<PAGE>
As filed with the Securities and Exchange Commission on January 26, 1996
File No. 33-7559
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Post-Effective Amendment No. 12
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 13
(Check appropriate box or boxes)
HERITAGE INCOME-GROWTH TRUST
(Exact name of registrant as specified in charter)
880 Carillon Parkway
St. Petersburg, FL 33716
(Address of principal executive offices)
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)
Copies to:
CLIFFORD J. ALEXANDER, ESQ.
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
2nd Floor
Washington, D.C. 20036
Telephone: (202) 778-9000
It is proposed that this filing will become effective on February 1, 1996
pursuant to paragraph (b) of Rule 485.
Registrant filed a Notice pursuant to Rule 24f-2 under the Investment
Company Act of 1940 on or about November 29, 1995.
Page 1 of ____ Pages
Exhibit Index begins on Page _____
<PAGE>
HERITAGE INCOME-GROWTH 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 INCOME-GROWTH TRUST
FORM N-1A CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
Part A Item No. PROSPECTUS CAPTION
--------------- ------------------
<S> <C>
1. Cover Page Cover Page
2. Synopsis Total Trust Expenses
3. Condensed Financial Information Financial Highlights; Performance
Information
4. General Description of Registrant Cover Page; About the Trust; Investment
Objective, Policies and Risk Factors
5. Management of the Fund Cover Page; Management of the Trust
5A. Management's Discussion of Fund Inapplicable
Performance
6. Capital Stock and Other Securities Cover Page; About the Trust; Differences
Between A Shares and C Shares; Management of
the Trust; Dividends and Other
Distributions; Taxes; Shareholder
Information
7. Purchases of Securities Being Net Asset Value; How to Buy Shares; Minimum
Offered Investment Required/
Accounts with Low Balances; Investment
Programs; Alternative Purchase Plans; 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
<PAGE>
STATEMENT OF ADDITIONAL
Part B Item No. INFORMATION CAPTION
--------------- -----------------------
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information
13. Investment Objectives and Policies Investment Information; Investment
Limitations
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Inapplicable
Holders of Securities
16. Investment Advisory and Other Management of the Trust; Investment Adviser
Services and Administrator; Subadviser; Distribution
of Shares; Administration of the Trust
17. Brokerage Allocation Brokerage Practices
18. Capital Stock and Other Securities General Information; Potential Liability
19. Purchase, Redemption and Pricing Net Asset Value; Investing in the Trust;
of Securities Being Offered Redeeming Shares; Exchange Privilege
20. Tax Status Taxes
21. Underwriters Distribution of Shares
22. Calculation of Performance Data Performance Information
23. Financial Statements Financial Statements
</TABLE>
PART C. OTHER INFORMATION
-----------------
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]
------------------------
INCOME-GROWTH
TRUST
------------------------
Heritage Income-Growth Trust (the "Trust") is a mutual fund with the
investment objective of long-term total return by seeking, with approximately
equal emphasis, current income and capital appreciation. The Trust invests
primarily in income-producing securities that the Trust's portfolio manager
believes are consistent with its investment objective. The Trust offers two
classes of shares, Class A shares (sold subject to a front-end sales load) and
Class C shares (sold subject to a contingent deferred sales load).
This Prospectus contains information that should be read before investing in
the Trust and should be kept for future reference. A Statement of Additional
Information dated February 1, 1996 relating to the Trust has been filed with the
Securities and Exchange Commission and is incorporated by reference in this
Prospectus. A copy of the Statement of Additional Information is available free
of charge and shareholder inquiries can be made by writing to Heritage Asset
Management, Inc. or by calling (800) 421-4184.
TRUST SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY,
THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY
OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
LOGO
Registered Investment Advisor--SEC
880 Carillon Parkway
St. Petersburg, Florida 33716
(800) 421-4184
Prospectus Dated February 1, 1996
<PAGE> 2
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
GENERAL INFORMATION................................................. 1
About the Trust........................................... 1
Total Trust Expenses...................................... 1
Financial Highlights...................................... 3
Differences Between A Shares and C Shares................. 3
Investment Objective, Policies and Risk Factors........... 4
Net Asset Value........................................... 7
Performance Information................................... 8
INVESTING IN THE TRUST.............................................. 8
How to Buy Shares......................................... 8
Minimum Investment Required/Accounts With Low Balances.... 9
Investment Programs....................................... 10
Alternative Purchase Plans................................ 11
What Class A Shares Will Cost............................. 12
What Class C Shares Will Cost............................. 14
How to Redeem Shares...................................... 15
Receiving Payment......................................... 16
Exchange Privilege........................................ 16
MANAGEMENT OF THE TRUST............................................. 18
SHAREHOLDER AND ACCOUNT POLICIES.................................... 19
Dividends and Other Distributions......................... 19
Distribution Plans........................................ 20
Taxes..................................................... 20
Shareholder Information................................... 21
</TABLE>
<PAGE> 3
GENERAL INFORMATION
ABOUT THE TRUST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Heritage Income-Growth Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated July 25, 1986.
The Trust is an open-end diversified management investment company designed for
individuals, institutions and fiduciaries whose investment objective is
long-term total return by seeking, with approximately equal emphasis, current
income and capital appreciation. The Trust offers two classes of shares, Class A
shares ("A shares") and Class C shares ("C shares"). The Trust requires a
minimum initial investment of $1,000, except for certain retirement accounts and
investment plans for which lower limits may apply. See "Investing in the Trust."
TOTAL TRUST EXPENSES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shown below are all Class A expenses that the Trust expects to incur during
its 1996 fiscal year. Anticipated Class A annual operating expenses are shown as
an annualized percentage of fiscal 1995 average daily net assets. Because C
shares were not offered for sale prior to April 3, 1995, Class C annual
operating expenses are based on estimated expenses. Shareholder transaction
expenses for both classes are expressed as a percentage of maximum public
offering price, cost per transaction or as otherwise noted.
<TABLE>
<CAPTION>
CLASS A CLASS C
------- -------
<S> <C> <C> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales load "charge" on purchases.......... 4.75% None
Contingent deferred sales load (as a (declining to 0%
percentage of original purchase price or after the first
redemption proceeds, as applicable)..... None 1.00% year)
Wire redemption fee....................... $5.00 $5.00
ANNUAL TRUST OPERATING EXPENSES
Management fee (after waiver)............. 0.71% 0.71%
12b-1 Distribution fee.................... 0.25% 1.00%
Other expenses............................ 0.64% 0.64%
----- -----
Total Trust operating expenses (after
waiver)................................. 1.60% 2.35%
----- -----
----- -----
</TABLE>
The Trust's manager, Heritage Asset Management, Inc. (the "Manager"),
voluntarily will waive its fees and, if necessary, reimburse the Trust to the
extent that Class A annual operating expenses exceed 1.60% of the average daily
net assets and to the extent that Class C annual operating expenses exceed 2.35%
of the average daily net assets attributable to that class for the fiscal year
ending September 30, 1996. The above amounts are restated to reflect this
voluntary fee waiver. 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. Due to the imposition of Rule 12b-1 distribution fees, it
is possible that long-term shareholders of the Trust may pay more in total sales
charges than the economic equivalent of the maximum front-end sales load
permitted by the rules of the National Association of Securities Dealers, Inc.
1
<PAGE> 4
The impact of Trust operating expenses on earnings is illustrated in the
example below assuming a hypothetical $1,000 investment, a 5% annual rate of
return, and redemption at the end of each period shown.
<TABLE>
<CAPTION>
3 5 10
1 YEAR YEARS YEARS YEARS
------ ------ ------ -------
<S> <C> <C> <C> <C>
Total Operating Expenses -- Class A....... $ 63 $ 96 $130 $ 228
Total Operating Expenses -- Class C....... $ 34 $ 73 $126 $ 268
</TABLE>
The impact of Trust operating expenses on earnings is illustrated in the
example below assuming a hypothetical $1,000 investment, a 5% annual rate of
return, and no redemption at the end of each period shown.
<TABLE>
<CAPTION>
3 5 10
1 YEAR YEARS YEARS YEARS
------ ------ ------ -------
<S> <C> <C> <C> <C>
Total Operating Expenses -- Class A....... $ 63 $ 96 $130 $ 228
Total Operating Expenses -- Class C....... $ 24 $ 73 $126 $ 268
</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 "What Class A Shares Will Cost," "What Class C Shares Will Cost,"
"Management of the Trust" and "Distribution Plans."
2
<PAGE> 5
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The following table shows important financial information for an A share
and a C share of the Trust outstanding for the periods indicated, including net
investment income, net realized and unrealized gain on investments, and certain
other information. It has been derived from financial statements that have been
audited by Coopers & Lybrand L.L.P., independent accountants, whose report
thereon is included in the Statement of Additional Information ("SAI"), which
may be obtained by calling the Trust at the telephone number on the front page
of this Prospectus.
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------------
CLASS
FOR THE YEARS ENDED SEPTEMBER 30, C
---------------------------------------------------------------------------------- ------
1995 1994 1993 1992 1991 1990 1989 1988 1987+ 1995++
------ ------ ------- ------ ------ ------- ------- ------- ------ ------
<S> <C> <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 $11.21
------ ------ ------- ------ ------ ------- ------- ------- ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (a)...... 0.27 0.30 0.39 0.28 0.36 0.45 0.45 0.44 0.26 0.18
Net realized and unrealized
gain (loss) on investments... 1.79 (0.09) 1.44 1.02 1.88 (2.06) 1.22 (0.81) 0.38 1.28
------ ------ ------- ------ ------ ------- ------- ------- ------ ------
Total from Investment
Operations................... 2.06 0.21 1.83 1.30 2.24 (1.61) 1.67 (0.37) 0.64 1.46
------ ------ ------- ------ ------ ------- ------- ------- ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income....................... (0.34) (0.24) (0.36) (0.36) (0.34) (0.48) (0.44) (0.43) (0.16) (0.16)
Distributions from net realized
gain on investments.......... (0.49) (0.92) -- -- (0.11) (0.24) -- -- -- --
------ ------ ------- ------ ------ ------- ------- ------- ------ ------
Total Distributions............ (0.83) (1.16) (0.36) (0.36) (0.45) (0.72) (0.44) (0.43) (0.16) (0.16)
------ ------ ------- ------ ------ ------- ------- ------- ------ ------
NET ASSET VALUE, END OF THE
PERIOD......................... $12.56 $11.33 $ 12.28 $10.81 $ 9.87 $ 8.08 $ 10.41 $ 9.18 $ 9.98 $12.51
====== ====== ======= ====== ====== ======= ======= ======= ====== ======
TOTAL RETURN (%)(D).............. 19.57 1.80 16.44 13.42 28.72 (16.42) 18.80 (3.38) 6.79(c) $13.18(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets(a).......... 1.64 1.64 1.72 1.75 1.75 1.75 1.75 1.75 1.75(b) 2.40 (b)
Net investment income to
average daily net assets..... 4.63 2.62 2.67 2.77 4.02 4.77 4.72 5.01 4.29(b) 4.61 (b)
Portfolio turnover rate........ 42 98 130 71 81 156 249 184 91(b) 42
Net assets, end of the period
($millions).................. 34 33 34 27 20 19 24 20 24 0.2
</TABLE>
- ---------------
+ For the period December 15, 1986 (commencement of operations) to September
30, 1987.
++ For the period April 3, 1995 (commencement of Class C shares) to August 31,
1995.
(a) Excludes management fees waived by the Manager through 1992 in the amount of
less than $.01, $.01, $.02, $.02, $.01 and $.02 per Class A share,
respectively. The operating expense ratios including such items would be
1.75%, 1.94%, 1.96%, 1.92%, 1.89%, and 2.11% (annualized) per Class A share,
respectively. The year 1993 includes previously 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 load.
DIFFERENCES BETWEEN A SHARES AND C SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The primary difference between the A shares and the C shares lies in their
initial load and contingent deferred sales load ("CDSL") structures and in their
ongoing expenses, including asset-based sales charges in the form of
distribution fees. These differences are summarized below. In addition, each
class may bear differing amounts of certain class-specific expenses, such as
transfer agent fees, Securities and Exchange
3
<PAGE> 6
Commission ("SEC") registration fees, state registration fees and expenses of
administrative personnel and services. Each class has distinct advantages and
disadvantages for different investors, and investors may choose the class that
best suits their circumstances and objectives. See "How to Buy Shares,"
"Alternative Purchase Plan," "What Class A Shares Will Cost" and "What Class C
Shares Will Cost."
<TABLE>
<CAPTION>
ANNUAL 12B-1 FEES AS A
% OF AVERAGE DAILY NET
SALES LOAD ASSETS OTHER INFORMATION
---------------------- ---------------------- ----------------------
<S> <C> <C> <C>
A Shares.............. Maximum initial sales Service fee of 0.25% Initial sales load
load of 4.75% waived or reduced for
certain purchases
C Shares.............. Maximum CDSL of 1% of Service fee of 0.25%; CDSL waived for
redemption proceeds; distribution fee of up certain types of
declining to zero to 0.75% redemptions
after 1 year
</TABLE>
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Trust's investment objective is long-term total return by seeking, with
approximately equal emphasis, current income and capital appreciation. The Trust
may invest a portion of its assets in lower-rated securities, as discussed
below. Although investing in lower-rated securities may offer the potential for
above-average income, it also increases the risk of loss of principal.
Therefore, an investment in the Trust is subject to a higher risk of loss of
principal than an investment in a fund that does not invest in lower-rated
securities. There can be no assurance that the Trust's investment objective will
be achieved. Trust shares will fluctuate in value as a result of changes in the
value of portfolio investments.
The Trust invests primarily in income-producing securities that Eagle Asset
Management, Inc. (the "Subadviser") believes are consistent with the Trust's
investment objective. These securities may include equities, convertible
securities, corporate debt obligations, U.S. Government securities, money market
instruments, real estate investment trusts, and repurchase agreements. The Trust
also may write covered call options on common stocks in order to earn additional
income, engage in short sales "against the box," loan portfolio securities and
invest in warrants. The Trust will have a majority of its investments in common
stocks or securities convertible into common stocks. The Trust may purchase and
sell securities without regard to the length of time the securities have been
held.
The Trust may invest up to 20% of its assets in foreign securities and
American Depository Receipts ("ADRs"). The Trust also may purchase domestic
Eurodollar certificates of deposit without regard to the 20% limit. The Trust
may engage in forward contracts to purchase or sell foreign currencies at a
future date.
For temporary defensive purposes during anticipated periods of general
market decline, the Trust may invest up to 100% of its assets in money market
instruments, including securities issued or guaranteed by the U.S. Government,
its agencies or instrumentalities and repurchase agreements secured thereby, as
well as bank certificates of deposit and banker's acceptances issued by banks
having net assets of at least $1 billion as of the end of their most recent
fiscal year, high grade commercial paper, and other long- and short-term debt
instruments that are rated A or higher by Moody's Investors Service, Inc.
("Moody's") or Standard & Poor's Rating Services ("S&P"). It is impossible to
predict when, or for how long, such alternative strategies may be utilized. See
the Appendix in the SAI for a description of S&P and Moody's commercial paper
ratings.
4
<PAGE> 7
The Trust's investment objective is fundamental and may not be changed
without the vote of a majority of the outstanding voting securities of the
Trust, as defined in the Investment Company Act of 1940, as amended (the "1940
Act"). All policies of the Trust described in this Prospectus may be changed by
the Board of Trustees without shareholder approval. The following is a
discussion of the types of investments in which the Trust may invest, including
the risks of investing in these securities. For a further discussion of the
Trust's investment policies and risks, see "Investment Information" in the SAI.
AMERICAN DEPOSITORY RECEIPTS. Sponsored ADRs are receipts typically issued
by a U.S. bank or trust company evidencing ownership of the underlying
securities of foreign issuers and other forms of depository receipts for
securities of foreign issuers. Investing in ADRs involves greater risks than
normally are present in domestic investments. These risks are similar to the
risks of investing in foreign securities in general, as discussed below.
CONVERTIBLE SECURITIES. A convertible security is a bond, debenture, note,
preferred stock or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different issue within a
particular period of time at a specified price or formula. A convertible
security entitles the holder to receive interest paid or accrued on debt or
dividends paid on preferred stock until the convertible stock matures or is
redeemed, converted or exchanged. Convertible securities have unique investment
characteristics in that they generally have higher yields than common stocks,
but lower yields than comparable non-convertible securities, are less subject to
fluctuation in value than the underlying stock because they have fixed-income
characteristics and provide the potential for capital appreciation if the market
price of the underlying common stock increases. The Trust only will invest in
convertible securities rated B or better by Moody's or S&P or, if unrated,
deemed to be of comparable quality by the Subadviser. The Trust, at the
discretion of the Subadviser, may retain a security that has been downgraded
below the initial investment criteria.
DEBT SECURITIES -- RISK FACTORS. The market value of debt securities is
influenced primarily by the changes in the level of interest rates. Generally,
as interest rates rise, the market value of debt securities decreases.
Conversely, as interest rates fall, the market value of debt securities
increases.
EQUITY SECURITIES. Equity securities in which the Trust may invest
generally will be those that have above-average current dividend yields relative
to the average yield of the issuers included in the Standard & Poor's 500
Composite Stock Price Index ("S&P 500") and whose prospects for dividend growth
and capital appreciation are considered favorable by the Subadviser. However,
the Trust also may invest in equity securities that have dividend yields less
than such average yield if the Subadviser believes these securities will help
the Trust achieve its investment objective.
FOREIGN SECURITIES -- RISK FACTORS. The Trust's foreign investments
involve certain risks not present in domestic investments. Most notably, there
generally is less publicly available information about foreign companies; there
may be less governmental regulation and supervision of foreign stock exchanges,
brokers and listed companies; such companies may use different accounting and
financial standards; the establishment of exchange controls or the adoption of
other foreign governmental restrictions might affect adversely the payment of
principal and/or interest on foreign investments; and fluctuations in monetary
exchange rates will affect the dollar value of foreign investments, dividends
and interest payments.
INVESTMENT GRADE CORPORATE DEBT SECURITIES. The Trust may invest in
nonconvertible corporate debt obligations, primarily for interest income, that
are rated Baa by Moody's or BBB by S&P or above or, if unrated, deemed to be of
comparable quality by the Subadviser ("investment grade securities"). Debt
securities rated in the lowest category of investment grade securities are
deemed to have speculative
5
<PAGE> 8
characteristics. The Trust, at the discretion of the Subadviser, may retain a
security that has been downgraded below the initial investment criteria.
LOWER-RATED SECURITIES. The Trust also may invest up to 10% of its assets
in nonconvertible corporate debt obligations that are rated Ba or B by Moody's
or BB or B by S&P or, if unrated, that are deemed to be of comparable quality by
the Subadviser. In no instance will the Trust invest 35% or more of its assets
in securities rated below investment grade. The prices of lower-rated securities
tend to be less sensitive to interest rate changes than higher-rated securities,
but more sensitive to adverse economic changes or individual corporate
developments. Securities rated below investment grade are deemed to be
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal and may involve major risk exposure to adverse conditions.
See the Appendix in the SAI for a description of corporate debt ratings by
Moody's and S&P.
Lower-rated securities (commonly referred to as "junk bonds") generally
offer a higher current yield than that available for higher-grade issues.
However, lower-rated securities involve higher risks, in that they are
especially subject to adverse changes in general economic conditions and in the
industries in which the issuers are engaged, to changes in the financial
condition of the issuers and to price fluctuations in response to changes in
interest rates. During periods of economic downturn or rising interest rates,
highly leveraged issuers may experience financial stress that could affect
adversely their ability to make payments of interest and principal and increase
the possibility of default. In addition, the market for lower-rated securities
has expanded rapidly in recent years, and its growth paralleled a long economic
expansion. The market for lower-rated securities generally is thinner and less
active than that for higher-quality securities, which may limit the Trust's
ability to sell such securities at fair value in response to changes in the
economy or financial markets. Adverse publicity and investor perceptions,
whether or not based on fundamental analysis, also may decrease the values and
liquidity of lower-rated securities, especially in a thinly traded market.
The table below shows the percentages of the Trust's assets invested during
fiscal 1995 in securities assigned to the various ratings categories by Moody's
and S&P and in unrated securities determined by the Subadviser to be of
comparable quality. These figures are dollar-weighted averages of month-end
Trust holdings for the fiscal year ended September 30, 1995, presented as a
percentage of total net assets. These percentages are historical and are not
necessarily indicative of the quality of current or future investment portfolio
holdings, which will vary.
<TABLE>
<CAPTION>
COMPARABLE QUALITY OF
RATED SECURITIES UNRATED SECURITIES AS A
AS A PERCENTAGE OF THE PERCENTAGE OF THE
S&P/MOODY'S RATINGS TRUST'S ASSETS TRUST'S ASSETS
--------------------------------------------- ---------------------- -----------------------
<S> <C> <C>
A....................................... % --%
BBB/Baa................................. --
BB/Ba................................... --
B.......................................
------ -----
Total.............................. % %
=============== ================
</TABLE>
OPTIONS. The Trust may sell (write) covered call options on common stocks
in its investment portfolio or on common stocks into which securities held by it
are convertible to earn additional income. The Trust 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. The aggregate value of the
securities underlying call options (based on the lower of the option price or
market) may not exceed 50% of the Trust's net assets. The Trust also may
purchase call options to close out call options it has written. The principal
risks associated with the
6
<PAGE> 9
use of options are (1) possible lack of a liquid market for closing out options
positions; (2) the need for additional portfolio management skills and
techniques; and (3) losses due to unanticipated market price movements.
REAL ESTATE INVESTMENT TRUSTS. The Trust may invest in different types of
real estate investment trusts ("REITs"), such as equity REITs, which own real
estate properties, and mortgage REITs, which make construction, development and
long-term mortgage loans. The value of an equity REIT may be affected by changes
in the value of the underlying property, while a mortgage REIT may be affected
by the quality of the credit extended. The performance of both types of REITs
depends upon conditions in the real estate industry, management skills and the
amount of cash flow. The risks associated with REITs include defaults by
borrowers, self-liquidation, failure to qualify as a "pass-through" entity under
the Federal tax law, failure to qualify as an exempt entity under the 1940 Act,
and the fact that REITs are not diversified.
REPURCHASE AGREEMENTS AND SECURITIES LOANS. The Trust may not enter into
repurchase agreements with respect to more than 25% of its total assets. A
repurchase agreement is a transaction in which the Trust purchases securities
and simultaneously commits to resell the securities to the original seller (a
member bank of the Federal Reserve System or a securities dealer who is a member
of a national securities exchange or is a market maker in U.S. Government
securities) at an agreed upon date and price reflecting a market rate of
interest unrelated to the coupon rate or maturity of the purchased securities.
Although repurchase agreements carry certain risks not associated with direct
investment in securities, including possible decline in the market value of the
underlying securities and delays and costs to the Trust if the other party to
the repurchase agreement becomes bankrupt, the Trust intends to enter into
repurchase agreements only with banks and dealers in transactions believed by
the Subadviser to present minimal credit risks in accordance with guidelines
established by the Board of Trustees. The Trust also can lend portfolio
securities (not exceeding 25% of its total assets) to broker-dealers. Securities
loans will be collateralized fully at all times, but involve some risk to the
Trust. If the other party to the securities loan defaults or becomes involved in
bankruptcy proceedings, the Trust may incur delays and costs in selling or
recovering the underlying security or may suffer a loss of principal and
interest.
NET ASSET VALUE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The net asset values of A shares and C shares are calculated by dividing
the value of the total assets of the Trust attributable to that class, less
liabilities attributable to that class, by the number of shares outstanding of
that class. Shares are valued as of the close of regular trading on the New York
Stock Exchange ("Exchange") each day it is open. Trust securities and other
investments are stated at market value based on the last sales price as reported
by the principal securities exchange on which the security is traded. If no sale
is reported, market value is based on the most recent quoted bid price. In the
absence of a readily available market quote, or if Heritage Asset Management,
Inc. (the "Manager") or the Subadviser has reason to question the validity of
market quotations it receives, securities and other assets are valued using such
methods as the Board of Trustees believes would reflect fair value. Short-term
investments that will mature in 60 days or less are valued at amortized cost,
which approximates market value. Securities that are quoted in a foreign
currency will be valued daily in U.S. dollars at the foreign currency exchange
rates prevailing at the time the Trust calculates its net asset value per share.
The per share net asset value of A shares and C shares may differ as a result of
the different daily expense accruals applicable to each class. For more
information on the calculation of net asset value, see "Net Asset Value" in the
SAI.
7
<PAGE> 10
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Total return data of the A shares and C shares from time to time may be
included in advertisements about the Trust. Performance information is computed
separately for A shares and C shares in accordance with the methods described
below. Because C shares bear the expense of a higher distribution fee
attributable to the deferred sales load alternative, the performance of C shares
likely will be lower than that of A shares.
Total return with respect to a class for the one-, five- and ten-year
periods or, if such periods have not elapsed, the period since the establishment
of that class through the most recent calendar quarter represents the average
annual compounded rate of return on an investment of $1,000 in that class at the
public offering price (in the case of A shares, giving effect to the maximum
initial sales load of 4.75% and, in the case of C shares, giving effect to the
deduction of any CDSL that would be payable). In addition, the Trust also may
advertise the total return in the same manner, but without taking into account
the initial sales load or CDSL. The Trust also may advertise total return
calculated without annualizing the return and total return, may be presented for
other periods. By not annualizing the returns, the total return calculated in
this manner simply will reflect the increase in net asset value per A share and
C share over a period of time, adjusted for dividends and other distributions. A
share and C share performance may be compared with various indices.
The Trust may also from time to time advertise the yield of A shares and C
shares and compare these yields to those of other mutual funds with similar
investment objectives. The yield of each class of the Trust will be computed by
dividing the net investment income per share earned during a 30-day (or one
month) period by the maximum offering price per share on the last day of the
period. Yield accounting methods differ from the methods used for other
accounting purposes; accordingly, the yield for a class may not equal the
dividend income actually paid to shareholders or the net investment income per
share reported in the Trust's financial statements.
All data is based on the Trust's past investment results and does not
predict future performance. Investment performance, which will vary, is based on
many factors, including market conditions, the composition of the Trust's
investment portfolio and the Trust's operating expenses. Investment performance
also often reflects the risks associated with the Trust's investment objective
and policies. These factors should be considered when comparing the Trust's
investment results to those of other mutual funds and other investment vehicles.
For more information on investment performance, see the SAI.
INVESTING IN THE TRUST
HOW TO BUY SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Shares of the Trust are offered continuously through the Trust's principal
underwriter, Raymond James & Associates, Inc. (the "Distributor"), and through
other participating dealers or banks that have dealer agreements with the
Distributor. The distributor receives commissions consisting of that portion of
the sales load remaining after the dealer concession is paid to participating
dealers or banks. Such dealers may be deemed to be underwriters pursuant to the
Securities Act of 1933, as amended.
Shares of the Trust may be purchased through a registered representative of
the Distributor, a participating dealer or a participating bank
("Representative") by placing an order for Trust shares with your
8
<PAGE> 11
Representative, completing and signing the Account Application found in the back
of this Prospectus, and mailing it, along with your payment, within three
business days.
The Trust offers and sells two classes of shares, A shares and C shares. A
shares may be purchased at a price equal to their net asset value per share next
determined after receipt of an order, plus a sales load imposed at the time of
purchase. C shares may be purchased at a price equal to their net asset value
per share next determined after receipt of an order. A CDSL of 1% is imposed on
C shares if you redeem those shares within one year of purchase. When you place
an order for Trust shares, you must specify which class of shares you wish to
purchase. See "Alternative Purchase Plans."
All purchase orders received by the Distributor prior to the close of
regular trading on the Exchange -- generally 4:00 p.m. Eastern time -- will be
executed at that day's offering price. Purchase orders received by your
Representative prior to the close of regular trading on the Exchange and
transmitted to the Distributor before 5:00 p.m. Eastern time on that day also
will receive that day's offering price. Otherwise, all purchase orders accepted
after the offering price is determined will be executed at the offering price
determined as of the close of regular trading on the Exchange on the next
trading day. See "What Class A Shares Will Cost" and "What Class C Shares Will
Cost."
You also may purchase shares of the Trust directly by completing and
signing the Account Application found in the back of this Prospectus and mailing
it, along with your payment, to Heritage Income-Growth Trust, c/o Shareholder
Services, Heritage Asset Management, Inc., P.O. Box 33022, St. Petersburg, FL
33733.
Shares may be purchased with Federal funds (a commercial bank's deposit
with the Federal Reserve Bank that can be transferred to another member bank on
the same day) sent by Federal Reserve or bank wire to State Street Bank and
Trust Company, Boston, Massachusetts, ABA #011-000-028, Account #3196-769-8.
