<PAGE> 1
[INCOME
GROWTH
TRUST
LOGO]
[pictures of people working and playing]
From Our Family to Yours: The Intelligent Creation of Wealth.
Semiannual Report
(Unaudited) and Investment Performance
Review for the Six-month Period Ended
March 31, 1997
[HERITAGE LOGO]
-----------------
INCOME-GROWTH
TRUST(TM)
-----------------
<PAGE> 2
May 1, 1997
Dear Fellow Shareholders:
I am pleased to provide you with the semiannual report for Heritage
Income-Growth Trust (the "Fund") for the six-month period ended March 31, 1997.
During this period your Fund continued to participate in the gains of a
generally bullish stock market while providing reduced volatility relative to
the overall market. For the semiannual period, your Fund's A shares and C shares
registered gains of 8.05% and 7.65%, respectively.* During the recent very
volatile period for the stock market, your Fund has performed in line with our
expectations by participating in most of the gains on up days and falling less
than the market averages on down days. In short, the Fund has provided a
smoother ride for shareholders.
In the letter that follows, Lou Kirschbaum and David Blount, the portfolio
managers for your Fund, expand on the Fund's recent performance and share their
thoughts on the outlook for your Fund's portfolio. I hope you find their
comments instructive in understanding how your Fund's investment portfolio is
managed.
Since our last report, we have modified many of our shareholder documents,
such as our recent prospectus updates, in an effort to make them easier to
understand. We hope you find these changes to be positive. Please let us know
what you think by calling us at 800-709-3863.
On behalf of all of us at Heritage, thank you for your investments with us.
We look forward to helping to serve your investment needs for years to come.
Sincerely,
/s/ STEPHEN G. HILL
Stephen G. Hill
President
- ---------------
* These returns are calculated without the imposition of front- or back-end
sales charges.
<PAGE> 3
May 1, 1997
Dear Fellow Shareholders:
One of our principal missions in managing the Heritage Income-Growth Trust
(the "Fund") is to provide less volatility through difficult markets. To this
end, we maintain a defensive posture as a rule, not merely when the market turns
choppy. The past six months have provided a test of our defensive tactics, and
we are pleased to note that they have been quite effective. The Fund's best
performance (relative to the general market) has consistently occurred on days
when the market has declined.
We use a variety of tools to achieve our goal of participating as fully as
possible when the market is rising, while providing a measure of safety when it
is not. Security positions held by the Fund are broadly diversified among
dividend-paying stocks, convertible bonds and convertible preferred stocks, and
real estate investment trusts (REITs). We also make selective use of covered
call option writing in an effort to reduce the volatility of the Fund's
day-to-day performance.
Coming into the current year, we expressed the view that equity returns
seemed likely to fall in a range of 5%-10% in 1997. The assumptions underlying
this conclusion were that corporate earnings might be up about 7%-10% for the
year and that the interest rate environment would be friendly to financial
assets, in other words, that rates would finish the year not much higher than
where they started.
At this juncture, we see no reason to alter this forecast. Profits have
been coming in at the high end of the range of expectations, and interest rates
are up only modestly. If these conditions persist, stock market returns in the
5%-10% range would seem to be a reasonable result. If conditions should change,
however, and stocks miss this mark, we would hope that your Fund will provide a
cushion against a market decline.
Sincerely,
<TABLE>
<S> <C>
/s/ LOU KIRSCHBAUM /s/ DAVID BLOUNT
Lou Kirschbaum David Blount
Senior Vice President Vice President
Eagle Asset Management, Inc. Eagle Asset Management, Inc.
