<PAGE> 1
May 23, 1995
Dear Fellow Shareholders:
It is my pleasure to provide you with the semiannual report for Heritage
Income-Growth Trust for the six-month period ended March 31, 1995. For this
period, your Fund had a positive total return (calculated without the imposition
of a front-end sales charge) of 5.14%. For the same period, the Standard &
Poor's 500 Composite Stock Price Index appreciated by 9.72%, while the broader
Value Line Index appreciated by only 1.43%. As we have discussed in previous
letters, your Fund is designed to provide participation in the stock market via
income-producing equity securities. We believe that this strategy should help
reduce some of the short-term volatility inherent in equity investing. For
example, when the market (as measured by the Dow Jones Industrial Index) was
down 82 points (or nearly 2%) on May 18, your Fund's net asset value fell only
eight cents, or 0.7%. On May 22, when the Dow was up 54 points, or 1.25%, your
Fund's net asset value was up six cents, or 0.5%.
In the letter that follows, Lou Kirschbaum shares his thoughts about your
Fund's recent investment performance as well as his outlook for your Fund and
the market in general. Lou is a Senior Vice President of Eagle Asset Management,
Inc., your Fund's subadviser, and has managed your Fund's portfolio since
February 1990. I hope you find his comments helpful in understanding how your
Fund's investments are managed.
Thank you for your continuing investment in Heritage Income-Growth Trust.
We look forward to serving your investment needs for years to come.
Sincerely,
Stephen G. Hill
President
<PAGE> 2
(This Page Intentionally Left Blank)
<PAGE> 3
Dear Fellow Shareholders:
It has been said that patience is a virtue, and the financial markets have
provided ample reinforcement for this view in recent months. The time when
patience was required was the fall of 1993 through November 1994. During this
period of sharply rising interest rates, neither stocks nor bonds, in the
aggregate, provided positive returns.
The reward for exercising patience, however, has been very strong
performance by both stocks and bonds through the early months of 1995. The
catalyst for this improvement was the mounting evidence that last year's actions
by the Federal Reserve had their desired effect: The series of seven increases
in short-term interest rates appears to have squeezed inflation expectations out
of the system, without pitching the economy into recession.
In managing your Fund, we continue to emphasize stocks and convertible
securities that have high current income yields and what we believe are good
growth prospects. Real Estate Investment Trusts (REITs), regional banks,
telephones, and energy stocks are among the heaviest concentrations in the
portfolio, though no group represents more than 10% exposure.
A word or two on REITs, which at present comprise the largest single group
of stocks in the portfolio, seems appropriate. The bull market in REIT stocks
that started in 1991 came to an end in the latter half of 1994, as most stocks
in this category struggled against the rising tide of interest rates. For the
most part, REITs have sat on the sidelines in the most recent stock market rally
(in common with small capitalization stocks in general). In so doing, the stocks
have created a valuation anomaly that is unlikely to persist for very long, in
my view.
REIT dividend yields, averaging around 7%, are approaching all-time highs
relative to intermediate-term bond yields -- one of the typical valuation
benchmarks used in this industry. Internal cash flow growth, driven by effective
property management and rising rents, has seldom been better (except for the
hyperinflationary period from the mid-1970s through the mid-1980s). In general,
dividend payouts are rising 6%-10% per year.
Stocks sometimes get out of synch with the underlying fundamentals of the
business and economic environment for periods of some months. Historically, if
the fundamentals remain robust (as they appear to be in many segments of the
real estate industry), these periods have proven to be excellent opportunities
to accumulate shares for long-term gains. In the case of REITs, we are being
paid through their ample current dividends to wait for the market once again to
"discover" these stocks.
As always, I appreciate your confidence in Eagle Asset Management. We will
continue to work diligently to provide worthwhile investment returns, with an
emphasis on current yield, capital appreciation, and below-market risk.