Wire instructions should include (1) the name of the Trust, (2) the class of
shares to be purchased, (3) your account number assigned by the Trust, and (4)
your name. To open a new account with Federal funds or by wire, you must contact
the Manager or your Representative to obtain a Heritage mutual fund account
number. Commercial banks may elect to charge a fee for wiring funds to State
Street Bank and Trust Company. For more information on "How to Buy Shares," see
"Investing in the Trust" in the SAI.
MINIMUM INVESTMENT REQUIRED/ACCOUNTS WITH LOW BALANCES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Except as provided under "Investment Programs," the minimum initial
investment in the Trust is $1,000, and a minimum account balance of $500 must be
maintained. These minimum requirements may be waived at the discretion of the
Manager. In addition, initial investments in Individual Retirement Accounts
("IRAs") may be reduced or waived under certain circumstances. Contact the
Manager or your Representative for further information.
Due to the high cost of maintaining accounts with low balances, it is
currently the Trust's policy to redeem Trust shares in any account if the
account balance falls below the required minimum value of $500, except for
retirement accounts. The shareholder will be given 30 days' notice to bring the
account balance to the minimum required or the Trust may redeem shares in the
account and pay the proceeds to the shareholder. The Trust does not apply this
minimum account balance requirement to accounts that fall below the minimum due
to market fluctuation.
9
<PAGE> 12
INVESTMENT PROGRAMS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A variety of automated investment options are available for the purchase of
Trust shares. These plans provide for automatic monthly investments of $50 or
more through various methods described below. You may change the amount to be
automatically invested or may discontinue this service at any time without
penalty. If you discontinue this service before reaching the required account
minimum, the account must be brought up to the minimum in order to remain open.
Shareholders desiring this service should complete the appropriate application
available from the Manager. You will receive a periodic confirmation of all
activity for your account.
AUTOMATIC INVESTMENT OPTIONS:
1. Bank Draft Investing -- You may authorize the Manager to process a monthly
draft from your personal checking account for investment into the Trust. The
draft is returned by your bank the same way a canceled check is returned.
2. Payroll Direct Deposit -- If your employer participates in a direct deposit
program (also known as ACH Deposits) you may have all or a portion of your
payroll directed to the Trust. This will generate a purchase transaction each
time you are paid by your employer. Your employer will report to you the
amount sent from each paycheck.
3. Government Direct Deposit -- If you receive a qualifying periodic payment
from the U.S. Government or other agency that participates in Direct Deposit,
you may have all or a part of each check directed to purchase shares of the
Trust. The U.S. Government or agency will report to you all payments made.
4. Automatic Exchange -- If you own shares of another Heritage mutual fund
advised by the Manager ("Heritage Mutual Fund"), you may elect to have a
preset amount redeemed from that fund and exchanged into the corresponding
class of shares of the Trust. You will receive a statement from the other
Heritage Mutual Fund confirming the redemption.
You may change or terminate any of the above options at any time.
RETIREMENT PLANS:
Shares of the Trust may be purchased as an investment for Heritage IRA
plans. In addition, shares may be purchased as an investment for self-directed
IRAs, defined contribution plans, Simplified Employee Pension Plans ("SEPs") and
other retirement plans.
HERITAGE IRA. Individuals who earn compensation and who have not reached
age 70 1/2 before the close of the year generally may establish a Heritage IRA.
You may make limited contributions to a Heritage IRA through the purchase of
shares of the Trust and/or other Heritage Mutual Funds. The Internal Revenue
Code of 1986, as amended (the "Code"), limits the deductibility of IRA
contributions to taxpayers who are not active participants (and whose spouses
are not active participants) in employer-provided retirement plans or who have
adjusted gross income below certain levels. Nevertheless, the Code permits other
individuals to make nondeductible IRA contributions up to $2,000 per year (or
$2,250, if such contributions also are made for a nonworking spouse and a joint
return is filed). A Heritage IRA also may be used for certain "rollovers" from
qualified benefit plans and from Section 403(b) annuity plans. For more detailed
information on the Heritage IRA, please contact the Manager.
10
<PAGE> 13
Trust shares may be used as the investment medium for qualified plans
(defined benefit or defined contribution plans established by corporations,
partnerships or sole proprietorships). Contributions to qualified plans may be
made (within certain limits) on behalf of the employees, including
owner-employees, of the sponsoring entity.
OTHER RETIREMENT PLANS. Multiple participant payroll deduction retirement
plans also may purchase A shares of any Heritage Mutual Fund at a reduced sales
load on a monthly basis during the 13-month period following such a plan's
initial purchase. The sales load applicable to such initial purchase of A shares
will be that normally applicable under the schedule of sales loads set forth in
this Prospectus to an investment 13 times larger than such initial purchase. The
sales load applicable to each succeeding monthly purchase of A shares will be
that normally applicable, under such schedule, to an investment equal to the sum
of (1) the total purchase previously made during the 13-month period and (2) the
current month's purchase multiplied by the number of months (including the
current month) remaining in the 13-month period. Sales loads previously paid
during such period will not be adjusted retroactively on the basis of later
purchases. Multiple participant payroll deduction retirement plans may purchase
C shares at any time.
ALTERNATIVE PURCHASE PLANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The alternative purchase plans offered by the Trust enable you to choose
the class of shares that you believe will be most beneficial given the amount of
your intended purchase, the length of time you expect to hold the shares and
other circumstances. You should consider whether, during the anticipated length
of your intended investment in the Trust, the accumulated continuing
distribution and service fees plus the CDSL on C shares would exceed the initial
sales load plus accumulated service fees on A shares purchased at the same time.
Another factor to consider is whether the potentially higher yield of A shares
due to lower ongoing charges will offset the initial sales load paid on such
shares. Representatives may receive different compensation for sales of A shares
than sales of C shares.
If you purchase sufficient shares to qualify for a reduced sales load, you
may prefer to purchase A shares because similar reductions are not available on
the C shares. For example, if you intend to invest more than $1,000,000 in
shares of the Trust, you should purchase A shares. Moreover, all A shares are
subject to a lower 12b-1 fee and, accordingly, are expected to pay
correspondingly higher dividends on a per share basis. If your purchase will not
qualify for a reduced sales load, you still may wish to purchase A shares if you
expect to hold your shares for an extended period of time because, depending on
the number of years you hold the investment, the continuing distribution and
service fees on C shares eventually would exceed the initial sales load plus the
continuing service fee on A shares during the life of your investment. However,
because initial sales loads are deducted at the time of purchase, not all of the
purchase payment for A shares is invested initially.
You might determine that it would be more advantageous to purchase C shares
in order to have all of your purchase payment invested initially. However, your
investment would remain subject to continuing distribution and service fees and,
for a one-year period, be subject to a CDSL. For example, based on current fees
and expenses for the Trust and the maximum A shares sales load, you would have
to hold A shares approximately six years before the accumulated distribution and
service fees on the C shares would exceed the initial sales load plus the
accumulated service fees on the A shares.
11
<PAGE> 14
WHAT CLASS A SHARES WILL COST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A shares are sold each day on which the Exchange is open. A shares are sold
at their next determined net asset value plus a sales load as described below.
<TABLE>
<CAPTION>
SALES LOAD AS A PERCENTAGE OF
------------------------------------
NET AMOUNT DEALER CONCESSION
INVESTED AS A PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE (NET ASSET VALUE) OFFERING PRICE(1)
---------------------------- -------------- ----------------- ------------------
<S> <C> <C> <C>
Less than $25,000........... 4.75% 4.99% 4.25%
$25,000 to $49,999.......... 4.25% 4.44% 3.75%
$50,000 to $99,999.......... 3.75% 3.90% 3.25%
$100,000 to $249,999........ 3.25% 3.36% 2.75%
$250,000 to $499,999........ 2.50% 2.56% 2.00%
$500,000 to $999,999........ 1.75% 1.78% 1.25%
$1,000,000 and over......... 1.00% 1.01% 0.75%
</TABLE>
(1) During certain periods, the Distributor may pay 100% of the sales load to
participating dealers. Otherwise, it will pay the Dealer Concession shown
above.
A shares may be sold at net asset value without any sales load to the
Manager and the Subadviser; current and retired officers and Trustees of the
Trust; directors, officers, and full-time employees of the Manager, Subadviser
of any Heritage Mutual Fund, Distributor and their affiliates; registered
representatives or employees of broker-dealers that are parties to dealer
agreements with the Distributor (or financial institutions that have
arrangements with such broker-dealers); directors, officers and full-time
employees of banks that are parties to agency agreements with the Distributor;
and all such persons' immediate relatives and their beneficial accounts. In
addition, the American Psychiatric Association (the "APA Group") has entered
into an agreement with the Distributor that allows its members to purchase A
shares at a sales load equal to two-thirds of the percentages in the above
table. The Dealer Concession also will be adjusted in a like manner. Members of
the APA Group also are eligible to purchase A shares at net asset value in
amounts equal to the value of shares redeemed from other mutual funds that were
purchased under reduced sales load programs available to their organizations. A
shares also may be purchased without sales loads by investors who participate in
certain broker-dealer wrap fee investment programs.
A shares also may be purchased at net asset value by trust companies and
bank trust departments for funds over which they exercise exclusive
discretionary authority and are held in a fiduciary, agency, advisory, custodial
or similar capacity. Such purchases are subject to minimum requirements with
respect to amount of purchase. Currently, the minimum purchase required is
$1,000,000, which may be invested over a period of 13 months. The minimum may be
changed from time to time by the Distributor. The minimum may be aggregated
between A shares of the Trust and A shares of any other Heritage Mutual Fund
that would be subject to a sales load. Cities, counties, states or
instrumentalities, and their departments, authorities or agencies are able to
purchase A shares of the Trust at net asset value as long as certain conditions
are met.
HERITAGE NET ASSET VALUE ("NAV") TRANSFER PROGRAM
A share of the Trust may be sold at net asset value without any sales load
under the Manager's NAV Transfer Program. to qualify for the NAV Transfer
Program, you must provide adequate proof that you recently redeemed shares from
a load or no-load mutual fund other than a Heritage Mutual Fund or any money
market fund. To provide adequate proof you must complete a qualification form
and provide a statement showing the value liquidated from the other mutual fund
within time parameters set by the
12
<PAGE> 15
Manager. In addition, shares of the other fund must have been liquidated no more
than 90 days prior to the beginning of the promotion period and not after the
period ends. The Manager may pay Representatives a one-time fee of up to 0.25%
for all trades meeting these requirements. The Manager reserves the right to
recover these fees if A shares are redeemed within 90 days of purchase.
COMBINED PURCHASE PRIVILEGE (RIGHT OF ACCUMULATION)
You may qualify for the sales load reductions indicated in the above sales
load schedule by combining purchases of A shares into a single "purchase" if the
resulting "purchase" totals at least $25,000. The term "purchase" refers to a
single purchase by an individual, or to concurrent purchases that, in the
aggregate, are at least equal to the prescribed amounts, by an individual, his
spouse and their children under the age of 21 years purchasing A shares for his
or their own account; a single purchase by a trustee or other fiduciary
purchasing A shares for a single trust, estate, or single fiduciary account
although more than one beneficiary is involved; or a single purchase for the
employee benefit plans of a single employer. A "purchase" also may include A
shares purchased at the same time through a single selected dealer of any other
Heritage Mutual Fund that distributes its shares subject to a sales load. To
qualify for the Combined Purchase Privilege on a purchase through a selected
dealer, the investor or selected dealer must provide the Distributor with
sufficient information to verify that each purchase qualifies for the privilege
or discount.
STATEMENT OF INTENTION
You also may obtain the reduced sales loads shown under "What Class A
Shares Will Cost" by means of a written Statement of Intention, which expresses
your intention to invest not less than $25,000 within a period of 13 months in A
shares of the Trust or A shares of any other Heritage Mutual Fund subject to a
sales load. ("Statement of Intention")
Investors qualifying for the Combined Purchase Privilege described above
may purchase A shares of the Heritage Mutual Funds under a single Statement of
Intention. For example, if, at the time an investor signs a Statement of
Intention to invest at least $25,000 in A shares of the Trust, the investor and
the investor's spouse each purchase A shares worth $5,000 (for a total of
$10,000), then it will be necessary only to invest a total of $15,000 during the
following 13 months in A shares of the Trust or any other Heritage Mutual Fund
subject to a sales load to qualify for the reduced sales loads on the total
amount being invested.
The Statement of Intention is not a binding obligation upon the investor to
purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. If you would like to enter into a
Statement of Intention in conjunction with your initial investment in A shares
of the Trust, please complete the appropriate portion of the Account Application
at the back of this Prospectus. Current Trust shareholders desiring to do so can
obtain a Statement of Intention form by contacting the Manager or the
Distributor at the address or telephone number listed on the cover of this
Prospectus, or from their Representative.
REINSTATEMENT PRIVILEGE
A shareholder who has redeemed any or all of his A shares of the Trust may
reinvest all or any portion of the redemption proceeds in A shares at net asset
value without any sales load, provided that such reinvestment is made within 90
calendar days after the redemption date. A shareholder who has redeemed any or
all of his C shares of the Trust and has paid a CDSL on those shares or has held
those shares long enough so that the CDSL no longer applies, may reinvest all or
any portion of the redemption proceeds in C shares of the Trust at
13
<PAGE> 16
net asset value without paying a CDSL on future redemptions of those shares,
provided that such reinvestment is made within 90 calendar days after the
redemption date. A reinstatement pursuant to this privilege will not cancel the
redemption transaction; therefore, (1) any gain realized on the transaction will
be recognized for Federal income tax purposes, while (2) any loss realized will
not be recognized for those purposes to the extent that the redemption proceeds
are reinvested in shares of the Trust. See "Taxes." The reinstatement privilege
may be utilized by a shareholder only once, irrespective of the number of shares
redeemed, except that the privilege may be utilized without limitation in
connection with transactions whose sole purpose is to transfer a shareholder's
interest in the Trust to his defined contribution plan, IRA or SEP. Investors
must notify the Fund if they intend to exercise the reinstatement privilege.
For more information on "What Class A Shares Will Cost" and a further
explanation of instances in which the sales load will be waived or reduced, see
"Investing in the Trust" in the SAI.
WHAT CLASS C SHARES WILL COST
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
A CDSL of 1% is imposed on C shares if, within one year of purchase, you
redeem an amount that causes the current value of your account to fall below the
total dollar amount of C shares purchased subject to the CDSL. The CDSL will not
be imposed on the redemption of C shares acquired as dividends or other
distributions, or on any increase in the net asset value of the redeemed C
shares above the original purchase price. Thus, the CDSL will be imposed on the
lower of net asset value or purchase price.
Redemptions will be processed in a manner intended to minimize the amount
of redemption that will be subject to the CDSL. When calculating the CDSL, it
will be assumed that the redemption is made first of C shares acquired as
dividends, second of C shares that have been held for over one year, and finally
of C shares held for less than one year on a first-in first-out basis.
For example, assume you purchase 100 C shares at $10 per share (for a total
cost of $1,000) and, during the year you purchase such shares, the net asset
value increases to $12 per share and you acquire 10 additional shares as
dividends. If you redeem 50 shares (or $600) within the first year of purchase,
10 shares would not be subject to the CDSL because redemptions are made first of
shares acquired as dividends. With respect to the remaining shares, the CDSL is
applied only to the original cost of $10 per share and not to the higher net
asset value of $1 per share. Therefore, only 40 of the 50 shares (or $400 )
being redeemed would be subject to a CDSL at a rate of 1%.
WAIVER OF THE CONTINGENT DEFERRED SALES LOAD. The CDSL currently is waived
for (1) any partial or complete redemption in connection with a distribution
without penalty under Section 72(t) of the Code from a qualified retirement
plan, including a Keogh Plan or IRA upon attaining age 70 1/2; (2) any
redemption resulting from a tax-free return of an excess contribution to a
qualified employer retirement plan or an IRA; (3) any partial or complete
redemption following death or disability (as defined in Section 72(m)(7) of the
Code) of a shareholder (including one who owns the shares as joint tenant with
his spouse) from an account in which the deceased or disabled is named, provided
the redemption is requested within one year of the death or initial
determination of disability; (4) certain periodic redemptions under a Systematic
Withdrawal Plan from an account meeting certain minimum balance requirements, in
amounts meeting certain maximums established from time to time by the
Distributor (currently a maximum of 12% annually of the account balance at the
beginning of the Systematic Withdrawal Plan); or (5) involuntary redemptions by
the Trust of C shares in shareholder accounts that do not comply with the
minimum balance requirements. The Distributor may require proof of documentation
prior to waiver of the CDSL described in sections (1) through
14
<PAGE> 17
(4) above, including distribution letters, certification by plan administrators,
applicable tax forms or death certificates or physicians certificates.
For more information about C shares, see "Reinstatement Privilege" and
"Exchange Privilege."
HOW TO REDEEM SHARES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Redemptions of Trust shares can be made by:
CONTACTING YOUR REPRESENTATIVE. Your Representative will transmit an order
to the Trust for redemption and may charge you a fee for this service.
TELEPHONE REQUEST. You may redeem shares by placing a telephone request to
the Trust (800-421-4184) prior to the close of regular trading on the Exchange.
If you do not wish to have telephone exchange/redemption privileges, you should
so elect by completing the appropriate section of the Account Application. The
Trust, Manager, Distributor and their Trustees, directors, officers and
employees are not liable for any loss arising out of telephone instructions they
reasonably believe are authentic. These parties will employ reasonable
procedures to confirm that telephone instructions are authentic. To the extent
that the Trust, Manager, Distributor and their Trustees, directors, officers and
employees do not follow reasonable procedures, some or all of them may be liable
for losses due to unauthorized or fraudulent transactions. For more information
on these procedures, see "Redeeming Shares - Telephone Transactions" in the SAI.
You may elect to have the funds wired to the bank account specified on the
Account Application. Funds normally will be sent the next business day, and you
will be charged a wire fee by the Manager (currently $5.00). For redemptions of
less than $25,000, you may request that the check be mailed to your address of
record, providing that such address has not been changed in the past 60 days.
For your protection, all other redemption checks will be transferred to the bank
account specified on the Account Application.
WRITTEN REQUEST. Trust shares may be redeemed by sending a written request
for redemption to "Heritage Income-Growth Trust, c/o Shareholder Services,
Heritage Asset Management, Inc., P.O. Box 33022, St. Petersburg, Florida 33733."
Signature guarantees will be required on the following types of
requests: redemptions from any account that has had an address change in the
past 60 days, redemptions greater than $25,000, redemptions that are sent to an
address other than the address of record and exchanges or transfers into other
Heritage accounts that have different titles. The Manager will transmit an order
to the Trust for redemption.
SYSTEMATIC WITHDRAWAL PLAN. Withdrawal plans are available that provide
for regular periodic withdrawals of $50 or more on a monthly, quarterly,
semiannual or annual basis. Under these plans, sufficient shares of the Trust
are redeemed to provide the amount of the periodic withdrawal payment. The
purchase of A shares while participating in the Systematic Withdrawal Plan
ordinarily will be disadvantageous to you because you will be paying a sales
load on the purchase of those shares at the same time that you are redeeming A
shares upon which you may have already paid a sales load. Therefore, the Trust
will not knowingly permit the purchase of A shares through the Automatic
Investment Plan if you are at the same time making systematic withdrawals of A
shares. The Manager reserves the right to cancel systematic withdrawals if
insufficient shares are available for two or more consecutive months.
Please contact the Manager or your Representative for further information
or see "Redeeming Shares" in the SAI.
15
<PAGE> 18
RECEIVING PAYMENT
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If a request for redemption is received by the Trust in good order (as
described below) before the close of regular trading on the Exchange, the shares
will be redeemed at the net asset value per share determined at the close of
regular trading on the Exchange on that day, less any applicable CDSL for C
shares. Requests for redemption received by the Trust after the close of regular
trading on the Exchange will be executed at the net asset value determined at
the close of regular trading on the Exchange on the next trading day, less any
applicable CDSL for C shares.
Payment for shares redeemed by the Trust normally will be made on the
business day after redemption was made. If the shares to be redeemed recently
have been purchased by personal check, the Trust may delay mailing a redemption
check until the purchase check has cleared, which may take up to seven days.
This delay can be avoided by wiring funds for purchases. The proceeds of a
redemption may be more or less than the original cost of Trust shares.
A redemption request will be considered to be received in "good order" if:
- the number or amount of shares and the class of shares to be redeemed and
shareholder account number have been indicated;
- any written request is signed by the shareholder and by all co-owners of
the account with exactly the same name or names used in establishing the
account;
- any written request is accompanied by certificates representing the
shares that have been issued, if any, and the certificates have been
endorsed for transfer exactly as the name or names appear on the
certificates or an accompanying stock power has been attached; and
- the signatures on any written redemption request of $25,000 or more and
on any certificates for shares (or an accompanying stock power) have been
guaranteed by a national bank, a state bank that is insured by the
Federal Deposit Insurance Corporation, a trust company, or by any member
firm of the New York, American, Boston, Chicago, Pacific or Philadelphia
Stock Exchanges. Signature guarantees also will be accepted from savings
banks and certain other financial institutions that are deemed acceptable
by the Manager, as transfer agent, under its current signature guarantee
program.
The Trust has the right to suspend redemption or postpone payment at times
when the Exchange is closed (other than customary weekend or holiday closings)
or during periods of emergency or other periods as permitted by the SEC. In the
case of any such suspension you may either withdraw your request for redemption
or receive payment based upon the net asset value next determined after the
suspension is lifted. If a redemption check remains outstanding after six
months, the Manager reserves the right to redeposit those funds into your
account. For more information on receiving payment, see "Redeeming
Shares - Receiving Payment" in the SAI.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
If you have held A shares or C shares for at least 30 days, you may
exchange some or all of your shares for the same class of any other Heritage
Mutual Fund. All exchanges will be based on the respective net asset values of
the Heritage Mutual Funds involved. All exchanges are subject to the minimum
investment requirements and any other applicable terms set forth in the
prospectus for the Heritage Mutual Fund whose shares are being acquired.
Exchanges involving the redemption of shares recently purchased by check will be
16
<PAGE> 19
permitted only after the Heritage Mutual Fund whose shares have been tendered
for exchange is reasonably assured that the check has cleared, normally seven
calendar days following the purchase date. Exchanges of shares of Heritage
Mutual Funds generally will result in the realization of a taxable gain or loss
for Federal income tax purposes.
For purposes of calculating the commencement of the one-year CDSL holding
period for shares exchanged from the Trust to the C shares of any other Heritage
Mutual Fund, except Heritage Cash Trust -- Money Market Fund ("Money Market
Fund"), the original purchase date of those shares exchanged will be used. Any
time period that the exchanged shares were held in the Money Market Fund will
not be included in this calculation.
If you exchange A shares or C shares for corresponding shares of the Money
Market Fund, you may, at any time thereafter, exchange such shares for the
corresponding class of shares of any other Heritage Mutual Fund. Because the
Money Market Fund is a no-load mutual fund, if you exchange shares of that fund
acquired by purchase (rather than exchange) for shares of another Heritage
Mutual Fund, you will be subject to the sales load, if any, that would be
applicable to a purchase of that Heritage Mutual Fund. In addition, if you
exchange C shares of the Trust for corresponding shares of the Money Market
Fund, the period during which an investment is held in shares of Money Market
Fund will not count for purposes of calculating the one-year CDSL holding period
for such shares. As a result, if you redeem C shares of the Money Market Fund
before the expiration of the one-year CDSL holding period, you will be subject
to the applicable CDSL. A shares of the Trust may be exchanged for A shares of
the Heritage Cash Trust -- Municipal Money Market Fund, which is the only class
of shares offered by that fund. Because the Heritage Cash Trust -- Municipal
Money Market Fund is a no-load fund, if you exchange shares of that fund
acquired by purchase (rather than exchange) for shares of another Heritage
Mutual Fund, you also will be subject to the sales load, if any, that would be
applicable to a purchase of that Heritage Mutual Fund. C shares are not eligible
for exchange into the Heritage Cash Trust -- Municipal Money Market Fund.
Shares acquired pursuant to a telephone request for exchange will be held
under the same account registration as the shares redeemed through such
exchange. For a discussion of limitation of liability of certain entities, see
"How to Redeem Shares -- Telephone Request."
Telephone exchanges can be effected by calling the Manager at (800)
421-4184, or by calling your Representative. In the event that you or your
Representative are unable to reach the Manager by telephone, an exchange can be
effected by sending a telegram to Heritage Asset Management, Inc., attention:
Shareholder Services. Due to the volume of calls or other unusual circumstances,
telephone exchanges may be difficult to implement during certain time periods.
The exchange privilege is available only in states where shares of the
Heritage Mutual Fund being acquired may be legally sold. Each Heritage Mutual
Fund reserves the right to reject any order to acquire its shares through
exchange or otherwise to restrict or terminate the exchange privilege at any
time. In addition, each Heritage Mutual Fund may terminate this exchange
privilege upon 60 days' notice. For further information on this exchange
privilege, contact the Manager or your Representative and see "Exchange
Privilege" in the SAI.
17
<PAGE> 20
MANAGEMENT OF THE TRUST
BOARD OF TRUSTEES
The business and affairs of the Trust are managed by or under the direction
of its Board of Trustees. The Trustees are responsible for managing the Trust's
business affairs and for exercising all the Trust's powers except those reserved
to the shareholders. A Trustee may be removed by the other Trustees or by a
two-thirds vote of the outstanding Trust shares.
INVESTMENT ADVISER, FUND ACCOUNTANT, ADMINISTRATOR AND TRANSFER AGENT
Heritage Asset Management, Inc. is the Trust's investment adviser, fund
accountant, administrator and transfer agent. The Manager is responsible for
reviewing and establishing investment policies for the Trust as well as
administering the Trust's noninvestment affairs. The Manager is a wholly-owned
subsidiary of Raymond James Financial, Inc., which, together with its
subsidiaries, provides a wide range of financial services to retail and
institutional clients. The Manager manages, supervises and conducts the business
and administrative affairs of the Trust and the other Heritage Mutual Funds with
net assets totalling approximately $2.0 billion as of October 31, 1995. The
Manager's annual investment advisory and administration fee paid monthly by the
Trust to the Manager is based on the Trust's average daily net assets shown on
the chart below. The Trust pays the Manager directly for fund accounting and
transfer agent services.
<TABLE>
<CAPTION>
ADVISORY FEE
AS A % OF
AVERAGE
DAILY NET
AVERAGE DAILY NET ASSETS ASSETS
- ---------------------------------------- ---------------
<S> <C>
First $100 million...................... .75%
Over $100 million....................... .60%
</TABLE>
This fee is higher than that charged for most other mutual funds with
similar investment objectives. The advisory fee may be reduced pursuant to
regulations in various states where Trust shares are qualified for sale which
impose limitations on the annual expense ratio of the Trust. In addition, the
Manager will voluntarily waive its fees, and if necessary, reimburse the Trust
to the extent that Class A annual operating expenses exceed 1.60% or to the
extent that Class C annual operating expenses exceed 2.35% of the Trust's
average daily net assets attributable to that class for a fiscal year. In the
event that the Manager waives or reimburses its fees with respect to one class
of shares, it will waive or reimburse the Trust with respect to the other class
of shares on an equal basis. The Manager reserves the right to discontinue any
voluntary waiver of its fees or reimbursements to the Trust in the future. The
Manager also may recover advisory fees waived in the previous two years if the
recovery does not cause the Trust to exceed applicable state expense
limitations. It currently is not anticipated that the Manager will recover these
fees.
SUBADVISER
The Manager has entered into an agreement with Eagle Asset Management, Inc.
to provide investment advice and portfolio management services, including
placement of brokerage orders, to the Trust for a fee payable by the Manager
equal to 50% of the fees payable to the Manager by the Trust without regard to
any reduction in fees actually paid to the Manager as a result of state expense
limitations or voluntary total expense limits. The Subadviser is a wholly-owned
subsidiary of Raymond James Financial, Inc. The Subadviser acts as adviser to
the Heritage Series Trust-Eagle International Equity Portfolio. The Subadviser
also acts as subadviser to the Heritage Series Trust-Value Equity Fund, the
Heritage Capital Appreciation
18
<PAGE> 21
Trust (although no assets currently are allocated to the Subadviser) and the
Heritage Income Trust-High Yield Fund, and advises private investment accounts
with net assets totalling approximately $ billion as of
, 1996. The Subadviser may use the Distributor as broker for agency
transactions in listed and over-the-counter securities at commission rates and
under circumstances consistent with the policy of best price and execution. See
"Brokerage Practices" in the SAI.
