged omission to state
a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading, provided that in no
event shall anything contained in this Agreement be construed so as to
protect Raymond, James against any liability to the Trust or its
shareholders to which Raymond, James would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations
and duties under this Agreement.
8. Raymond, James agrees to indemnify, defend and hold harmless
the Trust, its several officers and directors, and any person who controls
the Trust within the meaning of Section 15 of the 1933 Act from and
against any and all claims, demands, liabilities and expenses (including
the cost of investigating or defending such claims, demands or liabilities
and any counsel fees incurred in connection therewith) which the Trust,
its officers or Trustees, or any such controlling person may incur under
the 1933 Act or under common law or otherwise arising out of or based upon
any alleged untrue statement of a material fact contained in information
furnished in writing by Raymond, James to the Trust for use in the
Registration Statement, Prospectus or Statement of Additional Information
or arising out of or based upon any alleged omission to state a material
fact in connection with such information required to be stated in the
Registration Statement or Prospectus or necessary to make such information
not misleading.
9. The Trust reserves the right at any time to withdraw all
offerings of the Shares by written notice to the Distributor at its
principal office.
10. The Trust shall not issue certificates representing Shares.
11. Raymond, James at its sole discretion may repurchase Shares
offered for sale by the shareholders. Repurchase of Shares by Raymond,
James shall be at the net asset value next determined after a repurchase
order has been received. Raymond, James will receive no commission or
other remuneration for repurchasing Shares other than the fee set forth in
paragraph 3 hereof. On each business day, Raymond, James shall notify by
telex or in writing the Trust and State Street Bank and Trust Company, the
Trust's transfer agent, of the orders for repurchase of shares received by
Raymond, James since the last such report, the amount to be paid for such
Shares, and the identity of the shareholders offering Shares for
repurchase. Upon such notice, the Trust shall pay Raymond, James such
amounts as are required by Raymond, James for the repurchase of such
- 3 -
<PAGE>
Shares in cash or in the form of a credit against moneys due the Trust
from Raymond, James as proceeds from the sale of Shares. The Trust
reserves the right to suspend such repurchases upon written notice to
Raymond, James. Raymond, James further agrees to act as agent for the
Trust to receive and transmit promptly to the Trust's transfer agent
shareholder requests for redemption of Shares.
12. Raymond, James is an independent contractor and shall be an
agent for the Trust only with respect to the sale and repurchase of the
Shares.
13. The services of Raymond, James to the Trust under this
Agreement are not to be deemed exclusive, and the Distributor shall be
free to render similar services or other services to others so long as its
services hereunder are not impaired thereby.
14. Raymond, James shall prepare reports for the Board of
Trustees of the Trust upon request showing information concerning
expenditures related to this Agreement.
15. As used in this Agreement, the term "net asset value" shall
have the meanings ascribed to it in the Trust's Declaration of Trust; and
the terms "assignment," "interested person," and "majority of the
outstanding voting securities" shall have the meanings given to them by
Section 2(a) of the 1940 Act, subject to such exemptions as may be granted
by the Securities and Exchange Commission by any rule, regulation or
order.
16. Subject to the provisions of paragraphs 17 and 18 below,
this Agreement will remain in effect for one year from the date of its
execution and from year to year thereafter, provided that Raymond, James
does not notify the Trust in writing at least 60 days' prior to the
expiration date in any year that it does not wish continuance of the
Agreement for an additional year.
17. This Agreement shall automatically terminate in the event of
its assignment and may be terminated at any time without the payment of
any penalty by the Trust or by the Distributor on 60 days written notice
to the other party. The Trust may effect such termination by a vote of
(i) a majority of the Trust's Board of Trustees, (ii) a majority of the
Trustees who are not interested persons of the Trust and who have no
direct or indirect financial interest in the operation of the Trust's
Distribution Plan pursuant to Rule 12b-1 under the 1940 Act in this
Agreement or in any agreement related to the Trust's Distribution Plan
(the "Rule 12b-1 Directors"), or (iii) a majority of the outstanding
voting securities of the Trust.
18. This Agreement shall be submitted for approval to the Board
of Trustees of the Trust annually and shall continue in effect only so
long as specifically approved annually (i) by a majority vote of the
Trust's Board of Trustees, and (ii) by the vote of a majority of the Rule
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<PAGE>
12b-1 Trustees of the Trust, cast in person at a meeting called for the
purpose of voting on such approval.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers thereunto duly authorized.
Dated: November 22, 1985
Attest: HERITAGE CASH TRUST
By: /s/ Jennifer A. Tash By: /s/ Richard K. Riess
------------------------ -------------------------
Attest: RAYMOND, JAMES & ASSOCIATES, INC.
By: /s/ Martha E. Dunbar By: /s/ Thomas A. James
-------------------------- -----------------------------
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<PAGE>
<PAGE>
CUSTODIAN CONTRACT
Between
HERITAGE CASH TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
1. Employment of Custodian and Property to be Held By It . . . 1
2. Duties of the Custodian with Respect to Property of the
Fund Held by the Custodian . . . . . . . . . . . . . . . . . 2
2.1 Holding Securities . . . . . . . . . . . . . . . . . 2
2.2 Delivery of Securities . . . . . . . . . . . . . . . 2
2.3 Registration of Securities . . . . . . . . . . . . . 7
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . 7
2.5 Payments for Shares . . . . . . . . . . . . . . . . 8
2.6 Investment and Availability of Federal Funds . . . . 8
2.7 Collection of Income . . . . . . . . . . . . . . . . 9
2.8 Payment of Fund Moneys . . . . . . . . . . . . . . . 10
2.9 Liability for Payment in Advance of Receipt of
Securities Purchased . . . . . . . . . . . . . . . . 12
2.10 Payments for Repurchases or Redemptions of Shares
of the Fund . . . . . . . . . . . . . . . . . . . . 12
2.11 Appointment of Agents . . . . . . . . . . . . . . . 13
2.12 Deposit of Fund Assets in Securities Systems . . . . 14
2.13 Segregated Account . . . . . . . . . . . . . . . . . 17
2.14 Ownership Certificates for Tax Purposes . . . . . . 18
2.15 Proxies . . . . . . . . . . . . . . . . . . . . . . 18
2.16 Communications Relating to Fund Portfolio
Securities . . . . . . . . . . . . . . . . . . . . . 18
2.17 Proper Instructions . . . . . . . . . . . . . . . . 19
2.18 Actions Permitted without Express Authority . . . . 20
2.19 Evidence of Authority . . . . . . . . . . . . . . . 21
3. Duties of Custodian with Respect to the Books of Account
and Calculation of Net Asset Value and Net Income . . . . . 21
4. Records . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5. Opinion of Fund's Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . 23
6. Reports to Fund by Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . 23
7. Compensation of Custodian . . . . . . . . . . . . . . . . . 23
8. Responsibility of Custodian . . . . . . . . . . . . . . . . 23
9. Effective Period, Termination and Amendment . . . . . . . . 25
10. Successor Custodian . . . . . . . . . . . . . . . . . . . . 26
11. Interpretive and Additional Provisions . . . . . . . . . . . 28
<PAGE>
12. Additional Funds . . . . . . . . . . . . . . . . . . . . . . 28
13. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . 28
14. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . 29
15. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 29
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Heritage Cash Trust, a business trust
organized and existing under the laws of Massachusetts, having its
principal place of business at 1400-66th Street North, St. Petersburg,
Florida 33710 hereinafter called the "Fund", and State Street Bank and
Trust Company, a Massachusetts corporation, having its principal place of
business at 225 Franklin Street, Boston, Massachusetts, 02110, hereinafter
called the "Custodian",
WITNESSETH: That in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
-----------------------------------------------------
The Fund hereby employs the Custodian as the custodian of its
assets pursuant to the provisions of the Fund's Declaration of Trust and
the terms and conditions hereof. The Fund agrees to deliver to the
Custodian all securities and cash owned by the Fund, and all payments of
income, principal and capital distributions received by the Fund with
respect to all securities it owns from time to time, and the cash
consideration received by the Fund for such new or treasury shares of
beneficial interest, without par value ("Shares") of the Fund as may be
issued or sold from time to time. The Custodian shall not be responsible
for any property of the Fund held or received by the Fund and not
delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 2.17), the Custodian may from time to time employ one or more
sub-custodians, but only after the prior express written consent of the
Fund in accordance with an applicable vote by its Board of Trustees, and
provided that the Custodian shall have no more or less responsibility or
liability to the Fund on account of any actions or omissions of any
sub-custodian so employed than any such sub-custodian has to the
Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held
By the Custodian
------------------------------------------------------------
2.1 HOLDING SECURITIES. The Custodian shall hold and
physically segregate for the account of the Fund all
non-cash property, including all securities owned by the
Fund, other than securities which are maintained pursuant
to Section 2.11 in a clearing agency which acts as a
securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury,
collectively referred to herein as "Securities System".
2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver securities owned by the Fund held by the
Custodian or in a Securities System account of the
<PAGE>
Custodian only upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by
the parties, and only in the following cases:
1) Upon sale of such securities for the account of
the Fund and receipt by the Custodian of payment
therefor;
2) Upon the receipt of payment in connection with
any repurchase agreement related to such
securities entered into by the Fund;
3) In the case of a sale effected through a
Securities System, in accordance with the
provisions of Section 2.12 hereof;
4) To the depository agent in connection with tender
or other similar offers for portfolio securities
of the Fund;
5) To the issuer thereof or its agent when such
securities are called, redeemed, retired or
otherwise become payable; provided that, in any
such case, the cash or other consideration is to
be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer
into the name of the Fund or into the name of any
nominee or nominees of the Custodian or into the
name or nominee name of any agent appointed
pursuant to Section 2.11 or into the name or
nominee name of any sub-custodian appointed
pursuant to Article 1 hereof; or for exchange for
a different number of bonds, certificates or
other evidence representing the same aggregate
face amount or number of units; PROVIDED that, in
any such case, the new securities are to be
delivered to the Custodian;
7) To the broker selling the same for examination in
accordance with the "street delivery" custom;
8) For exchange or conversion pursuant to any plan
of merger, consolidation, recapitalization,
reorganization or readjustment of the securities
of the issuer of such securities, or pursuant to
provisions for conversion contained in such
securities, or pursuant to any deposit agreement;
provided that, in any such case, the new
securities and cash, if any, are to be delivered
to the Custodian;
- 2 -
<PAGE>
9) In the case of warrants options, rights or
similar securities, the surrender thereof in the
exercise of such warrants, options, rights or
similar securities or the surrender of interim
receipts or temporary securities for definitive
securities; provided that, in any such case, the
new securities and cash, if any, are to be
delivered to the Custodian;
10) For delivery in connection with any loans of
securities made by the Fund, BUT ONLY against
receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund,
which may be in the form of cash or other
securities including obligations issued by the
United States government, its agencies or
instrumentalities, except that in connection with
any loans for which collateral is to be credited
to the Custodian's account in the book-entry
system authorized by the U.S. Department of the
Treasury, the Custodian will not be held liable
or responsible for the delivery of securities
owned by the Fund prior to the receipt of such
collateral;
11) For delivery as security in connection with any
borrowings by the Fund requiring a pledge of
assets by the Fund, BUT ONLY against receipt of
amounts borrowed;
12) For delivery in accordance with the provisions of
any agreement among the Fund, the Custodian and a
broker-dealer registered under the Securities
Exchange Act of 1934 (the "Exchange Act") and a
member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance
with the rules of The Options Clearing
Corporation and of any registered national
securities exchange, or of any similar
organization or organizations, regarding escrow
or other arrangements in connection with
transactions by the Fund;
13) Upon receipt of instructions from the Fund's
transfer agent ("Transfer Agent"), for delivery
to the Transfer Agent or to the holders of Shares
in connection with distributions in kind, as may
be described from time to time in the Fund's
currently effective Prospectus and Statement of
Additional Information, in satisfaction of
requests by holders of Shares for repurchase or
redemption; and
- 3 -
<PAGE>
14) For release of securities to designated brokers
under covered call options; provided however,
that such securities shall be released only upon
payment to the Custodian of monies for the
premium due and a receipt for the securities
which are to be held in escrow. Upon exercise of
the option, or at expiration, the Custodian will
receive from brokers the securities previously
deposited. The Custodian will act strictly in
accordance with Proper Instructions in the
delivery of securities to be held in escrow and
will have no responsibility or liability for any
such securities which are not returned promptly
when due other than to make proper request for
such return;
15) For any other proper corporate purpose, BUT ONLY
upon receipt of, in addition to Proper
Instructions, a certified copy of a resolution of
the Board of Trustees or of the Executive
Committee signed by an officer of the Fund and
certified by its Secretary or an Assistant
Secretary, specifying the securities to be
delivered, setting forth the purpose for which
such delivery is to be made, declaring such
purposes to be proper corporate purposes, and
naming the person or persons to whom delivery of
such securities shall be made.