Sincerely,
Lou Kirschbaum
Senior Vice President
Eagle Asset Management
<PAGE> 4
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1995
(UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<C> <S> <C>
REPURCHASE AGREEMENT--7.32%(A)
Repurchase Agreement with State Street Bank and Trust Company, dated March 31, 1995 @ 5.9%, to be repurchased at
$2,336,148 on April 3, 1995, collateralized by $2,410,000 United States Treasury Bonds, 7.25%, due May 15, 2016
(market value $2,448,651, including interest) (cost $2,335,000)..................................................... $ 2,335,000
-----------
SHARES
------
COMMON STOCKS--57.6%(A)
ADVERTISING--1.7%
10,000 Omnicom Group, Inc.............................................................................. 547,500
-----------
BANKING--4.9%
4,000 Signet Banking Corporation...................................................................... 81,500
10,000 Corestates Financial Corporation................................................................ 320,000
10,000 Fleet Financial Group, Inc...................................................................... 323,750
15,000 Mellon Bank Corporation......................................................................... 611,250
3,000 NationsBank Corporation......................................................................... 152,250
4,000 Capital One Financial Corporation............................................................... 76,500
-----------
1,565,250
-----------
BUILDING SUPPLIES--0.3%
8,000 Interface, Inc., Class "A"...................................................................... 112,000
-----------
BUSINESS SERVICES--1.4%
10,000 Reuters Holdings, PLC, ADR...................................................................... 460,000
-----------
CELLULAR COMMUNICATIONS--1.3%
12,000 Vodafone Group, PLC, ADR........................................................................ 397,500
-----------
COMPUTER SERVICES--2.2%
6,000 Automatic Data Processing, Inc.................................................................. 378,000
10,000 Wallace Computer Services, Inc.................................................................. 321,250
-----------
699,250
-----------
CONSUMER PRODUCTS--1.9%
2,500 Gillette Company................................................................................ 204,063
6,000 Procter & Gamble Company........................................................................ 397,500
-----------
601,563
-----------
DIVERSIFIED BUSINESS--1.5%
15,000 Chemed Corporation.............................................................................. 468,750
-----------
ELECTRICAL EQUIPMENT--3.7%
10,000 General Electric Company........................................................................ 541,250
10,000 Grainger (W.W.), Inc. .......................................................................... 630,000
-----------
1,171,250
-----------
FINANCIAL SERVICES--3.7%
10,000 American Express Company........................................................................ 348,750
5,000 Federal National Mortgage Association........................................................... 406,875
5,000 Marsh & McLennan Companies, Inc................................................................. 410,625
-----------
1,166,250
-----------
FOOD/TOBACCO--3.1%
10,000 Philip Morris Companies, Inc.................................................................... 652,500
50,000 RJR Nabisco Holdings Corporation, PERCS-C....................................................... 318,750
-----------
971,250
-----------
HEALTH CARE SERVICES--1.6%
10,000 Genesis Health Ventures, Inc.*.................................................................. 312,500
15,000 Advocat, Inc.*.................................................................................. 191,250
-----------
503,750
-----------
HOTELS--.5%
5,000 Marriott International, Inc..................................................................... 173,750
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1995
(CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
INSURANCE--1.3%
6,500 MBIA, Inc....................................................................................... $ 408,688
-----------
INVESTMENT ADVISORS--0.8%
15,000 Security Capital Industrial Trust*.............................................................. 243,750
-----------
OIL & GAS--4.3%
6,000 Amoco Corporation............................................................................... 381,750
3,000 Mobil Corporation............................................................................... 277,875
8,000 Williams Companies, Inc......................................................................... 245,000
10,000 Chevron Corporation............................................................................. 480,000
-----------