PORTFOLIO MANAGEMENT
Louis Kirschbaum serves as portfolio manager for the Trust. Mr. Kirschbaum
is responsible for the day-to-day management of the Trust's investment
portfolio, subject to the general oversight of the Manager and the Board of
Trustees. Mr. Kirschbaum has been a Senior Vice President and portfolio manager
of the Subadviser since July 1986 and portfolio manager of the Trust since
February 1990. Mr. Kirschbaum is assisted by Michael J. Chren and Andrew J.
Duffy, each a senior Research Analyst of the Subadviser. Mr. Chren has been
affiliated with the Subadviser since May 1994. Prior to 1994, he was employed at
Bear, Stearns & Co. Inc. Mr. Duffy has been affiliated with the Subadviser since
1993. From 1986 to 1993, he was a senior vice president in the Corporate Finance
Department of the Distributor.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS AND OTHER DISTRIBUTIONS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Dividends from net investment income are declared and paid quarterly. The
Trust distributes to shareholders substantially all net realized capital gains
on portfolio securities after the end of the year in which the gains are
realized. Dividends and other distributions on shares held in retirement plans
and by shareholders maintaining a Systematic Withdrawal Plan generally are
declared and paid in additional Trust shares. Other shareholders may elect to:
- receive both dividends and other distributions in additional Trust
shares;
- receive dividends in cash and other distributions in additional Trust
shares;
- receive both dividends and other distributions in cash; or
- receive both dividends and other distributions in cash for investment
into another Heritage Mutual Fund.
If you select none of these options, the first option will apply. In any
case when you receive a dividend or an other distribution in additional Trust
shares, your account will be credited with shares valued at their net asset
value determined at the close of regular trading on the Exchange on the day
following the record date for the dividend or capital gain distribution.
Distribution options can be changed at any time by notifying the Manager in
writing.
Dividends paid by the Trust with respect to its A shares and C shares are
calculated in the same manner and at the same time and will be in the same
amount relative to the aggregate net asset value of the shares in each class,
except that dividends on C shares may be lower than dividends on A shares
primarily as a result of the higher distribution fee and class-specific expenses
applicable to C shares.
19
<PAGE> 22
DISTRIBUTION PLANS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
As compensation for services rendered and expenses borne by the Distributor
in connection with the distribution of A shares and in connection with personal
services rendered to Class A shareholders and the maintenance of Class A
shareholder accounts, the Trust may pay the Distributor a service fee of up to
0.25% of the Trust's average daily net assets attributable to A shares. The
Trust currently pays the Distributor a service fee of 0.25% on A shares
purchased prior to April 3, 1995. This fee represents compensation for the
maintenance of Class A accounts. This fee is computed daily and paid monthly.
As compensation for services rendered and expenses borne by the Distributor
in connection with the distribution of C shares and in connection with personal
services rendered to Class C shareholders and the maintenance of C shareholder
accounts, the Trust pays the Distributor a service fee of 0.25% and a
distribution fee of 0.75% of the Trust's average daily net assets attributable
to Class C shares. This fee is computed daily and paid monthly.
The above-referenced fees paid to the Distributor are made under
Distribution Plans adopted pursuant to Rule 12b-1 under the 1940 Act. These
Plans authorize the Distributor to spend such fees on any activities or expenses
intended to result in the sale of A shares and C shares, including compensation
(in addition to the sales load) paid to Representatives, advertising, salaries
and other expenses of the Distributor relating to selling or servicing efforts;
expenses of organizing and conducting sales seminars; printing of prospectuses,
statements of additional information and reports for other than existing
shareholders; and preparation and distribution of advertising material, sales
literature and other sales promotion expenses. The Distributor has entered into
dealer agreements with participating dealers who also will distribute shares of
the Trust.
If either Plan is terminated, the obligation of the Trust to make payments
to the Distributor pursuant to the Plan will cease and the Trust will not be
required to make any payment past the date the Plan terminates.
TAXES
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The Trust intends to continue to qualify for treatment as a regulated
investment company under Subchapter M of the Code. In each taxable year that it
does so, the Trust (but not its shareholders) will be relieved of Federal income
tax on that part of its investment company taxable income (generally consisting
of net investment income, net short-term capital gains and net gains from
certain foreign currency transactions) and net capital gain (the excess of net
long-term capital gain over net short-term capital loss) that is distributed to
its shareholders. Dividends from the Trust's investment company taxable income
are taxable to its shareholders as ordinary income, to the extent of the Trust's
earnings and profits, whether received in cash or in additional Trust shares.
Distributions of the Trust's net capital gain, when designated as such, are
taxable to its shareholders as long-term capital gains, whether received in cash
or in additional Trust shares and regardless of the length of time the shares
have been held. No substantial portion of the dividends paid by the Trust is
expected to be eligible for the dividends-received deduction allowed to
corporations.
Dividends and other distributions declared by the Trust in November or
December of any year and payable to shareholders of record on a date in one of
those months will be deemed to have been paid by the Trust and received by the
shareholders on December 31 of that year if they are paid by the Trust during
the following January. Shareholders receive Federal income tax information
regarding dividends and other distributions after the end of each year. The
Trust is required to withhold 31% of all dividends, capital gain distributions
and redemption proceeds payable to individuals and certain other non-corporate
shareholders
20
<PAGE> 23
who do not provide the Trust with a correct taxpayer identification number.
Withholding at that rate also is required for from dividends and capital gain
distributions payable to such shareholders who otherwise are subject to backup
withholding.
The foregoing is only a summary of some of the important Federal income tax
considerations generally affecting the Trust and its shareholders. See the SAI
for a further discussion. There may be other Federal, state or local tax
considerations applicable to a particular investor. You are therefore urged to
consult your tax adviser.
SHAREHOLDER INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Each share of the Trust gives the shareholder one vote in matters submitted
to shareholders for a vote. A shares and C shares of the Trust have equal voting
rights, except that, in matters affecting only a particular class, only shares
of that class are entitled to vote. As a Massachusetts business trust, the Trust
is not required to hold annual shareholder meetings. Shareholder approval will
be sought only for certain changes in the Trust's operation and for the election
of Trustees under certain circumstances. Trustees may be removed by the Trustees
or shareholders at a special meeting. A special meeting of shareholders shall be
called by the Trustees upon the written request of shareholders owning at least
10% of the Trust's outstanding shares.
21
<PAGE> 24
<TABLE>
<C> <S>
- ---- ---------------------------------------------------------------------------------------
4 Telephone Exchange Information/Telephone Information*
- ---- ---------------------------------------------------------------------------------------
</TABLE>
/ / If you do not want to have Telephone Exchange and Telephone Redemption
privileges, please check here. If telephone redemption amounts will be
wired to your bank or the amount requested exceeds $25,000 please
complete the following:
<TABLE>
<S> <C>
Name of Bank: Account Number:
Address of
Bank:
Street City State Zip Code
WIRE
INSTRUCTIONS:
BANK ABA # CITY STATE
* I understand the Trust, Manager, Distributor and their Trustees, directors, officers and employees are not responsible
for any loss arising out of telephone instructions that they reasonably believe are authentic provided they follow
reasonable procedures as described in the Prospectus and Statement of Additional Information.
- ---- ---------------------------------------------------------------------------------------
5 Statement of Intention/Right of Accumulation (optional)
- ---- ---------------------------------------------------------------------------------------
</TABLE>
/ / I agree to the Statement of Intention and Escrow Agreement set forth
in the Prospectus and SAI. Although I am not obligated to do so, it is
my intention to invest, over a 13-month period, in Heritage mutual
funds, an aggregate amount at least equal to:
/ / $25,000 / / $50,000 / / $100,000 / / $250,000 /
/ $500,000 / / $1,000,000
/ / I qualify for the Right of Accumulation privilege as described in the
Trust's Prospectus. Below are listed all the accounts (please list
fund name and account number) in any Heritage mutual fund which should
be credited to my Statement of Intention for purposes of Right of
Accumulation.
<TABLE>
<C> <S>
- ---- ---------------------------------------------------------------------------------------
6 Automatic Investment Plans (optional)
- ---- ---------------------------------------------------------------------------------------
</TABLE>
/ / Please check the Box to the left, complete and sign the appropriate
Investment Plan Application.
<TABLE>
<C> <S>
- ---- ---------------------------------------------------------------------------------------
7 For Dealer Use Only
- ---- ---------------------------------------------------------------------------------------
</TABLE>
We hereby authorize the Distributor to act as our agent in connection with
transactions under this authorization form and agree to notify the
Distributor of any purchases made under a Statement of Intention or Right
of Accumulation. We guarantee the shareholder's signature.
If a Systematic Withdrawal Plan is being opened, we believe that the
amount to be withdrawn is reasonable in light of the investor's
circumstances and we recommend establishment of the account.
Dealer's Name
Home Office
City State Zip
Authorized Signature
Branch Office Location
<TABLE>
<S> <C>
Branch No. Registered Representative's No.
</TABLE>
Registered Representative's Last Name
<PAGE> 25
No dealer, salesman or other person has been authorized to give any
information or to make any representation other than that 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> 26
[HERITAGE LOGO]
PROSPECTUS
February 1, 1996
Heritage Income-Growth Trust
P.O. Box 33022
St. Petersburg, FL 33733
--------------------------------------------
Address Change Requested
Prospectus
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
10M 2/95 HAM011
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
_________________________________
HERITAGE INCOME-GROWTH TRUST
This Statement of Additional Information ("SAI") dated
February 1, 1996, should be read with the Prospectus of the Heritage
Income-Growth Trust dated February 1, 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 Objective . . . . . . . . . . . . . . . . . . . . . 1
Investment Policies . . . . . . . . . . . . . . . . . . . . . 1
Industry Classifications . . . . . . . . . . . . . . . . . . 10
INVESTMENT LIMITATIONS . . . . . . . . . . . . . . . . . . . . . . . 10
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 14
INVESTING IN THE TRUST . . . . . . . . . . . . . . . . . . . . . . . 15
Alternative Purchase Plans . . . . . . . . . . . . . . . . . 15
Class A Purchases at Net Asset
Value . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Class A Combined Purchase Privilege
(Right of Accumulation) . . . . . . . . . . . . . . . . . . 16
Class A Statement of Intention . . . . . . . . . . . . . . . 17
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . 18
Telephone Transactions . . . . . . . . . . . . . . . . . . . 19
Redemptions in Kind . . . . . . . . . . . . . . . . . . . . 19
Receiving Payment . . . . . . . . . . . . . . . . . . . . . 20
EXCHANGE PRIVILEGE . . . . . . . . . . . . . . . . . . . . . . . . . 20
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
TRUST INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Management of the Trust . . . . . . . . . . . . . . . . . . 25
Investment Adviser and
Administrator; Subadviser . . . . . . . . . . . . . . . . . 28
Brokerage Practices . . . . . . . . . . . . . . . . . . . . 30
Distribution of Shares . . . . . . . . . . . . . . . . . . . 32
Administration of the Trust . . . . . . . . . . . . . . . . 34
Potential Liability . . . . . . . . . . . . . . . . . . . . 35
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
REPORT OF THE INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . A-4
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . A-5
<PAGE>
GENERAL INFORMATION
-------------------
Heritage Income-Growth Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated July 25,
1986. The Trust offers two classes of shares, Class A shares sold subject
to a front-end sales load ("A shares") and Class C shares sold subject to
a contingent deferred sales load ("CDSL") ("C shares").
INVESTMENT INFORMATION
----------------------
Investment Objective
--------------------
The Trust's investment objective, as described in the prospectus,
is long-term total return by seeking, with approximately equal emphasis,
current income and capital appreciation. This objective cannot be changed
without shareholder approval.
Investment Policies
-------------------
Convertible Securities. The Trust may invest in convertible
securities. While no securities investment is without some risk,
investments in convertible securities generally entail less risk than the
issuer's common stock, although the extent to which such risk is reduced
depends in large measure upon the degree to which the convertible security
sells above its value as a fixed-income security. The Trust's investment
subadviser, Eagle Asset Management, Inc. ("Eagle" or the "Subadviser"),
will decide whether to invest in convertible securities based upon a
fundamental analysis of the long-term attractiveness of the issuer and the
underlying common stock, the evaluation of the relative attractiveness of
the current price of the underlying common stock, and the judgment of the
value of the convertible security relative to the common stock at current
prices.
Covered Call Options. The Trust may write covered call options
on securities to increase income in the form of premiums received from the
purchasers of the options. Because it can be expected that a call option
will be exercised if the market value of the underlying security increases
to a level greater than the exercise price, the Trust will write covered
call options on securities generally when the Subadviser believes that the
premium received by the Trust, plus anticipated appreciation in the market
price of the underlying security up to the exercise price of the option,
will be greater than the total appreciation in the price of the security.
The strategy also may be used to provide limited protection
against a decrease in the market price of the security in an amount equal
to the premium received for writing the call option, less any transaction
costs. Thus, if the market price of the underlying security held by the
Trust declines, the amount of such decline will be offset wholly or in
part by the amount of the premium received by the Trust. If, however,
<PAGE>
there is an increase in the market price of the underlying security and
the option is exercised, the Trust will be obligated to sell the security
at less than its market value. The Trust would lose the ability to
participate in an increase in the value of such securities above the
exercise price of the call option. The Trust also gives up the ability to
sell the portfolio securities used to cover the call option while the call
option is outstanding.
Eurodollar Certificates. The Trust may purchase certificates of
deposit issued by foreign branches of domestic and foreign banks.
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 or 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 subject necessarily to
the same or similar regulatory requirements, loan limitations, and
accounting, auditing and recordkeeping requirements as are domestic banks
or domestic branches of foreign banks. In addition, less information may
be publicly available about a foreign branch of a domestic bank or a
foreign bank than a domestic bank.
Foreign Securities. The Trust may invest in foreign securities
and American, European, Global and International Depository Receipts
("ADRs," "EDRs," "GDRs" and "IDRs," respectively); however, such
investments may not exceed 20% of the Trust's investment portfolio.
Investments in these types of securities involve, among other factors, the
risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the
removal of funds or other assets of the Trust, political or financial
instability or diplomatic and other developments that could affect such
investments. Further, the economies of particular countries or areas of
the world may differ favorably or unfavorably from the economy of the
United States.
ADRs, EDRs, GDRs and IDRs are receipts that represent interests
in, or are convertible into, securities of foreign issuers. ADRs are
receipts typically issued by a U.S. bank or trust company evidencing
ownership of the underlying securities of foreign issuers and other forms
of depository receipts for securities of foreign issuers. EDRs and IDRs
are receipts typically issued by a European bank or trust company
evidencing ownership of the underlying foreign securities. GDRs are
receipts issued globally for trading in non-U.S. securities markets and
evidence a similar ownership arrangement.
- 2 -
<PAGE>
It is anticipated that in most cases the best available market
for foreign securities will be on exchanges or in over-the-counter markets
located outside the United States. Many foreign stock markets, while
growing in volume and sophistication, generally are not as developed as
those in the United States, and securities of some foreign issuers
(particularly those located in developing countries) may be less liquid
and more volatile than securities of comparable U.S. companies. In
addition, foreign brokerage commissions generally are higher than
commissions on securities traded in the United States. In general, there
is less overall governmental supervision and regulation of securities
exchanges, brokers and listed companies than in the United States.
It is the Trust's policy not to invest in foreign securities from
countries in which currency or trading restrictions are in force or where,
in the judgment of the Subadviser, such restrictions likely are to be
imposed. It should be understood, however, that certain currencies may
become blocked (i.e., not freely available for transfer from a foreign
country), resulting in the possible inability of the Trust to convert
proceeds realized upon the sale of portfolio securities of the affected
foreign companies into U.S. currency.
Because investments in foreign companies usually will involve
currencies of foreign countries, and because the Trust temporarily may
hold funds in bank deposits in foreign currencies during the completion of
investment programs, the value of Trust assets as measured in U.S. dollars
may be affected favorably or unfavorably by changes in foreign currency
exchange rates and exchange control regulations, and the Trust may incur
costs in connection with conversions between various currencies. The
Trust will conduct its foreign currency exchange transactions on a spot
(i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market. In addition, in order to protect against uncertainty in
the level of future exchange rates, the Trust may enter into contracts to
purchase or sell foreign currencies at a future date (i.e., a "forward
currency contract" or "forward contract").
Foreign Currency Forward Contracts. A forward currency contract
involves an obligation of the Trust to purchase or sell a specified
currency at a future date, which may be any fixed number of days from the
date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are traded in the interbank market
conducted directly between currency traders (usually large commercial
banks) and their customers.
The Trust may enter into forward currency contracts for the
purchase or sale of a specified currency at a specified future date either
with respect to specific transactions or with respect to portfolio
positions in order to minimize the risk to the Trust from adverse changes
in the relationship between the U.S. dollar and foreign currencies. For
example, when the Subadviser anticipates purchasing or selling a security,
the Trust may enter into a forward contract in order to set the exchange
- 3 -
<PAGE>
rate at which the transaction will be made. The Trust also may enter into
a forward contract to sell an amount of a foreign currency approximating
the value of some or all of the Trust's securities positions denominated
in such currency. The Trust may also use forward contracts in one
currency or a basket of currencies to attempt to hedge against
fluctuations in the value of securities denominated in a different
currency if the Subadviser anticipates that there will be a correlation
between the two currencies.
The Trust may use forward currency contracts to shift the Trust's
exposure to foreign currency exchange rate changes from one foreign
currency to another. For example, if the Trust owns securities
denominated in a foreign currency and the Subadviser believes that
currency will decline relative to another currency, it might enter into a
forward contract to sell the appropriate amount of the first foreign
currency with payment to be made in the second foreign currency.
Transactions that use two foreign currencies are sometimes referred to as
"cross hedging." Use of a different foreign currency magnifies the
Trust's exposure to foreign currency exchange rate fluctuations. The
Trust also may purchase forward currency contracts to enhance income when
the Subadviser anticipates that the foreign currency will appreciate in
value, but securities denominated in that currency do not present
attractive investment opportunities.
A forward currency contract generally has no deposit requirement,
and no commissions are charged at any stage for trades. When the Trust
enters into a forward currency contract, it relies on its counterparty to
make or take delivery of the underlying currency at the maturity of the
contract. Failure by the counterparty to do so would result in the loss
of any expected benefit of the transaction.
Purchasers and sellers of forward currency contracts can enter
into offsetting closing transactions by selling or purchasing,
respectively, an instrument identical to the instrument purchased or sold.
Secondary markets generally do not exist for forward currency contracts,
with the result that closing transactions generally can be made for
forward currency contracts only by negotiating directly with the
counterparty. Thus, there can be no assurance that the Trust will, in
fact, be able to close out a forward currency contract at a favorable
price prior to maturity. In addition, in the event of insolvency of the
counterparty, the Trust might be unable to close out a forward currency
contract at any time prior to maturity. In either event, the Trust would
continue to be subject to market risk with respect to the position, and
would continue to be required to maintain a position in securities
denominated in foreign currency or to maintain cash or securities in a
segregated account.
The precise matching of forward currency contract amounts and the
value of the securities involved generally will not be possible because
the value of such securities, measured in the foreign currency, will
- 4 -
<PAGE>
change after the forward currency contract has been established. Thus,
the Trust might need to purchase or sell foreign currencies in the spot
(cash) market to the extent such foreign currencies are not covered by
forward contracts. The projection of short-term currency market movements
is extremely difficult, and the successful execution of a short-term
hedging strategy is highly uncertain.
The Trust may purchase and sell foreign currency and invest in
foreign currency deposits. Currency conversion involves dealer spreads
and other costs, although commissions usually are not charged.
Successful use of forward currency contracts will depend on the
Subadviser's skill in analyzing and predicting currency values. Forward
contracts may substantially change the Trust's investment exposure to
changes in currency exchange rates, and could result in losses to the
Trust if currencies do not perform as the Subadviser anticipates. There
is no assurance that the Subadviser's use of forward currency contracts
will be advantageous to the Trust or that it will hedge at an appropriate
time.
Foreign Currency Strategies - Special Considerations. The value
of forward currency contracts depends on the value of the underlying
currency relative to the U.S. dollar. Because foreign currency
transactions occurring in the interbank market might involve substantially
larger amounts than those involved in the use of forward currency
contracts, the Trust could be disadvantaged by having to deal in the odd
lot market (generally consisting of transactions of less than $1 million)
for the underlying foreign currencies at prices that are less favorable
than for round lots.
There is no systematic reporting of last sale information for
foreign currencies or any regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely
basis. Quotation information generally is representative of very large
transactions in the interbank market and thus might not reflect odd-lot
transactions where rates might be less favorable. The interbank market in
foreign currencies is a global, round-the-clock market.
Settlement of transactions involving foreign currencies might be
required to take place within the country issuing the underlying currency.
Thus, the Trust might be required to accept or make delivery of the
underlying foreign currency in accordance with any U.S. or foreign
regulations regarding the maintenance of foreign banking arrangements by
U.S. residents and might be required to pay any fees, taxes and charges
associated with such delivery assessed in the issuing country.
Cover. Transactions using forward currency contracts expose the
Trust to an obligation to another party. The Trust will not enter into
any such transactions unless it owns either (1) an offsetting ("covered")
position in currencies or other forward contracts, or (2) cash,
- 5 -
<PAGE>
receivables and short-term debt securities with a value sufficient at all
times to cover its potential obligations not covered as provided in (1)
above. The Trust will comply with Securities and Exchange Commission
("SEC") guidelines regarding cover for these instruments and, if the
guidelines so require, set aside cash, U.S. Government securities or other
liquid, high-grade debt securities in a segregated account with its
custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be
sold while the position in the corresponding forward currency contract is
open, unless they are replaced with other appropriate assets. As a
result, the commitment of a large portion of the Trust's assets to cover
or segregated accounts could impede investment portfolio management or the
Trust's ability to meet redemption requests or other current obligations.
Forward Commitments. The Trust may make contracts to purchase
securities for a fixed price at a future date beyond customary settlement
time ("forward commitments") if the Trust holds, and maintains until the
settlement date in a segregated account, cash, U.S. Government securities
or high-grade debt obligations in an amount sufficient to meet the
purchase price, or if the Trust enters into offsetting contracts for the
forward sale of other securities it owns. The Trust may invest up to 25%
of its total assets in forward commitments. Forward commitments may be
considered securities in themselves and involve a risk of loss if the
value of the security to be purchased declines prior to the settlement
date, which risk is in addition to the risk of decline in value of the
Trust's other assets. When such purchases are made through dealers, the
Trust relies on the dealer to consummate the sale. The dealer's failure
to do so may result in the loss to the Trust of an advantageous yield or
price. Although the Trust generally will enter into forward commitments
with the intention of acquiring securities for its investment portfolio,
the Trust may dispose of a commitment prior to settlement if the
Subadviser deems it appropriate to do so. The Trust may realize
short-term profits or losses upon the sale of forward commitments.
Money Market Instruments. In addition to the investments
described in the Prospectus, the Trust also may invest in money market
instruments, including the following:
(1) 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 Bank
Insurance Fund or the Savings Institution Insurance Fund of the Federal
Deposit Insurance Corporation.
(2) Commercial paper rated A-1 or A-2 by Standard & Poor's
("S&P") or Prime-1 or Prime-2 by Moody's Investors Service, Inc.
- 6 -
<PAGE>
("Moody's"). For a description of these ratings, see "Commercial Paper
Ratings" in the attached Appendix.
(3) High quality short-term corporate debt obligations, including
variable rate demand notes, having a maturity of one year or less.
Because there is no secondary trading market in demand notes, the
inability of the issuer to make required payments could impact adversely
the Trust's ability to resell when it deems advisable to do so.
Repurchase Agreements. The Trust may enter into repurchase
agreements. Although repurchase agreements carry certain risks not
associated with direct investment in securities, including possible
decline in the market value of the underlying securities and delays and
costs to the Trust if the other party to the repurchase agreement becomes
bankrupt, the Trust intends to enter into repurchase agreements only with
banks and dealers in transactions believed by the Subadviser to present
minimal credit risks in accordance with guidelines established by the
Trust's Board of Trustees (the "Board of Trustees" or the "Board"). The
period of these repurchase agreements usually will be short, from
overnight to one week, and at no time will the Trust invest in repurchase
agreements of more than one year. The securities that are subject to
repurchase agreements, however, may have maturity dates in excess of one
year from the effective date of the repurchase agreement. The Trust
always will receive as collateral securities whose market value, including
accrued interest, will be at least equal to 100% of the dollar amount
invested by the Trust in each agreement, and the Trust will make payment
for such securities only upon physical delivery or evidence of book entry
transfer to the account of the Trust's custodian bank.
Restricted and Illiquid Securities. The Trust may invest 10% of
its net assets in illiquid securities, including securities that are
illiquid due to the absence of a readily available market or due to legal
or contractual restrictions on resale, and repurchase agreements maturing
in more than seven days as limited by its investment restrictions. The
assets used as cover for over-the-counter ("OTC") call options written by
the Trust will be considered illiquid unless the OTC call options are sold
to qualified dealers who agree that the Trust may repurchase any OTC call
option it writes at a maximum price to be calculated by a formula set
forth in the option agreement. The cover for an OTC call option written
subject to this procedure would be considered illiquid only to the extent
that the maximum repurchase price under the formula exceeds the intrinsic
value of the option.
Risk Factors of High-Yield Securities. The Trust will not invest
35% or more of its assets in convertible securities and nonconvertible
corporate debt obligations rated B or higher, but lower than Baa by
Moody's, or BBB by S&P or, if unrated, deemed to be of comparable quality
by the Subadviser ("below investment grade"), which are commonly referred
to as "junk bonds." The prices of lower-rated securities tend to be less
sensitive to interest rate changes than higher-rated securities, but more
- 7 -
<PAGE>
sensitive to adverse economic changes or individual corporate
developments. Securities rated below investment grade are deemed to be
predominantly speculative with respect to the issuer's capacity to pay
interest and repay principal and may involve major risk exposure to
adverse conditions. The following supplements the disclosure in the
Prospectus.
Effect of Interest Rate and Economic Changes. The prices
of high-yield securities tend to be less sensitive to interest rate
changes than higher-rated investments, but may be more sensitive to
adverse economic changes or individual corporate developments. Periods of
economic uncertainty and changes generally result in increased volatility
in market prices and yields of high-yield securities and thus in the
Trust's net asset value. A strong economic downturn or a substantial
period of rising interest rates could affect severely the market for high-
yield securities. In these circumstances, highly leveraged companies
might have difficulty in making principal and interest payments, meeting
projected business goals, and obtaining additional financing. Thus, there
could be a higher incidence of default. This would affect the value of
such securities and thus the Trust's net assets value. Further, if the
issuer of a security owned by the Trust defaults, the Trust might incur
additional expenses to seek recovery.
Generally, when interest rates rise, the value of fixed-rate debt
obligations, including high-yield securities, tends to decrease; when
interest rates fall, the value of fixed-rate debt obligations tends to
increase. If an issuer of a high-yield security containing a redemption
or call provision exercises either provision in a declining interest rate
market, the Trust would have to replace the security, which could result
in a decreased return for shareholders. Conversely, if the Trust
experiences unexpected net redemptions in a rising interest rate market,
it might be forced to sell certain securities, regardless of investment
merit. This could result in decreasing the assets to which the Trust's
expenses could be allocated and in a reduced rate of return for the Trust.
While it is impossible to protect entirely against this risk,
diversification of the Trust's investment portfolio and the Subadviser's
careful analysis of prospective investment portfolio securities should
minimize the impact of a decrease in value of a particular security or
group of securities in the Trust's investment portfolio.
The High Yield Securities Market. The market for below-
investment grade bonds expanded rapidly in the 1980s, and its growth
paralleled a long economic expansion. During that period, the yields on
below-investment grade bonds rose dramatically. Such higher yields did
not reflect the value of the income stream that holders of such bonds
expected, but rather the risk that holders of such bonds could lose a
substantial portion of their value as a result of the issuers' financial
restructuring or default. In fact, from 1989 to 1991 during a period of
economic recession, the percentage of lower-quality bonds that defaulted
rose significantly, although the default rate decreased in subsequent
- 8 -
<PAGE>
years. There can be no assurance that such declines in the below-
investment grade market will not reoccur. The market for below-
investment grade bonds generally is thinner and less active than that for
higher-quality bonds, which may limit the Trust's ability to sell such
securities at fair value in response to changes in the economy or
financial markets. Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, also may decrease the values and
liquidity of lower-rated securities, especially in a thinly traded market.
Credit Ratings. The credit ratings issued by credit
rating services may not reflect fully the true risks of an investment.