Portfolio Manager, Income-Growth Trust Portfolio Manager, Income-Growth Trust
</TABLE>
2
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS--68.0%(A)
- --------------------------------------------------------------------------------------------
ADVERTISING/COMMUNICATIONS--1.6%
- --------------------------------------------------------------------------------------------
20,000 Omnicom Group, Inc.......................................... $ 997,500
-----------
AUTO/TRUCK MANUFACTURERS--0.8%
- --------------------------------------------------------------------------------------------
15,000 Ford Motor Company.......................................... 470,625
-----------
BANKING--6.1%
- --------------------------------------------------------------------------------------------
5,500 Bankers Trust New York Corporation.......................... 451,000
12,000 Chase Manhattan Corporation(c).............................. 1,123,500
6,000 Jefferson-Pilot Corporation, ACES, 7.25%.................... 592,500
8,000 Mellon Bank Corporation(c).................................. 582,000
10,000 NationsBank Corporation(c).................................. 553,750
8,500 Norwest Corporation......................................... 393,125
-----------
3,695,875
-----------
CONGLOMERATES/DIVERSIFIED--2.7%
- --------------------------------------------------------------------------------------------
13,000 Chemed Corporation.......................................... 469,625
20,000 Harsco Corporation.......................................... 727,500
14,000 Thermo Electron Corporation*................................ 432,250
-----------
1,629,375
-----------
DATA PROCESSING--2.1%
- --------------------------------------------------------------------------------------------
15,000 Automatic Data Processing, Inc.............................. 628,125
16,078 Electronic Data Systems Corporation(c)...................... 649,149
-----------
1,277,274
-----------
ELECTRONICS/ELECTRIC--2.4%
- --------------------------------------------------------------------------------------------
10,000 General Electric Company.................................... 992,500
10,000 Philips Electronics N.V., NY Shares, ADR.................... 445,000
-----------
1,437,500
-----------
FINANCE--3.5%
- --------------------------------------------------------------------------------------------
12,000 American Express Company.................................... 718,500
18,000 Associates First Capital Corporation(c)..................... 774,000
17,000 Federal National Mortgage Association(c).................... 614,125
-----------
2,106,625
-----------
FOOD--1.3%
- --------------------------------------------------------------------------------------------
20,000 H.J. Heniz Company*......................................... 790,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
HEALTH CARE CENTERS--0.5%
- --------------------------------------------------------------------------------------------
8,000 Vencor, Inc.*............................................... $ 303,000
-----------
HOTELS/MOTELS/INNS--0.9%
- --------------------------------------------------------------------------------------------
10,500 Marriott International, Inc................................. 522,375
-----------
HOUSEHOLD PRODUCTS--1.3%
- --------------------------------------------------------------------------------------------
7,000 Procter & Gamble Company(c)................................. 805,000
-----------
INSURANCE--2.1%
- --------------------------------------------------------------------------------------------
7,000 Marsh & McLennan Companies, Inc............................. 792,750
10,000 Travelers Group, Inc.(c).................................... 478,750
-----------
1,271,500
-----------
LAND DEVELOPMENT/REAL ESTATE--1.1%
- --------------------------------------------------------------------------------------------
40,000 Security Capital US Realty(e)............................... 560,000
4,411 The Rouse Company*.......................................... 129,022
-----------
689,022
-----------
LEISURE/AMUSEMENT--0.8%
- --------------------------------------------------------------------------------------------
6,500 Eastman Kodak Company(c).................................... 493,188
-----------
MANUFACTURING/DISTRIBUTIONS--0.2%
- --------------------------------------------------------------------------------------------
2,011 Cooper Industries, Inc...................................... 87,227
-----------
OFFICE EQUIPMENT--1.4%
- --------------------------------------------------------------------------------------------
26,000 Wallace Computer Services, Inc.............................. 861,250
-----------
OIL & GAS--5.8%
- --------------------------------------------------------------------------------------------
15,000 Ashland, Inc................................................ 603,750
6,000 Exxon Corporation........................................... 646,500
5,500 Mobil Corporation........................................... 718,438
8,000 Schlumberger, Ltd.(c)....................................... 858,000
6,000 Texaco, Inc.*............................................... 657,000
-----------
3,483,688
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
PHARMACEUTICAL--8.5%
