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022 C000002 10170
022 D000002 8675
022 A000003 DEAN WITTER REYNOLDS
022 B000003 94-1671384
022 C000003 10018
<PAGE> PAGE 2
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022 A000004 MARK TWAIN BANK
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022 C000004 3067
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<PAGE> PAGE 3
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<PAGE> PAGE 4
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<PAGE> PAGE 5
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<PAGE> PAGE 6
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<PAGE> PAGE 7
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<PAGE> PAGE 8
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<PAGE> PAGE 9
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SIGNATURE STEPHEN G. HILL
TITLE PRESIDENT
<PAGE>
<PAGE>
For period ended 09-30-96
File Number 811-5853
Sub-Item 77.B
Series 1 & 2
Suite 2800 Telephone (813) 223-7577
400 North Ashley Street
P.O.Box 2640
Tampa, FL 33601-2640
__________________________________________________________________________
PRICE WATERHOUSE LLP
November 12, 1996
To the Board of Trustees
of Heritage Income Trust
In planning and performing our audit of the financial statements of the
Heritage Income Trust (the 'Trust') for the year ended September 30, 1996,
we considered its internal control structure, including procedures for
safeguarding securities, in order to determine our auditing procedures for
the purposes of expressing our opinion on the financial statements and to
comply with the requirements of Form N-SAR, and not to provide assurance
on the internal control structure.
The management of the Trust is responsible for establishing and
maintaining an internal control structure. In fulfilling this
responsibility, estimates and judgments by management are required to
assess the expected benefits and related costs of internal control
structure policies and procedures. Two of the objectives of an internal
control structure are to provide management with reasonable, but not
absolute, assurance that assets are appropriately safeguarded against loss
from unauthorized use or disposition and that transactions are executed in
accordance with management's authorization and recorded properly to permit
preparation of financial statements in conformity with generally accepted
accounting principles.
Because of inherent limitations in any internal control structure, errors
or irregularities may occur and may not be detected. Also, projection of
any evaluation of the structure to future periods is subject to the risk
that it may become inadequate because of changes in conditions or that the
effectiveness of the design and operation may deteriorate.
<PAGE>
To the Board of Trustees
of Heritage Income Trust
Page 2
November 12, 1996
Our consideration of the internal control structure would not necessarily
disclose all matters in the internal control structure that might be
material weaknesses under standards established by the American Institute
of Certified Public Accountants. A material weakness is a condition in
which the design or operation of the specific internal control structure
elements does not reduce to a relatively low level the risk that errors or
irregularities in amounts that would be material in relation to the
financial statements being audited may occur and not be detected within a
timely period by employees in the normal course of performing their
assigned functions. However, we noted no matters involving the internal
control structure, including procedures for safeguarding securities, that
we consider to be material weaknesses as defined above as of September 30,
1996.
This report is intended solely for the information and use of management
and the Securities and Exchange Commission.
/s/ Price Waterhouse LLP
-------------------------------
Price Waterhouse LLP
<PAGE>
<PAGE>
For period ending 09-30-96
File Number 811-5853
Sub-Item 77.C
Series 2
77.C. Matters submitted to a vote of securities holders.
The following matters were submitted to a vote of
securities holders at a special meeting of shareholders of Heritage Income
Trust - High Yield Bond Fund ("Fund") held on January 24, 1995:
(1) Approval of a modified investment objective of
high current income for the Fund: 1,505,288.656 shares were voted in
favor of, 155,119.345 shares were voted against, and 61,374.963 abstained
from voting on the motion to approve the modified investment objective of
high current income for the Fund.
(2) Approval of an Investment Subadvisory Agreement
between Heritage Asset Management, Inc. and Salomon Brothers Asset
Management Inc with respect to the Fund: 1,532,052.681 shares were voted
in favor of, 103,511.454 shares were voted against, and 86,218.829
abstained from voting on the motion to approve the Investment Subadvisory
Agreement between Heritage Asset Management, Inc. and Salomon Brothers
Asset Management Inc.
<PAGE>
<PAGE>
For period ending 09-30-96
File Number 811-5853
Sub-Item 77.D
Series 1 & 2
77.D. Policies with respect to securities investments.
The Heritage Income Trust - High Yield Bond Fund ("Fund")
modified its non-fundamental investment policies to allow for investment
of up to 100% -- rather than up to 50% -- of the Fund's assets in lower-
rated high yield securities and in securities rated BBB by Standard &
Poor's or Baa by Moody's Investors Service, Inc. or deemed to be of
comparable quality by the Fund's investment subadviser. To be consistent
with these new policies, the Fund further modified its fundamental
investment objective so that the Fund could seek high current income as
opposed to high current income consistent with the preservation of
capital.
