<PAGE>
As filed with the Securities and Exchange Commission on November 30, 1995
Registration No. 33-57986
__________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. _____ [ ]
Post-Effective Amendment No. __10__ [ X ]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. _11_ [ X ]
(Check appropriate box or boxes.)
HERITAGE SERIES TRUST
(Exact name of Registrant as specified in charter)
880 Carillon Parkway
St. Petersburg, FL 33716
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (813) 573-3800
STEPHEN G. HILL, PRESIDENT
880 Carillon Parkway
St. Petersburg, FL 33716
(Name and Address of Agent for Service)
Copy to:
CLIFFORD J. ALEXANDER, ESQ.
Kirkpatrick & Lockhart LLP
1800 M Street, N.W.
Washington, D.C. 20036
It is proposed that this filing will become effective on December 26, 1995
pursuant to paragraph (b)(1) of Rule 485.
Registrant has filed a notice pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended, on or about November 14, 1995.
Page 1 of ____ Pages
Exhibit Index Appears on Page____
<PAGE>
HERITAGE SERIES TRUST
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Amendment to Prospectus
Prospectus - Eagle International Equity Portfolio - Eagle
Class Shares
Statement of Additional Information - Eagle International
Equity Portfolio - Eagle Class Shares
Part C of Form N-1A
Signature Page
Exhibits
<PAGE>
HERITAGE SERIES TRUST
FORM N-1A CROSS-REFERENCE SHEET
PART A ITEM NO. PROSPECTUS CAPTION
--------------- ------------------
1. Cover Page Cover Page
2. Synopsis About the Portfolio--Expense
Summary
3. Condensed Financial Amendment to Prospectus
Information
4. General Description of Cover Page; About the Portfolio-
Registrant Objective, How the Objective is
Pursued, Other Investment
Policies and Risk Factors,
Organization and
History; Amendment to Prospectus
5. Management of the Fund About the Portfolio-How the
Portfolio is Managed
5A. Management's Discussion Inapplicable
of Fund Performance
6. Capital Stock and Other Cover Page; About the Portfolio-
Information Other Investment Policies and
Risk Factors; About Your
Investment-How Distributions are
Made; Tax Information
7. Purchase of Securities Being About the Portfolio-Distribution
Offered Plan; About Your Investment-How
to Buy Shares, How to Sell
Shares
8. Redemption or Repurchase About Your Investment-How to
Sell Shares
9. Pending Legal proceedings Inapplicable
STATEMENT OF ADDITIONAL
PART B ITEM NO. INFORMATION CAPTION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
<PAGE>
12. General Information and General Information
History
13. Investment Objectives and Investment Information-
Policies Investment Objective and
Investment Policies;
Investment Restrictions
14. Management of the Fund Portfolio Information-Trustees
and Officers
15. Control Persons and Inapplicable
Principal Holders of
Securities
16. Investment Advisory and Portfolio Information-Investment
Other Services Adviser, Subadviser,
Distribution of Shares and
Administration of the Portfolio
17. Brokerage Allocation Portfolio Information-Brokerage
Practices
18. Capital Stock and Other Inapplicable
Securities
19. Purchase, Redemption and Net Asset Value; Investing in
Pricing of Securities the Portfolio; Redeeming Shares
Being Offered
20. Tax Status Taxes
21. Underwriters Portfolio Information-
Distribution of Shares
22. Performance Data Performance Information
23. Financial Statements Appendix
PART C
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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>
HERITAGE SERIES TRUST
EAGLE INTERNATIONAL EQUITY PORTFOLIO -- EAGLE CLASS
Amendment dated December 26, 1995 to the Prospectus
dated February 14, 1995, as Supplemented on June 30, 1995
The following is to be read as if inserted prior to the section titled
"Objective" on page 3:
FINANCIAL HIGHLIGHTS
The following table shows important financial information for an Eagle
Class share of the Portfolio outstanding for the period 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, which may be obtained by calling the Portfolio
at the telephone number on the front page of this Prospectus.