1,384,625
-----------
OILFIELD SERVICES--1.7%
6,000 Halliburton Company............................................................................. 218,250
15,000 Petroleum Geo-Services, ADR*.................................................................... 333,750
-----------
552,000
-----------
PERSONAL SERVICES--0.7%
5,000 H&R Block, Inc.................................................................................. 216,875
-----------
PHARMACEUTICAL--1.2%
5,000 Schering-Plough Corporation..................................................................... 371,873
-----------
PHOTOGRAPHY--0.7%
4,000 Eastman Kodak Company........................................................................... 212,500
-----------
PUBLISHING--3.9%
15,000 R. R. Donnelley & Sons Company.................................................................. 515,625
4,000 McGraw-Hill Companies Inc....................................................................... 287,000
8,000 Tribune Company................................................................................. 442,000
-----------
1,244,625
-----------
REAL ESTATE--5.8%
22,000 Allied Capital Commercial Corporation, REIT..................................................... 363,000
10,000 Columbus Realty Trust, REIT..................................................................... 187,500
15,000 Debartolo Realty Corporation, REIT.............................................................. 211,875
10,000 Evans Withycombe Residential, REIT.............................................................. 200,000
10,000 Health Care Property Investors, Inc. REIT....................................................... 296,250
10,000 Liberty Property Trust, REIT.................................................................... 193,750
10,000 The Rouse Company*.............................................................................. 196,250
10,000 Storage Trust Realty, REIT...................................................................... 206,250
-----------
1,854,875
-----------
RESTAURANTS--1.3%
12,000 McDonald's Corporation.......................................................................... 409,500
-----------
TELECOMMUNICATIONS--4.6%
12,000 ALLtel Corporation.............................................................................. 345,000
15,000 American Telephone & Telegraph Corporation...................................................... 776,250
10,000 GTE Corporation................................................................................. 332,500
-----------
1,453,750
-----------
UTILITIES--3.7%
8,000 American Water Works Company, Inc............................................................... 232,000
12,500 Long Island Lighting Company.................................................................... 182,813
25,000 UGI Corporation................................................................................. 478,125
10,000 Wicor, Inc...................................................................................... 281,250
-----------
1,174,188
-----------
Total common stocks (cost $16,467,601).............................................................................. 18,365,312
-----------
CONVERTIBLE PREFERRED STOCKS--8.7%(A)
AUTO & TRUCK MANUFACTURER--3.0%
3,000 Ford Motor Company, Series "A", $4.20........................................................... 264,750
10,000 General Motors Corporation, Series "C", $6.50................................................... 575,000
10,000 Mascotech, Inc., $1.20.......................................................................... 128,750
-----------
968,500
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1995
(CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
CHEMICALS--0.4%
4,000 LSB Industries, Inc., $3.25..................................................................... $ 130,000
-----------
ENTERTAINMENT--1.2%
15,000 AMC Entertainment Inc., Series "B", $1.75....................................................... 380,625
-----------
FINANCIAL SERVICES--0.9%
5,000 Travelers Group, Inc., $2.75.................................................................... 286,250
-----------
FOOD PROCESSING--1.1%
10,000 Conagra, Inc., Series "E", $1.69................................................................ 337,500
-----------
MANUFACTURING--0.8%
5,000 Corning, Inc., 6% Series M, MIPS................................................................ 266,250
-----------
PAPER/PLASTIC PRODUCTS--0.7%
4,000 Sonoco Products Company, Series "A", $2.25...................................................... 210,000
-----------
REAL ESTATE--0.6%
4,000 The Rouse Company, Series "A", $3.25............................................................ 204,000
-----------
Total convertible preferred stocks (cost $2,774,738)................................................................ 2,783,125