2.3 REGISTRATION OF SECURITIES. Securities held by the
Custodian (other than bearer securities) shall be
registered in the name of the Fund or in the name of any
nominee of the Fund or of any nominee of the Custodian
(which nominee shall be assigned exclusively to the
Fund), UNLESS the Fund has authorized in writing the
appointment of a nominee to be used in common with other
registered investment companies having the same
investment adviser as the Fund, or in the name or nominee
name of any agent appointed pursuant to Section 2.11 or
in the name or nominee name of any sub-custodian
appointed pursuant to Article 1 hereof. All securities
accepted by the Custodian on behalf of the Fund under the
terms of this Contract shall be in "street name" or other
good delivery form.
2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the name of the
Fund, subject only to draft or order by the Custodian
acting pursuant to the terms of this Contract, and shall
hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for
the account of the Fund, other than cash maintained by
- 4 -
<PAGE>
the Fund in a bank account established and used in
accordance with Rule 17f-3 under the Investment Company
Act of 1940 ("1940 Act"). Funds held by the Custodian
for the Fund may be deposited by it to its credit as
Custodian in the Banking Department of the Custodian or
in such other banks or trust companies as it may in its
discretion deem necessary or desirable; PROVIDED,
however, that every such bank or trust company shall be
qualified to act as a custodian under the 1940 Act and
that each such bank or trust company and the funds to be
deposited with each such bank or trust company shall be
approved by vote of a majority of the Board of Trustees
of the Fund. Such funds shall be deposited by the
Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 PAYMENTS FOR SHARES. The Custodian shall receive from
the distributor for the Fund's Shares or from the
Transfer Agent of the Fund and deposit into the Fund's
account such payments as are received for Shares of the
Fund issued or sold from time to time by the Fund. The
Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments
for Shares of the Fund.
2.6 INVESTMENT AND AVAILABILITY OF FEDERAL FUNDS. Upon
mutual agreement between the Fund and the Custodian, the
Custodian shall, upon the receipt of Proper Instructions,
1) invest in such instruments as may be set
forth in such instructions on the same
day as received all federal funds
received after a time agreed upon
between the Custodian and the Fund; and
2) make federal funds available to the Fund
as of specified times agreed upon from
time to time by the Fund and the
Custodian in the amount of checks
received in payment for Shares of the
Fund which are deposited into the Fund's
account.
2.7 COLLECTION OF INCOME. The Custodian shall collect on a
timely basis all income dividends and other payments with
respect to registered securities held hereunder to which
the Fund shall be entitled either by law or pursuant to
custom in the securities business, and shall collect on a
timely basis all income dividends and other payments with
respect to bearer securities if, on the date of payment
by the issuer, such securities are held by the Custodian
or agent thereof and shall credit such income dividends
- 5 -
<PAGE>
and other income items requiring payments, as collected,
to the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach
and present for payment all coupons and other income
items requiring presentation as and when they become due
and shall collect interest when due on securities held
hereunder. Income due the Fund on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be
the responsibility of the Fund. The Custodian will have
no duty or responsibility in connection therewith, other
than to provide the Fund with such information or data as
may be necessary to assist the Fund in arranging for the
timely delivery to the Custodian of the income to which
the Fund is properly entitled.
2.8 PAYMENT OF FUND MONEYS. Upon receipt of Proper
Instructions, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall
pay out moneys of the Fund in the following cases only:
1) Upon the purchase of securities, for the
account of the Fund but only (a) against
the delivery of such securities, to the
Custodian (or any bank, banking firm or
trust company doing business in the
United States or abroad which is
qualified under the 1940 Act, as
amended, to act as a custodian and which
has been designated by the Custodian as
its agent for this purpose) registered
in the name of the Fund or in the name
of a nominee of the Custodian referred
to in Section 2.3 hereof or in proper
form for transfer; (b) in the case of a
purchase effected through a Securities
System, in accordance with the
conditions set forth in Section 2.11
hereof or (c) in the case of repurchase
agreements entered into between the Fund
and the Custodian, or another bank, or a
broker-dealer which is a member of NASD,
(i) against delivery of the securities
either in certificate form or through an
entry crediting the Custodian's account
at the Federal Reserve Bank with such
securities (notwithstanding that the
written agreement to repurchase will be
received subsequently) or (ii) if the
agreement is with the Custodian against
delivery of the receipt evidencing
purchase by the Fund of securities owned
by the Custodian along with written
- 6 -
<PAGE>
evidence of the agreement by the
Custodian to repurchase such securities
from the Fund;
2) In connection with conversion, exchange
or surrender of securities owned by the
Fund as set forth in Section 2.2 hereof;
3) For the redemption or repurchase of
Shares issued by the Fund as set forth
in Section 2.10 hereof;
4) For the payment of any expense or
liability incurred by the Fund,
including but not limited to the
following payments for the account of
the Fund: interest, taxes, management,
distribution, advisory, accounting,
transfer agent and legal fees, and
operating expenses of the Fund whether
or not such expenses are to be in whole
or part capitalized or treated as
deferred expenses;
5) For the payment of any dividends
declared pursuant to the governing
documents of the Fund;
6) For payment of the amount of dividends
received in respect of securities sold
short;
7) For any other proper purpose, BUT ONLY
upon receipt of, in addition to Proper
Instructions, a certified copy of a
resolution of the Board of Trustees or
of the Executive Committee of the Fund
signed by an officer of the Fund and
certified by its Secretary or an
Assistant Secretary, specifying the
amount of such payment, setting forth
the purpose for which such payment is to
be made, declaring such purpose to be a
proper purpose, and naming the person or
persons to whom such payment is to be
made.
2.9 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED. In any and every case where payment for
purchase of securities for the account of the Fund is
made by the Custodian in advance of receipt of the
securities purchased, in the absence of specific written
- 7 -
<PAGE>
instructions from the Fund to so pay in advance, the
Custodian shall be absolutely liable to the Fund for such
securities to the same extent as if the securities had
been received by the Custodian, EXCEPT that in the case
of repurchase agreements entered into by the Fund with a
bank which is a member of the Federal Reserve System, the
Custodian may transfer funds to the account of such bank
prior to the receipt of written evidence that the
securities subject to such repurchase agreement have been
transferred by book-entry into a segregated non-
proprietary account of the Custodian maintained with the
Federal Reserve Bank of Boston or of the safe-keeping
receipt, provided that such securities have in fact been
so transferred by book-entry.
2.10 PAYMENTS FOR REPURCHASES OR REDEMPTIONS OF SHARES OF THE
FUND. From such funds as may be available for the
purpose but subject to the limitations of the Declaration
of Trust and By-Laws and any applicable resolution of the
Fund's Board of Trustees pursuant thereto, the Custodian
shall, upon receipt of instructions from the Transfer
Agent, make funds available for payment to holders of
Shares of their authorized agents who have delivered to
the Transfer Agent a request for redemption or repurchase
of their Shares and for payment to the distributor of the
Fund's Shares for its repurchase of Shares as agent for
the Fund. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is
authorized upon receipt of instructions from the Transfer
Agent to wire funds to or through a commercial bank
designated by the redeeming shareholders or the
distributor of the Fund's shares. In connection with the
redemption or repurchase of Shares of the Fund, the
Custodian shall honor checks drawn on the Custodian by a
holder of Shares, which checks have been furnished by the
Fund to the holder of Shares, when presented to the
Custodian in accordance with such procedures and controls
as are mutually agreed upon from time to time between the
Fund and the Custodian.
2.11 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time
remove) any other bank or trust company which is itself
qualified under the 1940 Act, as amended, to act as a
custodian, as its agent to carry out such of the
provisions of this Article 2 as the Custodian may from
time to time direct; PROVIDED, however, that the
appointment of any agent shall not relieve the Custodian
of its responsibilities or liabilities hereunder.
2.12 DEPOSIT OF TRUST ASSETS IN SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by
- 8 -
<PAGE>
the Fund in a clearing agency registered with the
Securities and Exchange Commission under Section 17A of
the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system
authorized by the U.S. Department of the Treasury and
certain federal agencies, (collectively referred to
herein as "Securities System") in accordance with
applicable Federal Reserve Board and Securities and
Exchange Commission rules and regulations, if any, and
subject to the following provisions:
1) The Custodian may keep securities of the
Fund in a Securities System provided
that such securities are represented in
an account ("Account") of the Custodian
in the Securities System which shall not
include any assets of the Custodian
other than assets held as a fiduciary,
custodian or otherwise for customers;
2) The records of the Custodian with
respect to securities of the Fund which
are maintained in a Securities System
shall identify by book-entry those
securities belonging to the Fund;
3) The Custodian shall pay for securities
purchased for the account of the Fund
upon (i) receipt of advice from the
Securities System that such securities
have been transferred to the Account,
and (ii) the making of an entry on the
records of the Custodian to reflect such
payment and transfer for the account of
the Fund. The Custodian shall transfer
securities sold for the account of the
Fund upon (i) receipt of advice from the
Securities System that payment for such
securities has been transferred to the
Account, and (ii) the making of an entry
on the records of the Custodian to
reflect such transfer and payment for
the account of the Fund. Copies of all
advices from the Securities System of
transfers of securities for the account
of the Fund shall identify the Fund, be
maintained for the Fund by the Custodian
and be provided to the Fund at its
request. Upon request, the Custodian
shall furnish the Fund confirmation of
each transfer to or from the account of
the Fund in the form of a written advice
- 9 -
<PAGE>
or notice and shall furnish to the Fund
copies of daily transaction sheets
reflecting each day's transactions in
the Securities System for the account of
the Fund, on the next business day.
4) The Custodian shall provide the Fund
with any report obtained by the
Custodian on the Securities System's
accounting system, internal accounting
control and procedures for safeguarding
securities deposited in the Securities
System;
5) The Custodian shall have received the
initial or annual certificate, as the
case may be, required by Article 9
hereof;
6) Anything to the contrary in this
Contract notwithstanding, the Custodian
shall be liable to the Fund for any loss
or damage to the Fund resulting from use
of the Securities System by reason of
any negligence, misfeasance or
misconduct of the Custodian or any of
its agents or of any of its or their
employees or from failure of the
Custodian or any such agent to enforce
effectively such rights as it may have
against the Securities System; at the
election of the Fund, it shall be
entitled to be subrogated to the rights
of the Custodian with respect to any
claim against the Securities System or
any other person which the Custodian may
have as a consequence of any such loss
or damage if and to the extent that the
Fund has not been made whole for any
such loss or damage.