For example, credit ratings typically evaluate the safety of principal and
interest payments, not market value risk, of high-yield securities. Also,
credit rating agencies may fail to change timely a credit rating to
reflect changes in economic or company conditions that affect a security's
market value. Although the Subadviser considers ratings of recognized
rating services such as Moody's and S&P, the Subadviser primarily relies
on its own credit analysis, which includes a study of existing debt,
capital structure, ability to service debt and to pay dividends, the
issuer's sensitivity to economic conditions, its operating history and the
current trend of earnings. The Subadviser continually monitors the
investments in the Trust's portfolio and carefully evaluates whether to
dispose of or retain high-yield securities whose credit ratings have
changed. See the Appendix for a description of corporate debt ratings.
Liquidity and Valuation. Lower-rated bonds typically are
traded among a smaller number of broker-dealers than in a broad secondary
market. Purchasers of high-yield securities tend to be institutions,
rather than individuals, which is a factor that further limits the
secondary market. To the extent that no established retail secondary
market exists, many high-yield securities may not be as liquid as higher-
grade bonds. A less active and thinner market for high-yield securities
than that available for higher-quality securities may limit the Trust's
ability to sell such securities at fair market value in response to
changes in the economy or the financial markets. The ability of the Trust
to value or sell high-yield securities also will be affected adversely to
the extent that such securities are thinly traded or illiquid. During
such periods, there may be less reliable, objective information available
and thus the responsibility of the Board to value high-yield, high-risk
securities becomes more difficult, with judgment playing a greater role.
Further, adverse publicity about the economy or a particular issuer may
affect adversely the public's perception of the value, and thus the
liquidity of a high-yield security, whether or not such perceptions are
based on a fundamental analysis. See "Determination of Net Asset Value."
Securities Loans. The Trust may loan investment portfolio
securities to qualified broker-dealers. Such loans may be terminated by
the Trust at any time and the market risk applicable to any security
loaned remains a risk of the Trust. Although voting rights, or rights to
consent, with respect to the loaned securities pass to the borrower, the
- 9 -
<PAGE>
Trust retains the right to call the loans at any time on reasonable
notice, and it will do so in order that the securities may be voted by the
Trust if the holders of such securities are asked to vote upon or consent
to matters materially affecting the investment. The Trust also may call
such loans in order to sell the securities involved. The borrower must
add to the collateral whenever the market value of the securities rises
above the level of such collateral. The Trust could incur a loss if the
borrower should fail financially at a time when the value of the loaned
securities is grater than the collateral. The primary objective of
securities lending is to supplement the Trust's income through investment
of the cash collateral in short-term interest-bearing obligations.
Short Sales. A short sale involves the sale by the Trust of a
security that it may not own. The Trust may not make short sales of
securities except "against the box." A short sale "against the box" is a
short sale whereby, at the time of the sale, the Trust owns or has the
immediate and unconditional right, at no additional cost, to obtain the
identical security. Not more than 10% of the Trust's net assets may be
held as collateral for such sales at any one time.
U.S. Government Securities. The Trust may invest in U.S.
Government securities, including a variety of securities that are issued
or guaranteed by the U.S. Government, its agencies or instrumentalities
and repurchase agreements secured thereby. These securities include
securities issued and guaranteed by the U.S. Government, such as Treasury
bills, Treasury notes, and Treasury bonds; obligations backed by the "full
faith and credit" of the United States, such as Government National
Mortgage Association securities; obligations supported by the right of the
issuer to borrow from the U.S. Treasury, such as those of the Federal Home
Loan Banks; and obligations supported only by the credit of the issuer,
such as those of the Federal Intermediate Credit Banks.
Warrants. The Trust may invest up to 2% of its net assets in
warrants (other than warrants acquired as part of a unit or attached to
securities at the time of purchase), which entitle the holder to buy
equity securities at a specific price for a specific period of time.
Warrants may be considered more speculative than certain other types of
investments in that they do not entitle a holder to dividends or voting
rights with respect to the securities that may be purchased nor do they
represent any rights in the assets of the issuing company. Also, the
value of a warrant does not change necessarily with the value of the
underlying securities, and a warrant ceases to have value if it is not
exercised prior to the expiration date.
Zero Coupon Securities. The Trust may invest in zero coupon
securities, which are debt obligations that do not entitle the holder to
any periodic payment of interest prior to maturity or a specified date
when the securities begin paying current interest. Zero coupon securities
are issued and traded at a discount from their face amount or par value,
which discount rate varies depending on the time remaining until cash
- 10 -
<PAGE>
payments begin, prevailing interest rates, liquidity of the security and
the perceived credit quality of the issuer. The market prices of zero
coupon securities generally are more volatile than the prices of
securities that pay interest periodically and are likely to respond to
changes in interest rates to a greater degree than do other types of debt
securities having similar maturities and credit value.
Industry Classifications
------------------------
For purposes of determining industry classifications, the Trust
relies upon classifications established by Heritage Asset Management, Inc.
("Heritage" or 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.
INVESTMENT LIMITATIONS
----------------------
In addition to the limits disclosed in "Investment Policies"
above and the investment limitations described in the Prospectus, the
Trust is subject to the following investment limitations that are
fundamental policies of the Trust and may not be changed without the vote
of a majority of the outstanding voting securities of the Trust. Under
the Investment Company Act of 1940, as amended (the "1940 Act"), a "vote
of a majority of the outstanding voting securities" of the Trust means the
affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of the Trust or (2) 67% or more of the shares present at a
shareholders meeting if more than 50% of the outstanding shares are
represented at the meeting in person or by proxy.
Investing in Commodities, Minerals or Real Estate. The Trust may
not invest in commodities, commodity contracts, oil, gas or other mineral
programs, or real estate, except that it may (1) purchase securities
secured by real estate or issued by companies that invest in or sponsor
such interests, (2) write and purchase call options and purchase and sell
forward contracts, and (3) engage in transactions in forward commitments.
Underwriting. The Trust may not underwrite the securities of
other issuers, except that the Trust may invest in securities that are not
readily marketable without registration under the Securities Exchange Act
of 1933 Act, as amended (the "1933 Act"), (restricted securities), if
immediately after the making of such investment not more than 5% of the
value of the Trust's total assets (taken at cost) would be so invested.
Loans. The Trust may not make loans, except to the extent that
the purchase of a portion of an issue of publicly distributed or privately
placed notes, bonds or other evidences of indebtedness or deposits with
banks and other financial institutions may be considered loans. The Trust
also may enter into repurchase agreements and securities loans as
- 11 -
<PAGE>
permitted under the Trust's investment policies. Privately placed
securities typically are either restricted as to resale or may not have
readily available market quotations, and therefore may not be as liquid as
other securities.
Issuing Senior Securities. The Trust may not issue senior
securities, except as permitted by its investment objective and policies
and investment limitations of the Trust and except that the Trust may
purchase and sell call options and forward contracts.
Investing in Issuers Whose Securities Are Owned by Officers and
Trustees of the Trust. The Trust may not purchase or retain the
securities of any issuer if the officers and Trustees of the Trust or the
Manager or Subadviser owning individually more than 1/2 of 1% of the
issuer's securities together own more than 5% of the issuer's securities.
Repurchase Agreements and Loans of Portfolio Securities. The
Trust may not enter into repurchase agreements with respect to more than
25% of its total assets and may not lend portfolio securities amounting to
more than 25% of its total assets.
Margin Purchases. The Trust may not purchase securities on
margin except to obtain such short-term credits as may be necessary for
the clearance of transactions.
Restricted Securities. The Trust may not invest more than 5% of
the Trust's total assets (taken at cost) in securities that are not
readily marketable without registration under the 1933 Act (restricted
securities).
The Trust has adopted the following additional restrictions that,
together with certain limits described in the Trust's prospectus, are
nonfundamental policies and may be changed by the Board of Trustees
without shareholder approval in compliance with applicable law, regulation
or regulatory policy.
Investing in Investment Companies. The Trust may invest in
securities issued by other investment companies to the extent permitted by
the 1940 Act and the rules and regulations thereunder. Under these rules
and regulations, the Trust is prohibited from acquiring the securities of
another investment company if, as a result of such acquisition, the Trust
owns more than 3% of the total voting stock of the company, securities
issued by any one investment company represent more than 5% of the Trust's
total assets, or securities (other than treasury stock) issued by all
investment companies represent more than 10% of the total assets of the
Trust. The Trust's purchase of investment company securities may result
in the layering and duplication of expenses such that shareholders
indirectly bear a proportionate share of the operating expenses of such
companies, including advisory fees.
- 12 -
<PAGE>
Control Purpose. The Trust may not make investments for the
purpose of gaining control of an issuer's management.
Pledging Securities. The Trust may not pledge any securities,
except in an amount of not more than 15% of its total assets, to secure
borrowings for temporary and emergency purposes or in connection with the
writing of call options. (The deposit in escrow of underlying securities
in connection with the writing of covered call options, and the deposit of
margin in connection with forward contracts, is not deemed to be a pledge
or other encumbrance.)
Unseasoned Issuers. The Trust may not invest more than 5% of its
net assets in securities of companies (other than obligations issued or
guaranteed by the U.S. Government, its agencies or instrumentalities)
that, including their predecessors, have been in continuous operation for
less than three years and in equity securities that do not have readily
available market quotations (other than restricted securities).
Warrants. The Trust may not invest more than 2% of its net
assets in warrants (other than warrants acquired as part of a unit or
attached to securities at the time of purchase).
Illiquid Investments. The Trust may not invest more than 10% of
its net assets in the aggregate in repurchase agreements of more than
seven days' duration, in securities without readily available market
quotations, and in restricted securities including privately placed
securities.
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. If at any
time, the Trust's borrowings exceed its limitations due to a decline in
net assets, such borrowings will be promptly reduced to the extent
necessary to comply with the limitation.
NET ASSET VALUE
---------------
The net asset values of the A shares and C shares are determined
daily Monday through Friday, except for New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day
and Christmas Day, as of the close of regular trading on the New York
Stock Exchange (the "Exchange"). Net asset value for each class is
calculated by dividing the value of the total assets of the Trust
attributable to that class, less all liabilities (including accrued
expenses) attributable to that class, by the number of class shares
outstanding, the result being adjusted to the nearest whole cent. A
security listed or traded on the Exchange, or other domestic or foreign
stock exchanges, is valued at its last sales price on the principal
- 13 -
<PAGE>
exchange on which it is traded prior to the time when assets are valued.
If no sale is reported at that time or the security is traded in the over-
the-counter market, the most recent bid price is used. Securities and
other assets for which market quotations are not readily available, or for
which market quotes are not deemed to be reliable, are valued at fair
value as determined in good faith by the Board of Trustees. Securities in
a foreign currency will be valued daily in U.S. dollars at the foreign
currency exchange rates prevailing at the time the Trust calculates the
daily net asset value of each class. Short-term investments having a
maturity of 60 days or less are valued at amortized cost, which
approximates market value.
The Trust is open for business on days on which the Exchange is
open (each a "Business Day"). Trading in securities on European and Far
Eastern securities exchanges and over-the-counter markets normally is
completed well before the Trust's close of business on each Business Day.
In addition, European or Far Eastern securities trading may not take place
on all Business Days. Furthermore, trading takes place in various foreign
capital markets on days that are not Business Days and on which the
Trust's net asset value is not calculated. Calculation of A shares and C
shares net asset value does not take place contemporaneously with the
determination of the prices of the majority of the portfolio securities
used in such calculation. The Trust calculates net asset value per share,
and therefore effects sales and redemptions, as of the close of regular
trading on the Exchange each Business Day. If events materially affecting
the value of such securities occur between the time when their prices are
determined and the time when the Trust's net asset value is calculated,
such securities will be valued at fair value by methods as determined in
good faith by or under the direction of the Board of Trustees.
The Board of Trustees may suspend the right of redemption or
postpone payment for more than seven days at times (1) during which the
Exchange is closed other than for the customary weekend and holiday
closings, (2) during which trading on the Exchange is restricted as
determined by the SEC, (3) during which an emergency exists as a result of
which disposal by the Trust of securities owned by it is not reasonably
practicable or it is not reasonably practical for the Trust fairly to
determine the value of its net assets, or (4) for such other periods as
the SEC may by order permit for the protection of the holders of A shares
and C shares.
PERFORMANCE INFORMATION
-----------------------
The performance data for each class of the Trust quoted in
advertising and other promotional materials represents past performance
and is not intended to indicate future performance. The investment return
and principal value will fluctuate so that an investor's shares, when
redeemed, may be worth more or less than their original cost. Average
annual total return quotes for each class used in the Trust's advertising
- 14 -
<PAGE>
and promotional materials are calculated according to the following
formula:
n
P(1+T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of the period at
the end of that period.
In calculating the ending redeemable value for Class A shares,
the current maximum sales load of 4.75% is deducted from the initial
$1,000 payment and all dividends and other distributions by the Trust are
assumed to have been reinvested at net asset value on the reinvestment
dates during the period. Based on this formula, the total return, or "T"
in the formula above, is computed by finding the average annual compounded
rates of return over the period that would equate the initial amount
invested to the ending redeemable value. The average annualized total
returns for A shares using this formula for the one- and five-year periods
ended September 30, 1995 and for the period December 15, 1986,
(commencement of operations) through September 30, 1995, were -14.53%,
13.89% and 8.32%, respectively. The average annualized total returns for
C shares using this formula for the period April 3, 1995 (commencement of
operations for C shares) to September 30, 1995 was ______%.
In connection with communicating its total return to current or
prospective shareholders, the Trust also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services
or to other unmanaged indexes that may assume reinvestment of dividends
but generally do not reflect deductions for administrative and management
costs. In addition, the Trust may from time to time include in
advertising and promotional materials total return figures that are not
calculated according to the formula set forth above for each class of
shares. For example, in comparing the Trust's cumulative total return
with data published by Lipper Analytical Services, Inc., CDA Investment
Technologies, Inc. or with such market indices as the Dow Jones Industrial
Average and the Standard & Poor's 500 Composite Stock Price Index, the
Trust calculates its cumulative total return for each class for the
specified periods of time by assuming an investment of $10,000 in shares
of that class and assuming the reinvestment of each dividend or other
distribution at net asset value on the reinvestment date. Percentage
increases are determined by subtracting the initial value of the
investment from the ending value and by dividing the remainder by the
beginning value. The Trust does not, for these purposes, deduct from the
initial value invested any amount representing front-end sales loads
charged on A shares or CDSLs charged on C shares.
- 15 -
<PAGE>
The A shares cumulative returns using this formula for the one-
and five-year periods ended September 30, 1995 and for the period
December 15, 1986, (commencement of operations) through September 30,
1995, were 19.57%, 106.92% and 111.98%, respectively. The C shares
cumulative return using this formula for the period April 3, 1995
(commencement of operations for C shares) to September 30, 1995 was
13.18%. By not annualizing the performance and excluding the effect of
the front-end sales load, the A shares and the CDSL on C shares, total
return calculated in this manner simply will reflect the increase in net
asset value per share over a period of time, adjusted for dividends and
other distributions. Calculating total return without taking into account
the front-end sales load or CDSL results in a higher rate of return than
calculating total return net of the sales load.
INVESTING IN THE TRUST
----------------------
A shares and C shares are sold at their next determined net asset
value on Business Days. The procedures for purchasing shares of the Trust
are explained in the Prospectus under "Investing in the Trust."
Alternative Purchase Plans
--------------------------
A shares are sold at their next determined net asset value plus a
front-end sales load on days the Exchange is open for business. C shares
are sold at their next determined net asset value on days the Exchange is
open for business, subject to a 1% CDSL if the investor redeems such
shares within one year. The Manager, as the Trust's transfer agent, will
establish an account with the Trust and will transfer funds to State
Street Bank and Trust Company (the "Custodian"). Normally, orders will be
accepted upon receipt of funds and will be executed at the net asset value
determined as of the close of regular trading on the Exchange on that day
plus any applicable sales load. See "Alternative Purchase Plans" in the
prospectus. The Trust reserves the right to reject any order for Trust
shares. The Trust's distributor, Raymond James & Associates, Inc. ("RJA"
or the "Distributor"), has agreed that it will hold the Trust harmless in
the event of loss as a result of cancellation of trades in Trust shares by
the Distributor, its affiliates or its customers.
Class A Purchases at Net Asset Value
------------------------------------
Cities, counties, states or instrumentalities, and their
departments, authorities or agencies are able to purchase A shares at net
asset value as long as certain conditions are met: the governmental
entity is prohibited by applicable investment laws, codes or regulations
from paying an initial sales load in connection with the purchase of
shares of a registered investment company; the governmental entity has
- 16 -
<PAGE>
determined that such A shares are a legally permissible investment; and
any relevant minimum purchase amounts are met.
In the instance of discretionary fiduciary assets or trusts, or
Class A purchases by a governmental entity through a registered broker-
dealer with which the Distributor has a dealer agreement, the Manager may
make a payment out of its own resources to the Distributor, who may
reallow the payment to the selling broker-dealer. However, the
Distributor and the selling broker-dealer may be required to reimburse the
Manager for these payments if investors redeem A shares within specified
periods.
Class A Combined Purchase Privilege (Right of Accumulation)
-----------------------------------------------------------
Certain investors may qualify for the Class A sales load
reductions indicated in the sales load schedule in the Prospectus by
combining purchases of A shares into a single "purchase," if the resulting
purchase totals at least $25,000. The term "purchase" refers to a single
purchase by an individual, or to concurrent purchases that, in the
aggregate, are at least equal to the prescribed amounts, by an individual,
his spouse and their children under the age of 21 years purchasing A
shares for his or their own account; a single purchase by a trustee or
other fiduciary purchasing A shares for a single trust, estate or single
fiduciary account although more than one beneficiary is involved; or a
single purchase for the employee benefit plans of a single employer. The
term "purchase" also includes purchases by a "company," as the term is
defined in the 1940 Act, but does not include purchases by any such
company that has not been in existence for at least six months or that has
no purpose other than the purchase of A shares or shares of other
registered investment companies at a discount; provided, however, that it
shall not include purchases by any group of individuals whose sole
organizational nexus is that the participants therein are credit card
holders of a company, policy holders of an insurance company, customers of
either a bank or broker-dealer, or clients of an investment adviser.
The applicable A shares initial sales load will be based on the
total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the
previous day) of (a) all A shares held by the investor and (b)
all A shares of any other Heritage mutual fund advised or
administered by the Manager ("Heritage Mutual Fund") held by the
investor and purchased at a time when A shares of such other fund
were distributed subject to a sales load (including Heritage Cash
Trust shares acquired by exchange); and
- 17 -
<PAGE>
(iii) the net asset value of all A shares described in paragraph
(ii) owned by another shareholder eligible to combine his
purchases with that of the investor into a single "purchase."
A shares of Heritage Income Trust-Limited Maturity Government
Portfolio ("Limited Maturity") purchased from February 1, 1992 through
July 31, 1992, without payment of an initial sales load will be deemed to
fall under the provisions of paragraph (ii) as if they had been
distributed without being subject to a sales load, unless those shares
were acquired through an exchange of other shares that were subject to a
sales load. Effective February 1, 1996, Limited Maturity will change its
name to Heritage Income Trust-Intermediate Government Fund.
Class A Statement of Intention
------------------------------
Investors also may obtain the reduced sales loads shown in the
Prospectus by means of a written Statement of Intention, which expresses
the investor's intention to invest not less than $25,000 within a period
of 13 months in A shares of the Trust or any other Heritage Mutual Fund.
Each purchase of A shares under a Statement of Intention will be made at
the public offering price or prices applicable at the time of such
purchase to a single transaction of the dollar amount indicated in the
Statement. At the investor's option, a Statement of Intention may include
purchases of A shares of the Trust or any other Heritage Mutual Fund made
not more than 90 days prior to the date that the investor signs a
Statement of Intention. However, the 13-month period during which the
Statement is in effect will begin on the date of the earliest purchase to
be included.
The Statement of Intention is not a binding obligation upon the
investor to purchase the full amount indicated. The minimum initial
investment under a Statement of Intention is 5% of such amount. A shares
purchased with the first 5% of such amount will be held in escrow (while
remaining registered in the name of the investor) to secure payment of the
higher sales load applicable to the shares actually purchased if the full
amount indicated is not purchased, and such escrowed A shares will be
redeemed involuntarily to pay the additional sales load, if necessary.
When the full amount indicated has been purchased, the escrow will be
released. To the extent an investor purchases more than the dollar amount
indicated on the Statement of Intention and qualifies for a further
reduced sales load, the sales load will be adjusted for the entire amount
purchased at the end of the 13-month period. The difference in sales load
will be used to purchase additional A shares of the Trust, subject to the
rate of sales load applicable to the actual amount of the aggregate
purchases. An investor may amend his/her Statement of Intention to
increase the indicated dollar amount and begin a new 13-month period. In
that case, all investments subsequent to the amendment will be made at the
sales load in effect for the higher amount. The escrow procedures
discussed above will apply.
- 18 -
<PAGE>
REDEEMING SHARES
----------------
The methods of redemption are described in the section of the
Prospectus entitled "How to Redeem Shares."
Systematic Withdrawal Plan
--------------------------
Shareholders may elect to make systematic withdrawals from a
Trust account of a minimum of $50 on a periodic basis. The amounts paid
each period are obtained by redeeming sufficient shares from an account to
provide the withdrawal amount specified. The Systematic Withdrawal Plan
currently is not available for shares held in an Individual Retirement
Account, Section 403(b) annuity plan, defined contribution plan,
Simplified Employee Pension Plan or other retirement plans, unless the
shareholder establishes to the Manager's satisfaction that withdrawals
from such an account may be made without imposition of a penalty.
Shareholders may change the amount to be paid without charge not more than
once a year by written notice to the Distributor or the Manager.
Redemptions will be made at net asset value determined as of the
close of regular trading on the Exchange on the 10th day of each month or
the 10th day of the last month of each period, whichever is applicable.
Systematic withdrawals of C shares, if made within one year of the date of
purchase, will be charged a CDSL of 1%. If the Exchange is not open for
business on that day, the shares will be redeemed at net asset value
determined as of the close of regular trading on the Exchange on the
preceding Business Day, minus any applicable CDSL for C shares. The check
for the withdrawal payment usually will be mailed on the next business day
following redemption. If a shareholder elects to participate in the
Systematic Withdrawal Plan, dividends and other distributions on all
shares in the account must be reinvested automatically in Trust shares. A
shareholder may terminate the Systematic Withdrawal Plan at any time
without charge or penalty by giving written notice to the Manager or the
Distributor. The Trust and its transfer agent and Distributor also
reserve the right to modify or terminate the Systematic Withdrawal Plan at
any time.
Withdrawal payments are treated as a sale of shares rather than
as a dividend or a capital gain distribution. These payments are taxable
to the extent that the total amount of the payments exceeds the tax basis
of the shares sold. If the periodic withdrawals exceed reinvested
dividends and distributions, the amount of the original investment may be
correspondingly reduced.
Ordinarily, a shareholder should not purchase additional A shares
if maintaining a Systematic Withdrawal Plan of A shares because the
shareholder may incur tax liabilities in connection with such purchases
and withdrawals. The Trust will not knowingly accept purchase orders from
- 19 -
<PAGE>
shareholders for additional A shares if they maintain a Systematic
Withdrawal Plan unless the purchase is equal to at least one year's
scheduled withdrawals. In addition, a shareholder who maintains such a
Plan may not make periodic investments under the Trust's Automatic
Investment Plan.
Telephone Transactions
----------------------
Shareholders may redeem shares by placing a telephone request to
the Trust. The Trust, Manager, Distributor and their Trustees, directors,
officers and employees are not liable for any loss arising out of
telephone instructions they reasonably believe are authentic. In acting
upon telephone instructions, these parties use procedures that are
reasonably designed to ensure that such instructions are genuine, such as
(1) obtaining some or all of the following information: account number,
name(s) and social security number registered to the account, and personal
identification; (2) recording all telephone transactions; and (3) sending
written confirmation of each transaction to the registered owner. If the
Trust, Manager, Distributor and their Trustees, directors, officers and
employees do not follow reasonable procedures, some or all of them may be
liable for any such losses.
Redemptions in Kind
-------------------
The Trust is obligated to redeem shares for any shareholder for
cash during any 90-day period up to $250,000 or 1% of the Trust's net
asset value, whichever is less. Any redemption beyond this amount also
will be in cash unless the Board of Trustees determine that further cash
payments will have a material adverse effect on remaining shareholders.
In such a case, the Trust will pay all or a portion of the remainder of
the redemption in portfolio instruments, valued in the same way as the
Trust determines net asset value. The portfolio instruments will be
selected in a manner that the Board of Trustees deem fair and equitable.
A redemption in kind is not as liquid as a cash redemption. If a
redemption is made in kind, a shareholder receiving portfolio instruments
could receive less than the redemption value thereof and could incur
certain transaction costs.
Receiving Payment
-----------------
If a request for redemption is received by the Trust in good
order (as described in the Prospectus) before the close of regular trading
on the Exchange, the shares will be redeemed at the net asset value per
share determined at such close, minus any applicable CDSL for C shares.
Requests for redemption received by the Trust after the close of regular
trading on the Exchange will be executed at the net asset value determined
- 20 -
<PAGE>
as of such close on the next trading day, minus any applicable CDSL for C
shares.
If shares of the Trust are redeemed by a shareholder through the
Distributor or a participating dealer, the redemption is settled with the
shareholder as an ordinary transaction. If a request for redemption is
received before the close of regular trading on the Exchange, shares will
be redeemed at the net asset value per share determined on that day, minus
any applicable CDSL for C shares. Requests for redemption received after
the close of regular trading on the Exchange will be executed on the next
trading day. Payment for shares redeemed normally will be made by the
Trust to the Distributor or a participating dealer by the third day after
the day the redemption request was made, provided that certificates for
shares have been delivered in proper form for transfer to the Trust or, if
no certificates have been issued, a written request signed by the
shareholder has been provided to the Distributor or a participating dealer
prior to settlement date.
Other supporting legal documents may be required from
corporations or other organizations, fiduciaries or persons other than the
shareholder of record making the request for redemption. Questions
concerning the redemption of Trust shares can be directed to registered
representatives of the Distributor or a participating dealer, or to the
Manager.
EXCHANGE PRIVILEGE
------------------
Shareholders who have held Trust shares for at least 30 days may
exchange some or all of their A shares or C shares for corresponding
classes of shares of any other Heritage Mutual Fund. All exchanges will be
based on the respective net asset values of the Heritage Mutual Funds
involved. An exchange is effected through the redemption of the shares
tendered for exchange and the purchase of shares being acquired at their
respective net asset values as next determined following receipt by the
Heritage Mutual Fund whose shares are being exchanged of (1) proper
instructions and all necessary supporting documents as described in such
fund's Prospectus, or (2) a telephone request for such exchange in
accordance with the procedures set forth in the Prospectus and below.
A shares of Limited Maturity purchased from February 1, 1992
through July 31, 1992, without payment of an initial sales load may be
exchanged into A shares of the Trust without payment of any sales load.
Effective February 1, 1996, Limited Maturity will change its name to
Heritage Income Trust-Intermediate Government Fund. A shares of Limited
Maturity purchased after July 31, 1992 without an initial sales load will
be subject to a sales load when exchanged into A shares of the Trust,
unless those shares were acquired through an exchange of other shares that
were subject to an initial sales load.
- 21 -
<PAGE>
Shares acquired pursuant to a telephone request for exchange will
be held under the same account registration as the shares redeemed through
such exchange. For a discussion of limitation of liability of certain
entities, see "Telephone Transactions" above.
Telephone exchanges can be effected by calling the Manager at
800-421-4184 or by calling a registered representative of the Distributor,
a participating dealer or participating bank ("Representative"). In the
event that a shareholder or his Representative is unable to reach the
Manager by telephone, a telephone exchange can be effected by sending a
telegram to Heritage Asset Management, Inc., attention: Shareholder
Services. Telephone or telegram requests for an exchange received by the
Trust before the close of regular trading on the Exchange will be effected
at the close of regular trading on that day. Requests for an exchange
received after the close of regular trading will be effected on the
Exchange's next trading day. Due to the volume of calls or other unusual
circumstances, telephone exchanges may be difficult to implement during
certain time periods.