The Heritage Income Trust - Intermediate Government Fund
("Government Fund") changed its non-fundamental investment policies to an
intermediate term as opposed to a short or limited term portfolio and
changed the weighted average portfolio maturity of the Government Fund
from less than five years to between three and ten years.
<PAGE>
<PAGE>
For period ending 09-30-96
File Number 811-5853
Sub-Item 77.K
Series 1 & 2
Exhibit A
77.K. Changes in Registrant's Certifying Accountant.
(a) Previous independent accountants
(1) On April 11, 1996, the auditor relationship between
Heritage Income Trust ("Trust") and Coopers & Lybrand L.L.P. ("C&L") was
terminated.
(2) The reports of C&L on the financial statements for the
fiscal years ended 1994 and 1995 contained no adverse opinion or
disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
(3) The decision to change independent accountants was
approved by the Trust's Board of Trustees.
(4) In connection with its audits for the fiscal years ended
1994 and 1995 and through the interim period preceding the termination,
there have been no disagreements with C&L on any matter of accounting
principles or practices, financial statements disclosure, or auditing
scope of procedure which disagreements if not resolved to the satisfaction
of C&L would have caused them to make reference thereto in their report on
the financial statements for such years.
(5) During the fiscal years ended 1994 and 1995 and through
the interim period preceding the termination, there have been no
reportable events (as defined in Regulation S-K Item 304(a)(1)(v)) with
C&L.
(6) The Trust has requested that C&L furnish it with a letter
addressed to the Securities and Exchange Commission stating whether it
agrees with the above statements. A copy of such letter, dated
November 26, 1996, is filed as EXHIBIT B to this Form N-SAR.
(b) New independent accountants
The Trust engaged Price Waterhouse LLP as its new independent
public accountants as of April 11, 1996. During the two most recent
fiscal years and through April 11, 1996, the Trust has not consulted with
Price Waterhouse LLP on items that (1) were or should have been subject to
SAS 50 or (2) concerned the subject matter of a disagreement or reportable
event with the former auditor (as described in Regulation S-K Item
304(a)(2).
<PAGE>
For period ending 09-30-96
File Number 811-5853
Sub-Item 77.K
Series 1 & 2
Exhibit B
November 26, 1996
Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549
Gentlemen:
We have read the statements made by Heritage Income Trust (copy
attached), which we understand will be filed with the Commission, pursuant
to Item 77K, as part of the Trust's Form N-SAR report for the year ended
September 30, 1996. We agree with the statements concerning our Firm in
such Form N-SAR.
Very truly yours,
/s/ Coopers & Lybrand
Coopers & Lybrand L.L.P.
Attachment
<PAGE>
<PAGE>
For period ending 09-30-96
File Number 811-5853
Sub-Item 77.O
77.O. Transactions effected pursuant to Rule 10f-3.
The following information relates to the sole transaction
effected by Heritage Income Trust pursuant to Rule 10f-3 during the annual
period September 30, 1996:
Security: Trump Atlantic City
Date of purchase: 4/11/96
Date offering commenced: 4/11/96
Purchase price: $100.00
Commission: $0.03 (3.0%)
Securities acquired from: Donaldson, Lufkin & Jenrette