2.13 SEGREGATED ACCOUNT. The Custodian shall upon receipt of
Proper Instructions establish and maintain a segregated
account for and on behalf of the Fund, into which account
or accounts may be transferred cash and/or securities,
including securities maintained in an account by the
Custodian pursuant to Section 2.12 hereof, (i) in
accordance with the provisions of any agreement among the
Fund, the Custodian and a broker-dealer registered under
the Exchange Act and a member of the NASD, relating to
compliance with the rules of The Options Clearing
Corporation and of any registered national securities
- 10 -
<PAGE>
exchange, or of any similar organization or
organizations, regarding escrow or other arrangements in
connection with transactions by the Fund, (ii) for
purposes of segregating cash or government securities in
connection with options purchased, sold or written by the
Fund, (iii) for the purposes of compliance by the Fund
with the procedures required by Investment Company Act
Release No. 10666, or any subsequent release or releases
of the Securities and Exchange Commission relating to the
maintenance of segregated accounts by registered
investment companies and (iv) for other proper corporate
purposes, BUT ONLY, in the case of clause (iv), upon
receipt of, in addition to Proper Instructions, a
certified copy of a resolution of the Board of Trustees
or of the Executive Committee signed by an officer of the
Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such
segregated account and declaring such purposes to be
proper corporate purposes.
2.14 OWNERSHIP CERTIFICATES FOR TAX PURPOSES. The Custodian
shall execute ownership and other certificates and
affidavits for all federal and state tax purposes in
connection with receipt of income or other payments with
respect to securities of the Fund held by it and in
connection with transfers of securities.
2.15 PROXIES. The Custodian shall, with respect to the
securities held hereunder, cause to be promptly executed
by the registered holder of such securities, if the
securities are registered otherwise than in the name of
the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be
voted, and shall promptly deliver to the Fund such
proxies, all proxy soliciting materials and all notices
relating to such securities.
2.16 COMMUNICATIONS RELATING TO FUND PORTFOLIO SECURITIES.
The Custodian shall transmit promptly to the Fund all
written information (including, without limitation,
pendency of calls and maturities of securities and
expirations of rights in connection therewith and notices
of exercise of call and put options written by the Fund)
received by the Custodian from issuers of the securities
being held for the Fund. With respect to tender or
exchange offers, the Custodian shall transmit promptly to
the Fund all written information received by the
Custodian from issuers of the securities whose tender or
exchange is sought and from the party (or his agents)
making the tender or exchange offer. If the Fund desires
to take action with respect to any tender offer, exchange
offer or any other similar transaction, the Fund shall
- 11 -
<PAGE>
notify the Custodian at least three business days prior
to the date on which the Custodian is to take such
action.
2.17 PROPER INSTRUCTIONS. Proper Instructions as used
throughout this Article 2 means a writing signed or
initialled by one or more person or persons as the Fund's
Board of Trustees shall have from time to time
authorized. Each such writing shall set forth the
specific transaction or type of transaction involved,
including a specific statement of the purpose for which
such action is requested. Oral instructions will be
considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person
authorized in writing to give oral instructions with
respect to the transaction involved. The Fund shall cause
all oral instructions to be confirmed in writing. Upon
receipt of a certificate of the Secretary or an Assistant
Secretary of the Fund as to the authorization by the
Board of Trustees of the Fund accompanied by a detailed
description of procedures approved by the Board of
Trustees, Proper Instructions may include communications
effected directly between electro-mechanical or
electronic devices provided that the Board of Trustees
and the Custodian are satisfied that such procedures
afford adequate safeguards for the Fund's assets.
2.18 ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. The
Custodian may in its discretion, without express
authority from the Fund:
1) make payments to itself or others for
minor expenses of handling securities or
other similar items relating to its
duties under this Contract, PROVIDED
that all such payments shall be
accounted for to the Fund;
2) surrender securities in temporary form
for securities in definitive form;
3) endorse for collection, in the name of -
the Fund, checks, drafts and other
negotiable instruments; and
4) in general, attend to all
non-discretionary details in connection
with the sale, exchange, substitution,
purchase, transfer and other dealings
with the securities and property of the
Fund except as otherwise directed by the
Board of Trustees of the Fund.
- 12 -
<PAGE>
2.19 EVIDENCE OF AUTHORITY. The Custodian shall be protected
in acting upon any instructions, notice, request,
consent, certificate or other instrument or paper
believed by it to be genuine and to have been properly
executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote or
resolution of the Board of Trustees of the Fund as
conclusive evidence (a) of the authority of any person to
act in accordance with such vote or resolution or (b) of
any determination or of any action by the Fund's Board of
Trustees pursuant to the Declaration of Trust as
described in such vote or resolution, and such vote or
resolution may be considered as in full force and effect
until receipt by the Custodian of written notice to the
contrary.
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income.
------------------------------------------------------------
The Custodian shall cooperate with and supply necessary
information to the entity or entities appointed by the Board of Trustees
of the Fund to keep the books of account of the Fund and/or compute the
net asset value per share of the outstanding shares of the Fund or, if
directed in writing to do so by the Fund, shall itself keep such books of
account and/or compute such net asset value per share. If so directed, the
Custodian shall also calculate daily the net income of the Fund including
the calculation of distribution and advisory fees, all as described in the
Fund's currently effective Prospectus and Statement of Additional
Information and shall advise the Fund and the Transfer Agent daily of the
total amounts of such fees and net income and, if instructed in writing by
an officer of the Fund to do so, shall advise the Transfer Agent
periodically of the division of such net income among its various
components. The calculations of the net asset value per share and the
daily income of the Fund shall be made at the time or times described from
time to time in the Fund's currently effective Prospectus and Statement of
Additional Information and in accordance with the requirements of the 1940
Act and the rules thereunder.
4. Records
-------
The Custodian shall create and maintain all records relating to
its activities and obligations under this Contract in such manner as will
meet the obligations of the Fund under the 1940 Act, with particular
attention to Section 31 thereof and Rules 31a-1 and 31a-2 thereunder,
applicable federal and state tax laws and any other law or administrative
rules or procedures which may be applicable to the Fund. All such records
shall be the property of the Fund and shall at all times during the
regular business hours of the Custodian be open for inspection by duly
authorized officers, employees or agents of the Fund and employees and
agents of the Securities and Exchange Commission. The Custodian shall, at
- 13 -
<PAGE>
the Fund's request, supply the Fund with a tabulation of securities owned
by the Fund and held by the Custodian and shall, when requested to do so
by the Fund and for such compensation as shall be agreed upon between the
Fund and the Custodian, include certificate numbers in such tabulations.
5. Opinion of Fund's Independent Certified Public Accountants
----------------------------------------------------------
The Custodian shall take all reasonable action, as the Fund may
from time to time request, to obtain from year to year favorable opinions
from the Fund's independent certified public accountants with respect to
its activities hereunder in connection with the preparation of the Fund's
Form N-1A, and Form N-SAR or other reports to the Securities and Exchange
Commission and with respect to any other requirements of such Commission.
6. Reports to Fund by Independent Certified Public Accountants
-----------------------------------------------------------
The Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with reports by independent certified public
accountants on the accounting system, internal accounting control and
procedures for safeguarding securities, including securities deposited
and/or maintained in a Securities System, relating to the services
provided by the Custodian under this Contract; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required
by the Fund, and shall provide reasonable assurance that any material
inadequacies would be disclosed by such examination, and, if there are no
such inadequacies, shall so state.
7. Compensation of Custodian
-------------------------
The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon from time to time
between the Fund and the Custodian.
8. Responsibility of Custodian
---------------------------
So long as and to the extent that it is in the exercise of
reasonable care, the Custodian shall not be responsible for the title,
validity or genuineness of any property or evidence of title thereto
received by it or delivered by it pursuant to this Contract and shall be
held harmless in acting upon any notice, request, consent, certificate or
other instrument reasonably believed by it to be genuine and to be signed
by the proper party or parties. The Custodian shall be held to the
exercise of reasonable care in carrying out the provisions of this
Contract, but shall be kept indemnified by and shall be without liability
to the Fund for any action taken or omitted by it in good faith without
negligence. It shall be entitled to rely on and may act upon the
reasonable advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably taken or
omitted pursuant to such advice. Notwithstanding the foregoing, the
- 14 -
<PAGE>
responsibility of the Custodian with respect to redemptions effected by
check shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of the Custodian, result in the Custodian or
its nominee assigned to the Fund being liable for the payment of money or
incurring liability of some other form, the Fund, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to
the Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or securities
for any purpose or in the event that the Custodian or its nominee shall
incur or be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise or involve its or its nominee's own negligent action,
negligent failure to act or willful misconduct, it shall be reimbursed by
the Fund for such advances or other costs within a reasonable time after
the receipt of written notice requesting reimbursement and any property at
any time held for the account of the Fund shall be security therefor and
should the Fund fail to repay the Custodian within a reasonable time after
receipt of written notice, the Custodian shall be entitled to utilize
available cash and to dispose of Fund assets to the extent necessary to
obtain reimbursement.
9. Effective Period, Termination and Amendment
-------------------------------------------
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement of the parties
hereto and may be terminated by either party by an instrument in writing
delivered or mailed, postage prepaid to the other party, such termination
to take effect not sooner than sixty (60) days after the date of such
delivery or mailing; PROVIDED, however that the Custodian shall not act
under Section 2.12 hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary of the Fund that
the Board of Trustees of the Fund has approved the initial use of a
particular Securities System and the receipt of an annual certificate of
such Secretary or an Assistant Secretary that the Fund's Board of Trustees
has reviewed the use by the Fund of such Securities System, as required in
each case by Rule 17f-4 under the 1940 Act, as amended; PROVIDED FURTHER,
however, that the Fund shall not amend or terminate this Contract in
contravention of any applicable federal or state regulations, or any
provision of its Declaration of Trust or By-Laws, and further provided,
that the Fund may at any time by action of its Board of Trustees (i)
substitute another bank or trust company for the Custodian by giving
notice as described above to the Custodian, or (ii) immediately terminate
this Contract in the event of the appointment of a conservator or receiver
for the Custodian by the Comptroller of the Currency or upon the happening
of a like event at the direction of an appropriate regulatory agency or
- 15 -
<PAGE>
court of competent jurisdiction. Upon termination of the Contract, the
Fund shall pay to the Custodian such compensation as may be due hereunder
as of the date of such termination and shall also reimburse the Custodian
for its costs, expenses and disbursements as contemplated by this
Contract.
10. Successor Custodian
-------------------
If a successor custodian shall be appointed by the Board of
Trustees of the Fund, the Custodian shall, upon termination, deliver to
such successor custodian at the office of the Custodian, all securities
duly endorsed and in the form for transfer, and all other property of the
Fund then held by it hereunder and shall transfer to an account of the
successor custodian all of the Fund's securities held in a Securities
System.
If this Contract is terminated and no such successor custodian
shall be appointed, the Custodian shall, in like manner, as directed by
vote of the holders of a majority of the outstanding shares of the stock
of the Fund or upon receipt of a certified copy of a vote or resolution of
the Board of Trustees of the Fund, deliver at the office of the Custodian
and transfer such securities, funds and other properties of the Fund then
held by it hereunder as specified and in accordance with such vote or
resolution.