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT DATE
- - ---------------- --------
<C> <S> <C> <C>
CORPORATE BONDS--22.5%(A)
AUTO PARTS--0.7%
$250,000 Venture Holdings Trust, 9.75%....................................................... 04/01/04 216,250
-----------
BEVERAGES--0.4%
200,000 Heileman Acquisition Co., 9.625%.................................................... 01/31/04 140,000
-----------
BUILDING SUPPLIES--0.6%
200,000 Interface, Inc., 8% (c)............................................................. 09/15/13 197,000
-----------
CEMENT--0.6%
300,000 Cemex S.A. de C.V., 4.25%(c)........................................................ 11/01/97 183,000
-----------
ENVIRONMENTAL ENGINEERING--2.3%
200,000 Thermo Electron Corporation, 4.625%(c).............................................. 08/01/97 322,000
350,000 Thermo Electron Corporation, 5%(c).................................................. 04/15/01.. 406,000
-----------
728,000
-----------
FINANCIAL SERVICES--1.5%
400,000 First Financial Management Corporation, 5%(c)....................................... 12/15/99 476,000
-----------
HEALTH CARE SERVICES--4.3%
250,000 Genesis Health Ventures, Inc., 6%(c)................................................ 11/30/03 361,875
250,000 OrNda HealthCorp, 12.25%............................................................ 05/15/02 271,250
250,000 Mediplex Group, Inc., 6.50%(c)...................................................... 08/01/03 351,250
300,000 Sun Healthcare Group, Inc. 6%(c)(a)................................................. 03/01/04 378,000
-----------
1,362,375
-----------
PAPER PRODUCTS--0.8%
225,000 Riverwood International Corporation, 6.75%(c)....................................... 09/15/03 261,000
-----------
PERSONAL SERVICES--1.7%
400,000 Service Corporation International, 6.50%(c)......................................... 09/01/01 544,000
-----------
PRINTING--0.7%
250,000 Webcraft Technologies, 9.375%....................................................... 02/15/02 220,000
-----------
PUBLISHING--1.0%
800,000 Time Warner, Inc., Zero Coupon Bond(c).............................................. 06/22/13 305,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1995
(CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
- - ---------------- -------- -----------
<C> <S> <C> <C>
REAL ESTATE--2.7%
$500,000 Alexander Haagen Properties, Inc., REIT, 7.5%(c).................................... 01/15/01 $ 430,000
300,000 Developers Diversified Realty Corporation, REIT, 7%(c).............................. 08/15/99 282,000
150,000 Liberty Property Trust, REIT, 8%(c)................................................. 07/01/00 144,000
-----------
856,000
-----------
RECREATION--1.3%
300,000 Carnival Corporation, 4.50%(c)...................................................... 07/01/97 412,500
-----------
RECREATIONAL EQUIPMENT--0.6%
250,000 Bell Sports Corporation, 4.25%(c)................................................... 11/15/00 180,000
-----------
RESTAURANTS--0.6%
200,000 TPI Enterprises, Inc., 8.25%(c)..................................................... 07/15/02 187,500
-----------
RETAIL--1.0%
300,000 Big 5 Holdings, 13.625%............................................................. 09/15/02 306,000
-----------
SECURITIES--0.9%
300,000 Advest Group, Inc., 9%(c)........................................................... 03/15/08 274,500
-----------
WASTE MANAGEMENT--1.0%
300,000 Laidlaw, Inc., 6%(c)................................................................ 01/15/99 330,000
-----------
Total corporate bonds (cost $6,708,742).................................................................. 7,179,125
-----------
DEBT EXCHANGEABLE FOR COMMON STOCK (DECS)--1.8%(A)
COMMUNICATIONS & INFORMATION
12,500 American Express Company, 6.25%..................................................... 10/15/96 560,938
-----------
Total DECS (cost $459,375)............................................................................... 560,938
-----------
TOTAL INVESTMENT PORTFOLIO (COST $28,745,456)(B), 97.9%(A)............................................... 31,223,500
OTHER ASSETS AND LIABILITIES, NET, INCLUDING COVERED CALL OPTIONS WRITTEN, 2.1%(A)....................... 665,108
-----------
NET ASSETS, 100%......................................................................................... $31,888,608
============
</TABLE>
- - ---------------
*Not an income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is the same.
Market value includes net unrealized appreciation of $2,478,044 which
consists of aggregate gross unrealized appreciation for all securities in
which there is an excess of market value over tax cost of $3,170,224 and
aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over market value of $692,180.
(c) Convertible security.