- --------------------------------------------------------------------------------------------
7,500 Abbott Laboratories......................................... $ 420,937
8,500 Eli Lilly & Company(c)...................................... 699,125
8,000 Merck & Company, Inc.(c).................................... 674,000
6,500 Pfizer, Inc................................................. 546,813
25,000 Pharmacia & Upjohn, Inc..................................... 915,625
6,000 Schering-Plough Corporation................................. 436,500
10,000 SmithKline Beecham, PLC, ADR(c)............................. 700,000
9,000 Warner-Lambert Company...................................... 778,500
-----------
5,171,500
-----------
PUBLISHING--2.1%
- --------------------------------------------------------------------------------------------
15,000 McGraw-Hill Companies, Inc.................................. 766,875
9,000 Reuters Holdings PLC, ADR................................... 523,687
-----------
1,290,562
-----------
REAL ESTATE INVESTMENT TRUST--14.3%
- --------------------------------------------------------------------------------------------
32,000 Alexander Haagen Properties, Inc............................ 444,000
12,000 Allied Capital Commercial Corporation....................... 289,500
10,000 Bay Apartment Communities, Inc.............................. 358,750
25,000 Brandywine Realty Trust..................................... 506,250
20,000 Cali Realty Corporation..................................... 640,000
12,000 Health Care Property Investors, Inc......................... 397,500
20,000 Highwoods Properties, Inc................................... 670,000
11,500 Kilroy Realty Corporation*.................................. 306,188
29,512 LTC Properties, Inc......................................... 490,637
10,000 Manufactured Home Communities, Inc.......................... 218,750
25,000 Meridian Industrial Trust, Inc.............................. 578,125
12,000 Patriot American Hospitality, Inc........................... 291,000
20,000 Public Storage, Inc......................................... 580,000
23,958 Security Capital Industrial Trust*.......................... 500,122
10,000 Sovran Self Storage, Inc.................................... 307,500
15,000 Spieker Properties, Inc..................................... 585,000
15,000 Starwood Lodging Trust...................................... 585,000
10,000 Storage USA, Inc............................................ 368,750
18,200 Sun Communities, Inc........................................ 582,400
-----------
8,699,472
-----------
RETAIL STORES--0.8%
- --------------------------------------------------------------------------------------------
25,000 Intimate Brands, Inc........................................ 471,875
-----------
TELECOMMUNICATIONS--1.4%
- --------------------------------------------------------------------------------------------
15,000 Frontier Corporation(c)..................................... 268,125
13,000 GTE Corporation............................................. 606,125
-----------
874,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
TOBACCO--1.3%
- --------------------------------------------------------------------------------------------
7,000 Philip Morris Companies, Inc.(c)............................ $ 798,875
-----------
UTILITIES-ELECTRIC--1.9%
- --------------------------------------------------------------------------------------------
13,000 FPL Group, Inc.............................................. 573,625
15,000 NIPSCO Industries, Inc...................................... 588,750
-----------
1,162,375
-----------
UTILITIES-GAS--2.5%
- --------------------------------------------------------------------------------------------
25,000 UGI Corporation............................................. 593,750
17,000 Wicor, Inc.................................................. 578,000
7,500 Williams Companies, Inc..................................... 333,750
-----------
1,505,500
-----------
UTILITIES-WATER--0.6%
- --------------------------------------------------------------------------------------------
16,000 American Water Works Company, Inc........................... 336,000
-----------
Total common stocks (cost $33,160,257)...................... 41,231,433
-----------
CONVERTIBLE PREFERRED STOCKS--15.1%(A)
- --------------------------------------------------------------------------------------------
BROADCASTING--0.8%
- --------------------------------------------------------------------------------------------
60,000 Triathlon Broadcasting Company, Series "A", 9.0%............ 495,000
-----------
FILMED ENTERTAINMENT--0.9%
- --------------------------------------------------------------------------------------------
15,000 AMC Entertainment, Inc., Series "B", $1.75.................. 510,000
-----------
FINANCE--0.4%
- --------------------------------------------------------------------------------------------
5,000 MCN Financing III, 8.0%..................................... 245,625
-----------
FOOD SERVING--0.8%
- --------------------------------------------------------------------------------------------
10,000 Wendy's Financing, Series "A", 5.0%......................... 506,250
-----------
GLASS/PRODUCTS--1.2%
- --------------------------------------------------------------------------------------------