In the event that no written order designating a successor
custodian or certified copy of a vote or resolution of the Fund's Board of
Trustees shall have been delivered to the Custodian on or before the date
when the termination of this Contract shall become effective, then the
Custodian shall have the right to deliver to a bank or trust company,
which is a "bank" as defined in the 1940 Act, doing business in Boston,
Massachusetts, of its own selection, having an aggregate capital surplus,
and undivided profits, as shown by its last published report, of not less
than $25,000,000, all securities, funds and other properties then held by
the Custodian hereunder and all instruments held by the Custodian relative
hereto and all other property held by it under this Contract and to
transfer to an account of such successor custodian all of the Fund's
securities held in any Securities System. Thereafter, such bank or trust
company shall be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties of the
Fund remain in the possession of the Custodian after the date of
termination hereof owing to failure of the Fund to deliver to the
Custodian the written order or certified copy referred to above, or of the
Fund's Board of Trustees to appoint a successor custodian, the Custodian
shall be entitled to fair compensation for its services during such period
as the Custodian retains possession of such securities, funds and other
properties and the provisions of this Contract relating to the duties and
obligations of the Custodian shall remain in full force and effect.
- 16 -
<PAGE>
11. Interpretive and Additional Provisions
--------------------------------------
In connection with the operation of this Contract, the Custodian
and the Fund may from time to time agree on such provisions interpretive
of or in addition to the provisions of this Contract as may in their joint
opinion be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in a writing signed by both
parties and shall be annexed hereto, PROVIDED that no such interpretive or
additional provisions shall contravene any applicable federal or state
regulations or any provision of the Declaration of Trust of the Fund. No
interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
12. Additional Funds
----------------
In the event that the Fund establishes an additional series of
capital stock other than the Shares with respect to which it desires to
have the Custodian render services as custodian under the terms hereof, it
shall so notify the Custodian in writing, and if the Custodian agrees in
writing to provide such services, such additional series of shares shall
become a Fund hereunder.
13. Massachusetts Law to Apply
--------------------------
This Contract shall be construed and the provisions thereof
interpreted under and in accordance with laws of The Commonwealth of
Massachusetts.
14. Prior Contracts
---------------
This Contract supersedes and terminates, as of the date hereof,
all prior contracts between the Fund and the Custodian relating to the
custody of the Fund's assets. This Contract may not be assigned by the
Custodian, except as expressly provided in Section 10, hereof without the
prior written consent of the Fund.
15. Headings
--------
The headings of the sections of this Contract are inserted for
reference and convenience only, and shall not affect the construction of
this Contract.
16. Notices
-------
Any notice shall be sufficiently given when sent by overnight,
registered or certified mail to the other party at the address of such
- 17 -
<PAGE>
party set forth above or at such other address as such party may from time
to time specify in writing to the other party.
IN WITNESS WHEREOF, each of the parties has caused this
instrument to be executed in its name and behalf by its duly authorized
representative and its seal to be hereunder affixed as of the 31st day of
December, 1985.
ATTEST HERITAGE CASH TRUST
/s/ Jennifer A. Tash By /s/ Richard K. Riess
------------------------- -------------------------
Jennifer A. Tash Richard K. Riess
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Officer By /s/ E. D. Hawkes, Jr.
-------------------------- --------------------------------
Assistant Secretary Vice President
- 18 -
<PAGE>
HERITAGE CASH TRUST
CUSTODIAN CONTRACT
APPENDIX A
The Custodian agrees that any claims by it against the
Fund under this Contract may be satisfied only from the assets of the
Fund; that the person executing this Contract has executed it on behalf of
the Fund and not individually, and that the obligations of the Fund
arising out of this Contract are not binding upon such person or the
Fund's shareholders individually but are binding only upon the assets and
property of the Fund; and that no shareholders, trustees or officers of
the Fund may be held personally liable or responsible for any obligations
of the Fund arising out of this Contract.
ATTEST HERITAGE CASH TRUST
/s/ Linda Champagne By /s/ Richard K. Riess
------------------------- --------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Officer By /s/ Officer
------------------------- --------------------------------
<PAGE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
HERITAGE CASH TRUST
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
Article 1 Terms of Appointment; Duties of the Bank . . . . . . 1
Article 2 Fees and Expenses . . . . . . . . . . . . . . . . . 5
Article 3 Representations and Warranties of the Bank . . . . . 6
Article 4 Representations and Warranties of the Fund . . . . . 6
Article 5 Indemnification . . . . . . . . . . . . . . . . . . 7
Article 6 Covenants of the Fund and the Bank . . . . . . . . . 11
Article 7 Termination of Agreement . . . . . . . . . . . . . . 13
Article 8 Assignment . . . . . . . . . . . . . . . . . . . . . 13
Article 9 Amendment . . . . . . . . . . . . . . . . . . . . . 14
Article 10 Merger of Agreement . . . . . . . . . . . . . . . . 15
Article 11 Miscellaneous . . . . . . . . . . . . . . . . . . . 15
Article 12 Massachusetts Law to Apply . . . . . . . . . . . . . 15
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
-------------------------------------
AGREEMENT made as of the 13th day of November, 1985, by and
between HERITAGE CASH TRUST, a Massachusetts business trust, having its
principal office and place of business at 1400-66th Street North, St.
Petersburg, Florida 33710 (the "Fund"), and STATE STREET BANK AND TRUST
COMPANY, a Massachusetts corporation having its principal office and place
of business at 225 Franklin Street, Boston, Massachusetts 02110 (the
"Bank").
WHEREAS, the Fund desires to appoint the Bank as its transfer
agent, dividend disbursing agent and agent in connection with certain
other activities, and the Bank desires to accept such appointment;
WHEREAS, the Fund is authorized to issue Shares of beneficial
interest, without par value ("Shares");
WHEREAS, Raymond James & Associates, Inc. may provide certain
shareholder services in connection with the Fund and the Fund shall not
hold the Bank responsible for such services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
Article 1 TERMS OF APPOINTMENT; DUTIES OF THE BANK
----------------------------------------
1.01 Subject to the terms and conditions set forth in
this Agreement, the Fund hereby employs and appoints the Bank to act as,
and the Bank agrees to act as its transfer agent for the Fund's authorized
and issued Shares; its dividend disbursing agent and its agent in
connection with any accumulation, open-account or similar plans provided
to the Shareholders of the Fund ("Shareholders") and set out in the
current effective Prospectus and Statement of Additional Information of
the Fund, including without limitation any periodic investment plan or
periodic withdrawal program.
1.02 The Bank agrees that it will perform the
following services:
(a) In accordance with the Fund's then current
Prospectus and Statement of Additional Information and procedures
established from time to time by agreement between the Fund and the Bank,
the Bank shall:
(i) receive for acceptance, orders for the purchase
of Shares, and promptly deliver payment and
appropriate documentation therefor to the
Custodian of the Fund (the "Custodian");
(ii) pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares
in the appropriate account of the Shareholder;
<PAGE>
(iii) receive for acceptance, redemption requests and
redemption directions and deliver the appropriate
documentation therefor to the Custodian;
(iv) at the appropriate time as and when the Bank
receives monies paid to it by the Custodian with
respect to any redemption, pay over or cause to
be paid over in the appropriate manner such
monies as instructed by the redeeming
Shareholder;
(v) effect transfers of Shares by the Shareholders
thereof upon receipt of appropriate instructions;
(vi) prepare and transmit payments for dividends and
distributions declared by the Fund;
(vii) maintain records of account for and advise the
Fund and its Shareholders as to the foregoing;
and
(viii) record the issuance of shares of the Fund and
maintain pursuant to Rule 17Ad-10(e) under the
Securities Exchange Act of 1934 a record of the
total number of shares of the Fund which are
authorized, based upon data provided to it by the
Fund, and issued and outstanding. Bank shall
also provide the Fund on a regular basis with the
total number of shares which are authorized and
issued and outstanding and shall have no
obligation, when recording the issuance of
shares, to monitor the issuance of such shares or
to take cognizance of any laws relating to the
issue or sale of such shares, which functions
shall be the sole responsibility of the Fund.
(b) In addition to and not in lieu of the services
set forth in the above paragraph (a), the Bank shall: (i) perform all of
the customary services of a transfer agent, dividend disbursing agent and,
as relevant, agent in connection with accumulation, open-account or
similar plans (including without limitation any periodic investment plan
or periodic withdrawal program), including but not limited to:
maintaining all Shareholder accounts, preparing Shareholder meeting lists,
mailing proxies, receiving and tabulating proxies, mailing Shareholder
reports and prospectuses to current Shareholders, withholding taxes on
non-resident alien accounts, preparing and filing U.S. Treasury Department
Forms 1099 and other appropriate forms required with respect to dividends
and distributions by federal authorities for all Shareholders, preparing
and mailing confirmation forms and statements of account to Shareholders
for all purchases and redemptions of Shares and other confirmable
transactions in Shareholder accounts, (which shall also indicate
redemptions by check if the Shareholder has elected the checkwriting
- 2 -
<PAGE>
privilege), preparing and mailing activity statements for Shareholders,
and providing Shareholder account information and (ii) provide a system
which will enable the Fund to monitor the total number of Shares sold in
each State. The Fund shall (i) identify to the Bank in writing those
transactions and assets to be treated as exempt from blue sky reporting
for each State and (ii) verify the establishment of transactions for each
State on the system prior to activation and thereafter monitor the daily
activity for each State. The responsibility of the Bank for the Fund's
blue sky State registration status is solely limited to the initial
establishment of transactions subject to blue sky compliance by the Fund
and the reporting of such transactions to the Fund as provided above.
Procedures applicable to certain of these services described in
paragraphs (a) and (b) may be established from time to time by agreement
between the Fund and the Bank and shall be subject to the review and
approval of the Fund. The failure of the Fund to establish such
procedures with respect to any service shall not in any way diminish the
duty and obligation of the Bank to perform such service hereunder.
(c) In regard to the services set forth above, the
Bank may not provide certain shareholder services which may be provided by
Raymond James & Associates, Inc. The services to be provided shall be as
mutually agreed upon from time to time between the Fund, the Bank and
Raymond James & Associates, Inc. and as set forth in writing attached
hereto as Appendix B.
Article 2 FEES AND EXPENSES
-----------------
2.01 For the duties and obligations to be performed by
the Bank pursuant to this Agreement, the Fund agrees to pay the Bank an
annual maintenance fee for each Shareholder account as set out in the fee
schedule attached hereto. Such fees and out-of-pocket expenses and
advances identified under Section 2.02 below may be changed from time to
time subject to mutual written agreement between the Fund and the Bank.
2.02 In addition to the fee paid under Section 2.01
above, the Fund agrees to promptly reimburse the Bank for reasonable out-
of-pocket expenses or advances incurred by the Bank for the items set out
in the fee schedule attached hereto. In addition, any other expenses
incurred by the Bank at the request or with the consent of the Fund which
are not properly borne by the Bank as part of its duties and obligations
under this Agreement will be promptly reimbursed by the Fund. Postage for
mailing of dividends, proxies, Fund reports and other mailings to all
Shareholder accounts shall be advanced to the Bank by the Fund at least
seven (7) days prior to the mailing date of such materials.
- 3 -
<PAGE>
Article 3 REPRESENTATIONS AND WARRANTIES OF THE BANK
------------------------------------------
The Bank represents and warrants to the Fund that:
3.01 It is a corporation duly organized and existing
and in good standing under the laws of The Commonwealth of Massachusetts.
3.02 It is duly qualified to carry on its business in
The Commonwealth of Massachusetts.
3.03 It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been
taken to authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the
necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement in accordance with procedures established
from time to time by mutual agreement between the Fund and the Bank.
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
------------------------------------------
The Fund represents and warrants to the Bank that;
4.01 It is a business trust duly organized and
existing and in good standing under the laws of Massachusetts.
4.02 It is empowered under applicable laws and by its
Declaration of Trust and By-Laws to enter into and perform this Agreement.