Securities, Corp.
Amount purchased: $500,000
Total Offering: $1.2 billion
<PAGE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
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<NUMBER> 1
<NAME> INTERMEDIATE GOVERNMENT FUND - CLASS A
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<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> $19,724,071
<INVESTMENTS-AT-VALUE> $19,424,388
<RECEIVABLES> $1,207,681
<ASSETS-OTHER> $15,342
<OTHER-ITEMS-ASSETS> $0
<TOTAL-ASSETS> $20,647,411
<PAYABLE-FOR-SECURITIES> $2,485,165
<SENIOR-LONG-TERM-DEBT> $0
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<TOTAL-LIABILITIES> $2,531,410
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<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> ($7,217,625)
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> ($299,683)
<NET-ASSETS> $18,116,001
<DIVIDEND-INCOME> $0
<INTEREST-INCOME> $1,342,595
<OTHER-INCOME> $0
<EXPENSES-NET> $199,164
<NET-INVESTMENT-INCOME> $1,143,431
<REALIZED-GAINS-CURRENT> $109,860
<APPREC-INCREASE-CURRENT> ($549,553)
<NET-CHANGE-FROM-OPS> $703,738
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<NET-CHANGE-IN-ASSETS> ($5,986,251)
<ACCUMULATED-NII-PRIOR> $1,614,516
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<GROSS-ADVISORY-FEES> $0
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $332,894
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<PER-SHARE-NAV-BEGIN> $9.29
<PER-SHARE-NII> $0.50
<PER-SHARE-GAIN-APPREC> ($0.21)
<PER-SHARE-DIVIDEND> $0.50
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<PAGE>
<ARTICLE> 6
<SERIES>
[NUMBER] 1
<NAME> INTERMEDIATE GOVERNMENT FUND - CLASS C
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> SEP-30-1996
[INVESTMENTS-AT-COST] $19,724,071
[INVESTMENTS-AT-VALUE] $19,424,388
[RECEIVABLES] $1,207,681
[ASSETS-OTHER] $15,342
[OTHER-ITEMS-ASSETS] $0
[TOTAL-ASSETS] $20,647,411
[PAYABLE-FOR-SECURITIES] $2,485,165
[SENIOR-LONG-TERM-DEBT] $0
[OTHER-ITEMS-LIABILITIES] $46,245
[TOTAL-LIABILITIES] $2,531,410
[SENIOR-EQUITY] $0
[PAID-IN-CAPITAL-COMMON] $24,935,800
[SHARES-COMMON-STOCK] 1,995,001
[SHARES-COMMON-PRIOR] 2,644,129
[ACCUMULATED-NII-CURRENT] $697,509
[OVERDISTRIBUTION-NII] $0
[ACCUMULATED-NET-GAINS] ($7,217,625)
[OVERDISTRIBUTION-GAINS] $0
[ACCUM-APPREC-OR-DEPREC] ($299,683)
[NET-ASSETS] $18,116,001
[DIVIDEND-INCOME] $0
[INTEREST-INCOME] $1,342,595
[OTHER-INCOME] $0
[EXPENSES-NET] $199,164
[NET-INVESTMENT-INCOME] $1,143,431
[REALIZED-GAINS-CURRENT] $109,860
[APPREC-INCREASE-CURRENT] ($549,553)
[NET-CHANGE-FROM-OPS] $703,738
[EQUALIZATION] $0
[DISTRIBUTIONS-OF-INCOME] $1,167,488
[DISTRIBUTIONS-OF-GAINS] $0
[DISTRIBUTIONS-OTHER] $0
[NUMBER-OF-SHARES-SOLD] 176,370
[NUMBER-OF-SHARES-REDEEMED] (934,655)
[SHARES-REINVESTED] 109,157
[NET-CHANGE-IN-ASSETS] ($5,986,251)
[ACCUMULATED-NII-PRIOR] $1,614,516
[ACCUMULATED-GAINS-PRIOR] ($712,069)
[OVERDISTRIB-NII-PRIOR] $0
[OVERDIST-NET-GAINS-PRIOR] $0
[GROSS-ADVISORY-FEES] $0
[INTEREST-EXPENSE] $0
[GROSS-EXPENSE] $7,049
[AVERAGE-NET-ASSETS] $377,529
[PER-SHARE-NAV-BEGIN] $9.27
[PER-SHARE-NII] $0.49
[PER-SHARE-GAIN-APPREC] ($0.21)
[PER-SHARE-DIVIDEND] $0.49
[PER-SHARE-DISTRIBUTIONS] $0.00
[RETURNS-OF-CAPITAL] $0.00
[PER-SHARE-NAV-END] $9.06
[EXPENSE-RATIO] 1.20
[AVG-DEBT-OUTSTANDING] $0
[AVG-DEBT-PER-SHARE] $0
<PAGE>