10,000 Corning Delaware, L.P., Series "M", 6.0%, MIPS.............. 708,750
-----------
LAND DEVELOPMENT/REAL ESTATE--0.8%
- --------------------------------------------------------------------------------------------
10,000 The Rouse Company, Series "B", $3.00*....................... 490,000
-----------
MANUFACTURING/DISTRIBUTIONS--1.4%
- --------------------------------------------------------------------------------------------
45,000 Cooper Industries, Inc., 6.0%............................... 821,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
MINING/DIVERSIFIED--0.9%
- --------------------------------------------------------------------------------------------
20,000 Freeport-McMoran Copper & Gold Mine, Inc., Series "A",
7.0%........................................................ $ 565,000
-----------
OIL & GAS--0.9%
- --------------------------------------------------------------------------------------------
10,000 Unocal Capital Trust, 6.25%................................. 543,590
-----------
PUBLISHING--0.6%
- --------------------------------------------------------------------------------------------
7,500 Golden Books Financial Trust, 8.75%......................... 373,613
-----------
REAL ESTATE INVESTMENT TRUST--0.5%
- --------------------------------------------------------------------------------------------
10,000 Felcor Suite Hotels, Inc., Series "A", $1.95................ 285,000
-----------
RETAIL STORES--0.7%
- --------------------------------------------------------------------------------------------
8,000 Kmart Financing Corporation, 7.75%.......................... 428,000
-----------
SERVICES--1.9%
- --------------------------------------------------------------------------------------------
11,100 Service Corporation International Finance, Series "A",
$3.125...................................................... 1,132,200
-----------
TELECOMMUNICATIONS--1.1%
- --------------------------------------------------------------------------------------------
20,000 Sprint Corporation, 8.25%................................... 687,500
-----------
UTILITIES-DIVERSIFIED--0.8%
- --------------------------------------------------------------------------------------------
10,000 Citizens Utilities Trust Company, 5.0%...................... 506,250
-----------
UTILITIES--GAS--1.4%
- --------------------------------------------------------------------------------------------
8,200 Williams Companies, Inc., $3.50............................. 857,728
-----------
Total convertible preferred stocks (cost $8,445,411)........ 9,155,756
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
--------- -------- -----------
<C> <S> <C> <C>
CONVERTIBLE BONDS--11.7%(A)
- -------------------------------------------------------------------------------------------
AIR TRANSPORT--1.2%
- -------------------------------------------------------------------------------------------
$500,000 Air Wisconsin Services, 7.75%............................... 06/15/10 $ 498,750
250,000 Reno Air, Inc., 9.0%........................................ 09/30/02 254,788
-----------
753,538
-----------
AUTO PARTS/EQUIPMENT--0.9%
- -------------------------------------------------------------------------------------------
500,000 Magna International, Inc., 5.0%............................. 10/15/02 536,695
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
--------- -------- -----------
<C> <S> <C> <C>
BANKING--1.0%
- -------------------------------------------------------------------------------------------
$500,000 BankAtlantic Bancorp, Inc., 6.75%........................... 07/01/06 $ 613,750
-----------
CONGLOMERATES/DIVERSIFIED--1.3%
- -------------------------------------------------------------------------------------------
750,000 Thermo Electron Corporation, 4.25%.......................... 01/01/03 774,720
-----------
FOOD SERVING--0.7%
- -------------------------------------------------------------------------------------------
1,000,000 Shoney's, Inc., Zero Coupon Bond............................ 04/11/04 408,860
-----------
HEALTH CARE CENTERS--0.6%
- -------------------------------------------------------------------------------------------
300,000 Tenet Healthcare Corporation, 6.0%.......................... 12/01/05 344,796
-----------
HOTELS/MOTELS/INNS--1.2%
- -------------------------------------------------------------------------------------------
750,000 Hilton Hotels Corporation, 5.0%............................. 05/15/06 751,845
-----------
MANUFACTURING/DISTRIBUTIONS--0.4%
- -------------------------------------------------------------------------------------------
217,000 Cooper Industries, Inc., 7.05%.............................. 01/01/15 228,062
-----------
METALS--0.1%
- -------------------------------------------------------------------------------------------
250,000 Phoenix Shannon, PLC, 9.5%(d)............................... 11/01/00 50,000
-----------
OFFICE EQUIPMENT--0.4%
- -------------------------------------------------------------------------------------------
300,000 U.S. Office Products Company, 5.5%.......................... 11/01/00 249,000
-----------
OIL & GAS--1.4%
- -------------------------------------------------------------------------------------------
750,000 Lomak Petroleum, Inc., 6.0%................................. 02/01/07 879,375