4.03 All corporate proceedings required by said
Declaration of Trust and By-Laws have been taken to authorize it to enter
into and perform this Agreement.
4.04 It is an open-end management investment company
registered under the Investment Company Act of 1940.
4.05 A Registration Statement containing a Prospectus
and Statement of Additional Information under the Securities Act of 1933
is currently effective or will become effective before any public offering
commences, and appropriate state securities law filings have been made or
will be made before any public offering in such state commences, with
respect to all Shares of the Fund being offered for sale.
- 4 -
<PAGE>
Article 5 INDEMNIFICATION
---------------
5.01 The Bank shall not be responsible for, and the
Fund shall indemnify and hold the Bank harmless from and against, any and
all losses, damages, and any and all reasonable costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to:
(a) All actions of the Bank or its agents or
subcontractors required to be taken by the Bank pursuant to this
Agreement, provided the Bank and its agents or sub-contractors have acted
in good faith and without negligence or willful misconduct.
(b) The Fund's refusal or failure to comply with the
terms of this Agreement, or the Fund's lack of good faith, negligence or
willful misconduct or the breach of any representation or warranty of the
Fund hereunder.
(c) The reliance on, or use by, the Bank, its agents
or subcontractors of information, records and documents which (i) are
received by the Bank or its agents or subcontractors and furnished to it
by or on behalf of the Fund, and (ii) have been prepared and/or maintained
by the Fund or any other person or firm on behalf of the Fund.
(d) The reliance on or the carrying out by the Bank
or its agents or subcontractors of any written instructions of the Fund.
"Written Instructions" means written instructions delivered by mail,
tested telegram cable, telex or facsimile sending device and received by
the Bank, or its agents or subcontractors, signed by authorized persons.
(e) The offer or sale of Shares in violation of any
requirement under the federal securities laws or regulations or the
securities laws or regulations of any state that such Shares be registered
in such state or in violation of any stop order or other determination or
ruling by any federal agency or any state with respect to the offer or
sale of such Shares in such state.
5.02 The Fund shall not be responsible for and the
Bank shall indemnify and hold the Fund harmless from and against any and
all losses, damages, and any and all reasonable costs, charges, counsel
fees, payments, expenses and liability arising out of or attributable to
the Bank's failure to comply with the terms of this Agreement or any
action or failure or omission to act by the Bank as a result of the lack
of good faith, negligence or willful misconduct of the Bank or any of its
agents or subcontractors referred to in Section 8.03 (i) and (ii) or which
arise out of the breach of any representation or warranty of the Bank
hereunder.
5.03 At any time the Bank may apply to any authorized
officer of the Fund for instructions, and may consult with experienced
securities counsel with respect to any matter arising in connection with
the services to be performed by the Bank under this Agreement, and the
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Bank and its agents and subcontractors shall not be liable and shall be
indemnified by the Fund for any action taken or omitted by them in good
faith in reliance upon such instructions or upon the opinion of such
counsel that such actions or omissions comply with the terms of this
Agreement and with all applicable laws. The Bank, its agents and
subcontractors shall be protected and indemnified in acting upon any paper
or document furnished by or on behalf of the Fund, reasonably believed by
the Bank to be genuine and to have been signed by the proper person or
persons, or upon any instruction, information, data, records or documents
provided the Bank or its agents or subcontractors by machine readable
input, telex, CRT data entry or other similar means authorized by the
Fund, and shall not be held to have notice of any change of authority of
any person, until receipt of written notice thereof from the Fund. The
Bank, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers
of the Fund, and the proper countersignature of any former transfer agent
or registrar, or of a co-transfer agent or co-registrar.
5.04 In the event either party is unable to perform
its obligations under the terms of this Agreement because of acts of God,
strikes, equipment or transmission failure or damage, or other causes
reasonably beyond its control, such party shall not be liable for damages
to the other party resulting from such failure to perform or otherwise
from such causes. In addition, the Bank shall enter into and shall
maintain in effect with appropriate parties one or more agreements making
reasonable provision for emergency use of electronic data processing
equipment to the extent appropriate equipment is available and the Bank
shall further use reasonable care to minimize the likelihood of such
damage, loss of data, delays and/or errors and should such damage, loss of
data, delays and/or errors occur, the Bank shall use its best efforts to
mitigate the effects of such occurrence.
5.05 Neither party to this Agreement shall be liable
to the other party for consequential damages under any provision of this
Agreement or for any act or failure to act hereunder.
5.06 In order that the indemnification provisions
contained in this Article 5 shall apply, upon the assertion of a claim or
the institution of any agency action or investigation for which either
party may be required to indemnify the other, the party seeking
indemnification shall promptly notify the other party of such assertion,
and shall keep the other party advised with respect to all developments
concerning same. The party who may be required to indemnify shall have
the option to participate with the party seeking indemnification in the
defense of same. The party seeking indemnification shall in no case
confess any claim or make any compromise in any case in which the other
party may be required to indemnify it except with the other party's prior
written consent.
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Article 6 COVENANTS OF THE FUND AND THE BANK
----------------------------------
6.01 The Fund shall promptly furnish to the Bank the
following:
(a) A certified copy of the resolution of the Board
of Trustees of the Fund authorizing the appointment of the Bank and the
execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of
the Fund and all amendments thereto.
6.02 The Bank represents and warrants that to the best
of its knowledge, the various procedures and systems which the Bank has
implemented with regard to safeguarding from loss or damage the stock
certificates, check forms, facsimile signature imprinting devices, and
other property used in the performance of its obligations hereunder are
adequate and will enable the Bank to perform satisfactorily its
obligations hereunder and that the Bank will make such changes therein
from time to time as in its judgment are required for the secure
performance of its obligations hereunder.
6.03 The Bank shall keep all records relating to the
services to be performed hereunder, in the form and manner it may deem
advisable. To the extent required by Section 31 of the Investment Company
Act of 1940, as amended, and the Rules thereunder, the Bank agrees that
all such records prepared or maintained by the Bank relating to the
services to be performed by the Bank hereunder are the property of the
Fund and will be preserved, maintained and made available in accordance
with such Section and Rules, and will be surrendered promptly to the Fund
on and in accordance with its request.
6.04 The Bank and the Fund agree that all books,
records, information and data pertaining to the business of the other
party which are exchanged or received pursuant to the negotiation or the
carrying out of this Agreement shall remain confidential, and shall not be
voluntarily disclosed to any other person, except as may be required by
law.
6.05 In case of any requests or demands for the
inspection of the Shareholder records of the Fund, the Bank will endeavor
to notify the Fund and to secure instructions from an authorized officer
of the Fund as to such inspection. The Bank reserves the right, however,
to exhibit the Shareholder records to any person whenever it is advised by
its counsel that it may be held liable for the failure to exhibit the
Shareholder records to such person.
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Article 7 TERMINATION OF AGREEMENT
------------------------
7.01 This Agreement may be terminated by either party
upon sixty (60) days written notice to the other. Any such termination
shall not effect the rights and obligations of the parties under Article 5
hereof. Should the Fund exercise its right to terminate, all
out-of-pocket expenses associated with the movement of records and
material will be borne by the Fund. Additionally, the Bank reserves the
right to charge for any other reasonable expenses associated with such
termination. In the event that the Fund designates a successor to any of
the Bank's obligations hereunder, the Bank shall, at the expense and
direction of the Fund, transfer to such successor a certified list of the
Shareholders of the Fund, a complete record of the account of each
Shareholder, and all other relevant books, records and other data
established or maintained by the Bank hereunder.
Article 8 ASSIGNMENT
----------
8.01 Except as provided in Section 8.03 below, neither
this Agreement nor any rights or obligations hereunder may be assigned by
the Bank without the written consent of the Fund.
8.02 This Agreement shall inure to the benefit of and
be binding upon the parties and their respective permitted successors and
assigns.
8.03 The Bank may, without further consent on the part
of the Fund, subcontract for the performance hereof with (i) Boston
Financial Data Services, Inc., a Massachusetts corporation ("BFDS") which
is duly registered as a transfer agent pursuant to Section 17A(c)(l) of
the Securities Exchange Act of 1934 ("Section 17A(c)(l)"), (ii) a BFDS
subsidiary duly registered as a transfer agent pursuant to Section
17A(c)(l), or (iii) Raymond, James & Associates, Inc. for the performance
of certain duties in connection with the Bank's performance of this
Agreement; provided, however, that the Bank shall be as fully responsible
to the Fund for the acts and omissions of any subcontractor referred to in
(i) and (ii) above as it is for its own acts and omissions and further
provided, the Fund shall hold the Bank harmless for the acts and omissions
of Raymond James & Associates, Inc. referred to in (iii).
Article 9 AMENDMENT
---------
9.01 This Agreement may be amended or modified only by
a written agreement executed by both parties and authorized or approved by
a resolution of the Board of Trustees of the Fund.
9.02 In the event the Fund issues additional series of
shares in addition to the Shares with respect to which it desires to have
the Bank render services as transfer agent, dividend disbursing agent and
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agent under the terms hereof, it shall so notify the Bank in writing, and
if the Bank agrees, in writing to provide such services, such additional
series of Shares shall become a Fund hereunder.
Article 10 MERGER OF AGREEMENT
-------------------
10.01 This Agreement constitutes the entire agreement
between the parties hereto and supersedes any prior agreement with respect
to the subject matter hereof whether oral or written.
Article 11 MISCELLANEOUS
-------------
11.01 The Fund authorizes the Bank to provide Raymond,
James & Associates, Inc. any information it provides or makes available to
the Fund in connection with this Agreement.
11.02 The Bank agrees to treat all records and other
information relative to the Fund and its prior, present or potential
Shareholders confidentially and the Bank on behalf of itself and its
employees agrees to keep confidential all such information, except after
prior notification to and approval in writing by the Fund, which approval
shall not be unreasonably withheld and may not be withheld where the Bank
may be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities, or when so requested by the Fund.
Article 12 MASSACHUSETTS LAW TO APPLY
--------------------------
12.01 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
The Commonwealth of Massachusetts.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in their names and on their behalf under their
seals by and through their duly authorized officers, as of the day and
year first above written.
HERITAGE CASH TRUST
BY: /s/ Richard K. Reiss
------------------------
Richard K. Riess
ATTEST:
/s/ Linda Champagne
--------------------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Officer
-------------------------------
Vice President
ATTEST:
/s/ Officer
--------------------------
Assistant Secretary
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HERITAGE ASSET MANAGEMENT
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
Original contract dated January 26, 1990:
ORIGINAL FEE SCHEDULE DATED JANUARY 26, 1990
AND AMENDED ON NOVEMBER 15, 1993
HERITAGE CASH TRUST
GENERAL - Fees are based on actual cost of services provided PLUS 10% with
a per account annual limit, plus out-of-pocket expenses. Specific charges
are listed below.
ACCOUNT CHARGES - Heritage Asset Management will charge Heritage Cash
Trust the actual cost of servicing accounts, not to exceed a charge of
$12.00 per account per year. The fee is billable on a monthly basis. The
billing rate shall be the lesser of actual expenses (which may include
startup costs amortized over three years) or 1/12 of the $12.00 per
account per year maximum annual fee.
OUT-OF-POCKET EXPENSES - Out-of-pocket expenses include but are not
limited to: postage, forms, telephone, microfilm, microfiche, statement
preparation and other expenses incurred at the specific direction of the
fund. Postage for mass mailings is due seven days in advance of the
mailing date.
PAYMENT - The above fees will be due and payable five days after
notification is received at the fund's offices.