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> HIGH YIELD BOND FUND - A SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> $38,425,159
<INVESTMENTS-AT-VALUE> $38,989,367
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<TOTAL-ASSETS> $40,639,443
<PAYABLE-FOR-SECURITIES> $756,250
<SENIOR-LONG-TERM-DEBT> $0
<OTHER-ITEMS-LIABILITIES> $276,390
<TOTAL-LIABILITIES> $1,032,640
<SENIOR-EQUITY> $0
<PAID-IN-CAPITAL-COMMON> $40,249,690
<SHARES-COMMON-STOCK> 3,879,307
<SHARES-COMMON-PRIOR> 3,083,609
<ACCUMULATED-NII-CURRENT> $229,488
<OVERDISTRIBUTION-NII> $0
<ACCUMULATED-NET-GAINS> ($1,436,583)
<OVERDISTRIBUTION-GAINS> $0
<ACCUM-APPREC-OR-DEPREC> $564,208
<NET-ASSETS> $39,606,803
<DIVIDEND-INCOME> $0
<INTEREST-INCOME> $3,227,942
<OTHER-INCOME> $0
<EXPENSES-NET> $424,168
<NET-INVESTMENT-INCOME> $2,803,774
<REALIZED-GAINS-CURRENT> $970,631
<APPREC-INCREASE-CURRENT> ($58,735)
<NET-CHANGE-FROM-OPS> $3,715,670
<EQUALIZATION> $0
<DISTRIBUTIONS-OF-INCOME> $2,667,376
<DISTRIBUTIONS-OF-GAINS> $0
<DISTRIBUTIONS-OTHER> $0
<NUMBER-OF-SHARES-SOLD> 1,524,750
<NUMBER-OF-SHARES-REDEEMED> (930,406)
<SHARES-REINVESTED> 201,354
<NET-CHANGE-IN-ASSETS> $7,911,842
<ACCUMULATED-NII-PRIOR> $2,378,363
<ACCUMULATED-GAINS-PRIOR> ($1,106,214)
<OVERDISTRIB-NII-PRIOR> $0
<OVERDIST-NET-GAINS-PRIOR> $0
<GROSS-ADVISORY-FEES> $105,734
<INTEREST-EXPENSE> $0
<GROSS-EXPENSE> $459,915
<AVERAGE-NET-ASSETS> $30,386,588
<PER-SHARE-NAV-BEGIN> $9.94
<PER-SHARE-NII> $0.84
<PER-SHARE-GAIN-APPREC> $0.24
<PER-SHARE-DIVIDEND> $0.80
<PER-SHARE-DISTRIBUTIONS> $0.00
<RETURNS-OF-CAPITAL> $0.00
<PER-SHARE-NAV-END> $10.22
<EXPENSE-RATIO> 1.23
<AVG-DEBT-OUTSTANDING> $0
<AVG-DEBT-PER-SHARE> $0
<PAGE>
<ARTICLE> 6
<SERIES>
[NUMBER] 2
<NAME> HIGH YIELD BOND FUND - C SHARES
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> SEP-30-1995
<PERIOD-END> SEP-30-1996
[INVESTMENTS-AT-COST] $38,425,159
[INVESTMENTS-AT-VALUE] $38,989,367
[RECEIVABLES] $1,636,361
[ASSETS-OTHER] $13,715
[OTHER-ITEMS-ASSETS] $0
[TOTAL-ASSETS] $40,639,443
[PAYABLE-FOR-SECURITIES] $756,250
[SENIOR-LONG-TERM-DEBT] $0
[OTHER-ITEMS-LIABILITIES] $276,390
[TOTAL-LIABILITIES] $1,032,640
[SENIOR-EQUITY] $0
[PAID-IN-CAPITAL-COMMON] $40,249,690
[SHARES-COMMON-STOCK] 3,879,307
[SHARES-COMMON-PRIOR] 3,083,609
[ACCUMULATED-NII-CURRENT] $229,488
[OVERDISTRIBUTION-NII] $0
[ACCUMULATED-NET-GAINS] ($1,436,583)
[OVERDISTRIBUTION-GAINS] $0
[ACCUM-APPREC-OR-DEPREC] $564,208
[NET-ASSETS] $39,606,803
[DIVIDEND-INCOME] $0
[INTEREST-INCOME] $3,227,942
[OTHER-INCOME] $0
[EXPENSES-NET] $424,168
[NET-INVESTMENT-INCOME] $2,803,774
[REALIZED-GAINS-CURRENT] $970,631
[APPREC-INCREASE-CURRENT] ($58,735)
[NET-CHANGE-FROM-OPS] $3,715,670
[EQUALIZATION] $0
[DISTRIBUTIONS-OF-INCOME] $2,667,376
[DISTRIBUTIONS-OF-GAINS] $0
[DISTRIBUTIONS-OTHER] $0
[NUMBER-OF-SHARES-SOLD] 1,524,750
[NUMBER-OF-SHARES-REDEEMED] (930,406)
[SHARES-REINVESTED] 201,354
[NET-CHANGE-IN-ASSETS] $7,911,842
[ACCUMULATED-NII-PRIOR] $2,378,363
[ACCUMULATED-GAINS-PRIOR] ($1,106,214)
[OVERDISTRIB-NII-PRIOR] $0
[OVERDIST-NET-GAINS-PRIOR] $0
[GROSS-ADVISORY-FEES] $105,734
[INTEREST-EXPENSE] $0
[GROSS-EXPENSE] $58,560
[AVERAGE-NET-ASSETS] $2,953,669
[PER-SHARE-NAV-BEGIN] $9.91
[PER-SHARE-NII] $0.79
[PER-SHARE-GAIN-APPREC] $0.24
[PER-SHARE-DIVIDEND] $0.76
[PER-SHARE-DISTRIBUTIONS] $0.00
[RETURNS-OF-CAPITAL] $0.00
[PER-SHARE-NAV-END] $10.18
[EXPENSE-RATIO] 1.70
[AVG-DEBT-OUTSTANDING] $0
[AVG-DEBT-PER-SHARE] $0
<PAGE>
</TABLE>