-----------
PHARMACEUTICAL--0.4%
- -------------------------------------------------------------------------------------------
200,000 ICN Pharmaceuticals, Inc., 8.5%............................. 11/15/99 231,250
-----------
RETAIL STORES--1.4%
- ---------------------------------------------------------------------------------
600,000 Home Depot, Inc., 3.25%..................................... 10/01/01 595,764
250,000 Pier 1 Imports, Inc., 5.75%................................. 10/01/03 289,110
-----------
884,874
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
--------- -------- -----------
<C> <S> <C> <C>
TELECOMMUNICATIONS--0.7%
- ---------------------------------------------------------------------------------
$500,000 MIDCOM Communications, Inc., 8.25%.......................... 08/15/03 $ 432,500
-----------
Total convertible bonds (cost $7,192,047)................... 7,139,265
-----------
Total investment portfolio excluding repurchase agreement and covered call
options written (cost $48,797,715)............................................... 57,526,454
-----------
REPURCHASE AGREEMENT--6.1%(A)
- ---------------------------------------------------------------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated March 31,
1997, @ 6.10%, to be repurchased at $3,705,628 on April 1, 1997, collateralized
by $3,684,470 United States Treasury Bonds, 7.25%, due May 15, 2016, (market
value $3,785,030 including interest) (cost $3,705,000)........................... 3,705,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $52,502,715)(B), 100.9%(A)...................... $61,231,454
-----------
</TABLE>
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C> <C>
COVERED CALL OPTIONS WRITTEN--(0.4%)(A)*
- ---------------------------------------------------------------------------------------
Associates First Capital Corporation
4,000 June 1997 @ 45............................................ (6,500)
4,000 June 1997 @ 40............................................ (17,500)
Chase Manhattan Corporation
2,000 April 1997 @ 95........................................... (4,500)
2,000 May 1997 @ 95............................................. (7,750)
5,000 June 1997 @ 100........................................... (16,875)
Eastman Kodak Company
3,000 July 1997 @ 85............................................ (4,313)
3,500 July 1997 @ 80............................................ (10,500)
Electronic Data Systems Corporation
5,000 June 1997 @ 42.5.......................................... (9,062)
5,000 June 1997 @ 40............................................ (14,687)
Eli Lilly & Company
2,500 April 1997 @ 80........................................... (10,938)
2,500 April 1997 @ 75........................................... (20,000)
Federal National Mortgage Association
5,000 September 1997 @ 40....................................... (9,375)
Frontier Corporation
2,500 April 1997 @ 20........................................... (469)
Mellon Bank Corporation
2,000 May 1997 @ 75............................................. (3,750)
4,000 June 1997 @ 80............................................ (5,250)
Merck & Company, Inc.
3,000 July 1997 @ 95............................................ (5,813)
NationsBank Corporation
2,500 May 1997 @ 57.5........................................... (6,094)
5,000 August 1997 @ 62.5........................................ (12,188)
Philip Morris Companies, Inc.
2,500 May 1997 @ 120............................................ (9,063)
2,500 June 1997 @ 140........................................... (2,188)
Procter & Gamble Company
3,000 July 1997 @ 115........................................... (22,500)
Schlumberger, Ltd.
5,000 May 1997 @ 115............................................ (6,250)
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
INVESTMENT PORTFOLIO
MARCH 31, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C> <C>
SmithKline Beecham, PLC, ADR
2,000 May 1997 @ 70............................................. $ (7,500)
2,000 May 1997 @ 65............................................. (14,500)
Travelers Group, Inc.
3,500 April 1997 @ 50........................................... (8,530)
2,500 May 1997 @ 47.5........................................... (7,030)
3,500 June 1997 @ 55............................................ (3,500)
-----------
TOTAL COVERED CALL OPTIONS WRITTEN (PREMIUMS RECEIVED $353,709)(B)........... (246,625)
-----------
OTHER ASSETS AND LIABILITIES (0.5%)(A)....................................... (313,822)
-----------
NET ASSETS 100.0%............................................................ $60,671,007
===========
</TABLE>
- ---------------
* Non-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 $8,835,823, which
consists of aggregate gross unrealized appreciation for all securities in
which there is an excess of market value over tax cost of $9,871,714 and
aggregate gross unrealized depreciation for all securities in which there
is an excess of tax cost over market value of $1,035,891.
(c) A portion of these shares were held by the custodian in connection with
covered call options written.
(d) Security is in default and is being valued using a method that the Board of
Trustees believe reflects its fair market value.
(e) Foreign security, denominated in US dollars.