HERITAGE CASH TRUST HERITAGE ASSET MANAGEMENT
By /s/ Donald H. Glassman /s/ Stehen G. Hill
-------------------------- -------------------------
Title Treasurer President
-------------------------- -------------------------
Date 11/15/93 11/15/93
------------------------- --------------------------
<PAGE>
<PAGE>
HERITAGE FUNDS ACCOUNTING AND PRICING SERVICES AGREEMENT
--------------------------------------------------------
THIS AGREEMENT is made as of the 1st day of March, 1994, by and
between each of the investment companies and investment series thereof
listed on Schedule A attached hereto, as such Schedule is amended from
time to time (each a "Fund" and collectively, the "Funds"), and Heritage
Asset Management, Inc. ("Heritage"), a Florida corporation.
WHEREAS, each Fund is organized as a business trust under the
laws of the Commonwealth of Massachusetts, is registered as an open-end
management investment company under the Investment Company Act of 1940, as
amended ("1940 Act"), and is authorized to issue its shares in separate
investment series; and
WHEREAS, each Fund wishes to retain Heritage to provide certain
fund accounting and pricing services to each Fund and each of its existing
investment series, together with all other investment series established
in the future, and Heritage is willing to furnish such services.
NOW, THEREFORE, in consideration of the promises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. APPOINTMENT. The Funds hereby appoint Heritage to provide
certain accounting services for each Fund on the terms set forth in this
Agreement. Heritage accepts such appointment and agrees to furnish the
services herein set forth in return for the compensation as provided in
Paragraph 11 of this Agreement.
2. DELIVERY OF DOCUMENTS. Each Fund has made available to Heritage
(or has furnished Heritage with) properly certified or authenticated
copies, with all amendments and supplements thereto, of the following
documents:
(a) Declaration of Trust of the Fund;
(b) By-Laws of the Fund;
(c) Resolution of the Fund's Board of Trustees appointing
Heritage and approving the form of this Agreement; and
(d) Resolutions of the Fund's Board of Trustees designating
certain of its officers to give instructions on behalf of the Fund to
Heritage and authorizing Heritage to rely upon Proper Instructions (as
hereinafter defined).
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3. AUTHORIZED PERSONS. Concurrently with the execution of this
Agreement, each Fund shall deliver to Heritage a certificate setting forth
the names, titles and signatures of such persons authorized to give Proper
Instructions or any other notice, request, direction, instruction,
certificate or instrument on behalf of the Fund ("Authorized Persons").
Such certificate may be accepted and reasonably relied upon by Heritage as
conclusive evidence of the facts set forth therein and shall be considered
to be in full force and effect until delivery to Heritage of a similar
certificate to the contrary. Upon delivery of a certificate that deletes
the name of a person previously authorized to give Proper Instructions,
such person shall no longer be considered an Authorized Person.
4. PROPER INSTRUCTIONS.
-------------------
(a) Unless otherwise provided in this Agreement, Heritage
shall act only upon Proper Instructions. "Proper Instructions" shall
mean: (i) a tested telex from a Fund; (ii) other communications effected
directly between electro-mechanical or electronic devices or systems,
provided that the Heritage and the Fund agree to the use of such device or
system; (iii) a written request, direction, instruction or certificate
signed or initialled on behalf of a Fund by one or more Authorized
Persons; or (iv) telephonic or other oral instructions given by any
Authorized Person that Heritage reasonably believes to have been given by
a person authorized to give such instructions. Proper Instructions may be
in the form of standing instructions.
(b) Oral instruments will be confirmed by tested telex or in
writing in the manner set forth above at the close of business on the same
day that oral instructions are given to Heritage, but the lack of such
confirmation shall in no way affect any action taken by Heritage in
reasonable reliance upon such oral instructions.
(c) Heritage may assume that any Proper Instructions received
hereunder are not in any way inconsistent with any provisions of the
applicable Fund's Declaration of Trust or By-Laws or any vote, resolution
or proceeding of the Fund's Shareholders, or of the Board of Trustees or
of any committees thereof. Heritage shall be entitled reasonably to rely
upon any Proper Instructions actually received by it pursuant to this
Agreement. The sole obligation of Heritage with respect to any follow-up
or confirmatory instruction shall be to make reasonable efforts to detect
any discrepancy between said instruction and the original Proper
Instruction and to advise the applicable Fund accordingly.
5. FUND ACCOUNTING SERVICES.
------------------------
(a) DAILY ACTIVITIES. Heritage will perform the following
accounting functions on a daily basis for each Fund:
(1) Journalize the Fund's capital share and income
and expense activities;
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(2) Verify investment buy/sell trade tickets
received from the Fund's investment adviser(s) or subadvier(s)
and transmit trades to the Fund for transmittal for proper
settlement;
(3) Maintain individual ledgers for investment
securities;
(4) Maintain historical tax lots for each security;
(5) Reconcile Share activity and outstanding Share
balances with the transfer agent;
(6) Update the cash availability throughout the day
as required by the Fund's investment adviser(s) or subadviser(s);
(7) Post to and prepare the Fund's Statement of
Assets and Liabilities and the Statement of Operations;
(8) Calculate various contractual expenses (e.g.,
advisory and custody fees);
(9) Monitor the expense accruals and notify Fund
management of any proposed adjustments;
(10) Calculate capital gains and losses;
(11) Determine the Fund's net income;
(12) Obtain security market quotations from
appropriately approved independent pricing services or, if such
quotes are unavailable, then obtain such prices from the Fund's
investment adviser(s) or subadviser(s), and in either case
calculate the market value of the Fund's investments;
(13) Value the assets of the Fund and compute the net
asset value per share of the Fund at such times and dates and in
the manner specified in the Fund's current prospectus;
(14) Provide a copy of the daily portfolio valuation
to the Fund's investment adviser(s) or subadviser(s); and
(15) Compute the Fund's yield, total return, expense
ratio, portfolio turnover rate and daily dividend factor and
disseminate as agreed upon by the parties hereto.
(b) MONTHLY ACTIVITIES. On the first business day following
the end of each month, each Fund shall cause its custodian to prepare and
forward to Heritage, within three business days following the end of each
such month, a monthly statement of cash and portfolio transactions, which
Heritage will reconcile with Heritage's accounts and records maintained
for the Fund. Within three business days following Heritage's receipt of
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the monthly statement provided by the Fund's custodian , Heritage will
provide a written report of any discrepancies to the Fund's custodian, and
will provide a written report of any unreconciled items to the Fund.
(c) OTHER ACTIVITIES. In addition to the foregoing
accounting services, Heritage, will on behalf of each Fund and its
separate investment series:
(1) Prepare quarterly broker security transactions
summaries;
(2) Supply various Fund statistical data as
reasonably requested by the Fund on an ongoing basis;
(3) Assist in the preparation of support schedules
necessary for completion of the Fund's federal, state and, if
applicable, excise tax returns;
(4) Assist in preparation of the Fund's semi-annual
reports with the Securities and Exchange Commission on Form N-
SAR;
(5) Assist in the preparation of the Fund's annual
and semi-annual Shareholder reports and any proxy statements;
(6) Assist in the preparation of registration
statements on Form N-1A and other filings relating to the
registration of the Fund's Shares;
(7) Act as liaison with the Fund's independent
certified public accountants and provide account analyses, fiscal
year summaries, and other audit related schedules, and take all
reasonable actions in the performance of its obligations under
this Agreement to assure that the necessary information is made
available to such accountants for the expression of their
opinion, as such may be required by the Fund from time to time;
and
(8) Render such other similar services as may be
reasonably requested by the Fund.
6. RECORDS. Heritage shall create and maintain all necessary books
and records in accordance with all applicable laws, rules and regulations,
including, but not limited to, records required by Section 31(a) of the
1940 Act and the rules thereunder, as the same may be amended from time to
time, pertaining to the services performed by it and not otherwise created
and maintained by another party pursuant to contract with the Funds. Such
books and records which are in the possession of the Heritage shall be the
property of the applicable Fund. The Fund, or the Fund's authorized
representatives, shall have access to such books and records at all times
during Heritage's normal business hours. Upon the reasonable request of
the Fund, copies of any such books and records shall be provided by
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Heritage to the Fund or the Fund's authorized representatives at the
Fund's expense.
7. INFORMATION TO BE PROVIDED TO HERITAGE. Each Fund shall provide,
and shall require each of its agents (including, without limitation, its
custodian and distributor) to provide, to Heritage in a timely fashion all
data and information necessary for Heritage to maintain the Fund's
accounts, books and records as required by this Agreement.
8. CONFIDENTIALITY. Heritage agrees on behalf of itself and its
employees to treat confidentially and as proprietary information of the
Funds all books, records and other information relative to the Funds and
the Funds' prior, present or potential shareholders, and not to use such
books, records and other information for any purpose other than
performance of the Heritage's responsibilities and duties hereunder,
except, after prior notification to and approval by the applicable Fund,
which approval shall not be unreasonably withheld and may not be withheld
where Heritage may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Fund.
9. RIGHT TO RECEIVE ADVICE.
-----------------------
(a) ADVICE OF A FUND. If Heritage shall be in doubt as to
any action to be taken or omitted by it, it may request, and shall
promptly receive, from a Fund directions or advice, including Proper
Instructions where appropriate.
(b) ADVICE OF COUNSEL. If Heritage shall be in doubt as to
any question of law involved in any action to be taken or omitted by the
Heritage, it may request advice from qualified legal counsel of its own
choosing, who is acceptable to the Fund.
(c) PROTECTION OF HERITAGE. Heritage shall be protected in
any action that it takes or determines not to take in reasonable reliance
on any directions, advice or Proper Instructions received pursuant to
subsections (a) or (b) of this paragraph. However, nothing in this
paragraph shall be construed as imposing upon Heritage any obligation to
seek such directions, advice or Proper Instructions, or to act in
accordance with such directions, advice or Proper Instructions when
received, unless, under the terms of another provision of this Agreement,
the same is a condition to Heritage's properly taking or omitting to take
such action. Nothing in this subsection shall excuse Heritage when an
action or omission on its part constitutes willful misfeasance, willful
misconduct, gross negligence or reckless disregard by Heritage of its
duties under this Agreement.
10. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, Heritage shall at all times conform with
all applicable provisions of the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, the 1940 Act, and the
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Commodity Exchange Act; any other applicable provisions of state and
federal laws, rules and regulations; and the provisions of each Fund's
current prospectus, Declaration of Trust and By-Laws, all as amended from
time to time.
11. FEES AND EXPENSES.
-----------------
(a) As compensation for the accounting services rendered by
Heritage during the terms of this Agreement, each Fund will pay Heritage a
fee equal to 110% of Heritage's cost in complying with the terms of this
Agreement including, but not limited to, Heritage's cash disbursements,
expenses and charges in connection with the Agreement (excluding salaries
and usual overhead expenses).
(b) Heritage will, on a timely basis, bill the Funds for any
and all amounts due it under this Agreement. The Fund will promptly pay
to Heritage the amount of such billing.
(c) Heritage in its sole discretion may from time to time
employ or associate with itself such person or persons as Heritage may
believe to be particularly suited to assist it in performing services
under this Agreement. Such person or persons may be officers and
employees who are employed by both the Fund and Heritage. The
compensation of such person or persons shall be paid by Heritage and no
obligation shall be incurred on behalf of the Fund.
12. RESPONSIBILITY OF HERITAGE. Heritage shall be under no duty to
take any action on behalf of the Funds except as specifically set forth
herein or as may be specifically agreed to by Heritage in writing.