TAXES
-----
In order to 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 Trust must distribute annually to
its shareholders at least 90% of its investment company taxable income
(generally consisting of net investment income, net short-term capital
gain and net gains from certain foreign currency transactions)
("Distribution Requirement") and must meet several additional
requirements. These requirements include the following: (1) the Trust
must derive at least 90% of its gross income each taxable year from
dividends, interest, payments with respect to securities loans and gains
from the sale or other disposition of securities or foreign currencies, or
other income (including gains from options or forward contracts) derived
with respect to its business of investing in securities or those
currencies ("Income Requirement"); (2) the Trust must derive less than 30%
of its gross income each taxable year from the sale or other disposition
of securities or options, or foreign currencies or forward contracts
thereon that are not directly related to the Trust's principal business of
investing in securities, that are held for less than three months ("Short-
Short Limitation"); (3) at the close of each quarter of the Trust's
taxable year, at least 50% of the value of its total assets must be
represented by cash and cash items, U.S. Government securities, securities
of other RICs and other securities, with those other securities limited,
in respect of any one issuer, to an amount that does not exceed 5% of the
value of the Trust's total assets and that does not represent more than
10% of the issuer's outstanding voting securities; and (4) at the close of
each quarter of the Trust's taxable year, not more than 25% of the value
of its total assets may be invested in securities (other than U.S.
Government securities or the securities of other RICs) of any one issuer.
- 22 -
<PAGE>
The Trust will be subject to a nondeductible 4% excise tax
("Excise Tax") to the extent it fails to distribute by the end of any
calendar year substantially all of its ordinary income for that year and
its capital gain net income for the one-year period ending on October 31
of that year, plus certain other amounts.
A redemption of Trust shares will result in a taxable gain or
loss to the redeeming shareholder, depending on whether the redemption
proceeds are more or less than the shareholder's adjusted basis for the
redeemed shares (which normally includes any sales load paid on A shares).
An exchange of Trust shares for shares of another Heritage Mutual Fund
generally will have similar tax consequences. However, special rules
apply when a shareholder disposes of Trust shares through a redemption or
exchange within 90 days after purchase thereof and subsequently reacquires
A shares of the Trust or acquires A shares of another Heritage Mutual Fund
without paying a sales load due to the 30-day reinstatement or exchange
privilege. In these cases, any gain on the disposition of the original
Trust A shares will be increased, or loss decreased, by the amount of the
sales load paid when those shares were acquired, and that amount will
increase the adjusted basis of the shares subsequently acquired. In
addition, if Trust shares are purchased (whether pursuant to the
reinstatement privilege or otherwise) within 30 days before or after
redeeming other Trust shares (regardless of class) at a loss, all or a
portion of that loss will not be deductible and will increase the basis of
the newly purchased shares.
If Trust shares are sold at a loss after being held for six
months or less, the loss will be treated as long-term, instead of
short-term, capital loss to the extent of any capital gain distributions
received on those shares. Investors also should be aware that if shares
are purchased shortly before the record date for a dividend or other
distribution, the shareholder will pay full price for the shares and
receive some portion of the price back as a taxable distribution.
Dividends and interest received by the Trust may be subject to
income, withholding or other taxes imposed by foreign countries and U.S.
possessions that would reduce the yield on its securities. Tax
conventions between certain countries and the United States may reduce or
eliminate these foreign taxes, however and many foreign countries do not
impose taxes on capital gains in respect of investments by foreign
investors.
The Trust may invest in the stock of "passive foreign investment
companies" ("PFICs"). A PFIC is a foreign corporation that, in general,
meets either of the following tests: (1) at least 75% of its gross income
is passive or (2) an average of at least 50% of its assets produce, or are
held for the production of, passive income. Under certain circumstances,
the Trust will be subject to Federal income tax on a portion of any
"excess distribution" received on stock it holds in a PFIC or of any gain
on disposition of the stock (collectively "PFIC income"), plus interest
- 23 -
<PAGE>
thereon, even if the Trust distributes the PFIC income as a taxable
dividend to its shareholders. The balance of the PFIC income will be
included in the Trust's investment company taxable income and,
accordingly, will not be taxable to it to the extent that income is
distributed to its shareholders.
If the Trust invests in a PFIC and elects to treat the PFIC as a
"qualified electing fund," then in lieu of the foregoing tax and interest
obligation, the Trust will be required to include in income each year its
pro rata share of the qualified electing fund's annual ordinary earnings
and net capital gain (the excess of net long-term capital gain over net
short-term capital loss) -- which probably would have to be distributed to
satisfy the Distribution Requirement and avoid imposition of the Excise
Tax -- even if those earnings and gain were not received by the Trust. In
most instances it will be very difficult, if not impossible, to make this
election because of certain requirements thereof.
Pursuant to proposed regulations, open-end RICs, such as the
Trust, would be entitled to elect to "mark-to-market" their stock in
certain PFICs. "Marking-to-market," in this context, means recognizing as
gain for each taxable year the excess, as of the end of that year, of the
fair market value of a PFIC's stock over the adjusted basis in that stock
(including mark-to-market gain for each prior year for which an election
was in effect).
The use of hedging strategies, such as purchasing and selling
futures contracts and entering into forward contracts, involves complex
rules that will determine for income tax purposes the character and timing
of recognition of the gains and losses the Trust realizes in connection
therewith. Gains from the disposition of foreign currencies (except
certain gains therefrom that may be excluded by future regulations), and
gains from options and forward contracts derived by the Trust with respect
to its business of investing in securities or foreign currencies, will
qualify as permissible income under the Income Requirement. However,
income from the disposition of options, and from foreign currencies and
forward contracts thereon that are not directly related to the Trust's
principal business of investing in securities, will be subject to the
Short-Short Limitation if they are held for less than three months.
The Trust may acquire zero coupon or other securities issued with
original issue discount ("OID"). As a holder of those securities, the
Trust must include in its income the OID that accrues on them during the
taxable year, even if the Trust receives no corresponding payment on them
during the year. Because the Trust annually must distribute substantially
all of its investment company taxable income, including any OID, to
satisfy the Distribution Requirement and avoid imposition of the Excise
Tax, the Trust may be required in a particular year to distribute as a
dividend an amount that is greater than the total amount of cash it
actually receives. Those distributions will be made from the Trust's cash
- 24 -
<PAGE>
assets or from the proceeds of sales of portfolio securities, if
necessary. The Trust may realize capital gains or losses from those
sales, which would increase or decrease its investment company taxable
income and/or net capital gain. In addition, any such gains may be
realized on the disposition of securities held for less than three months.
Because of the Short-Short Limitation, any such gains would reduce the
Trust's ability to sell other securities, or certain options or forward
contracts, held for less than three months that it might wish to sell in
the ordinary course of its portfolio management.
TRUST INFORMATION
-----------------
Management of the Trust
-----------------------
Trustees and Officers. Trustees and officers are listed below
with their addresses, principal occupations and present positions,
including any affiliation with Raymond James Financial, Inc. ("RJF"), RJA,
the Manager and Eagle.
Position with Principal Occupation
Name the Trust During Past Five Years
---- ------------- ----------------------
Thomas A. James* Trustee Chairman of the Board since
880 Carillon Parkway 1986 and Chief Executive
St. Petersburg, FL Officer since 1969; Chairman
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
880 Carillon Parkway 1995 to present, Chief
St. Petersburg, FL Operating Officer, July 1988
33716 to present, Executive Vice
President, July 1988-December
1993; President of Heritage
Mutual Funds, June 1985-
November 1991.
Donald W. Burton Trustee President of South Atlantic
614 W. Bay Street Capital Corporation (venture
Suite 200 capital) since October 1981.
Tampa, FL 33606
- 25 -
<PAGE>
Position with Principal Occupation
Name the Trust During Past Five Years
---- ------------- ----------------------
C. Andrew Graham Trustee Vice President of Financial
Financial Designs, Designs Ltd. since 1992;
Ltd. Executive Vice President of
1775 Sherman Street the Madison Group, Inc.,
Suite 1900 October 1991-1992; Principal
Denver, CO 80203 of First Denver Financial
Corporation (investment
banking) since 1987.
David M. Phillips Trustee Chairman and Chief Executive
World Trade Center Officer of CCC Information
Chicago Services, Inc. since 1994 and
444 Merchandise of InfoVest Corporation
Mart (information services to the
Chicago, IL 60654 insurance and auto industries
and consumer households) since
October 1982.
Eric Stattin Trustee Litigation Consultant/Expert
2587 Fairway Village Witness and private investor
Drive since February 1988.
Park City, UT 84060
James L. Pappas Trustee Dean of College of Business
University of South Administration since August
Florida 1987 and Lykes Professor of
College of Business Banking and Finance since
Administration August 1986 at University of
Tampa, FL 33620 South Florida.
Stephen G. Hill President Chief Executive Officer and
880 Carillon Parkway President of the Manager since
St. Petersburg, FL April 1989 and Director since
33716 December 31, 1994.
Donald H. Glassman Treasurer Treasurer of the Manager since
880 Carillon Parkway May 1989; Treasurer of
St. Petersburg, FL Heritage Mutual Funds since
33716 May 1989.
Clifford J. Alexander Secretary Partner, Kirkpatrick &
1800 Massachusetts Lockhart LLP (law firm).
Ave., N.W.
Washington, DC 20036
- 26 -
<PAGE>
Position with Principal Occupation
Name the Trust During Past Five Years
---- ------------- ----------------------
Patricia Schneider Assistant Compliance Administrator of
880 Carillon Parkway Secretary the Manager.
St. Petersburg, FL
33716
Robert J. Zutz Assistant Partner, Kirkpatrick &
1800 Massachusetts Secretary Lockhart LLP (law firm).
Ave., N.W.
Washington, DC 20036
* These Trustees are "interested persons" as defined in section
2(a)(19) of the 1940 Act.
The Trustees and officers of the Trust, as a group, own less than
1% of the Trust's shares outstanding. The Trust's Declaration of Trust
provides that the Trustees will not be liable for errors of judgment or
mistakes of fact or law. However, they are not protected against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of their office.
The Trust currently pays Trustees who are not "interested
persons" of the Trust $1,333.33 annually and $333.33 per meeting of the
Board of Trustees. Trustees also are reimbursed for any expenses incurred
in attending meetings. Because the Manager performs substantially all of
the services necessary for the operation of the Trust, the Trust requires
no employees. No officer, director or employee of the Manager receives
any compensation from the Trust for acting as a director or officer. The
following table shows the compensation earned by each Trustee who is not
an "interested person of the Trust" for the fiscal year ended September
30, 1995.
- 27 -
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
Pension or Total Compensation
Aggregate Retirement From the Fund and
Compensation Benefits Accrued Estimated the Heritage Family
Name of Person, From the as Part of the Annual Benefits of Trust Paid
Position Trust Trust's Expenses Upon Retirement to Trustees
-------------- --------- --------------- --------------- ----------------
<S> <C> <C> <C> <C>
Donald W. Burton, $2,333 $0 $0 $14,000
Trustee
C. Andrew Graham, $2,667 $0 $0 $16,000
Trustee
David M. Phillips, $2,333 $0 $0 $14,000
Trustee
Eric Stattin, $2,667 $0 $0 $16,000
Trustee
James L. Pappas, $2,667 $0 $0 $16,000
Trustee
Richard K. Riess, $0 $0 $0 $0
Trustee
Thomas A. James, $0 $0 $0 $0
Trustee
</TABLE>
Investment Adviser and Administrator; Subadviser
------------------------------------------------
The Trust's investment adviser and administrator, Heritage Asset
Management, Inc., was organized as a Florida corporation in 1985. All the
capital stock of the Manager is owned by RJF. RJF is a holding company
that, through its subsidiaries, is engaged primarily in providing cus-
tomers with a wide variety of financial services in connection with
securities, limited partnerships, options, investment banking and related
fields.
- 28 -
<PAGE>
Under an Investment Advisory and Administration Agreement
("Advisory Agreement") dated October 31, 1986, between the Trust and the
Manager and subject to the control and direction of the Board of Trustees,
the Manager is responsible for reviewing and establishing investment
policies for the Trust as well as administering the Trust's noninvestment
affairs. Under a Subadvisory Agreement, Eagle Asset Management, Inc.,
subject to direction by the Manager and the Board of Trustees, provides
investment advice and portfolio management services to the Trust for a fee
payable by the Manager.
The Manager also is obligated to furnish the Trust with office
space, administrative, and certain other services as well as executive and
other personnel necessary for the operation of the Trust. The Manager and
its affiliates also pay all the compensation of Trustees of the Trust who
are employees of the Manager and its affiliates. The Trust pays all its
other expenses that are not assumed by the Manager. The Trust also is
liable for such nonrecurring expenses as may arise, including litigation
to which the Trust may be a party. The Trust also may have an obligation
to indemnify its Trustees and officers with respect to any such
litigation.
The Advisory Agreement and the Subadvisory Agreement each were
approved by the Board of Trustees of the Trust (including all of the
Trustees who are not "interested persons" of the Manager or Subadviser, as
defined under the 1940 Act) and by the shareholders of the Trust in
compliance with the 1940 Act. Each Agreement will continue in force for
only so long as 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 Manager,
Subadviser or the Trust, and by (2) the majority vote of either the full
Board of Trustees or the vote of a majority of the outstanding shares of
the Trust. The Advisory and Subadvisory Agreements each automatically
terminates on assignment, and each is terminable on not more than 60 days'
written notice by the Trust to either party. In addition, the Advisory
Agreement may be terminated on not less than 60 days' written notice by
the Manager to the Trust and the Subadvisory Agreement may be terminated
on not less than 60 days' written notice by the Manager or 90 days'
written notice by the Subadviser. Under the terms of the Advisory
Agreement, the Manager automatically becomes responsible for the
obligations of the Subadviser upon termination of the Subadvisory
Agreement. In the event the Manager ceases to be the Manager of the Trust
or the Distributor ceases to be principal distributor of Trust shares, the
right of the Trust to use the identifying name of "Heritage" may be
withdrawn.
The Manager and Subadviser shall not be liable to the Trust or
any shareholder for anything done or omitted by them, except acts or
omissions involving willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties imposed upon them by their agreements
- 29 -
<PAGE>
with the Trust or for any losses that may be sustained in the purchase,
holding or sale of any security.
All of the officers of the Trust except for Messrs. Alexander and
Zutz are officers or directors of the Manager. These relationships are
described under "Management of the Trust."
Advisory and Administration Fee. The annual investment advisory
fee paid monthly by the Trust to the Manager is based on the Trust's
average daily net assets as listed in the Prospectus.
The Manager has voluntarily agreed to waive management fees to
the extent that expenses attributable to A shares exceed 1.65% of the
average daily net assets or to the extent that expenses attributable to C
shares exceed 2.4% of average daily net assets. To the extent that the
Manager waives its fees for one class, it will waive its fees for the
other class on a proportionate basis. The Manager has entered into an
agreement with the Subadviser to provide investment advice and portfolio
management services to the Trust for a fee paid by the Manager equal to
50% of the fees payable to the Manager by the Trust, without regard to any
reduction in fees actually paid to the Manager as a result of expense
limitations. For the three fiscal year ended September 30, 1993, the
Manager earned $271,212 (inclusive of recapture of approximately $38,000
of fees waived in the prior two years). For the fiscal years ended
September 30, 1994 and 1995, the Manager earned approximately $252,000 and
$242,000, respectively. For the three fiscal years ended September 30,
1993, 1994 and 1995, the Manager paid the Subadviser approximately
$117,000, $126,000 and $121,000, respectively.
Class-Specific Expenses. The Trust may determine to allocate
certain of its expenses (in addition to distribution fees) to the specific
classes of the Trust's shares to which those expenses are attributable.
State Expense Limitations. Certain states have established
expense limitations for investment companies whose shares are registered
for sale in that state. If the Trust's operating expenses (including the
investment advisory fee, but not including distribution fees, brokerage
commissions, interest, taxes and extraordinary expenses) exceed state
expense limits, the Manager will reimburse the Trust for its expense over
the limitation. If the Trust's monthly projected operating expenses
exceed applicable state expense limitations, the investment advisory fee
paid will be reduced on a monthly basis by the amount of the excess,
unless waivers of the expense limitations are obtained by the Trust. If
applicable state expense limitations are exceeded, the amount to be
reimbursed by the Manager will be limited to the amount of the investment
advisory fee and the Trust may have to cease offering its shares for sale
in such states until the expense ratio declines. Any fees waived by the
Manager can be recovered by it from the Trust when such recovery would not
cause the Trust to exceed its expense limits. The most restrictive
current state expense limit is 2.5% of the Trust's first $30 million in
- 30 -
<PAGE>
average net assets, 2.0% of the next $70 million in average net assets and
1.5% of all excess average net assets.
Brokerage Practices
-------------------
The Trust may purchase and sell securities without regard to the
length of time the securities have been held. Thus, the turnover rate may
vary greatly from year to year or during periods within a year. The
Trust's portfolio turnover rate is computed by dividing the lesser of
purchases or sales of securities for the period by the average value of
portfolio securities for that period. The Trust's annualized portfolio
turnover rate for the fiscal years ended September 30, 1993, 1994 and
1995, was approximately 130%, 99% and 42%, respectively.
The Subadviser is responsible for the execution of the Trust's
portfolio transactions and must seek the most favorable price and
execution for such transactions. Best execution, however, does not mean
that the Trust necessarily will be paying the lowest commission or spread
available. Rather, the Trust also will take into account such factors as
size of the order, difficulty of execution, efficiency of the executing
broker's facilities, and any risk assumed by the executing broker.
It is a common practice in the investment advisory business for
advisers of investment companies and other institutional investors to
receive research, statistical and quotation services from broker-dealers
who execute portfolio transactions for the clients of such advisers.
Consistent with the policy of most favorable price and execution, the
Subadviser may give consideration to research, statistical and other
services furnished by brokers or dealers. In addition, the 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 Subadviser determines in good faith that such
commission is reasonable in relation to the value of brokerage and
research services provided. Such research and analysis may be useful to
the Subadviser in connection with services to clients other than the
Trust.
The Trust generally uses the Distributor as broker for agency
transactions in listed and over-the-counter securities at commission rates
and under circumstances consistent with the policy of best execution.
Commissions paid to the Distributor will not exceed "usual and customary
brokerage commissions." Rule l7e-1 under the 1940 Act defines "usual and
customary" commissions to include amounts that are "reasonable and fair
compared to the commission, fee or other remuneration received or to be
received by other brokers in connection with comparable transactions
involving similar securities being purchased or sold on a securities
exchange during a comparable period of time."
- 31 -
<PAGE>
The Subadviser also may select other brokers to execute portfolio
transactions. In the over-the-counter market, the Trust generally deals
with primary market-makers unless a more favorable execution can otherwise
be obtained.
Aggregate brokerage commissions paid by the Trust for the three
fiscal years ended September 30, 1993, 1994 and 1995 amounted to $87,636,
$68,341 and $53,748, respectively. Those commissions were paid on
brokerage transactions worth $42,550,375, $41,920,076 and $28,057,262,
respectively. Aggregate brokerage commissions paid by the Trust to the
Distributor amounted to $42,426, or 48.4%, $9,741, or 14.25%, and $7,852,
or 14.6%, respectively, of the aggregate commissions paid. These
commissions were paid on aggregate brokerage transactions of $20,591,477,
or 48.4%, $3,733,597, or 8.91%, and $1,830,625, or 6.5%, respectively, of
the total aggregate brokerage transactions.
The Trust may not buy securities from, or sell securities to, the
Distributor as principal. However, the Board of Trustees has adopted
procedures in conformity with Rule 10f-3 under the 1940 Act whereby the
Trust may purchase securities that are offered in underwritings in which
the Distributor is a participant. The Board of Trustees will consider the
possibilities of seeking to recapture for the benefit of the Trust
expenses of certain portfolio transactions, such as underwriting
commissions and tender offer solicitation fees, by conducting such
portfolio transactions through affiliated entities, including the
Distributor, but only to the extent such recapture would be permissible
under applicable regulations, including the rules of the National
Association of Securities Dealers, Inc. and other self-regulatory
organizations.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934,
as amended, the Trust expressly consented to the Distributor executing
transactions on an exchange on the Trust's behalf.
Distribution of Shares
----------------------
The Distributor and Representative with whom the Distributor has
entered into dealer agreements offer shares of the Trust as agents on a
best efforts basis and are not obligated to sell any specific amount of
shares. In this connection, the Distributor makes distribution and
service payments to Representatives in connection with the sale of C
shares (in the case of A shares, Representatives are compensated based on
the amount of the initial sales load). Pursuant to its Distribution
Agreement with the Trust with respect to A shares and C shares, the
Distributor bears the cost of making information about the Trust available
through advertising, sales literature and other means, the cost of
printing and mailing prospectuses to persons other than shareholders, and
salaries and other expenses relating to selling efforts. The Distributor
also pays service fees to Representatives for providing personal services
- 32 -
<PAGE>
to Class A and Class C shareholders and for maintaining shareholder
accounts. The Trust pays the cost of registering and qualifying its
shares under state and federal securities laws and typesetting of its
prospectuses and printing and distributing prospectuses to existing
shareholders.
As compensation for the services provided and expenses borne by
the Distributor pursuant to the Distribution Agreement with respect to A
shares, the Trust pays the Distributor the sales load described in the
prospectus and a Rule 12b-1 fee in accordance with the Class A Plan
described below. This fee is accrued daily and paid monthly, and
currently is equal on an annual basis to .25% of average daily net assets.
For the fiscal year ended September 30, 1995, the Distributor received A
share Rule 12b-1 fees in the amount of $80,562.
As compensation for the services provided and expenses borne by
the Distributor pursuant to the Distribution Agreement with respect to C
shares, the Trust pays the Distributor a Rule 12b-1 fee and a shareholder
servicing fee in accordance with the Class C Plan described below. The
distribution fee is accrued daily and paid monthly, and currently is equal
on an annual basis to .75% of average daily net assets. The service fee
is accrued daily and paid monthly, and currently is equal on an annual
basis to .25% of average daily net assets. For the fiscal period April 3,
1995 (commencement of offering of C shares) to September 30, 1995, the
Distributor received C share Rule 12b-1 fees amounting to $647.
In reporting amounts expended under the Plans to the Board of
Trustees, the Distributor will allocate expenses attributable to the sale
of A shares and C shares to the applicable class based on the ratio of
sales of shares of that class to the sales of all Trust shares. The fees
paid by one class of shares will not be used to subsidize the sale of any
other class of shares.
The Trust has adopted a Class A Distribution Plan (the "Class A
Plan") which, among other things, permits it to pay the Distributor the
above-described fee out of its net assets to finance activity that is
intended to result in the sale and retention of A shares. As required by
Rule 12b-1 under the 1940 Act, the Class A Plan was approved by the Board
of Trustees, including a majority of the Trustees who are not interested
persons of the Trust (as defined in the 1940 Act) and who have no direct
or indirect financial interest in the operation of the Plan or the
Distribution Agreement (the "Independent Trustees") after determining that
there is a reasonable likelihood that the Trust and its Class A
shareholders will benefit from the Class A Plan.
The Trust also has adopted a Class C Distribution Plan (the
"Class C Plan") which, among other things, permits it to pay the
Distributor the above-described fee out of its net assets to finance
activity that is intended to result in the sale and retention of C shares.
The Distributor, on C shares, may retain the first 12 months distribution
- 33 -
<PAGE>
fee for reimbursement of amounts paid to the broker-dealer at the time of
purchase. The Class C Plan was approved by the Board of Trustees,
including a majority of the Independent Trustees after determining that
there is a reasonable likelihood that the Trust and its Class C
shareholders will benefit from the Class C Plan.
The Class A Plan and the Class C Plan each may be terminated by
vote of a majority of the Independent Trustees, or by vote of a majority
of the outstanding voting securities of the Trust. The Board of Trustees
review quarterly a written report of Plan costs and the purposes for which
such costs have been incurred. A Plan may be amended by vote of the Board
of Trustees, including a majority of the Independent Trustees cast in
person at a meeting called for such purpose. Any change in a Plan that
would materially increase the distribution cost to a class requires
approval of that class of shareholder.
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
the entire Board of Trustees cast in person at a meeting called for that
purpose.
For the three fiscal years ended September 30, 1993, 1994 and
1995, the Distributor received $182,370, $92,322 and $27,055,
respectively, as compensation for the sale of A shares, of which it
retained $27,698, $13,334 and $3,490, respectively.
Administration of the Trust
---------------------------
Administrative, Fund Accounting and Transfer Agent Services. The
Manager, subject to the control of the Board of Trustees, will manage,
supervise and conduct the administrative and business affairs of the
Trust; furnish office space and equipment; oversee the activities of the
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 Trust.
The Manager also is the fund accountant and transfer and dividend
disbursing agent for the Trust. The Trust pays the Manager the Manager's
- 34 -
<PAGE>
cost plus ten percent for its services as fund accountant and transfer and
dividend disbursing agent. For the three fiscal years ended September 30,
1993, 1994 and 1995, the Manager earned $26,092, $29,355 and $28,570,
respectively, from the Trust for its services as transfer agent. For the
period March 1, 1994 (commencement of the Manager's engagement as fund
accountant) to September 30, 1994, and the fiscal year ended September 30,
1995, the Manager earned $11,969 and $28,932, respectively, from the Trust
for its services as fund accountant.
Custodian. State Street Bank and Trust Company, P.0. Box 1912,
Boston, Massachusetts 02105, serves as custodian of the Trust's assets.
Legal Counsel. Kirkpatrick & Lockhart LLP of 1800 Massachusetts
Ave., 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 Trust. The Financial Statements and Financial
Highlights of the Trust which appear in this Statement of Additional
Information have been audited by Coopers & Lybrand L.L.P. and included
herein in reliance upon the report of said firm of accountants, which is
given upon their authority as experts in accounting and auditing.
Potential Liability
-------------------
Under certain circumstances, shareholders may be held personally
liable as partners under Massachusetts law for obligations of the Trust.
To protect its shareholders, the Trust has filed legal documents with
Massachusetts that expressly disclaim the liability of its shareholders
for acts or obligations of the Trust. These documents require notice of
this disclaimer to be given in each agreement, obligation or instrument
the Trust or its Trustees enter into or sign. In the unlikely event a
shareholder is held personally liable for the Trust's obligations, the
Trust is required to use its property to protect or compensate the share-
holder. On request, the Trust will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Trust.
Therefore, financial loss resulting from liability as a shareholder will
occur only if the Trust itself cannot meet its obligations to indemnify
shareholders and pay judgments against them.
- 35 -
<PAGE>
APPENDIX
CORPORATE DEBT RATINGS
----------------------
The rating services' description of corporate bond ratings in which the
Trust may invest are:
Description of Moody's Investor's Service, Inc. Corporate Debt Ratings:
-----------------------------------------------------------------------
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and generally are 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.
Aa - Bonds that are rated Aa are judged to be of high quality by all stan-
dards. Together with the Aaa group, they comprise what generally are
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 risks appear
somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment attributes
and are to be considered as upper medium-grade obligations. Factors
giving security to principal and interest are considered adequate, but
elements may be present that suggest a susceptibility to impairment
sometime in the future.
Baa -- Bonds that are rated Baa are considered as medium-grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and in fact has speculative
characteristics as well.
Ba -- Bonds that are rated Ba are judged to have speculative elements;
their future cannot be considered as well assured. Often the protection
of interest and principal payments may be very moderate and thereby not
well safeguarded during both good and bad times over the future.
Uncertainty of position characterizes bonds in this class.
B -- Bonds that are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
A-1
<PAGE>
Description of Standard & Poor's Corporate Debt Ratings:
--------------------------------------------------------
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated catego-
ries.
BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than for debt in
higher rated categories.
BB and B -- Debt rated BB and B is regarded, on balance, as somewhat
speculative with respect to the issuer's capacity to pay interest and
repay principal in accordance with the terms of the obligation. While
such debt likely will have some quality and protective characteristics,
these are outweighed by large uncertainties or major risk exposures to
adverse conditions. Debt rated "BB" has less near-term vulnerability to
default than other speculative issues. However, it faces major ongoing
uncertainties or exposure to adverse business, financial, or economic
conditions that could lead to inadequate capacity to meet timely interest
and principal payments. The "BB" rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied "BBB"
rating. Debt rated "B" has a greater vulnerability to default but
currently has the capacity to meet interest payments and principal
repayments. Adverse business, financial, or economic conditions likely
will impair capacity or willingness to pay interest and repay principal.
The "B" rating category also is used for debt subordinated to senior debt
that is assigned an actual or implied "BB" or "BB-" rating.
A-2
<PAGE>
COMMERCIAL PAPER RATINGS
------------------------
The rating services' descriptions of commercial paper ratings in which the
Trust may invest are:
Description of Moody's Investors Service, Inc.
----------------------------------------------
Prime-1. Issuers (or supporting institutions) rated Prime-1 (P-1) have a
superior ability for repayment of senior short-term debt obligations. P-1
repayment ability often will be evidenced by many of the following
characteristics: leading market positions in well-established industries;
high rates of return on funds employed; conservative capitalization
structure with moderate reliance on debt and ample asset protection; broad
margins in earnings coverage of fixed financial charges and high internal
cash generation; well-established access to a range of financial markets
and assured sources of alternative liquidity.