ACES -- Adjustable Convertible Extendable Securities
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
- ------------------------------------------------------------
Investments, at market value (identified cost $52,502,715)
(Note 1).................................................. $61,231,454
Cash........................................................ 912
Receivables:
Fund shares sold.......................................... 274,339
Dividends and interest.................................... 247,263
Investments sold.......................................... 72,591
Deferred state registration expenses (Note 1)............... 13,170
-----------
Total assets........................................ 61,839,729
Liabilities
- ------------------------------------------------------------
Payables (Note 4):
Investments purchased..................................... $ 706,225
Fund shares redeemed...................................... 83,450
Accrued management fee.................................... 39,343
Accrued distribution fee.................................. 20,005
Other accrued expenses.................................... 73,074
Covered call options written, at market value (premiums
received $353,709) (Notes 1 and 3)........................ 246,625
----------
Total liabilities................................... 1,168,722
-----------
Net assets, at market value................................. $60,671,007
===========
Net Assets
- ------------------------------------------------------------
Net assets consist of:
Paid-in capital (Note 1).................................. $50,037,439
Undistributed net investment income (Note 1).............. 348,966
Accumulated net realized gain on investments and covered
call options written (Note 1)........................... 1,448,779
Net unrealized appreciation on investments and covered
call options written.................................... 8,835,823
-----------
Net assets, at market value................................. $60,671,007
===========
Class A Shares
- ------------------------------------------------------------
Net asset value and redemption price per share ($49,587,368
divided by 3,524,812 shares of beneficial interest
outstanding, no par value) (Notes 1 and 2)................ $14.07
=====
Maximum offering price per share (100/95.25 of $14.07)...... $14.77
=====
Class C Shares
- ------------------------------------------------------------
Net asset value, offering price and redemption price per
share ($11,083,639 divided by 794,667 shares of beneficial
interest outstanding, no par value) (Notes 1 and 2)....... $13.95
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 13
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED MARCH 31, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
- ------------------------------------------------------------
Income:
Dividends................................................. $ 768,691
Interest.................................................. 410,427
----------
Total income........................................ 1,179,118
Expenses (Notes 1 and 4):
Management fee............................................ $208,219
Distribution fee (Class A Shares)......................... 59,110
Distribution fee (Class C Shares)......................... 41,184
Professional fees......................................... 28,671
Custodian/Fund accounting fees............................ 27,472
Amortization of state registration expenses............... 14,848
Shareholder servicing fees................................ 13,228
Reports to shareholders................................... 5,395
Trustees' fees and expenses............................... 4,131
Insurance................................................. 2,553
Other..................................................... 4,643
--------
Total expenses...................................... 409,454
----------
Net investment income....................................... 769,664
----------
Realized and Unrealized Gain on Investments
- ------------------------------------------------------------
Net realized gain from investment transactions.............. 2,346,317
Net realized loss from covered call options written (Note
1)........................................................ (374,418)
Net increase in unrealized appreciation of investments
during the period......................................... 1,036,119
Net increase in unrealized appreciation of covered call
options written during the period......................... 185,978
----------
Net gain on investments............................. 3,193,996
----------
Net increase in net assets resulting from
operations.......................................... $3,963,660
==========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED FOR THE
MARCH 31, 1997 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 769,664 $ 1,036,265
Net realized gain from investment transactions............ 2,346,317 4,940,798
Net realized gain (loss) from covered call options
written................................................. (374,418) 130,417
Net increase in unrealized appreciation of investments and
covered call options written during the period.......... 1,222,097 1,700,001
----------- -----------
Net increase in net assets resulting from operations...... 3,963,660 7,807,481
Dividends and distributions to shareholders from:
Net investment income, Class A Shares ($.20 and $.35 per
share, respectively).................................... (600,660) (966,884)
Net investment income, Class C Shares ($.16 and $.29 per
share, respectively).................................... (73,646) (20,249)
Net realized gains, Class A Shares ($1.49 and $.25 per
share, respectively).................................... (4,547,678) (676,674)
Net realized gains, Class C Shares ($1.49 and $.25 per