ADR-American Depository Receipt
MIPS-Monthly Income Preferred Stock
PERCS-Preferred Equity Redemption Cumulative Stock
REIT-Real Estate Investment Trust
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
COVERED CALL OPTIONS WRITTEN
MARCH 31, 1995
(UNAUDITED)
(CONTINUED)
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES
SUBJECT MARKET
TO CALL VALUE
------- -------
<S> <C> <C>
ALLtel Corporation, April 1995 @ $30............................................................ 3,300 $ 1,238
H&R Block, Inc., July 1995 @ $35................................................................ 2,000 18,000
R.R. Donnelly & Sons, June 1995 @ $35........................................................... 5,000 5,938
Eastman Kodak Company, Inc., April 1995 @ $50................................................... 2,500 8,750
Federal National Mortgage Association, June 1995 @ $75.......................................... 2,500 19,063
W.W. Grainger, Inc., April 1995 @ $60........................................................... 5,000 18,125
McDonald's Corporation, June 1995 @ $35......................................................... 6,000 6,750
Vodafone Group PLC, Sponsored ADR, July 1995 @ $30.............................................. 3,000 12,750
-------
Total liability for covered call options written (premiums received $60,189).................... $90,613(a)
=======
</TABLE>
- - ---------------
(a) At March 31, 1995 portfolio securities valued @ $1,308,875 were held in
escrow by the custodian in connection with covered call options written by
the Fund.
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1995
(UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at market value (identified cost $26,410,456)(Note 1)....................... $28,888,500
Repurchase agreement (identified cost $2,335,000) (Note 1)............................... 2,335,000
Cash..................................................................................... 4,726
Receivables:
Investments sold....................................................................... 632,353
Dividends and interest................................................................. 214,919
Deferred state registration expenses (Note 1)............................................ 9,187
-----------
Total assets..................................................................... 32,084,685
Liabilities
Payables (Note 4):
Accrued management fee................................................................. $ 20,288
Accrued distribution fee............................................................... 6,763
Other accrued expenses................................................................. 78,413
Covered call options written, at market value (premiums received $60,189) (Notes 1 and
3)..................................................................................... 90,613
----------
Total liabilities................................................................ 196,077
-----------
Net assets, at market value.............................................................. $31,888,608
===========
Net Assets
Net assets consist of:
Accumulated net investment income...................................................... $ 106,902
Net unrealized appreciation on investments............................................. 2,478,044
Net unrealized depreciation on covered call options written............................ (30,424)
Accumulated net realized loss.......................................................... (388,553)
Accumulated net realized gain on covered call options written (Note 1)................. 522,128
Paid-in capital........................................................................ 29,200,511
-----------
Net assets, at market value.............................................................. $31,888,608
===========
Net asset value and redemption price per share ($31,888,608 divided by 2,845,733 shares
of beneficial interest outstanding, no par value)(Note 2).............................. $11.21
======
Maximum offering price per share (100/96 of $11.21)...................................... $11.68
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1995
(UNAUDITED)
- - --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends................................................................................. $ 448,551
Interest.................................................................................. 351,076
----------
Total income........................................................................ 799,627
Expenses (Notes 1 and 4):
Management fee............................................................................ $118,149
Distribution fee.......................................................................... 39,383
Custodian/Fund accounting fees............................................................ 24,411
Legal fee................................................................................. 17,257
Shareholder servicing fee................................................................. 15,807
Auditing fee.............................................................................. 15,350
Amortization of state registration expenses............................................... 12,600
Reports to shareholders................................................................... 6,049
Trustees' fees and expenses............................................................... 4,336