Prime-2. Issuers (or supporting institutions) rated Prime-2 (P-2) have a
strong ability for repayment of senior short-term debt obligations. This
normally will be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound, may
be more subject to variation. Capitalization characteristics, while still
appropriate, may be affected more by external conditions. Ample
alternative liquidity is maintained.
Description of Standard & Poor's Commercial Paper Ratings:
----------------------------------------------------------
A-1. This designation indicates that the degree of safety regarding
timely payment is very strong. Those issues determined to possess
extremely strong characteristics are denoted with a plus sign (+)
designation.
A-2. Capacity for timely payment of issues with this designation is
satisfactory. However, the relative degree of safety is not as high as
for issues designated "A-1."
A-3
<PAGE>
<PAGE> 1
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Income-Growth Trust:
We have audited the accompanying statement of assets and liabilities of
Heritage Income-Growth Trust, including the investment portfolio, as of
September 30, 1995, and the related statement of operations for the year then
ended, the statements of changes in net assets for each of the two years in the
period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Heritage Income-Growth Trust as of September 30, 1995, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended, and the financial highlights for each of
the periods indicated therein, in conformity with generally accepted accounting
principles.
/s/Coopers & Lybrand
Boston, Massachusetts
November 27, 1995
15
<PAGE> 2
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<C> <S> <C>
REPURCHASE AGREEMENT--7.8%(A)
Repurchase Agreement with State Street Bank and Trust Company, dated September 29, 1995 @ 6.10%, to be repurchased
at $2,716,380 on October 2, 1995, (collateralized by $2,125,000 United States Treasury Bonds, 10.375% due November
15, 2009 with a market value of $2,794,577, including interest) (cost $2,715,000)................................... $ 2,715,000
-----------
SHARES
COMMON STOCKS--61.0%(A)
- ---------------------
ADVERTISING/COMMUNICATIONS--1.9%
----------------------------
10,000 Omnicom Group, Inc.............................................................................. 651,250
-----------
BANKING--4.8%
-----------
4,000 Capital One Financial Corporation............................................................... 117,500
10,000 Corestates Financial Corporation................................................................ 366,250
15,000 Mellon Bank Corporation(d)...................................................................... 669,375
6,000 NationsBank Corporation......................................................................... 403,500
4,000 Signet Banking Corporation...................................................................... 105,000
-----------
1,661,625
-----------
CONGLOMERATES/DIVERSIFIED--2.7%
-------------------------
15,000 Chemed Corporation.............................................................................. 530,625
7,000 Harsco Corporation.............................................................................. 389,375
-----------
920,000
-----------
COSMETICS/TOILETRIES--2.7%
--------------------
10,000 Gillette Company................................................................................ 476,250
6,000 Procter & Gamble Company........................................................................ 462,000
-----------
938,250
-----------
DATA PROCESSING--1.2%
-----------------
6,000 Automatic Data Processing, Inc.................................................................. 408,750
-----------
ELECTRONICS/ELECTRIC--3.4%
--------------------
10,000 General Electric Company........................................................................ 637,500
10,000 Reuters Holdings, PLC, ADR...................................................................... 528,750
-----------
1,166,250
-----------
FILMED ENTERTAINMENT--0.6%
---------------------
10,000 Carmike Cinemas, Inc., Class "A"*............................................................... 220,000
-----------
FINANCE--2.0%
-----------
10,000 American Express Company........................................................................ 443,750
2,500 Federal National Mortgage Association........................................................... 258,750
-----------
702,500
-----------
GRAPHIC ARTS--1.1%
--------------
10,000 R. R. Donnelley & Sons Company.................................................................. 390,000
-----------
HOTELS/MOTELS/INNS--0.8%
--------------------
7,500 Marriott International, Inc..................................................................... 280,312
-----------
INSURANCE--2.6%
------------
5,000 Marsh & Mclennan Companies, Inc................................................................. 439,375
6,500 MBIA, Inc....................................................................................... 458,250
-----------
897,625
-----------
LEISURE/AMUSEMENT--0.9%
--------------------
5,000 Eastman Kodak Company(d)........................................................................ 296,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 3
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
SEPTEMBER 30, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------------- -----------
<C> <S> <C>
OFFICE EQUIPMENT--1.6%
------------------
10,000 Wallace Computer Services, Inc.................................................................. $ 570,000
-----------
OIL & GAS--5.2%
------------
6,000 Amoco Corporation............................................................................... 384,750
10,000 Chevron Corporation............................................................................. 486,250
3,000 Mobil Corporation............................................................................... 298,875
10,000 Petroleum Geo-Services, ADR*.................................................................... 245,000
6,000 Schlumberger Ltd................................................................................ 391,500
-----------
1,806,375
-----------
PHARMACEUTICAL--4.4%
----------------
6,000 Merck & Company, Inc............................................................................ 336,000
10,000 Schering-Plough Corporation..................................................................... 515,000
6,000 Smithkline Beecham, PLC, ADR.................................................................... 303,750
4,000 Warner-Lambert Corporation(d)................................................................... 381,000
-----------
1,535,750
-----------
PUBLISHING--2.5%
-------------
4,000 McGraw-Hill Companies, Inc...................................................................... 327,000
8,000 Tribune Company................................................................................. 531,000
-----------
858,000
-----------
REAL ESTATE/LAND DEVELOPMENT--0.6%
----------------------------
10,000 The Rouse Company............................................................................... 218,750
-----------
REAL ESTATE INVESTMENT TRUSTS (REIT)--8.5%
----------------------------------
22,000 Allied Capital Commercial Corporation........................................................... 398,750
10,000 Columbus Realty Trust........................................................................... 190,000
15,000 Debartolo Realty Corporation.................................................................... 210,000
17,500 Security Capital Industrial Trust............................................................... 284,375
10,000 Simon Property Group, Inc....................................................................... 253,750
10,000 Sovran Self Storage, Inc.*...................................................................... 248,750
10,000 Evans Withycombe Residential, Inc. ............................................................. 202,500
10,000 Health Care Property Investors, Inc. ........................................................... 338,750
12,000 Alexander Haagen Properties, Inc. .............................................................. 139,500
5,000 Duke Realty Investments, Inc. .................................................................. 155,625
10,000 Patriot American Hospitality, Inc.*............................................................. 256,250
12,500 Storage Trust Realty............................................................................ 254,688
-----------
2,932,938
-----------
SERVICES--0.5%
-----------
5,000 H&R Block, Inc.(d).............................................................................. 190,000
-----------
TELECOMMUNICATIONS--6.1%
--------------------
12,000 ALLTEL Corporation.............................................................................. 358,500
15,000 AT&T Corporation................................................................................ 986,250
10,000 GTE Corporation................................................................................. 392,500
9,000 Vodafone Group, PLC, Sponsored ADR.............................................................. 369,000
-----------
2,106,250
-----------
TEXTILES--0.4%
-----------
8,000 Interface, Inc., Class "A"...................................................................... 137,000
-----------
TOBACCO--1.8%
-----------
7,500 Philip Morris Companies, Inc.................................................................... 626,250
-----------
UTILITIES-DIVERSIFIED--0.6%
-------------------
12,500 Long Island Lighting Company.................................................................... 215,625
-----------
UTILITIES-GAS--3.3%
--------------
25,000 UGI Corporation................................................................................. 515,625
10,000 Wicor, Inc...................................................................................... 302,500
8,000 Williams Companies, Inc......................................................................... 312,000
-----------
1,130,125
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
SEPTEMBER 30, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
-----------
<C> <S> <C>
UTILITIES-WATER--0.7%
----------------
8,000 American Water Works Company, Inc............................................................... $ 245,000
-----------
Total common stocks (cost $16,877,993).............................................................................. 21,104,875
-----------
CONVERTIBLE PREFERRED STOCKS--9.4%(A)
- -----------------------------
AUTO/TRUCK MANUFACTURERS--0.9%
-------------------------
3,000 Ford Motor Company, Series "A", $4.20........................................................... 307,125
-----------
CHEMICALS--0.4%
------------
4,000 LSB Industries, Inc., Series 2, $3.25........................................................... 136,000
-----------
CONTAINERS--0.7%
-------------
4,000 Sonoco Products Company, Series "A", $2.25...................................................... 241,000
-----------
DATA PROCESSING--1.9%
-----------------
10,000 General Motors Corporation, Series "C", $6.50................................................... 648,750
-----------
FILMED ENTERTAINMENT--1.4%
---------------------
15,000 AMC Entertainment, Inc., Series "B", $1.75...................................................... 495,000
-----------
FINANCE--1.1%
-----------
5,000 Travelers Group, Inc., $2.75.................................................................... 370,000
-----------
FOOD--1.2%
---------
10,000 Conagra, Inc., Series "E", $1.69................................................................ 402,500
-----------
GLASS/PRODUCTS--0.7%
----------------
5,000 Corning, Inc., Series "M", 6.0%, MIPS........................................................... 233,750
-----------
REAL ESTATE--0.6%
--------------
4,000 The Rouse Company, Series "A", 6.5%............................................................. 219,500
-----------
TOBACCO--0.6%
-----------
30,000 RJR Nabisco Holdings Corporation, Series "C", PERCS, $.6012..................................... 202,500
-----------
Total convertible preferred stocks (cost $2,816,938)................................................................ 3,256,125
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT DATE
- ---------------- --------
<C> <S> <C> <C>
CORPORATE BONDS--20.3%(A)
AUTO PARTS/EQUIPMENT--0.9%
----------------------
$350,000 Venture Holdings Trust, 9.75%....................................................... 04/01/04 301,000
-----------
BUILDING--1.4%
-----------
300,000 Cemex S.A. de C.V., 4.25%(c)........................................................ 11/01/97 250,500
225,000 Continental Homes Holdings Corporation, 12%......................................... 08/01/99 235,125
-----------
485,625
-----------
CONGLOMERATES/DIVERSIFIED--2.8%
-------------------------
200,000 Thermo Electron Corporation, 4.625%(c).............................................. 08/01/97 434,000
350,000 Thermo Electron Corporation, 5%(c).................................................. 04/15/01 528,500
-----------
962,500
-----------
DATA PROCESSING--1.7%
-----------------
400,000 First Financial Management Corporation, 5%(c)....................................... 12/15/99 600,552
-----------
FOOD SERVING--0.5%
---------------
200,000 TPI Enterprises, Inc., 8.25%(c)..................................................... 07/15/02 184,000
-----------
HEALTH CARE CENTERS--2.2%
--------------------
300,000 Genesis Health Ventures, Inc., 6%(c)................................................ 11/30/03 469,500
250,000 OrNda HealthCorp, 12.25%............................................................ 05/15/02 277,500
-----------
747,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
SEPTEMBER 30, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
- ---------------- -------- -----------
<C> <S> <C> <C>
HOTELS/MOTELS/INNS--0.8%
--------------------
$250,000 Prime Hospitality Corporation, 7%(c)................................................ 04/15/02 $ 267,500
-----------
LEISURE/AMUSEMENT--1.2%
--------------------
300,000 Carnival Corporation, 4.5%(c)....................................................... 07/01/97 424,320
-----------
MANUFACTURING/DISTRIBUTIONS--0.6%
---------------------------
200,000 Interface, Inc., 8%(c).............................................................. 09/15/13 217,790
-----------
MEDICAL EQUIPMENT/SUPPLY--0.6%
--------------------------
250,000 Amsco International Corporation, 4.5% to 10/15/95, 6.5% to maturity(c).............. 10/15/02 237,500
-----------
POLLUTION CONTROL--1.0%
------------------
300,000 Laidlaw, Inc., 6%(c)................................................................ 01/15/99 351,000
-----------
PUBLISHING--1.6%
-------------
800,000 Time Warner, Inc., Zero Coupon Bond, 5%(c)(e)....................................... 06/22/13 324,096
250,000 Webcraft Technologies, 9.375%....................................................... 02/15/02 232,500
-----------
556,596
-----------
REAL ESTATE INVESTMENT TRUSTS (REIT)--1.9%
---------------------------------
250,000 Alexander Haagen Properties, Inc., 7.5%(c).......................................... 01/15/01 208,125
300,000 Developers Diversified Realty Corporation, 7%(c).................................... 08/15/99 293,874
150,000 Liberty Property Trust, 8%(c)....................................................... 07/01/01 156,282
-----------
658,281
-----------
RETAIL--0.8%
---------
300,000 Big 5 Holdings, 13.625%............................................................. 09/15/02 294,000
-----------
SERVICES--2.2%
-----------
400,000 Service Corporation International, 6.5%(c).......................................... 09/01/01 756,580
-----------
Total corporate bonds (cost $5,991,502).................................................................. 7,044,244
-----------
DEBT EXCHANGEABLE FOR COMMON STOCK (DECS)--1.9%(A)
- --------------------------------------------
SHARES
DATA PROCESSING
------------
12,500 American Express Company, 6.25%..................................................... 10/15/96 650,000
-----------
Total DECS (cost $459,375)............................................................................... 650,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $28,860,808)(B), 100.4%(A).............................................. 34,770,244
OTHER ASSETS AND LIABILITIES, INCLUDING COVERED CALL OPTIONS WRITTEN, (0.4%)(A).......................... (148,266)
-----------
NET ASSETS, 100.0%....................................................................................... $34,621,978
============
</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 $5,909,436, which
consists of aggregate gross unrealized appreciation for all securities in
which there is an excess of market value over tax cost of $6,227,726 and
aggregate gross unrealized depreciation for all securities in which there
is an excess of tax cost over market value of $318,290.
(c) Convertible security.
(d) A portion of these shares were held by the custodian in connection with
covered call options written.
(e) Yield to maturity (unaudited).
ADR-American Depository Receipt
MIPS-Monthly Income Preferred Stock
PERCS-Preferred Equity Redemption Cumulative Stock
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
COVERED CALL OPTIONS WRITTEN
<TABLE>
<CAPTION>
SHARES
SUBJECT MARKET
TO CALL VALUE
------- --------
<S> <C> <C>
Eastman Kodak Company, January 1996 @ $65...................................................... 2,500 $ 3,125
H&R Block, Inc., October 1995 @ $40............................................................ 2,000 1,125
Mellon Bank Corporation, October 1995 @ $45.................................................... 5,000 7,188
Warner-Lambert Company, January 1996 @ $90..................................................... 2,000 18,750
--------
Total liability for covered call options written (premiums received $34,477)................... $ 30,188(a)
========
</TABLE>
- ---------------
(a) At September 30, 1995 Fund securities valued @ $637,750 were held 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> 7
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
STATEMENT OF ASSETS AND LIABILITIES
SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
- -----
Investments, at market value (identified cost $26,145,808) (Note 1)...................... $32,055,244
Repurchase agreement (identified cost $2,715,000) (Note 1)............................... 2,715,000
Cash..................................................................................... 1,817
Receivables:
Fund shares sold....................................................................... 3,788
Dividends and interest................................................................. 216,854
Deferred state registration expenses (Note 1)............................................ 9,770
Prepaid insurance........................................................................ 2,730
-----------
Total assets..................................................................... 35,005,203
Liabilities
- --------
Payables (Note 4):
Investments purchased.................................................................. $ 240,000
Fund shares redeemed................................................................... 13,227
Accrued professional fees.............................................................. 33,621
Accrued management fee................................................................. 21,095
Accrued distribution fee............................................................... 7,154
Other accrued expenses................................................................. 37,940
Covered call options written, at market value (premiums received $34,477) (Notes 1 and
3)..................................................................................... 30,188
----------
Total liabilities................................................................ 383,225
-----------
Net assets, at market value.............................................................. $34,621,978
==========
Net Assets
- ---------
Net assets consist of:
Undistributed net investment income (Note 1)........................................... $ 193,122
Net unrealized appreciation on investments............................................. 5,909,436
Net unrealized appreciation on covered call options written............................ 4,289
Accumulated net realized loss (Note 1)................................................. (203,275)
Accumulated net realized gain on covered call options written.......................... 543,452
Paid-in capital (Note 1)............................................................... 28,174,954
-----------
Net assets, at market value.............................................................. $34,621,978
==========
Class A Shares
- -------------
Net asset value and redemption price per share ($34,403,848 divided by 2,739,571 shares
of beneficial interest outstanding, no par value) (Note 2)............................. $12.56
Maximum offering price per share (100/95.25 of $12.56)................................... $13.19
Class C Shares
- ------------
Net asset value, offering price and redemption price per share ($218,130 divided by
17,433 shares of beneficial interest outstanding, no par value) (Notes 1 and 2)........ $12.51
-----
-----
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends................................................................................. $ 886,472
Interest.................................................................................. 608,341
----------
Total income........................................................................ 1,494,813
Expenses (Notes 1 and 4):
Management fee............................................................................ $242,172
Distribution fee.......................................................................... 81,209
Professional fees......................................................................... 73,459
Custodian/Fund accounting fees............................................................ 46,287
State registration expenses............................................................... 31,121
Shareholder servicing fees................................................................ 28,570
Reports to shareholders................................................................... 11,084
Trustees' fees and expenses............................................................... 9,823
Insurance................................................................................. 5,168
Other expenses............................................................................ 1,211
--------
Total expenses...................................................................... 530,104
----------
Net investment income....................................................................... 964,709
----------
Realized and Unrealized Gain on Investments
Net realized gain from investment transactions.............................................. 411,468
Net realized gain from covered call options written (Note 1)................................ 38,733
Net increase in unrealized appreciation of investments during the year...................... 4,383,236
Net increase in unrealized appreciation of covered call options written during the year..... 21,411
----------
Net gain on investments............................................................. 4,854,848
----------
Net increase in net assets resulting from operations................................ $5,819,557
=========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------------
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------ ------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income.................................................... $ 964,709 $ 879,829
Net realized gain from investment transactions........................... 411,468 1,874,511
Net realized gain from covered call options written...................... 38,733 82,702
Net increase (decrease) in unrealized appreciation of investments and
covered call options written during the year........................... 4,404,647 (2,221,027)
------------------ ------------------
Net increase in net assets resulting from operations..................... 5,819,557 616,015
Distributions to shareholders from:
Net investment income, Class A Shares ($.34 and $.24 per share,
respectively).......................................................... (1,157,068) (722,439)
Net investment income, Class C Shares ($.16 per share)................... (1,164) --
Net realized gains, Class A shares ($.49 and $.92 per share,
respectively).......................................................... (1,189,190) (2,522,760)
Increase (decrease) in net assets from Fund share transactions (Note 2).... (1,459,209) 789,411
------------------ ------------------
Increase (decrease) in net assets.......................................... 2,012,926 (1,839,773)
Net assets, beginning of year.............................................. 32,609,052 34,448,825
------------------ ------------------
Net assets, end of year (including undistributed net investment income of
$193,122 and $236,491, respectively)..................................... $ 34,621,978 $ 32,609,052
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 9
- --------------------------------------------------------------------------------
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>
CLASS A SHARES
-------------------------------------------------------------------------------
CLASS C
FOR THE YEARS ENDED SEPTEMBER 30, SHARES
---------------------------------------------------------------------- -------
1995 1994 1993 1992 1991 1990 1989 1988 1987+ 1995++
------ ------ ------ ------ ------ ------- ------ ------ ------ -------
<S> <C> <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 $11.21
------ ------ ------ ------ ------ ------- ------ ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a)........... 0.27 0.30 0.39 0.28 0.36 0.45 0.45 0.44 0.26 0.18
Net realized and unrealized gain
(loss) on investments............ 1.79 (0.09) 1.44 1.02 1.88 (2.06) 1.22 (0.81) 0.38 1.28
------ ------ ------ ------ ------ ------- ------ ------ ------ -------
Total from Investment
Operations....................... 2.06 0.21 1.83 1.30 2.24 (1.61) 1.67 (0.37) 0.64 1.46
------ ------ ------ ------ ------ ------- ------ ------ ------ -------
LESS DISTRIBUTIONS:
Dividends from net investment
income........................... (0.34) (0.24) (0.36) (0.36) (0.34) (0.48) (0.44) (0.43) (0.16) (0.16 )
Distributions from net realized
gain on investments.............. (0.49) (0.92) -- -- (0.11) (0.24) -- -- -- --
------ ------ ------ ------ ------ ------- ------ ------ ------ -------
Total Distributions................ (0.83) (1.16) (0.36) (0.36) (0.45) (0.72) (0.44) (0.43) (0.16) (0.16 )
------ ------ ------ ------ ------ ------- ------ ------ ------ -------
NET ASSET VALUE, END OF THE PERIOD... $12.56 $11.33 $12.28 $10.81 $ 9.87 $ 8.08 $10.41 $ 9.18 $ 9.98 $12.51
====== ====== ====== ====== ====== ======= ====== ====== ====== =======
TOTAL RETURN (%)(D).................. 19.57 1.80 16.44 13.42 28.72 (16.42) 18.80 (3.38) 6.79(c) 13.18 (c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets(a).............. 1.64 1.64 1.72 1.75 1.75 1.75 1.75 1.75 1.75(b) 2.40 (b)
Net investment income to average
daily net assets................. 4.63 2.62 2.67 2.77 4.02 4.77 4.72 5.01 4.29(b) 4.61 (b)
Portfolio turnover rate............ 42 99 130 71 81 156 249 184 91(b) 42
Net assets, end of the period ($
millions)........................ 34 33 34 27 20 19 24 20 24 0.2
</TABLE>
- ---------------
+ For the period December 15, 1986 (commencement of operations) to September
30, 1987.
++ For the period April 3, 1995 (commencement of Class C Shares) to August 31,
1995.
(a) Excludes management fees waived by the Manager through 1992 in the amount of
less than $.01, $.01, $.02, $.02, $.01 and $.02 per Class A Share,
respectively. The operating expense ratios including such items would be
1.75%, 1.94%, 1.96%, 1.92%, 1.89%, and 2.11% (annualized) per Class A
Shares, respectively. The year 1993 includes previously 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> 10
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
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 Fund currently issues Class
A and Class C Shares. Class A Shares are sold subject to a maximum sales
charge of 4.75% of the amount invested payable at the time of purchase.
Class C Shares, which were offered to shareholders beginning April 3,
1995, are sold subject to a contingent deferred sales charge of 1% of
the lower of net asset value or purchase price payable upon any
redemptions within one year after purchase. The policies described below
are followed consistently by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
Security Valuation: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, market value is based on the 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. Of the $1,189,190 net realized gain distributions paid in
fiscal 1995, the Fund has designated such amount as net long-term
capital gains on a tax basis.
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.
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 Class A or Class C Shares of the Fund. As a result,
as of September 30, 1995, the Fund has reclassified $104,505 to increase
undistributed net investment income, $139,213 to decrease accumulated
net realized gain and $34,708 to increase paid in capital. These
reclassifications which have no impact on the net asset value for each
class of shares of the Fund, are primarily attributable to non-taxable
dividends in the computation of distributable income and capital gains
under Federal income tax rules and regulations versus generally accepted
accounting principles.
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. Expenses of the Fund are allocated to
each class of shares based upon their relative percentage of current net
assets. Expenses that are directly attributable to a specific class of
shares, such as distribution fees, are allocated to that class.
12
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 2: FUND SHARES. At September 30, 1995, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Class A Shares of the Fund during the years ended
September 30, 1995 and 1994, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
----------------------------------------------------
SEPTEMBER 30, 1995 SEPTEMBER 30, 1994
------------------------ ------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................... 164,214 $ 1,854,451 323,567 $ 3,745,587
Shares issued on reinvestment of distributions............ 208,793 2,247,195 271,222 3,109,646
Shares redeemed........................................... (511,309) (5,762,051) (522,958) (6,065,822)
--------- ----------- --------- -----------
Net increase (decrease)................................... (138,302) $(1,660,405) 71,831 $ 789,411
========== ==========
Shares outstanding:
Beginning of year....................................... 2,877,873 2,806,042
--------- ---------
End of year............................................. 2,739,571 2,877,873
======== ========
</TABLE>
Transactions for Class C Shares of the Fund from April 3, 1995
(commencement of Class C Shares) to September 30, 1995 were as follows:
<TABLE>
<CAPTION>
CLASS C SHARES SHARES AMOUNT
--------------------------------------------------------------- ------ --------
<S> <C> <C>
Shares sold.................................................... 17,555 $202,648
Shares issued on reinvestment of distributions................. 100 1,164
Shares redeemed................................................ (222) (2,616)
------ --------
Net increase................................................... 17,433 $201,196
========
Shares outstanding:
Beginning of period.......................................... --
------
End of period................................................ 17,433
======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the year ended September 30,
1995, purchases and sales of investment securities (excluding repurchase
agreements) aggregated $12,522,560 and $15,534,702, respectively. Agency
brokerage commissions for the same period aggregated $53,748, of which
$7,852 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 $ 28,534
Written........................................................................ 898 205,728
Terminated..................................................................... (440) (115,399 )
Exercised...................................................................... (370) (65,480 )
Expired........................................................................ (98) (18,906 )
--------- ---------
Outstanding September 30, 1995................................................... 115 $ 34,477
========== =========
</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 1.65% and 2.4% on Class A Shares and Class C Shares
respectively, on an annual basis, of the Fund's average daily net assets
attributable to each class of shares. This agreement is more restrictive
than any state expense limitation.
13
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
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.
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
September 30, 1995 was $7,500. In addition, the Manager performs Fund
accounting services and charged $28,932 during the current year of which
$7,200 was payable as of September 30, 1995.
Pursuant to the Class A Distribution Plan adopted in accordance with
Rule 12b-1 of the Investment Company Act of 1940, as amended, the Fund
is authorized to pay Raymond James & Associates, Inc. (the
"Distributor") a fee, equal to .25% of the average daily net assets for
Class A Shares. Under the Class C Distribution Plan the Fund paid the
Distributor a fee equal to 1.00% of the average daily net assets for
Class C Shares. The Distributor, on Class C Shares, may retain the first
12 months distribution fee for reimbursement of amounts paid to the
broker/dealer at the time of purchase. Such fees are accrued daily and
payable monthly. During the period $80,562 and $647 were paid as
distribution fees for Class A Shares and Class C Shares, respectively.
The Manager, Distributor, Fund Accountant and Shareholder Servicing
Agent are all wholly-owned subsidiaries of Raymond James Financial, Inc.
Trustees of the Fund also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income Trust, 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>
HERITAGE INCOME-GROWTH TRUST
----------------------------
PART C. OTHER INFORMATION
-------------------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A of the Registration Statement:
Financial Highlights for: the Class A Shares for
the period December 15, 1986 (commencement of
operations) to September 30, 1987 and for each of
the eight years in the period ended September 30,
1995; the Class C Shares for the period April 3,
1995 (commencement of operations of Class C
Shares) to September 30, 1995.
Included in Part B of the Registration Statement:
Investment Portfolio - September 30,
1995
Statement of Assets and Liabilities -
September 30, 1995
Statement of Operations - for the year
ended September 30, 1995
Statements of Charges in Net Assets for
the years ended September 30,
1994 and September 30, 1995
Notes to Financial Statements
Report of Coopers & Lybrand L.L.P.,
Independent Accountants, dated
November 27, 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) Specimen security relating to
Class A Shares*
(b) Specimen security relating to
Class C Shares*
C - 1
<PAGE>
(5) (a) Investment Advisory and
Administration Agreement (filed
herewith)
(b) Subadvisory Agreement (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 B Plan pursuant to Rule
12b-1 (filed herewith)
(16) Performance Computation Schedule (filed
herewith)
(17) Electronic Filers--Financial Data
Schedule:
(a) Financial Data Schedule relating
to Class A (filed herewith)
(b) Financial Data Schedule relating
to Class C (filed herewith)
C - 2
<PAGE>
(18) Plan pursuant to Rule 18f-3--none
* To be filed by subsequent amendment.
** Incorporated by reference to the Trust's Rule 24f-2 Notice filed
on November 29, 1995.
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 December 31, 1995
-------------- -----------------------
Class A Shares 2.457
Class C Shares 35
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.
(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
C - 3
<PAGE>
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.
According to Article XII, Section 1 of the Declaration of Trust,
the Trust is a trust, not a partnership. Trustees are not liable
C - 4
<PAGE>
personally to any person extending credit to, contracting with or having
any claim against the Trust.
Article XII, Section 2 of the Declaration of Trust provides that,
subject to the provisions of Section 1 of Article XII and to Article XI,
the Trustees are not liable for errors of judgment or mistakes of fact or
law, or for any act or omission in accordance with advice of counsel or
other experts or for failing to follow such advice. A Trustee, however,
is not protected from liability due to willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office.