share, respectively).................................... (698,646) (8,701)
Increase in net assets from Fund share transactions (Note
2)........................................................ 13,726,242 8,144,784
----------- -----------
Increase in net assets...................................... 11,769,272 14,279,757
Net assets, beginning of period............................. 48,901,735 34,621,978
----------- -----------
Net assets, end of period (including undistributed net
investment income of $348,966 and $253,608,
respectively)............................................. $60,671,007 $48,901,735
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 14
- --------------------------------------------------------------------------------
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 SHARES
------------------------------------------------------------ ---------------------------------
FOR THE SIX FOR THE SIX FOR THE YEARS
MONTH PERIOD MONTH PERIOD ENDED
ENDED FOR THE YEARS ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
MARCH 31, 1997 ------------------------------------------- MARCH 31, 1997 ----------------
(UNAUDITED) 1996 1995 1994 1993 1992 (UNAUDITED) 1996 1995+
-------------- ------- ------ ------ ------ ------ -------------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF THE PERIOD............ $ 14.67 $ 12.56 $11.33 $12.28 $10.81 $ 9.87 $ 14.57 $ 12.51 $11.21
------- ------- ------ ------ ------ ------ ------- ------- ------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment Income.... 0.21 0.36 0.27 0.30 0.39 0.28 0.15 0.26 0.18
Net realized and
unrealized gain (loss)
on investments......... 0.88 2.35 1.79 (0.09) 1.44 1.02 0.88 2.34 1.28
------- ------- ------ ------ ------ ------ ------- ------- ------
Total from Investment
Operations............. 1.09 2.71 2.06 0.21 1.83 1.30 1.03 2.60 1.46
------- ------- ------ ------ ------ ------ ------- ------- ------
LESS DISTRIBUTIONS:
Dividends from net
investment income...... (0.20) (0.35) (0.34) (0.24) (0.36) (0.36) (0.16) (0.29) (0.16)
Distributions from net
realized gain on
investments............ (1.49) (0.25) (0.49) (0.92) -- -- (1.49) (0.25) --
------- ------- ------ ------ ------ ------ ------- ------- ------
Total Distributions...... (1.69) (0.60) (0.83) (1.16) (0.36) (0.36) (1.65) (0.54) (0.16)
------- ------- ------ ------ ------ ------ ------- ------- ------
NET ASSET VALUE, END OF
PERIOD................... $ 14.07 $ 14.67 $12.56 $11.33 $12.28 $10.81 $ 13.95 $ 14.57 $12.51
======= ======= ====== ====== ====== ====== ======= ======= ======
TOTAL RETURN (%)(D)........ 8.05(c) 22.26 19.57 1.80 16.44 13.42 7.65(c) 21.37 13.18(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses to
average daily net
assets(a).............. 1.37(b) 1.51 1.64 1.64 1.72 1.75 2.10(b) 2.13 2.40(b)
Net investment income to
average daily net
assets................. 2.88(b) 2.66 4.63 2.62 2.67 2.77 2.16(b) 2.05 4.61(b)
Portfolio turnover
rate................... 30(c) 75 42 99 130 71 30(c) 75 42
Average commission rate
on portfolio
transactions........... $0.0597 $0.0595 -- -- -- -- $0.0597 $0.0595 --
Net assets, end of period
($ millions)............. 50 43 34 33 34 27 11 6 0.2
</TABLE>
- ---------------
+ For the period April 3, 1995 (commencement of Class C Shares) to August 31,
1995.
(a) Excludes management fees waived by the Manager in the amount of less than
$.01 per Class A Share, for the year ended September 30, 1992. The operating
expense ratio including such items would have been 1.75% per Class A Share,
for the year ended September 30, 1992. The year 1993 includes previously
waived management fees paid to the Manager of less than $.01 per share.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales charge.
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 15
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Income-Growth Trust (the
"Fund") is organized as a Massachusetts business trust and is
registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end management investment company. The Fund's
investment objective is long-term total return by seeking, with
approximately equal emphasis, current income and capital appreciation.
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 preparation of financial statements in accordance with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts and
disclosures. Actual results could differ from those estimates. The
following is a summary of significant accounting policies:
Security Valuation: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, market value is based on the last bid 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.
Expenses: The Fund is charged for those expenses that are directly
attributable to it, such as management fee, custodian/fund accounting
fees, distribution fee, etc., while other expenses such as professional
fees, insurance expense, etc., are allocated proportionately among the
funds. Expenses of the Fund are allocated to each class of shares based
upon their relative percentage of current net assets. All expenses that
are directly attributable to a specific class of shares, such as
distribution fees, are allocated to that class.
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 that 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 that 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: Distributions from net investment income and net
realized gains are determined in accordance with federal income tax
regulations, which may differ from generally accepted accounting
principles. To the extent these "book/tax" differences are permanent in
nature (i.e., that they result from other than timing of recognition --
"temporary"), such accounts are reclassified within the capital
accounts based on their federal tax-basis treatment; temporary
differences do not require reclassification.
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.