Insurance................................................................................. 3,000
Other..................................................................................... 428
--------
Total expenses...................................................................... 256,770
----------
Net investment income....................................................................... 542,857
----------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain from investment transactions.............................................. 41,327
Net realized gain from covered call options written (Note 1)................................ 17,409
Net increase in unrealized appreciation of investments during the period.................... 951,844
Net decrease in unrealized depreciation of covered call options written during the period... (13,302)
----------
Net gain on investments............................................................. 997,278
----------
Net increase in net assets resulting from operations........................................ $1,540,135
==========
</TABLE>
- - --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- - --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED MARCH FOR THE
31, 1995 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1994
------------------ ------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income.................................................... $ 542,857 $ 879,829
Net realized gain from investment transactions........................... 41,327 1,874,511
Net realized gain from covered call options written (Note 1)............. 17,409 82,702
Net increase (decrease) in unrealized appreciation of investments and
covered call options written during the period......................... 938,542 (2,221,027)
------------ ------------
Net increase in net assets resulting from operations..................... 1,540,135 616,015
Distributions to shareholders from:
Net investment income ($0.17 and $0.24 per share, respectively).......... (672,445) (722,439)
Net realized gains ($0.49 and $0.92 per share, respectively)............. (1,189,190) (2,522,760)
Increase (decrease) in net assets from Fund share transactions (Note 2).... (398,944) 789,411
------------ ------------
Increase (decrease) in net assets.......................................... 720,444 (1,839,773)
Net assets, beginning of period............................................ 32,609,052 34,448,825
------------ ------------
Net assets, end of period (including undistributed net investment income of
$106,902 and $236,491, respectively)..................................... $ 31,888,608 $ 32,609,052
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
FINANCIAL HIGHLIGHTS
- - --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
FOR THE
SIX MONTH
PERIOD ENDED FOR THE YEARS ENDED SEPTEMBER 30,
MARCH 31, 1995 ------------------------------------------------------------------
(UNAUDITED) 1994 1993 1992 1991 1990 1989 1988 1987+
-------------- ------ ------- ------ ------ ------- ------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $11.33 $12.28 $ 10.81 $ 9.87 $ 8.08 $ 10.41 $ 9.18 $ 9.98 $ 9.50
------ ------ ------- ------ ------ ------- ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (a)...... 0.12 0.30 0.39 0.28 0.36 0.45 0.45 0.44 0.26
Net realized and unrealized
gain (loss) on investments... 0.42 (0.09) 1.44 1.02 1.88 (2.06) 1.22 (0.81) 0.38
------ ------ ------- ------ ------ ------- ------- ------- ------
Total from Investment
Operations................... 0.54 0.21 1.83 1.30 2.24 (1.61) 1.67 (0.37) 0.64
------ ------ ------- ------ ------ ------- ------- ------- ------
LESS DISTRIBUTIONS:
Dividends from net investment
income....................... (0.17) (0.24) (0.36) (0.36) (0.34) (0.48) (0.44) (0.43) (0.16)
Distributions from net realized
gains........................ (0.49) (0.92) -- -- (0.11) (0.24) -- -- --
------ ------ ------- ------ ------ ------- ------- ------- ------
Total Distributions............ (0.66) (1.16) (0.36) (0.36) (0.45) (0.72) (0.44) (0.43) (0.16)
------ ------ ------- ------ ------ ------- ------- ------- ------
NET ASSET VALUE, END OF THE
PERIOD......................... $11.21 $11.33 $ 12.28 $10.81 $ 9.87 $ 8.08 $ 10.41 $ 9.18 $ 9.98
====== ====== ======= ====== ====== ======= ======= ======= ======
TOTAL RETURN (%)(D).............. 5.14(c) 1.80 16.44 13.42 28.72 (16.42) 18.80 (3.38) 6.79(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net to
average daily net
assets(a).................... 1.63(b) 1.64 1.72 1.75 1.75 1.75 1.75 1.75 1.75(b)
Net investment income to
average daily net assets..... 3.45(b) 2.62 2.67 2.77 4.02 4.77 4.72 5.01 4.29(b)
Portfolio turnover rate........ 43.04(b) 98.78 129.97 71.46 80.50 155.63 248.73 183.54 90.68(b)
Net assets, end of the period
(millions)................... $32 $33 $34 $27 $20 $19 $24 $20 $24
</TABLE>
- - ---------------
+ For the period December 15, 1986 (commencement of operations) to September
30, 1987.
(a) Excludes management fees waived by the Manager through 1992 in the amount of
less than $.01, $.01, $.02, $.02, $.01 and $.02 per share, respectively. The
operating expense ratios including such item would be 1.75%, 1.94%, 1.96%,
1.92%, 1.89%, and 2.11% (annualized), respectively. The year 1993 includes
waived management fees paid to the Manager of $.01 per share.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales charge.