Paragraph 8 of the Investment Advisory and Administration
Agreement of Heritage Income-Growth Trust ("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
for any loss suffered by the Trust in connection with the matters to which
the Advisory Agreement relates except a loss resulting from 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 the 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 for Heritage Income-
Growth Trust ("Subadvisory Agreement") between Heritage and Eagle Asset
Management, Inc. ("Eagle") provides that, in the absence of willful
misfeasance, bad faith or gross negligence on the part of Eagle or
reckless disregard of its obligations and duties under the Subadvisory
Agreement, Eagle 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 under the Subadvisory Agreement.
Paragraph 7 of the Distribution Agreement of Heritage Income-
Growth Trust ("Distribution Agreement") between the Trust and Raymond
James & Associates, Inc. ("Raymond James") provides that 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 Securities Act of 1933, as amended (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
C - 5
<PAGE>
thereof or necessary to make the statements in either thereof not
misleading, provided that in no event shall anything contained in the
Distribution Agreement be construed so as to protect Raymond James against
any liability to the Trust or its shareholder 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.
Paragraph 13 of the Heritage Funds Accounting and Pricing
Services Agreement ("Accounting Agreement") between the Trust and Heritage
provides that the Trust 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 Trust or (ii) upon Proper Instructions (as
defined in the Accounting Agreement), provided, that neither Heritage nor
any of its nominees shall be indemnified against any liability to the
Trust 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 the Accounting Agreement or its failure to meet
the standard of care set forth in the Accounting Agreement.
Item 28. I. Business and Other Connections of Investment Adviser
----------------------------------------------------
Heritage is a Florida corporation which offers investment
management services. Information as to the officers and directors of
Heritage is included in its current Form ADV filed with the Securities and
Exchange Commission ("SEC") and is included by reference herein.
II. Business and Other Connections of Subadviser
--------------------------------------------
Eagle, a Florida corporation, is a registered investment adviser.
All of its stock is owned by Raymond James Financial, Inc. ("RJF"). Eagle
is primarily engaged in the investment advisory business. Information as
to the officers and directors of Eagle 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, Heritage Income
Trust, Heritage Series Trust and Heritage U.S. Government Income Fund.
(b) The directors and officers of the Registrant's
principal underwriter are:
C - 6
<PAGE>
<TABLE>
<CAPTION>
Positions & Offices Position with
Name with Underwriter Registrant
---- -------------------- -------------
<S> <C> <C>
Thomas A. James Chief Executive Officer, Trustee
Director
Robert F. Shuck Executive V.P., Director None
Thomas S. Franke President, Chief Operating None
Officer, Director
Lynn Pippenger Secretary/Treasurer, Chief None
Financial Officer, Director
Dennis Zank Executive VP of Operations and None
Administration, Director
</TABLE>
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) and
(8); and the Subadviser maintains some or all of the records required by
Rule 31a-1(b)(2), (5), (6), (9), (10) and (11). Since March 1, 1994, all
required records are maintained by Heritage.
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
The Trust hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of the its latest annual report(s) to
shareholders, upon request and without charge.
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 this 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. 12 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 26th day of
January, 1996. No material event requiring prospectus disclosure has
occurred since the latest of the three dates specified in Rule 485(b)(2).
HERITAGE INCOME-GROWTH 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. 12 to the Registration
Statement has been signed below by the following persons in the capacities
and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ---- ----
<S> <C> <C>
/s/ Stephen G. Hill President January 26, 1996
-----------------------------
Stephen G. Hill
Thomas A. James* Trustee January 26, 1996
-----------------------------
Thomas A. James
Richard K. Riess* Trustee January 26, 1996
-----------------------------
Richard K. Riess
C. Andrew Graham* Trustee January 26, 1996
-----------------------------
C. Andrew Graham
David M. Phillips* Trustee January 26, 1996
-----------------------------
David M. Phillips
<PAGE>
Signature Title Date
--------- ---- ----
James L. Pappas* Trustee January 26, 1996
-----------------------------
James L. Pappas
Donald W. Burton* Trustee January 26, 1996
-----------------------------
Donald W. Burton
Eric Stattin* Trustee January 26, 1996
-----------------------------
Eric Stattin
*By /s/ Donald H. Glassman
-------------------------------------
Donald H. Glassman, Attorney-In-Fact
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
------- ----------- ----
<S> <C> <C>
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) Specimen security for Class A Shares*
(b) Specimen security for Class C Shares*
5 (a) Investment Advisory and Administration Agreement (filed herewith)
(b) Subadvisory Agreement (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 Electronic Filers -- Financial Data Schedule:
(a) Financial Data Schedule relating to Class A (filed herewith)
(b) Financial Data Schedule relating to Class C (filed herewith)
<PAGE>
18 Plan pursuant to Rule 18f-3 -- none
</TABLE>
* To be filed by subsequent amendment.
** Incorporated by reference to the Trust's Rule 24f-2 Notice filed
on November 29, 1995.
<PAGE>
<PAGE>
HERITAGE CONVERTIBLE INCOME-GROWTH TRUST
DECLARATION OF TRUST
DECLARATION OF TRUST, made July 25, 1986 by Thomas A. James and
Richard K. Riess, the Trustees hereunder, and by the holders of Shares of
beneficial interest to be issued hereunder as hereinafter provided.
WITNESSETH that
WHEREAS, this Trust has been formed to carry on the business of
an investment company; and
WHEREAS, the Trustees have agreed to manage all property coming
into their hands as trustees of a Massachusetts voluntary association with
transferable Shares in accordance with the provisions hereinafter set
forth.
NOW, THEREFORE, the Trustees hereby declare that they will hold
all cash, securities and other assets, which they may from time to time
acquire in any manner as Trustees hereunder IN TRUST to manage and dispose
of the same upon the following terms and conditions for the pro rata
benefit of the holders from time to time of Shares in this Trust as
hereinafter set forth.
ARTICLE I
NAME AND DEFINITIONS
--------------------
Name
----
Section 1. This Trust shall be known as "Heritage Convertible
Income-Growth Trust" and the Trustees shall conduct the business of the
Trust under that name or any other name as they may from time to time
determine.
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(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;
- 1 -
<PAGE>
(b) The "Trust" refers to Heritage Convertible
Income-Growth 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
shares as well as whole shares consistent with the requirements
of federal and/or other securities laws;
(g) The "1940 Act" refers to the Investment Company Act
of 1940, as amended from time to time;
(h) "Declaration of Trust" shall mean this Declaration
of Trust as amended or restated from time to time; and
(i) "Bylaws" shall mean the Bylaws of the Trust as
amended from time to time.
ARTICLE II
PURPOSE OF TRUST
----------------
The purpose of this Trust is to provide investors, through one or
more investment portfolios or series as designated by the Trustees, with a
continuous source of managed investments in securities.
ARTICLE III
BENEFICIAL INTEREST
-------------------
Shares of Beneficial Interest
-----------------------------
Section 1. The Shares of the Trust shall be issued in one or
more series or classes as the Trustees may, without shareholder approval,
authorize. Each series shall be preferred over all other series in
respect of the assets allocated to that series. The beneficial interest
in each series shall at all times be divided into Shares, with or without
par value as the Trustees may specify, each of which shall represent an
- 2 -
<PAGE>
equal proportionate interest in the series with each other Share of the
same series, none having priority or preference over another. The number
of Shares authorized shall be unlimited, and the Shares so authorized may
be represented in part by fractional Shares. The Trustees may from time
to time and without Shareholder approval divide or combine the Shares of
any series or class into a greater or lesser number without thereby
changing the proportionate beneficial interests in the series.
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.
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. As determined by guidelines established by the Trustees, such
investments may be in the form of cash or securities in which the Trust
(or each designated portfolio or series) is authorized to invest, valued
as provided in Article X, Section 3. 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.
- 3 -
<PAGE>
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).
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 initial 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 Trust's President or the other Trustees, which
resignation 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; and (c) a Trustee may be removed at any Special
Meeting of Shareholders of the Trust by a vote of two-thirds of the
outstanding Shares.
- 4 -
<PAGE>
Resignation and Appointment of Trustees
---------------------------------------
Section 4. In case any vacancy of a Trustee position shall exist
for any reason, including, but not limited to, declination to assume
office, death, resignation, removal, or by reason of an increase in the
number of Trustees authorized, 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. An appointment of a
Trustee may be made by the Trustees then in office 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 or she
shall be deemed a Trustee hereunder. The power of appointment of Trustees
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
or her 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 serving hereunder at any time
shall be determined by the Trustees themselves and shall not be less than
three (3) nor more than twelve (12).
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. Without limiting the
foregoing, but 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 or 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.
(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.
(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.
(r) To retain an administrator, investment adviser
and/or investment subadviser.
(s) To establish separate and distinct series of shares
with separately defined investment objectives, policies and
purposes, and to allocate assets, liabilities and expenses of the
Trust to a particular series of Shares or to apportion the same
among two or more series, provided that any liability or expense
incurred by a particular series of Shares shall be payable solely
out of the assets of that series.
(t) To purchase and pay for entirely out of Trust
property such insurance as they may deem necessary or appropriate
for the conduct of the business, including, without limitation,
insurance policies insuring the assets of the trust and payment
of distributions and principal on its portfolio investments, and
insurance policies insuring the Shareholders, Trustees, officers,
employees, agents, investment advisers or managers, principal
underwriters, or independent contractors of the Trust
individually against all claims and liabilities of every nature
arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have
been taken or omitted by any such person as Shareholder, Trustee,
officer, employee, agent, investment adviser or manager,
principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute
negligence, whether or not the Trust would have the power to
indemnify such person against such liability.
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.
- 8 -
<PAGE>
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.
ARTICLE VI
EXPENSES OF THE TRUST
---------------------
Payment of Expenses by the Trust
--------------------------------
Section 1. Subject to the provisions of Article III, Section 4,
the Trustees are authorized to have paid from the Trust estate or the
assets belonging to the Trust, as they deem fair and appropriate, expenses
and disbursements of the Trust, 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,
- 9 -
<PAGE>
insurance expenses, 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 when required
by the 1940 Act, 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 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
- 10 -
<PAGE>
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
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. To the extent that Section 15 of the 1940 Act is
applicable, 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 or amendment thereof.
- 11 -
<PAGE>
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(c), (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 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 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 10 percent 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.
- 12 -
<PAGE>
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:
(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;
(c) to disburse such funds upon orders or vouchers;
(d) to keep the books and accounts of the Trust and
furnish clerical and accounting services; and
(e) to compute, if authorized to do so by the Trustees,
the Trust's Net Asset Value in accordance with the provisions
hereof.
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.
- 13 -
<PAGE>
Employment of Sub-Custodian
---------------------------
Section 2. 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 organized 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 collars ($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 3. 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
accordance 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 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
- 14 -
<PAGE>
determine, and may be payable in Shares at the election of each
Shareholder.
(c) Anything in this Declaration of Trust 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
purchase, and the Trust or the principal underwriter of the Trust shall
purchase, 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 assets, 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.
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 or any series or portfolio thereof 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 to the extent as permitted
- 15 -
<PAGE>
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
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard or the duties involved in the conduct of
his office.
Indemnification
---------------
Section 2.
(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,
- 16 -
<PAGE>
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 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:
- 17 -
<PAGE>
(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.
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
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.
- 18 -
<PAGE>
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
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,
notwithstanding 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 paragraph (b) of this Section 4.
(b) Subject to a Majority Shareholder Vote, the Trustees
may:
- 19 -
<PAGE>
(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 paragraph (b), the Trust shall terminate
and the Trustees shall be discharged of any and all 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.
- 20 -
<PAGE>
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.
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., its successors or its affiliated companies as investment adviser or
manager of the Trust. 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 names 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>
Notice to Other Parties
-----------------------
Section 10. Every note, bond, contract, instrument, certificate
or undertaking made or issued by the Trustees or by any officers or
officer shall give notice that this Declaration of Trust is on file with
the Secretary of the Commonwealth of Massachusetts and shall recite that
the same was executed or made by or on behalf of the Trust or by them as
Trustees or Trustee or as officers or officer and not individually and
that the obligations of such instrument are not binding upon any of them
or the Shareholders individually but are binding only upon the assets and
property of the Trust, and may contain such further recital as he and she
or they may deem appropriate, but the omission thereof shall not operate
to bind any Trustees or Trustee or officers or officer or Shareholders or
Shareholder individually.
IN WITNESS WHEREOF, the undersigned, being all of the initial Trustees of
the Trust, have executed this instrument.
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 Thomas A. James as the original
of such instrument. /s/ Thomas A. James
--------------------
Thomas A. James
1400 66th Street North
St. Petersburg, FL 33710
WITNESS my hand and official seal, this
23rd day of July A.D., 1986.
/s/ Sharry L. Mauney
---------------------------------------
Notary Public State of Florida at Large
My Commission Expires JAN. 22, 1988
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 Richard K. Riess as the
original of such instrument. /s/ Richard K. Riess
---------------------
Richard K. Riess
1400 66th Street North
St. Petersburg, FL 33710
- 22 -
<PAGE>
WITNESS my hand and official seal, this
23rd day of July A.D., 1986.
/s/ Jean E. Crane
----------------------------------------
Notary Public, State of Florida at Large
My Commission Expires JULY 27, 1989
Resident Agent:
James E. Howard, Esq.
Kirkpatrick & Lockhart
Exchange Place
53 State Street - 28th Floor
Boston, MA 02109
(617) 227-6000
- 23 -
<PAGE>
<PAGE>
BYLAWS
of
HERITAGE CONVERTIBLE INCOME-GROWTH TRUST
These Bylaws of the Heritage Convertible Income-Growth Trust (the
"Trust"), a Massachusetts business trust, are subject to the Trust's
Declaration of Trust as from time to time amended.
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, 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
------------------------------------------
Management Of The Trust-General
-------------------------------
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.
- 2 -
<PAGE>
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.
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.
Assistant Secretary
-------------------
Section 9. Any Assistant Secretary 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 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. If the meeting is a meeting of the shareholders
of one or more series of shares, but not a meeting of all shareholders of
the Trust, then only the shareholders of such one or more series shall be
entitled to notice of and to vote at such meeting.
Notices
-------
Section 2. Except as above provided, notices of any special
meeting of the Shareholders shall be given by the Secretary by delivering
- 3 -
<PAGE>
or mailing, postage prepaid, to each Shareholder entitled to vote at said
meeting, a written or printed notification of such meeting, at least 10
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 or at such other
place in the United States as the Trustees may designate.
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.
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
- 4 -
<PAGE>
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 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.
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.
- 5 -
<PAGE>
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.
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
PROVISIONS RELATING TO THE
CONDUCT OF THE TRUST'S BUSINESS
-------------------------------
Dealings with Affiliates
------------------------
Section 1. The Trust shall not purchase or retain securities
issued by any issuer if one or more of the holders of the securities of
such issuer or one or more of the officers or directors of such issuer is
an officer or Trustee of the Trust or officer or director of any
organization, association or corporation with which the Trust has an
investment advisory or management contract ("investment adviser" or
"manager"), if to the knowledge of the Trust one or more of such officers
or Trustees of the Trust or such officers or directors of such investment
adviser or manager who own beneficially more than one-half of one percent
of the shares or securities together own beneficially more than five
percent of such outstanding shares or securities. Each Trustee and
officer of the Trust shall give notice to the President or Treasurer of
the Trust of the identity of all issuers whose securities are held by the
Trust of which such officer or Trustee owns as much as one-half of one
percent of the outstanding securities, and the Trust shall not be charged
with the knowledge of such holdings in the absence of receiving such
notice if the Trust has requested such information not less often than
quarterly.
- 6 -
<PAGE>
Subject to the provisions of the preceding paragraph, no officer,
Trustee or agent of the Trust and no officer, director or agent of any
investment adviser or manager shall deal for or on behalf of the Trust
with himself as principal or agent, or with any partnership, association
or corporation in which he has a material financial interest; provided
that the foregoing provisions shall not prevent (a) officers and Trustees
of the Trust from buying, holding or selling shares in the Trust, or from
being partners, officers or directors of or financially interested in any
investment adviser or manager to the Trust or in any corporation, firm or
association which may at any time have a distributor's or principal
underwriter's contract with the Trust; (b) purchases or sales of
securities or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company Act of
1940 or any rule or regulation thereunder and if such transaction does not
involve any commission or profit to any security dealer who is, or one of
more of whose partners, shareholders, officers or directors is, an officer
or Trustee of the Trust or an officer or director of the investment
adviser, manager or principal underwriter of the Trust; (c) employment of
legal counsel, registrar, transfer agent, shareholder services agent,
dividend disbursing agent or custodian who is, or has a partner,
stockholder, officer or director who is, an officer or Trustee of the
Trust; (d) sharing statistical, research and management expenses,
including personnel and services, with any other company in which an
officer or Trustee of the Trust is an officer or director or financially
interested.
Right to Engage in Business
---------------------------
Section 2. Any officer or Trustee of the Trust, the investment
adviser, the manager, and any officers or directors of the investment
adviser or manager may have personal business interests and may engage in
personal business activities.
Dealing in Securities of the Trust
----------------------------------
Section 3. The Trust, the investment adviser, the manager, any
corporation, firm or association which may at any time have an exclusive
distributor's or principal underwriter's contract with the Trust (the
"distributor") and the officers and Trustees of the Trust and officers and
directors of every investment adviser, manager and distributor, shall not
take long or short positions in the securities of the Trust, except that:
(a) the distributor may place orders with the Trust for its
shares equivalent to orders received by the distributor;
(b) shares of the Trust may be purchased at not less than net
asset value for investment by the investment adviser, manager, and
officers and directors of the distributor, investment adviser, or the
Trust, and by any trust, pension, profit-sharing or other benefit plan for
- 7 -
<PAGE>
such persons, no such purchase to be in contravention of any applicable
state or federal requirements.
Limitation on Certain Loans
---------------------------
Section 4. The Trust shall not make loans to any officer,
Trustee or employee of the Trust or any investment adviser, manager or
distributor or their respective officers, directors or partners or
employees.
Custodian
---------
Section 5. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies having
(according to its last published report) not less than two million dollars
($2,000,000) aggregate capital, surplus and undivided profits (any such
bank or trust company is hereinafter referred to as the "custodian");
provided, however, the custodian may deliver securities as collateral on
borrowings effected by the Trust, provided, that such delivery shall be
conditioned upon receipt of the borrowed funds by the custodian except
where additional collateral is being pledged on an outstanding loan and
the custodian may deliver securities lent by the Trust against receipt of
initial collateral specified by the Trust. Subject to such rules,
regulations and orders, if any, as the Securities and Exchange Commission
(the "Commission") may adopt, the Trust may, or may permit any custodian
to, deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities operated by the Federal
Reserve Banks, or established by a national securities exchange or
national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted
by the Commission, pursuant to which system all securities of any
particular class or series of any issue deposited with the system are
treated as fungible and may be transferred or pledged by bookkeeping
entry, without physical delivery of such securities.
The Trust shall upon the resignation or inability to serve of its
custodian or upon change of the custodian: (a) use its best efforts to
obtain a successor custodian; (b) require that the cash and securities
owned by this Trust be delivered directly to the successor custodian; and
(c) in the event that no successor custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities owned
by this Trust otherwise than to a successor custodian, the question
whether or not this Trust shall be liquidated or shall function without a
custodian
- 8 -
<PAGE>
ARTICLE VIII
SEAL
------------
The seal of the Trust shall be circular in form bearing the
inscription:
"HERITAGE CONVERTIBLE INCOME-GROWTH TRUST -- 1986"
ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of the Trust shall end on such date as the
Trustees shall from time to time determine
ARTICLE X
AMENDMENTS
----------
These Bylaws may be amended at any meeting of the Trustees of the
Trust by a majority 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.
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.
- 9 -
<PAGE>
<PAGE>
AMENDED BY-LAWS
of
HERITAGE INCOME-GROWTH 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: Management of The Trust-General . . . . . . . . . . . . 1
Section 2: Executive and Other Committees 2
Section 3: Chairman of The Trustees . . . . . . . . . . . . . . . 2
Section 4: President . . . . . . . . . . . . . . . . . . . . . . . 2
Section 5: Treasurer . . . . . . . . . . . . . . . . . . . . . . . 2
Section 6: Secretary . . . . . . . . . . . . . . . . . . . . . . . 2
Section 7: Vice President . . . . . . . . . . . . . . . . . . . . 3
Section 8: Assistant Treasurer . . . . . . . . . . . . . . . . . . 3
Section 9: Assistant Secretary . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Trustees' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1: Special Meetings . . . . . . . . . . . . . . . . . . . 4
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 . . . . . . . . . . . . . . . . . . . 5
Section 7: Action by Consent . . . . . . . . . . . . . . . . . . 5
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
<PAGE>
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Inspection of Books . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Provisions Relating to the Conduct of the
Trust's Business . . . . . . . . . . . . . . . . . . . . . . . 6
Section 1: Dealings with Affiliates . . . . . . . . . . . . . . 6
Section 2: Right to Engage in Business . . . . . . . . . . . . . 7
Section 3: Dealings in Securities of the Trust . . . . . . . . . 7
Section 4: Limitation on Certain Loans . . . . . . . . . . . . . 7
Section 5: Custodian . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Distribution Arrangements . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . 9
- ii -
<PAGE>
AMENDED BY-LAWS
of
HERITAGE INCOME-GROWTH TRUST
These By-laws of the Heritage Income-Growth Trust (the "Trust"),
a Massachusetts business trust, are subject to the Trust' Declaration of
Trust as from time to time amended.
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
------------------------------------------
Management Of The Trust-General
-------------------------------
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.
<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.
- 2 -
<PAGE>
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.
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.
Assistant Secretary
-------------------
Section 9. Any Assistant Secretary 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. If the meeting is a
meeting of the Shareholders of one or more series of shares, but not a
meeting of all shareholders of the Trust, then only the shareholders of
such one or more series shall be entitled to notice of and to vote at such
meeting.
- 3 -
<PAGE>
Notice of Meeting
-----------------
Section 2. Except as above provided, notices of the place, date,
hour, and, in the case of a special meeting, the purposes or purpose shall
be given by the Secretary by delivering or mailing, postage prepaid, to
each Shareholder entitled to vote at said meeting, a written or printed
notification of such meeting, at least 10 days before the meeting, to such
address as appears on the record of the Trust at the time of such meeting.
Place of Meeting
----------------
Section 4. All meetings of the Shareholders shall be held at the
principal place of business of the Trust or at such other place in the
United States as the Trustees may designate.
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
- 4 -
<PAGE>
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 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 Trust or at such other place in the
United States as the person or person 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 6. 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.
- 5 -
<PAGE>
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.
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
PROVISIONS RELATING TO THE
CONDUCT OF THE TRUST'S BUSINESS
-------------------------------
Dealings with Affiliates
------------------------
Section 1. The Trust shall not purchase or retain securities
issued by any issuer if one or more of the holders of the securities of
such issuer or one or more of the officers or directors of such issuer is
an officer or Trustee of the Trust or officer or director of any
organization, association or corporation with which the Trust has an
investment advisory or management contract ("investment adviser" or
"manager"), if to the knowledge of the Trust one or more of such officers
or Trustees of the Trust or such officers or directors of such investment
adviser or manager who own beneficially more than one-half of one percent
of the shares or securities together own beneficially more than five
percent of such outstanding shares or securities. Each Trustee and
officer of the Trust shall give notice to the President or Treasurer of
the Trust of the identity of all issuers whose securities are held by the
Trust of which such officer or Trustee owns as much as one-half of one
- 6 -
<PAGE>
percent of the outstanding securities, and the Trust shall not be charged
with the knowledge of such holdings in the absence of receiving such
notice if the Trust has requested such information not less often than
quarterly.
Subject to the provisions of the preceding paragraph, no officer,
Trustee or agent of the Trust and no officer, director or agent of any
investment adviser or manger shall deal for or on behalf of the Trust with
himself as principal or agent, or with any partnership, association or
corporation in which he has a material financial interest; provided, that
the foregoing provisions shall not prevent: (a) officers and Trustees of
the Trust from buying, holding or selling shares in the Trust, or from
being partners, officers or directors of or financially interested in any
investment adviser or manager to the Trust or in any corporation, firm or
association which may at any time have a distributor's or principal
underwriter's contract with the Trust; (b) purchases or sales of
securities or other property if such transaction is permitted by or is
exempt or exempted from the provisions of the Investment Company Act of
1940 or any rule or regulation thereunder and if such transaction does not
involve any commission or profit to any security dealer who is, or one of
more of whose partners, shareholders, officers or directors is, an officer
or Trustee of the Trust or an officer or director of the investment
adviser, manager or principal underwriter of the Trust; (c) employment of
legal counsel, registrar, transfer agent, shareholder services agent,
dividend disbursing agent or Custodian who is, or has a partner,
stockholder, officer or director who is, an officer or Trustee of the
Trust; or (d) sharing statistical, research and management expenses,
including personnel and services, with any other company in which an
officer or Trustee of the Trust is an officer or director or financially
interested.
Right to Engage in Business
---------------------------
Section 2. Any officer or Trustee of the Trust, the investment
adviser, the manager, and any officers or directors of the investment
adviser or manager may have personal business interests and may engage in
personal business activities.
Dealing in Securities of the Trust
----------------------------------
Section 3. The Trust, the investment adviser, the manager, any
corporation, firm or association which may at any time have an exclusive
distributor's or principal underwriter's contract with the Trust (the
"Distributor") and the officers and Trustees of the Trust and officers and
directors of every investment adviser, manager and Distributor, shall not
take long or short positions in the securities of the Trust, except that:
(a) the Distributor may place orders with the Trust for its
shares equivalent to orders received by the Underwriter;
- 7 -
<PAGE>
(b) shares of the Trust may be purchased at not less than net
asset value for investment by the investment adviser, manager, and
officers and directors of the Distributor, investment adviser, or the
Trust, and by any trust, pension, profit-sharing or other benefit plan for
such persons, no such purchase to be in contravention of any applicable
state or federal requirements.
Limitation on Certain Loans
---------------------------
Section 4. The Trust shall not make loans to any officer,
Trustee or employee of the Trust or any investment adviser, manager or
underwriter or their respective officers, directors or partners or
employees.
Custodian
---------
Section 5. All securities and cash owned by the Trust shall be
maintained in the custody of one or more banks or trust companies having
(according to its last published report) not less than two million dollars
($2,000,000) aggregate capital, surplus and undivided profits (any such
bank or trust company is hereinafter referred to as the "Custodian");
provided, however, the Custodian may deliver securities as collateral on
borrowing effected by the Trust; provided, that such delivery shall be
conditioned upon receipt of the borrowed funds by the Custodian except
where additional collateral is being pledged on an outstanding loan and
the Custodian may deliver securities lent by the Trust against receipt of
initial collateral specified by the Trust. Subject to such rules,
regulations and orders, if any, as the Securities and Exchange Commission
(the "Commission") may adopt, the Trust may, or may permit any Custodian
to, deposit all or any part of the securities owned by the Trust in a
system for the central handling of securities operated by the Federal
Reserve Banks, or established by a national securities exchange or
national securities association registered with the Commission under the
Securities Exchange Act of 1934, or such other person as may be permitted
by the Commission, pursuant to which system all securities of any
particular class or Series of any issue deposited with the system are
treated as fungible and may be transferred or pledged by bookkeeping
entry, without physical delivery of such securities.
The Trust shall upon the resignation or inability to serve of its
Custodian or upon change of the Custodian: (a) use its best efforts to
obtain a successor Custodian; (b) require that the cash and securities
owned by this Trust be delivered directly to the successor Custodian; and
(c) in the event that no successor Custodian can be found, submit to the
shareholders, before permitting delivery of the cash and securities owned
by this Trust otherwise than to a successor Custodian, the question
whether or not this Trust shall be liquidated or shall function without a
Custodian.
- 8 -
<PAGE>
ARTICLE VIII
SEAL
--------------
The seal of the Trust shall be circular in form bearing the
inscription:
"HERITAGE INCOME-GROWTH TRUST -- 1986"
ARTICLE IX
FISCAL YEAR
-----------
The fiscal year of the Trust shall end on such date as the
Trustees shall from time to time determine.
ARTICLE X
AMENDMENTS
----------
These By-laws may be amended at any meeting of the Trustees of
the Trust by a majority vote.
ARTICLE XI
DISTRIBUTION ARRANGEMENTS
-------------------------
Any agreement entered into for the sale of Share 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.
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: July 23, 1986, as restated and amended on
May 18, 1993
- 9 -
<PAGE>
<PAGE>
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
OF HERITAGE CONVERTIBLE INCOME-GROWTH TRUST
Agreement made as of October 31, 1986 between Heritage
Convertible Income-Growth 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 it
may be permitted to pay higher brokerage commissions for brokerage and
<PAGE>
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, 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 was 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 person or 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 11(a) of the Securities Exchange Act of 1934
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).