14
<PAGE> 16
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Note 2: FUND SHARES. At March 31, 1997, 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 six-month period
ended March 31, 1997 and for the year ended September 30, 1996 were as
follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
MARCH 31, 1997 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1996
----------------------- -----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 473,775 $ 6,862,247 560,355 $ 7,805,081
Shares issued on reinvestment of distributions........... 365,821 4,914,471 120,132 1,556,515
Shares redeemed.......................................... (250,116) (3,613,879) (484,726) (6,620,313)
--------- ----------- --------- -----------
Net increase............................................. 589,480 $ 8,162,839 195,761 $ 2,741,283
=========== ===========
Shares outstanding:
Beginning of period.................................... 2,935,332 2,739,571
--------- ---------
End of period.......................................... 3,524,812 2,935,332
========= =========
</TABLE>
Transactions in Class C Shares of the Fund during the six-month period
ended March 31, 1997 and for the year ended September 30, 1996 were as
follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
MARCH 31, 1997 FOR THE YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1996
---------------------- --------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- -------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................. 453,617 $ 6,532,061 397,688 $5,605,737
Shares issued on reinvestment of distributions.............. 54,462 727,041 2,008 26,420
Shares redeemed............................................. (114,307) (1,695,699) (16,234) (228,656)
-------- ----------- ------- ----------
Net increase................................................ 393,772 $ 5,563,403 383,462 $5,403,501
=========== ==========
Shares outstanding:
Beginning of period....................................... 400,895 17,433
-------- -------
End of period............................................. 794,667 400,895
======== =======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the six-month period ended March
31, 1997, purchases and sales of investment securities (excluding
repurchase agreements) aggregated $26,684,056 and $14,745,033,
respectively. Agency brokerage commissions for the same period
aggregated $45,078 of which $13,759 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, 1996.............................. 840 $ 227,669
Written................................................... 1,835 669,514
Closed.................................................... (1,150) (359,093)
Exercised................................................. (197) (64,403)
Expired................................................... (505) (119,978)
Corporate Actions......................................... 67 --
------ ---------
Outstanding March 31, 1997.................................. 890 $ 353,709
====== =========
</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. From October 1, 1995 to January 31, 1996,
the Manager voluntarily agreed to waive its fee to the extent that Fund
operating expenses exceed 1.65% and 2.40% 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. From February 1, 1996
to February 2, 1997, the Manager has voluntarily agreed to waive its
fee to the extent that Fund operating expenses exceed 1.60% and 2.35%
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. Effective February 3, 1997, the Manager has voluntarily agreed
to waive its fee and if necessary reimburse the Fund to the extent
that Fund operating expenses exceed 1.50% for Class A
15
<PAGE> 17
- --------------------------------------------------------------------------------
HERITAGE INCOME-GROWTH TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Shares and 2.25% for Class C Shares on an annual basis of the Fund's
average daily net assets. Under these agreements, no fees were waived
and no expenses were reimbursed for the period ended March 31, 1997.
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 expenses limitations.
The Manager also is the Dividend Paying and Shareholder Servicing Agent
for the Fund. The amount payable to the Manager for such expenses as of
March 31, 1997 was $6,900. In addition, the Manager performs Fund
accounting services and charged $16,144 during the current period of
which $7,800 was payable as of March 31, 1997.
Raymond James & Associates, Inc. (the "Distributor") has advised the
Fund that it received $167,732 in front-end sales charges and $1,436 in
contingent deferred sales charges for the six months ended March 31,
1997. The Distributor paid commissions to salespersons and from these
fees incurred other distribution costs.
Pursuant to the Class A Distribution Plan adopted in accordance with
Rule 12b-1 of the Investment Company Act of 1940, as amended, the Fund
is authorized to pay the Distributor a fee equal to .25% of the average
daily net assets for Class A Shares. Under the Class C Distribution
Plan the Fund may pay the Distributor a fee equal to 1.00% of the
average daily net assets for Class C Shares. Such fees are accrued
daily and payable monthly. During the period $59,110 and $41,184 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, investment
companies that also are 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.
Note 5: FEDERAL INCOME TAXES. For the year ended September 30, 1996, to reflect
reclassifications arising from permanent book/tax differences primarily
attributable to market discount, the Fund credited undistributed net
investment income $11,354, and debited paid in capital $8,541 and
accumulated net realized gain $2,813.
16
<PAGE> 18
HERITAGE FAMILY OF FUNDS (TM)
From Our Family to Yours: The Intelligent Creation of Wealth.
HERITAGE MONEY MARKET FUNDS
Cash Trust Money Market
Cash Trust Municipal Money Market
HERITAGE BOND FUNDS
Intermediate Government
High Yield
HERITAGE STOCK FUNDS
Income-Growth
Value Equity
Growth Equity
Capital Appreciation
Small Cap
International
This report is for the information of shareholders of Heritage Income-Growth
Trust. It may also be used as sales literature when preceded or accompanied by a
prospectus.
(C)1997 Heritage Asset Management, Inc.
4M 3/97 [RECYCLE LOGO] Printed on recycled paper
[HERITAGE LOGO] Heritage Income-Growth Trust
P.O. Box 33022
St. Petersburg, FL 33733
- ----------------------------------------------------------------
Address Change Requested