11
<PAGE> 12
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- - --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Income-Growth Trust (the
"Fund") is organized as a Massachusetts business trust and is registered
under the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company. The policies described below are
followed consistently by the Fund in the preparation of its financial
statements in conformity with generally accepted accounting principles.
Security Valuation: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, market value is based on the mean between the last bid and
asked price and in the absence of a market quote, securities are valued
using such methods as the Board of Trustees believe would reflect fair
market value. Short term investments having a maturity of 60 days or
less are valued at cost, which when combined with accrued interest
included in interest receivable or discount earned, approximates market.
Repurchase Agreements: The Fund enters into repurchase agreements
whereby the Fund, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of purchase
is required to be an amount equal to at least 100% of the resale price.
Federal Income Taxes: The Fund's policy is to comply with the
requirements of the Internal Revenue Code of 1986, as amended, which are
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no provision has been made for federal income and excise
taxes.
Distribution of Income and Gains: Distributions of net investment income
are made quarterly. Net realized gains from investment transactions
during any particular year in excess of available capital loss
carryforwards, which, if not distributed, would be taxable to the Fund,
will be distributed to shareholders in the following fiscal year. The
Fund uses the identified cost method for determining realized gain or
loss on investments for both financial and federal income tax reporting
purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Option Accounting Principles: When the Fund writes a covered call
option, an amount equal to the premium received by the Fund is included
in the Fund's Statement of Assets and Liabilities as an asset and as an
equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option
written. The current market value of a written option is the last
offering price on the principal exchange on which such option is traded.
The Fund receives a premium on the sale of an option, but gives up the
opportunity to profit from any increase in stock value above the
exercise price of the option. If an option which the Fund has written
either expires on its stipulated expiration date, or the Fund enters
into a closing purchase transaction, the Fund realizes a gain (or loss
if the cost of a closing purchase transaction exceeds the premium
received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such
option is extinguished. If a call option which the Fund has written is
exercised, the Fund realizes a capital gain or loss from the sale of the
underlying security, and the proceeds from such sale are increased by
the premium originally received.
Other: Investment security transactions are accounted for on a trade
date plus one basis. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded on the
accrual basis. All original issue discounts are accreted for both tax
and financial reporting purposes.
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.
12
<PAGE> 13
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- - --------------------------------------------------------------------------------
Note 2: FUND SHARES. At March 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 six month period ended March 31, 1995 and
the fiscal year ended September 30, 1994, were as follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
MARCH 31, 1995 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1994
---------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold................................................... 81,942 $ 894,586 323,567 $ 3,745,587
Shares issued on reinvestment of distributions................ 168,896 1,788,183 271,222 3,109,646
Shares redeemed............................................... (282,978) (3,081,713) (522,958) (6,065,822)
--------- ----------- --------- -----------
Net increase (decrease)....................................... (32,140) $ (398,944) 71,831 $ 789,411
=========== ===========
Shares outstanding:
Beginning of period......................................... 2,877,873 2,806,042
--------- ---------
End of period............................................... 2,845,733 2,877,873
========= =========
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the six month period ended March
31, 1995, purchases and sales of investment securities (excluding
repurchase agreements) aggregated $6,267,200 and $8,733,727,
respectively. Agency brokerage commissions for the same period
aggregated $28,918, of which $2,642 was paid to Raymond James &
Associates, Inc.