Heritage shall not be liable for any error in judgment or mistake at law
for any loss suffered by a Fund in connection with any matters to which
this Agreement relates, but nothing herein contained shall be construed to
protect Heritage against any liability by reason of willful misfeasance,
willful misconduct, or gross negligence in the performance of its duties
or by reason of its reckless disregard of its obligations and duties under
this Agreement. Without limiting the generality of the foregoing or of
any other provision of this Agreement, Heritage in connection with its
duties under this Agreement shall not be under any duty or obligation to
inquire into and shall not be liable for or in respect of:
(a) the validity or invalidity or authority or lack thereof
of any Proper Instruction, notice or other instrument which conforms to
the applicable requirements of this Agreement, and which Heritage
reasonably believes to be genuine.
(b) delays, errors or loss of data occurring by reason of
circumstances beyond Heritage's control, including, without limitation,
acts of civil or military authority, national emergencies, labor
difficulties, fire, mechanical breakdowns, flood or catastrophe, acts of
God, insurrection, war, riots or failure of the mails, transportation,
communication or power supply; or
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(c) the accuracy of security market quotations provided to
Heritage by independent pricing services or such other service or source
designated by the Fund's investment adviser, except when a Fund or the
investment adviser has given or caused Heritage to be given instructions
to utilize a different market value.
In addition, nothing herein shall require Heritage to perform any duties
under this Agreement on any day on which Heritage or the New York Stock
Exchange, Inc. is closed for business.
13. STANDARD OF CARE; INDEMNIFICATION.
---------------------------------
(a) STANDARD OF CARE. Heritage shall be held to a standard
of reasonable care in carrying out the provisions of this Agreement;
provided, however, that Heritage shall be held to any higher standard of
care that would be imposed upon Heritage by any applicable law, rule or
regulation even though such standard of care was not part of the
Agreement.
(b) INDEMNIFICATION BY THE FUND. Each Fund agrees to
indemnify and hold harmless Heritage and its nominees from all losses,
damages, costs, charges, payments, expenses (including reasonable counsel
fees), and liabilities arising directly or indirectly from any action that
Heritage takes or does or omits to take to do (i) at the request or on the
direction of or in reasonable reliance on the written advice of the
applicable Fund or (ii) upon Proper Instructions, provided, that neither
Heritage nor any of its nominees shall be indemnified against any
liability to a Fund or to its Shareholders (or any expenses incident to
such liability) arising out of Heritage's own willful misfeasance, willful
misconduct, gross negligence or reckless disregard of its duties and
obligations specifically described in this Agreement or its failure to
meet the standard of care set forth in Paragraph 14(a).
(c) INDEMNIFICATION BY HERITAGE. Heritage agrees to
indemnify and hold harmless each Fund and its nominees from all losses,
damages, costs, charges, payments, expenses (including reasonable counsel
fees), and liabilities arising out of or attributed to any action or
failure or omission to act by Heritage as a result of Heritage's own
willful misfeasance, willful misconduct, gross negligence or reckless
disregard of its duties and obligations specifically described in this
Agreement.
14. INSURANCE. Heritage will at all times maintain in effect
insurance coverage , including, without limitation, Fidelity Bond and
Electronic Data coverage, at levels of coverage consistent with those
customarily maintained by other high quality investor servicing agents for
registered investment companies and with such policies as the Board of
Trustees of the Funds may from time to time adopt.
15. DURATION AND TERMINATION. This Agreement shall continue until
termination by either Heritage or any Fund on sixty days' written notice.
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In the event that in connection with any such termination a successor to
any of Heritage's duties or responsibilities hereunder is designated by a
Fund by written notice to Heritage, Heritage will cooperate fully in the
transfer of such duties and obligations, including provision for
assistance by Heritage's personnel in the establishment of books, records
and other data by such successor. The applicable Fund will reimburse
Heritage for all reasonable expenses incurred by Heritage in connection
with such transfer. The termination of this Agreement with respect to a
Fund will not cause the termination of this Agreement on behalf of the
other Funds that are a party hereto.
16. NOTICES. All notices and other communications, including Proper
Instructions (collectively referred to as "Notices" in this paragraph),
hereunder shall be in writing or by confirming telegram, cable, telex or
facsimile sending device. Notices to Heritage shall be addressed to
Heritage at P.O. Box 33022, St. Petersburg, Florida 33733. Notices to a
Fund shall also be addressed to the applicable Fund at P.O. Box 33022, St.
Petersburg, Florida 33733. All postage, cable, telex, or facsimile
sending device charges arising from the sending of a Notice hereunder
shall be paid by the sender.
17. FURTHER ACTIONS. Each party agrees to perform such further acts
and execute such further documents as are necessary to effectuate the
purposes hereof.
18. AMENDMENT; MODIFICATION; WAIVER. This Agreement or any part
hereof may be amended, modified or waived only by an instrument in writing
signed by both parties hereto.
19. ASSIGNMENT. Neither this Agreement nor any rights or obligations
hereunder may be assigned by either party without the written consent of
the other party.
20. COUNTERPARTS. This Agreement may be executed in two
counterparts, each of which shall be deemed an original. The Agreement
shall become effective when one or two counterparts have been signed and
delivered by each of the parties.
21. MISCELLANEOUS. This Agreement embodies the entire agreement and
understanding between the parties thereto, and supersedes all prior
agreements and understandings, relating to the subject matter hereof,
provided that the parties hereto may embody in one or more separate
documents their agreement, if any, with respect to Proper Instructions.
The captions in this Agreement are included for convenience of reference
only and in no way define or delimit any of the provissions hereof or
otherwise affect their construction or effect. This Agreement shall be
deemed to be a contract made in Florida and governed by Florida law. If
any provision of this Agreement shall be held or made invalid by a court
decision, statute, rule regulation or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be binding
and shall inure to the benefits of the parties hereto and their respective
successors.
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22. MASSACHUSETTS BUSINESS TRUST. Notice is hereby given that
Heritage shall have no right to seek to proceed against or enforce this
Agreement against the individual shareholders of any Fund or against the
Trustees or officers of any Fund. Rather, Heritage can seek to enforce
this Agreement only against the applicable Fund itself.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers designated below on this day and year
first above written.
HERITAGE MUTUAL FUNDS
(as listed in Schedule A hereto)
By: /s/ Stephen G. Hill
----------------------------
Stephen G. Hill
President
HERITAGE ASSET MANAGEMENT, INC.
By: /s/ Donald H. Glassman
-----------------------------
Donald H. Glassman
Treasurer
- 9 -
<PAGE>
Schedule A
----------
Heritage Cash Trust (effective as of March 1, 1994):
Money Market Fund
Municipal Money Market Fund
Heritage Capital Appreciation Trust (effective as of March 1, 1994)
Heritage Income-Growth Trust (effective as of April 1, 1994)
Heritage Income Trust (effective as of April 1, 1994):
Diversified Portfolio
Institutional Government Portfolio
Limited Maturity Government Portfolio
Heritage Series Trust (effective as of May 1, 1994):
Small Cap Stock Fund
Value Equity Fund
Eagle International Equity Portfolio
Heritage Series Trust (effective as of November 16, 1995):
Growth Equity Fund
March 1, 1994, as amended on November 16, 1995
- 10 -
<PAGE>
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Heritage Cash Trust:
We consent to the inclusion in Post-Effective Amendment No. 15 to
the Registration Statement of Heritage Cash Trust on Form N-1A of our
reports dated October 12, 1995, on our audits of the financial statements
and financial highlights of Heritage Cash Trust-Money Market Fund and
Heritage Cash Trust-Municipal Money Market Fund which are also included in
the Registration Statement. We also consent to the reference to our Firm
under the captions "Financial Highlights" in the Prospectus and
"Independent Accountants" in the Registration Statement.
/s/ Coopers & Lybrand L.L.P.
---------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
December 26, 1995
<PAGE>
<PAGE>
November 5, 1985
Heritage Cash Trust
1400 66th Street North
St. Petersburg, Florida 33710
Dear Sirs:
Please be advised that the 100,000 shares of beneficial interest
of Heritage Cash Trust that we purchased on October 31, 1985 from you were
purchased as an investment with no present intention of redeeming or
reselling such shares and that we do not now have any intention of
redeeming or reselling such shares.
Very truly yours,
RJ FUND MANAGEMENT, INC.
By: /s/ Richard K. Riess
-------------------------
Richard K. Riess
President
RJ FUND MANAGEMENT, INC.
The Raymond James Center 1400 66th Street North
P.O. Box 12749 St. Petersburg, Florida 33733-2749 (813) 344-8143
<PAGE>
<PAGE>
HERITAGE CASH TRUST
CLASS A
DISTRIBUTION PLAN
WHEREAS, Heritage Cash Trust (the "Trust") is engaged in business
as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust, on behalf of its one or more designated
series presently existing or hereafter established (hereinafter referred
to as "Portfolios"), desires to adopt a Class A ("Class") Distribution
Plan pursuant to Rule l2b-1 under the 1940 Act and the Board of Trustees
of the Trust (the "Board of Trustees" or the "Board") has determined that
there is a reasonable likelihood that adoption of this Distribution Plan
will benefit the Trust and the Class A shareholders; and
WHEREAS, the Trust intends to employ a registered broker-dealer
as Distributor of the securities of which it is the issuer;
NOW, THEREFORE, the Trust, with respect to its Class A shares,
hereby adopts this Distribution Plan (the "Plan") in accordance with Rule
l2b-1 under the 1940 Act on the following terms and conditions:
1. PAYMENT OF FEES. The Trust is authorized to pay
distribution fees for the Class A shares of each Portfolio listed on
Schedule A of this Plan, as such schedule may be amended from time to
time, on an annualized basis, at such rates as shall be determined from
time to time by the Board of Trustees in the manner provided for approval
of this Plan in Paragraph 5, up to the maximum rates set forth in Schedule
A, as such schedule may be amended from time to time. Such fees shall be
calculated and accrued daily and paid monthly or at such other intervals
as shall be determined by the Board in the manner provided for approval of
this Plan in Paragraph 5. The distribution and service fees shall be
payable by the Trust on behalf of the Class A shares of a Portfolio
regardless of whether those fees exceed or are less than the actual
expenses, described in Paragraph 2 below, incurred by the Distributor with
respect to such Class in a particular year.
2. DISTRIBUTION EXPENSES. The fee authorized by Paragraph 1
of this Plan shall be paid pursuant to an appropriate Distribution
Agreement in payment for any activities or expenses intended to result in
the sale and retention of Trust shares, including, but not limited to,
compensation paid to registered representatives of the Distributor and to
participating dealers who have entered into sales agreements with the
Distributor, 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,
preparation and distribution of advertising material and sales literature
and other sales promotion expenses, for providing ongoing services to
Class A shareholders.
<PAGE>
3. ADDITIONAL COMPENSATION. This Plan shall not be
construed to prohibit or limit additional compensation derived from sales
charges or other sources that may be paid to the Distributor pursuant to
the aforementioned Distribution Agreement.
4. SHAREHOLDER APPROVAL. This Plan shall not take effect
with respect to the Class A shares of a Portfolio until it has been
approved by a vote of at least a majority of such Class' outstanding
voting securities, as defined in the 1940 Act, voting separately from any
other Class or Portfolio of the Trust.
5. BOARD APPROVAL. This Plan shall not take effect with
respect to any Class until it has been approved, together with any related
agreements, by vote of a majority of both (a) the Board of Trustees and
(b) those members of the Board who are not "interested persons" of the
Trust, as defined in the 1940 Act, and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
to it (the "Independent Trustees"), cast in person at a meeting or
meetings called for the purpose of voting on this Plan and such related
agreements.
6. RENEWAL OF PLAN. This Plan shall continue in full force
and effect with respect to the Class A shares of a Portfolio for
successive periods of one year from its approval as set forth in
Paragraphs 4 and 5 for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this
Plan in Paragraph 5.