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 may be delegated by the Manager,
at the Manager's expense, to Eagle Asset Management, 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 those 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
- 2 -
<PAGE>
or deprive the Board of Trustees of the Trust of its
responsibility for and control of the conduct of the Trust's
affairs.
(b) The Manager will investigate and, with
appropriate approval of 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
administrative 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 Sub-adviser.
(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 inquiries.
4. Service 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
- 3 -
<PAGE>
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
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:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
------------- -------------------------
First $100 million . . . . . . . . . . . .75%
Over $100 million . . . . . . . . . . . . .60%
- 4 -
<PAGE>
8. Limitation of Liability of the Manager. The Manager
shall not be liable for any error of judgment or mistake of law for any
loss suffered by the Trust in connection with the matters to which this
Agreement relates except a loss resulting from 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
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 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 Agree-
ment 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 a 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
- 5 -
<PAGE>
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 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 Convertible Income-Growth 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 Convertible
Income-Growth 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: _____12-5_______, 1986
Attest: HERITAGE CONVERTIBLE INCOME-GROWTH
TRUST
By: /s/ Linda M. Champagne By: /s/ Thomas A. James
---------------------- ------------------------------
Attest: RJ FUND MANAGEMENT, INC.
By: /s/ Martha E. Dunbar By: /s/ Richard K. Riess
----------------------- -------------------------------
- 6 -
<PAGE>
<PAGE>
SUBADVISORY AGREEMENT
FOR
HERITAGE CONVERTIBLE INCOME-GROWTH TRUST
Agreement made as of October 31, 1986 between RJ Fund Management,
Inc., a Florida corporation (the "Manager"), and Eagle Asset Management,
Inc., a Florida corporation (the "Subadviser").
WHEREAS, the Manager has by separate contract agreed to serve as
the investment adviser and administrator to the Heritage Convertible
Income-Growth Trust ("Trust"), a Massachusetts business trust engaged in
business as an open-end diversified management investment company that is
so registered under the Investment Company Act of 1940 ("1940 Act');
WHEREAS, the Manager's contract with the Trust allows it to
delegate certain investment advisory services for the Trust to other
parties; and
WHEREAS, the Manager desires to retain the Subadviser to perform
certain investment advisory services for the Trust and the Subadviser is
willing to perform such services;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. SERVICES TO BE RENDERED BY SUBADVISER TO THE TRUST
(a) Subject always to the control of the Trustees and Manager of
the 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.
(b) The Subadviser, at its expense, will make available its
officers and advisory and other personnel, particularly portfolio managers
and research analysts to the Trustees and Manager 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 and will provide periodic reports to the Manager relating to the
portfolio strategies it employs.
<PAGE>
(c) The Subadviser, at its expense, will furnish all salaries of
personnel and facilities to provide for the efficient conduct of the
investment affairs of the Trust, such affairs to include the monitoring of
the portfolio accounting services provided by the Trust's custodian.
(d) The Subadviser, at its expense, also will provide the
Manager with compliance reports relating to the Trust's investment
operations, including regular, periodic reports which monitor investment
restrictions and other guidelines of the Trust's prospectus and statement
of additional information, and such other compliance reports as may be
agreed upon from time to time.
(e) The Subadviser, at its expense, also will provide the
Trust's custodian bank with market price information relating to portfolio
instruments on a daily basis.
(f) 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 was
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 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).
- 2 -
<PAGE>
(g) 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 Section 2 hereafter.
2. BOOKS AND RECORDS
In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940 (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) insofar as such records relate to the
investment affairs of the Trust. 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 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 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 Sections 1 and 2, a fee, computed and paid monthly
at an annual rate equal to 50% of fees payable by the Trust to the Manager
under the Investment Advisory and Administration Agreement between the
Manager and the Trust. 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
as a result of any statutory or regulatory 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.
- 3 -
<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.
Action by the Trust under paragraph (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.
- 4 -
<PAGE>
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, pro-
ceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Trust; or (c)
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
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.
- 5 -
<PAGE>
IN WITNESS WHEREOF, RJ Fund Management, Inc. and Eagle Asset
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: December 5, 1986
--------------------
Attest: RJ FUND MANAGEMENT, INC.
By: /s/ Linda M. Champagne By: /s/ Richard K. Riess
----------------------- ------------------------
Attest: EAGLE ASSET MANAGEMENT COMPANY, INC.
By: /s/ Martha E. Dunbar By: /s/ Officer
------------------------ ---------------------------
- 6 -
<PAGE>
<PAGE>
DISTRIBUTION AGREEMENT
OF
HERITAGE CONVERTIBLE INCOME-GROWTH TRUST
This Distribution Agreement is made this 31st day of October,
1986, by and between Heritage Convertible Income-Growth 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, as amended
(the "1940 Act"), and has registered its shares of beneficial interest
(the "Shares") for sale to the public under the Securities Act of 1933, as
amended (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 plus a sales charge as set forth in the Trust's
current Prospectus. 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
<PAGE>
Raymond, James, as promptly as possible after the last day of each month,
a fee, accrued daily, of .25% 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 end of the month in which the Trust commences operations
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 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 portion 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 its transfer agent
that shall show the amount properly payable to Raymond, James under this
Agreement and the detailed computation thereof. Raymond, James shall also
receive the sales load set forth in the Trust's current prospectus.
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 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 or organizing and
conducting sales seminars, printing of Prospectuses 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 information and make only such
statements or representations as are contained in the Prospectus 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, Statements of
Additional Information 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.
- 2 -
<PAGE>
7. 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 Agreement be construed so as to
protect Raymond, James against any liability to the Trust or its
shareholder 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 unless requested by a shareholder. If such request is transmitted
through Raymond, James, the Trust will cause certificates evidencing the
shares owned to be issued in such names and denominations as Raymond,
James shall from time to time direct.
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. On each business day, Raymond, James
shall notify by telex or in writing the Trust and the Trust's transfer
agent of the orders for repurchase of shares received by Raymond, James
- 3 -
<PAGE>
since the last such report, the amount to be paid for such Shares, and the
identity of 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 shares cash or in the form of a
credit against moneys due the Trust from Raymond, James as proceeds from
the sale of Shares. Raymond, James will receive no commission or other
remuneration for repurchasing Shares other than the compensation set forth
in paragraph 3 hereof or service fees charged to its customers for
processing a redemption order. The Trust reserves the right to suspend
such purchases 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
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 meaning 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. 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 Raymond, James 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 Trustees"), or (iii) a majority of the outstanding voting
securities of the Trust.
17. This Agreement will remain in effect for one year from
the date of its execution and from year to year thereafter, provided that
it is 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 12b-1
- 4 -
<PAGE>
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: December 5, 1986
----------
Attest: HERITAGE CONVERTIBLE-GROWTH TRUST
By: /s/ Linda M. Champagne By: /s/ Richard K. Riess
----------------------- -----------------------------
Attest: RAYMOND, JAMES & ASSOCIATES, INC.
By: /s/ Martha E. Dunbar By: /s/ Thomas A. James
----------------------- ------------------------------
- 5 -
<PAGE>
<PAGE>
CUSTODIAN CONTRACT
Between
HERITAGE CONVERTIBLE INCOME-GROWTH 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 . . . . . . . . . . . . . 8
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . 8
2.5 Payments for Shares . . . . . . . . . . . . . . . . 9
2.6 Availability of Federal Funds . . . . . . . . . . . 9
2.7 Collection of Income . . . . . . . . . . . . . . . . 10
2.8 Payment of Fund Moneys . . . . . . . . . . . . . . . 10
2.9 Payment in Advance of Receipt of Securities
Purchased . . . . . . . . . . . . . . . . . . . . . 13
2.10 Payments for Repurchases or Redemptions of Shares
of the Fund . . . . . . . . . . . . . . . . . . . . 13
2.11 Appointment of Agents . . . . . . . . . . . . . . . 14
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 . . . . . . . . . . . . . . . . . . . . . . 19
2.16 Communications Relating to Fund Portfolio
Securities . . . . . . . . . . . . . . . . . . . . . 19
2.17 Proper Instructions . . . . . . . . . . . . . . . . 20
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 . . . . . 22
4. Records . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5. Opinion of Fund's Independent Certified Public Accountants . 23
6. Reports to Fund by Independent Certified Public
Accountants . . . . . . . . . . . . . . . . . . . . . . . . 24
7. Compensation of Custodian . . . . . . . . . . . . . . . . . 24
8. Responsibility of Custodian . . . . . . . . . . . . . . . . 24
9. Effective Period, Termination and Amendment . . . . . . . . 26
10. Successor Custodian . . . . . . . . . . . . . . . . . . . . 27
11. Interpretive and Additional Provisions . . . . . . . . . . . 29
12. Additional Funds . . . . . . . . . . . . . . . . . . . . . . 29
<PAGE>
13. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . 29
14. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . 30
15. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 30
- ii -
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Heritage Convertible Income-Growth 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 shall 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 the 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 2.12 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 Custodian only upon receipt of
<PAGE>
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; 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) Upon the sale of such securities for the account
of the Fund, to the broker or its clearing agent,
against a receipt, for examination in accordance
with "street delivery" custom; provided that in
any such case, the Custodian shall have no
responsibility or liability for any loss arising
from the delivery of such securities prior to
receiving payment for such securities except as
may arise from the Custodian's own negligence or
willful misconduct;
- 2 -
<PAGE>
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;
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 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
- 3 -
<PAGE>
or other arrangements in connection with
transactions by the Fund;
13) For delivery in accordance with the provisions of
any agreement among the Fund, the Custodian, and
a Futures Commission Merchant registered under
the Commodity Exchange Act, relating to
compliance with the rules of the Commodity
Futures Trading Commission and/or any Contract
Market, or any similar organization or
organizations, regarding account deposits in
connection with transactions by the Fund;
14) Upon receipt of instructions from the Fund's
transfer agent ("Transfer Agent") for delivery to
such 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 ("Registration
Statement"), in satisfaction of requests by
holders of Shares for repurchase or redemption;
and
15) 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;
16) 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 the 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
purpose to be a proper corporate purpose, and
- 4 -
<PAGE>
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 a
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 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 Availability of Federal Funds. Upon mutual agreement between the
Fund and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions, 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.
- 5 -
<PAGE>
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 its agent thereof and shall credit such
income, dividends and other 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, futures
contracts or options on futures contracts for the
account of the Fund but only (a) against the
delivery of such securities, or evidence of title
to futures contracts or options on futures
contracts, 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 2.12 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
- 6 -
<PAGE>
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 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 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.
- 7 -
<PAGE>
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 Board of Trustees of the Fund
pursuant thereto, the Custodian shall, upon receipt of
instructions from the Transfer Agent, make funds available for
payment to holders of Shares 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 Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by the Fund in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Exchange Act, 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;
- 8 -
<PAGE>
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 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.
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
- 9 -
<PAGE>
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 or
accounts 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 (or
any futures commission merchant registered under the Commodity
Exchange Act), relating to compliance with the rules of The
Options Clearing Corporation and of any registered national
securities exchange (or the Commodity Futures Trading Commission
or any registered contract market), 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 securities in connection with
options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold 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
- 10 -
<PAGE>
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 and the maturity of futures contracts purchased or
sold 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 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 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 to give such 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 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;
- 11 -
<PAGE>
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.
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 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 Registration Statement 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 Registration Statement and in accordance with
the requirements of the 1940 Act and the rules thereunder.
- 12 -
<PAGE>
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
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 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, futures contracts and options on
futures contracts, 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 to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination, and, if there are no such inadequacies, the reports
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.
- 13 -
<PAGE>
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 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 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 from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, 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 promptly, 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 the date hereof, 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
- 14 -
<PAGE>
certificate of the Secretary or an Assistant Secretary that the Board of
Trustees of the Fund have approved the initial use of a particular
Securities System and the receipt of an annual certificate of the
Secretary or an Assistant Secretary that the Board of Trustees have
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 the 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
court of competent jurisdiction.
Upon termination of the Contract, the Fund shall pay to the
Custodian such compensation as may be due as of the date of such
termination and shall likewise 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, 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 Board of
Trustees shall have been delivered to the Custodian on or before the date
when such 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 held by the
Custodian hereunder and all instruments held by the Custodian relative
- 15 -
<PAGE>
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 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 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.
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
shares 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
- 16 -
<PAGE>
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
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
October, 1986.
ATTEST HERITAGE CONVERTIBLE INCOME-GROWTH
TRUST
/s/ Linda Champagne By /s/ Richard K. Riess
-------------------- --------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
Officer By Officer
---------------------- --------------------------------
Assistant Secretary Vice President
- 17 -
<PAGE>
HERITAGE CONVERTIBLE INCOME-GROWTH 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 CONVERTIBLE INCOME-GROWTH TRUST
/s/ Linda Champagne By /s/ Richard K. Riess
----------------------- -------------------------------------
ATTEST STATE STREET BANK AND TRUST COMPANY
/s/ Officer By /s/ Officer
----------------------- -------------------------------------
- 18 -
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Custodian Fee Schedule
Heritage Convertible Income - Growth Trust
I. Administration
--------------
Custody, Portfolio and Fund Accounting Service - Maintain custody
of fund assets. Settle portfolio purchases and sales. Report
buy and sell fails. Determine and collect portfolio income.
Make cash disbursements and report cash transactions. Maintain
investment ledgers, provide selected portfolio transactions,
position and income reports. Maintain general ledger and capital
stock accounts. Prepare daily trial balance. Calculate net
asset value daily. Provide selected general ledger reports.
Securities yield or market value quotations will be provided to
State Street by the fund.
The administration fee shown below is an annual charge, billed
and payable monthly, based on average monthly net assets.
ANNUAL FEES PER PORTFOLIO
-------------------------
Custody, Portfolio
Fund Net Assets & Fund Acct.
--------------- --------------------
First $20 Million 1/ 15 of 1%
Next $80 Million 1/ 30 of 1%
Excess 1/100 of 1%
Minimum Monthly Charges $2,000
II. Portfolio Trades - For each line
item processed
--------------------------------
State Street Bank Repos $ 7.00
DTC or Fed Book Entry $12.00
New York Physical Settlements $25.00
All other trades $16.00
<PAGE>
III. Options
-------
Option charge for each option
written or closing contract, per
issue, per broker $25.00
Option expiration charge, per issue,
per broker $15.00
Option exercised charge, per issue,
per broker $15.00
IV. Lending of Securities
---------------------
Deliver loaned securities versus
cash collateral $20.00
Deliver loaned securities versus
securities collateral $30.00
Receive/deliver additional cash
collateral $ 6.00
Substitutions of securities
collateral $30.00
Deliver cash collateral versus
receipt of loaned securities $15.00
Deliver securities collateral versus
receipt of loaned securities $25.00
Loan administration -- mark-to-
market per day, per loan $ 3.00
V. Interest Rate Futures
---------------------
Transactions -- no security movement $ 8.00
VI. Coupon Bonds
------------
Monitoring for calls and processing
coupons -- for each coupon issue
held -- monthly charge $ 5.00
<PAGE>
VII. Holdings Charge
---------------
For each issue maintained -- monthly
charge $ 5.00
VIII. Paydown on Government Securities
--------------------------------
Per paydown $10.00
IX. Dividend Charges (For items held at
the Request of Traders over record
date in street form) $50.00
X. Special Services
----------------
Fees for activities of a non-recurring nature such as
fund consolidations or reorganizations, extraordinary
security shipments and the preparation of special
reports will be subject to negotiation. Fees for tax
accounting/recordkeeping for options, financial futures,
and other special items will be negotiated separately.
XI. Out-of-Pocket Expenses
----------------------
A billing for the recovery of applicable out-of-pocket
expenses will be made as of the end of each month. Out-
of-pocket expenses include, but are not limited to the
following:
Telephone
Wire Charges
Postage and Insurance
Courier Service
Duplicating
Legal Fees
Supplies Related to Fund Records
Rush Transfer -- $8.00 Each
Transfer Fees
Sub-custodian Charges
Price Waterhouse Audit Letter
Federal Reserve Fee for Return Check items over
$2,500 - $4.25
GNMA Transfer - $15 each
<PAGE>
Heritage Convertible STATE STREET BANK AND TRUST CO.
Income - Growth Trust
By By /s/ Joseph L. Hooley
_________________________ ________________________________
Title ______________________ Title Vice President
Date Date 9/12/86
_______________________ _________________________________
<PAGE>
<PAGE>
021387-1
TRANSFER AGENCY AND SERVICE AGREEMENT
between
HERITAGE CONVERTIBLE INCOME-GROWTH TRUST
and
STATE STREET BANK AND TRUST COMPANY
Ald 1/85
<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 . . . . . . . . . . . . . . . 12
Article 8 Assignment . . . . . . . . . . . . . . . . . . . . . . 13
Article 9 Amendment . . . . . . . . . . . . . . . . . . . . . . 14
Article 10 Merger of Agreement . . . . . . . . . . . . . . . . . 14
Article 11 Miscellaneous . . . . . . . . . . . . . . . . . . . . 14
Article 12 Massachusetts Law to Apply . . . . . . . . . . . . . . 15
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
AGREEMENT made as of the 31st day of October, 1986, by and
between HERITAGE CONVERTIBLE INCOME-GROWTH 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");
- 1 -
<PAGE>
(ii) pursuant to purchase orders, issue the
appropriate number of Shares and hold such Shares
in the appropriate account of the Shareholder;
(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
- 2 -
<PAGE>
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
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 law 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.
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:
- 4 -
<PAGE>
(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
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
- 5 -
<PAGE>
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 indem-
nified 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.
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 -
<PAGE>
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.
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.
- 7 -
<PAGE>
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)(1) of
the Securities Exchange Act of 1934 ("Section 17A(c)(1)"), (ii) a BFDS
subsidiary duly registered as a transfer agent pursuant to Section
17A(c)(1), 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
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
- 8 -
<PAGE>
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.
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 CONVERTIBLE INCOME-GROWTH TRUST
BY: /s/ Richard K. Riess
------------------------------------
ATTEST:
/s/ Linda Champagne
----------------
STATE STREET BANK AND TRUST COMPANY
BY: /s/ Officer
---------------------------------
Vice President
ATTEST:
/s/ Officer
-------------------
Assistant Secretary
- 9 -
<PAGE>
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 INCOME-GROWTH TRUST
(formerly Heritage Convertible Income-Growth 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 Income-
Growth Trust the actual cost of servicing accounts, not to exceed a charge
of $7.00 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 $7.00 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 INCOME-GROWTH TRUST HERITAGE ASSET MANAGEMENT
By /s/ Donald H. Glassman By /s/ Stephen G. Hill
---------------------------- ----------------------
Title Treasurer President
------------------------- ----------------------
Date 11/15/93 11/15/93
------------------------- ----------------------
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
Heritage Convertible Income - Growth Trust
_________________________________________________________________
GENERAL - Fees are based on an annual per shareholder account charge for
account maintenance plus out-of-pocket expenses. There is a minimum of
$2,000 per month per fund. Annual maintenance charges for various kinds
of mutual funds are given below. There is a minimum charge per fund on
the following schedule:
ANNUAL MAINTENANCE CHARGES - Fees are billable on a monthly basis at the
rate of 1/12 of the annual fee. A charge is made for an account in the
month that an account opens or closes.
Load Funds
Basic annual per account fee $ 8.00
This includes the processing of
up to 4 share transactions per
account.
Any manual share transaction
over 4 per year $ 1.50 Each
OTHER FEES
New Account Set up, each $ 4.00
Disaster Recovery/Emergency backup per account,
per year $ .25
Closed Accounts - per account, per month $ .10
OUT-OF-POCKET EXPENSES - Out-of-Pocket expenses include but are not
limited to: confirmation production, postage, forms, telephone,
microfilm, microfiche, and 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 charged against the fund's custodian checking
account five (5) days after the invoice is mailed to the fund's offices.
<PAGE>
Heritage Convertible Income - STATE STREET BANK AND TRUST CO.
Growth Trust
By By /s/ Joseph Littouley
-------------------------- -----------------------
Title Title Vice President
---------------------- --------------------
Date Date 9/12/86
------------------------ --------------------
<PAGE>
STATE STREET BANK AND TRUST COMPANY
Fee Schedules
SERVICE FOR KEOGH, IRA, 403(b) PLANS
Heritage Convertible Income - Growth Trust
_________________________________________________________________
I. KEOGH
Trustees Fees
Application processing fee $ 5.00
Annual maintenance fee $10.00 for each
fund account
Fee for lump sum distribution
of benefits in cash, shares,
annuity, government bonds; or
return of excess contributions;
or withdrawal of employee
contributions $10.00
II. INDIVIDUAL RETIREMENT ACCOUNT
Schedule of Custodian's Fees
Establishing the account $5.00
Annual maintenance fee per fund
account $10.00
Processing a lump sum
distribution $10.00
III. 403(b) PLANS
Administrative Service Fees
Processing the application $ 5.00
Annual maintenance per account $10.00
Processing a lump sum
distribution $10.00
Purchasing of annuity contract
upon distribution $10.00
<PAGE>
Heritage Convertible Income - STATE STREET BANK AND TRUST CO.
Growth Trust
By By /s/ Joseph L. Hooley
-------------------------- ------------------------
Title Title Vice President
------------------------ -----------------------
Date Date 9/12/86
------------------------ ----------------------
<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).
- 1 -
<PAGE>
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;
- 2 -
<PAGE>
(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
- 3 -
<PAGE>
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
- 4 -
<PAGE>
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
- 5 -
<PAGE>
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
- 6 -
<PAGE>
(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.
- 7 -
<PAGE>
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.
- 8 -
<PAGE>
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
Income - Growth Trust:
We consent to the inclusion in Post-Effective Amendment
No. 12 to the Registration Statement of Heritage Income-Growth Trust on
Form N-1A of our report dated November 27, 1995 on our audit of the
financial statements and financial highlights of the 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.
Boston, Massachusetts Coopers & Lybrand L.L.P.
January 24, 1996
<PAGE>
<PAGE>
October 24, 1986
Heritage Convertible Income-Growth Trust
1400 66th Street North
St. Petersburg, Florida 33710
Re: Letter of Investment Intent
Dear Sirs:
Please be advised that the $100,000 investment in Heritage
Convertible Income-Growth Trust being made on or about this date by RJ
Fund Management, Inc. is being made as an investment with no present
intention of redeeming or reselling such shares.
Very truly yours,
RJ FUND MANAGEMENT, INC.
/s/ Richard K. Riess
-------------------------
by Richard K. Riess
President
RKR:md
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 INCOME-GROWTH TRUST
OF CLASS A
DISTRIBUTION PLAN
WHEREAS, Heritage Income-Growth 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, 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 up to .50% of the Trust's
average daily net assets. 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 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.
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 until it has been approved by a vote of
<PAGE>
at least a majority of such Class' outstanding voting securities, as
defined in the 1940 Act, voting separately from any other Class 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 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 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 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.
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: December 5, 1986, as restated on April 3, 1995
- 2 -
<PAGE>
<PAGE>
HERITAGE INCOME-GROWTH TRUST
CLASS C
DISTRIBUTION PLAN
WHEREAS, Heritage Income-Growth 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 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 1.00% of the Trust's average
daily net assets. 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 which 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.
3. ADDITIONAL COMPENSATION. This Plan shall not be
construed to prohibit or limit additional compensation derived from sales
<PAGE>
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.
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
<PAGE>
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
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
HERITAGE INCOME-GROWTH TRUST
CALCULATION OF RETURN
Return Since One-Year Five-Year
Inception Return Return
------------ -------- --------
<S> <C> <C> <C>
Ending Date 9/30/93 9/30/93 9/30/93
Inception Date 12/17/86 09/30/92 09/30/88
----------- ---------- ----------
Days Since Inception 2479 365 1826
=========== ========= ==========
Years Since Inception 6.79 1.00 5.00
Beginning Offering Price 9.90 11.26 9.56
Ending Net Asset Value 12.28 12.28 12.28
Dividend Factor 1.3472299 1.024970 1.261790
--------- -------- --------
Ending Net Asset Value 16.5448 12.5866 15.4948
Adjusted for Dividend --------- -------- --------
Reinvestments
Annualized return 7.85% 11.78% 10.13%
Formula for since inception (((16.54)/(9.90))^(1/6.79))-1
Formula for One Year (((12.59)/(11.26))^(1))-1
Formula for Five Years (((15.49)/(9.56))^(1/5))-1
Beginning NAV 9.50 10.81 9.18
Ending Net Asset Value 12.28 12.28 12.28
Dividend Factor 1.347299 1.024970 1.261790
Ending Net Asset Value --------- --------- ---------
Adjusted for Dividend Reinvestment 16.5448 12.5866 15.4948
--------- --------- ---------
Cumulative Total Return 74.16% 16.44% 68.79%
Formula for since inception (16.54-9.50)/9.50
Formula for One Year (12.59-10.81)/10.81
Formula for Five Years (15.49-9.18)/9.18
</TABLE>
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000798075
<NAME> HERITAGE INCOME GROWTH TRUST
<SERIES>
<NUMBER> 1
<NAME> (CLASS A)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-1-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 28,826,331
<INVESTMENTS-AT-VALUE> 34,740,056
<RECEIVABLES> 220,642
<ASSETS-OTHER> 34,784,561
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,005,203
<PAYABLE-FOR-SECURITIES> 240,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 143,225
<TOTAL-LIABILITIES> 383,225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,174,954
<SHARES-COMMON-STOCK> 2,757,004
<SHARES-COMMON-PRIOR> 2,877,873
<ACCUMULATED-NII-CURRENT> 193,122
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 340,177
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,913,725
<NET-ASSETS> 34,621,978
<DIVIDEND-INCOME> 886,472
<INTEREST-INCOME> 608,341
<OTHER-INCOME> 0
<EXPENSES-NET> 530,104
<NET-INVESTMENT-INCOME> 964,709
<REALIZED-GAINS-CURRENT> 450,201
<APPREC-INCREASE-CURRENT> 4,404,647
<NET-CHANGE-FROM-OPS> 5,819,557
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,158,232
<DISTRIBUTIONS-OF-GAINS> 1,189,190
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 181,769
<NUMBER-OF-SHARES-REDEEMED> 511,531
<SHARES-REINVESTED> 208,893
<NET-CHANGE-IN-ASSETS> 2,012,926
<ACCUMULATED-NII-PRIOR> 879,829
<ACCUMULATED-GAINS-PRIOR> 1,957,213
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 242,172
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 530,104
<AVERAGE-NET-ASSETS> 32,289,566
<PER-SHARE-NAV-BEGIN> 11.33
<PER-SHARE-NII> 0.27
<PER-SHARE-GAIN-APPREC> 1.79
<PER-SHARE-DIVIDEND> 0.34
<PER-SHARE-DISTRIBUTIONS> 0.49
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.56
<EXPENSE-RATIO> 1.64
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
<PAGE>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000798075
<NAME> HERITAGE INCOME GROWTH TRUST
<SERIES>
<NUMBER> 1
<NAME> (CLASS C)
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-1-1994
<PERIOD-END> SEP-30-1995
<INVESTMENTS-AT-COST> 28,826,331
<INVESTMENTS-AT-VALUE> 34,740,056
<RECEIVABLES> 220,642
<ASSETS-OTHER> 34,784,561
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35,005,203
<PAYABLE-FOR-SECURITIES> 240,000
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 143,225
<TOTAL-LIABILITIES> 383,225
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 28,174,954
<SHARES-COMMON-STOCK> 2,757,004
<SHARES-COMMON-PRIOR> 2,877,873
<ACCUMULATED-NII-CURRENT> 193,122
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 340,177
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5,913,725
<NET-ASSETS> 34,621,978
<DIVIDEND-INCOME> 886,472
<INTEREST-INCOME> 608,341
<OTHER-INCOME> 0
<EXPENSES-NET> 530,104
<NET-INVESTMENT-INCOME> 964,709
<REALIZED-GAINS-CURRENT> 450,201
<APPREC-INCREASE-CURRENT> 4,404,647
<NET-CHANGE-FROM-OPS> 5,819,557
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,158,232
<DISTRIBUTIONS-OF-GAINS> 1,189,190
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 181,769
<NUMBER-OF-SHARES-REDEEMED> 511,531
<SHARES-REINVESTED> 208,893
<NET-CHANGE-IN-ASSETS> 2,012,926
<ACCUMULATED-NII-PRIOR> 879,829
<ACCUMULATED-GAINS-PRIOR> 1,957,213
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 242,172
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 530,104
<AVERAGE-NET-ASSETS> 32,289,566
<PER-SHARE-NAV-BEGIN> 11.21
<PER-SHARE-NII> 0.18
<PER-SHARE-GAIN-APPREC> 1.28
<PER-SHARE-DIVIDEND> 0.16
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 12.51
<EXPENSE-RATIO> 2.40
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