Transactions in covered call options written on equity securities were
as follows:
<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- ---------
<S> <C> <C>
Outstanding September 30, 1994................................................... 125 $ 28,535
Written.......................................................................... 413 73,823
Terminated....................................................................... (20) (6,920)
Exercised........................................................................ (180) (24,304)
Expired.......................................................................... (45) (10,945)
---- --------
Outstanding March 31, 1995....................................................... 293 $ 60,189
==== ========
</TABLE>
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administration
Agreement with Heritage Asset Management, Inc. (the "Manager"), the Fund
agrees to pay to the Manager a fee equal to an annualized rate of 0.75%
of the first $100,000,000 of the Fund's average daily net assets, and
0.60% of any excess over $100,000,000 of such net assets, computed daily
and payable monthly. 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. Currently, the Manager has
voluntarily agreed to waive its fee to the extent that Fund operating
expenses exceed 1.75% on an annual basis of the Fund's average daily net
assets. This agreement is more restrictive than any state expense
limitation at the current level of net assets. Fees voluntarily waived
are recoverable by the manager for a period of up to two years.
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
March 31, 1995 was $7,800. In addition, the Manager performs Fund
Accounting services and charged $14,732 during the current period of
which $7,500 was payable as of March 31, 1995.
The Manager has entered into an agreement with Eagle Asset Management,
Inc. (the "Subadviser") for the Subadviser to provide to the Fund
investment advice, portfolio management services (including the
placement of brokerage orders) and certain compliance and other services
for a fee payable by the Manager equal to 50% of the fees payable by the
Fund to the Manager without regard to any reduction due to the
imposition of expense limitations.
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 0.25% of average
daily net assets for the services it provides in connection with the
promotion and distribution of Fund shares. Such fee is accrued daily and
payable monthly. The Manager, the Subadviser, the Distributor and the
Shareholder Servicing Agent are all wholly-owned subsidiaries of Raymond
James Financial, Inc.
13
<PAGE> 14
- - --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- - --------------------------------------------------------------------------------
Trustees of the Fund also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income Trust and Heritage
Series Trust and Heritage U.S. Government Income Fund, mutual funds which
are also advised by the Manager of the Fund (collectively called 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.
14
<PAGE> 15
HERITAGE INCOME-GROWTH TRUST is a member of the Heritage family of mutual funds.
Other investment alternatives managed by Heritage include:
-- HERITAGE CASH TRUST
MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
-- HERITAGE CAPITAL APPRECIATION TRUST
-- HERITAGE INCOME TRUST
DIVERSIFIED PORTFOLIO
LIMITED MATURITY GOVERNMENT PORTFOLIO
INSTITUTIONAL PORTFOLIO
-- HERITAGE SERIES TRUST
SMALL CAP STOCK FUND
VALUE EQUITY FUND
-- HERITAGE U.S. GOVERNMENT INCOME FUND
(A CLOSED-END FUND THAT TRADES ON
THE NEW YORK STOCK EXCHANGE)
We are pleased that many of you are also investors in these funds. For
information and a prospectus for any of these funds, please contact your account
executive. Read the Prospectus carefully before you invest in any of the funds.
<PAGE> 16
<TABLE>
<CAPTION>
[LOGO]
HERITAGE
------------------------
INCOME GROWTH TRUST (TM)
------------------------
<S> <C>
A mutual fund seeking
--------------------------
long-term total return
--------------------------
with approximately equal
--------------------------
emphasis on current income
--------------------------
and capital appreciation
--------------------------
SEMIANNUAL REPORT
(Unaudited) and Investment
Performance Review for the
Six Month Period Ended
MARCH 31, 1995
A member of the
Heritage Family of Mutual Funds(TM)
</TABLE>
<TABLE>
<S> <C>
Heritage Income-Growth Trust -----------------
P.O. Box 33022 BULK RATE
St. Petersburg, FL 33733 U.S. POSTAGE
- - --------------------------------- PAID
PERMIT NO. 39
Address Change Requested ATLANTA, GA
-----------------
Semiannual Report
INVESTMENT ADVISOR/
SHAREHOLDER SERVICING AGENT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
(800) 421-4184
DISTRIBUTOR
Raymond James & Associates, Inc.
P.O. Box 12749
St. Petersburg, FL 33733
(813) 573-3800
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
This report is for the information of shareholders of
Heritage Income-Growth Trust. It may also be used as
sales literature when preceded or accompanied by a prospectus.
8M 5/95 HAM021
</TABLE>