7. REPORTS. Any Distribution Agreement entered into
pursuant to this Plan shall provide that the Distributor shall provide to
the Board of Trustees and the Board shall review, at least quarterly, or
at such other intervals as reasonably requested by the Board, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
8. TERMINATION. This Plan may be terminated with respect to
the Class A shares of a Portfolio at any time by vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities of such Class, voting separately from any other Class of the
Trust.
9. AMENDMENTS. Any change to the Plan that would materially
increase the distribution costs to the Class A shares of a Portfolio may
not be instituted unless such amendment is approved in the manner provided
for initial approval in Paragraphs 4 and 5 hereof. Any other material
change to the Plan may not be instituted unless such change is approved in
the manner provided for initial approval in Paragraph 5 hereof.
10. NOMINATION OF TRUSTEES. While this Plan is in effect,
the selection and nomination of Independent Trustees of the Trust shall be
committed to the discretion of the Independent Trustees then in office.
- 2 -
<PAGE>
11. RECORDS. The Trust shall preserve copies of this Plan
and any related agreements and all reports made pursuant to Paragraph 7
hereof for a period of not less than six years from the date of execution
of this Plan, or of the agreements or of such reports, as the case may be,
the first two years in an easily accessible place.
Dated: November 25, 1985, as restated on June 17, 1992 and April 3, 1995
- 3 -
<PAGE>
HERITAGE CASH TRUST
DISTRIBUTION PLAN
SCHEDULE A
The annualized fee rate pursuant to Paragraph 1 of the Heritage
Cash Trust Distribution Plan shall be as follows:
MONEY MARKET FUND:
0.15% of the average daily net assets
MUNICIPAL MONEY MARKET FUND:
0.15% of the average daily net assets
Dated: November 25, 1985, as restated on June 17, 1992 and April 3, 1995
<PAGE>
<PAGE>
HERITAGE CASH TRUST
CLASS C
DISTRIBUTION PLAN
WHEREAS, Heritage Cash Trust (the "Trust") is engaged in business
as an open-end management investment company and is registered as such
under the Investment Company Act of 1940, as amended (the "1940 Act"); and
WHEREAS, the Trust, on behalf of its one or more designated
series presently existing or hereafter established (hereinafter referred
to as "Portfolios"), desires to adopt a Class C ("Class") Distribution
Plan pursuant to Rule l2b-1 under the 1940 Act and the Board of Trustees
of the Trust (the "Board of Trustees" or the "Board") has determined that
there is a reasonable likelihood that adoption of this Distribution Plan
will benefit the Trust and the Class C shareholders; and
WHEREAS, the Trust intends to employ a registered broker-dealer
as Distributor of the securities of which it is the issuer;
NOW, THEREFORE, the Trust, with respect to its Class C shares,
hereby adopts this Distribution Plan (the "Plan") in accordance with Rule
l2b-1 under the 1940 Act on the following terms and conditions:
1. PAYMENT OF FEES. The Trust is authorized to pay
distribution fees for the Class C shares of each Portfolio listed on
Schedule A of this Plan, as such schedule may be amended from time to
time, on an annualized basis, at such rates as shall be determined from
time to time by the Board of Trustees in the manner provided for approval
of this Plan in Paragraph 5, up to the maximum rates set forth in Schedule
A, as such schedule may be amended from time to time. Such fees shall be
calculated and accrued daily and paid monthly or at such other intervals
as shall be determined by the Board in the manner provided for approval of
this Plan in Paragraph 5. The distribution and service fees shall be
payable by the Trust on behalf of the Class C shares of a Portfolio
regardless of whether those fees exceed or are less than the actual
expenses, described in Paragraph 2 below, incurred by the Distributor with
respect to such Class in a particular year.
2. DISTRIBUTION EXPENSES. The fee authorized by Paragraph 1
of this Plan shall be paid pursuant to an appropriate Distribution
Agreement in payment for any activities or expenses intended to result in
the sale and retention of Trust shares, including, but not limited to,
compensation paid to registered representatives of the Distributor and to
participating dealers who have entered into sales agreements with the
Distributor, 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,
preparation and distribution of advertising material and sales literature
and other sales promotion expenses, or for providing ongoing services to
Class C shareholders.
<PAGE>
3. ADDITIONAL COMPENSATION. This Plan shall not be
construed to prohibit or limit additional compensation derived from sales
charges or other sources that may be paid to the Distributor pursuant to
the aforementioned Distribution Agreement.
4. SHAREHOLDER APPROVAL. This Plan shall not take effect
with respect to the Class C shares of a Portfolio until it has been
approved by a vote of at least a majority of such Class' outstanding
voting securities, as defined in the 1940 Act, voting separately from any
other Class or Portfolio of the Trust.
5. BOARD APPROVAL. This Plan shall not take effect with
respect to any Class until it has been approved, together with any related
agreements, by vote of a majority of both (a) the Board of Trustees and
(b) those members of the Board who are not "interested persons" of the
Trust, as defined in the 1940 Act, and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
to it (the "Independent Trustees"), cast in person at a meeting or
meetings called for the purpose of voting on this Plan and such related
agreements.
6. RENEWAL OF PLAN. This Plan shall continue in full force
and effect with respect to the Class C shares of a Portfolio for
successive periods of one year from its approval as set forth in
Paragraphs 4 and 5 for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this
Plan in Paragraph 5.
7. REPORTS. Any Distribution Agreement entered into
pursuant to this Plan shall provide that the Distributor shall provide to
the Board of Trustees and the Board shall review, at least quarterly, or
at such other intervals as reasonably requested by the Board, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
8. TERMINATION. This Plan may be terminated with respect to
the Class C shares of a Portfolio at any time by vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities of such Class, voting separately from any other Class of the
Trust.
9. AMENDMENTS. Any change to the Plan that would materially
increase the distribution costs to the Class C shares of a Portfolio may
not be instituted unless such amendment is approved in the manner provided
for initial approval in Paragraphs 4 and 5 hereof. Any other material
change to the Plan may not be instituted unless such change is approved in
the manner provided for initial approval in Paragraph 5 hereof.
10. NOMINATION OF TRUSTEES. While this Plan is in effect,
the selection and nomination of Independent Trustees of the Trust shall be
committed to the discretion of the Independent Trustees then in office.
- 2 -
<PAGE>
11. RECORDS. The Trust shall preserve copies of this Plan
and any related agreements and all reports made pursuant to Paragraph 7
hereof for a period of not less than six years from the date of execution
of this Plan, or of the agreements or of such reports, as the case may be,
the first two years in an easily accessible place.
Date: April 3, 1995
- 3 -
<PAGE>
HERITAGE CASH TRUST
CLASS C
DISTRIBUTION PLAN
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Cash Trust Distribution Plan shall be as follows:
MONEY MARKET FUND
0.15% of the average daily net assets
Dated: April 3, 1995
<PAGE>
<PAGE>
CALCULATION OF YIELD
Base Period Return for the 7-day
Period Ended August 31, 1991 .000971507
Average Yield: .000971507 / 7 * 365 = 5.07%
365/7
Effective Yield: [(1+.000971507) ]-1 = 5.20%
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>
<NAME> HERITAGE CASH TRUST-MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> $1,323,208,167
<INVESTMENTS-AT-VALUE> $1,323,208,167
<RECEIVABLES> $1,364,216
<ASSETS-OTHER> $2,098,292
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $1,326,670,675
<PAYABLE-FOR-SECURITIES> $0
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $32,930,954
<TOTAL-LIABILITIES> $32,930,954
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $1,294,009,037
<SHARES-COMMON-STOCK> $1,294,009,037
<SHARES-COMMON-PRIOR> $981,618,610
<ACCUMULATED-NII-CURRENT> $0
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> ($269,316)
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $0
<NET-ASSETS> $1,293,739,721
<DIVIDEND-INCOME> $0
<INTEREST-INCOME> $65,182,402
<OTHER-INCOME> $0
<EXPENSES-NET> $8,886,019
<NET-INVESTMENT-INCOME> $56,296,383
<REALIZED-GAINS-CURRENT> ($269,316)
<APPREC-INCREASE-CURRENT> $0
<NET-CHANGE-FROM-OPS> $56,027,067
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> $56,296,383
<DISTRIBUTIONS-OF-GAINS> $0
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 4,788,622,703
<NUMBER-OF-SHARES-REDEEMED> 4,531,700,234
<SHARES-REINVESTED> 55,467,958
<NET-CHANGE-IN-ASSETS> $312,121,111
<ACCUMULATED-NII-PRIOR> $28,081,361
<ACCUMULATED-GAINS-PRIOR> ($15,719)
<OVERDISTRIB-NII-PRIOR> $0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $5,191,579
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $8,886,019
<AVERAGE-NET-ASSETS> $1,124,814,000
<PER-SHARE-NAV-BEGIN> $1.00
<PER-SHARE-NII> $0.50
<PER-SHARE-GAIN-APPREC> $0.00
<PER-SHARE-DIVIDEND> $0.50
<PER-SHARE-DISTRIBUTIONS> $0.00
<RETURNS-OF-CAPITAL> $0.00
<PER-SHARE-NAV-END> $1.00
<EXPENSE-RATIO> 0.79
<AVG-DEBT-OUTSTANDING> $0
<AVG-DEBT-PER-SHARE> $0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER>
<NAME> MUNICIPAL MONEY MARKET FUND
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> AUG-31-1995
<PERIOD-START> SEP-01-1994
<PERIOD-END> AUG-31-1995
<INVESTMENTS-AT-COST> $279,996,948
<INVESTMENTS-AT-VALUE> $279,996,948
<RECEIVABLES> $1,250,862
<ASSETS-OTHER> $2,905,991
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $284,153,801
<PAYABLE-FOR-SECURITIES> $0
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $1,144,062
<TOTAL-LIABILITIES> $1,144,062
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $283,076,115
<SHARES-COMMON-STOCK> 283,076,115
<SHARES-COMMON-PRIOR> 212,486,915
<ACCUMULATED-NII-CURRENT> ($66,376)
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> $0
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $0
<NET-ASSETS> $283,009,739
<DIVIDEND-INCOME> $0
<INTEREST-INCOME> $9,370,040
<OTHER-INCOME> $0
<EXPENSES-NET> $1,891,077
<NET-INVESTMENT-INCOME> $7,478,963
<REALIZED-GAINS-CURRENT> ($46,523)
<APPREC-INCREASE-CURRENT> $0
<NET-CHANGE-FROM-OPS> $7,432,440
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> $7,478,963
<DISTRIBUTIONS-OF-GAINS> $0
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 1,085,052,629
<NUMBER-OF-SHARES-REDEEMED> 1,021,814,083
<SHARES-REINVESTED> 7,350,654
<NET-CHANGE-IN-ASSETS> $70,542,677
<ACCUMULATED-NII-PRIOR> $4,645,067
<ACCUMULATED-GAINS-PRIOR> ($2,029)
<OVERDISTRIB-NII-PRIOR> $0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $1,186,239
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $1,891,007
<AVERAGE-NET-ASSETS> $245,594,667
<PER-SHARE-NAV-BEGIN> $1.00
<PER-SHARE-NII> $0.03
<PER-SHARE-GAIN-APPREC> $0.00
<PER-SHARE-DIVIDEND> $0.03
<PER-SHARE-DISTRIBUTIONS> $0.00
<RETURNS-OF-CAPITAL> $0.00
<PER-SHARE-NAV-END> $1.00
<EXPENSE-RATIO> 0.77
<AVG-DEBT-OUTSTANDING> $0
<AVG-DEBT-PER-SHARE> $0
</TABLE>