EAGLE CLASS
FOR THE PERIOD MAY 1, 1995 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1995
<TABLE>
<CAPTION>
1995+*
------
<S> <C>
Net asset value, beginning of the period . . . . . . . $20.00
Income from Investment Operations:
Net investment loss (a) . . . . . . . . . . . . . . (.03)
Net realized and unrealized gain on investments . . 0.82
Total from investment operations . . . . . . . . . . . 0.79
Net asset value, end of the period . . . . . . . . . . $20.79
Total Return (%) (c) . . . . . . . . . . . . . . . . . 3.95
Ratios (%)/Supplemental Data:
Ratio of operating expenses, net, to average
daily net assets (a) . . . . . . . . . . . . . 2.60 (b)
Ratio of net investment loss to average daily
net assets . . . . . . . . . . . . . . . . . . (0.33) (b)
Portfolio turnover rate . . . . . . . . . . . 61.0 (b)
Net assets, end of period (millions) $10.00
___________________________________
</TABLE>
* Per share amounts have been calculated using the monthly average
share method.
<PAGE>
+ For the period May 1, 1995 (commencement of operations) to
October 31, 1995.
(a) Excludes management fees waived and expenses reimbursed by the
Manager in fiscal 1995 of $.17 per share. The operating expense
ratio including such items would be 5.09% (annualized).
(b) Annualized.
(c) Not annualized.
The following is to be read as if inserted prior to the section titled
"About Your Investment" on page 9:
The Portfolio offers three classes of shares: Eagle Class shares, Class A
shares and Class C shares. All shares issued prior to December 26, 1995
are designated Eagle Class shares. Eagle Class shares are issued without
the imposition of an initial sales charge or a contingent deferred sales
load ("CDSL"), Class A shares are subject to a front-end sales load, and
Class C shares are subject to a CDSL. These expense differences may
affect performance. This Prospectus relates solely to Eagle Class shares.
You may contact Heritage at (800) 421-4184 or a registered representative
of the Distributor, a participating dealer, or participating bank for more
information concerning Class A and Class C shares or for assistance in
determining which class is appropriate for your investment objectives.
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Eagle International Equity EAGLE INTERNATIONAL EQUITY
Portfolio PORTFOLIO
P.O. Box 10520
St. Petersburg, FL 33733
Investment Adviser
Eagle Asset Management, Inc.
P.O. Box 10520
St. Petersburg, FL 33733
(800) 237-3101
Investment Subadviser
Martin Currie Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland EH1 2ES
Distributor Prospectus
Raymond James & Associates, Inc.
P.O. Box 12749
St. Petersburg, FL 33733
(813) 573-3800
Transfer Agent/
Dividend Disbursing Agent
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
Custodian
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02105
Legal Counsel February 14, 1995
Kirkpatrick & Lockhart LLP as supplemented on June 30, 1995
Independent Accountants
Coopers & Lybrand L.L.P.
<PAGE>
ABOUT THE PORTFOLIO
Expense summary . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Objective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
How the objective is pursued . . . . . . . . . . . . . . . . . . . . . 3
Other investment policies and risk factors . . . . . . . . . . . . . . 4
How performance is shown . . . . . . . . . . . . . . . . . . . . . . . 7
How the Portfolio is managed . . . . . . . . . . . . . . . . . . . . . 8
Distribution Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Organization and history . . . . . . . . . . . . . . . . . . . . . . . 9
ABOUT YOUR INVESTMENT
How to buy shares . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
How to sell shares . . . . . . . . . . . . . . . . . . . . . . . . . 11
How the Portfolio values its shares . . . . . . . . . . . . . . . . . 12
How distributions are made; tax information . . . . . . . . . . . . . 12
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Prospectus -- February 14, 1995
Eagle International Equity Portfolio (the "Portfolio") seeks capital
appreciation principally through investment in an international portfolio
of equity securities. Income is an incidental consideration. The Portfolio
invests primarily in equity securities of companies whose principal
activities are outside of the United States. The Portfolio is a series of
Heritage Series Trust.
This Prospectus explains concisely what you should know before investing
in the Portfolio. Please read it carefully and keep it for future
reference. You can find more detailed information in the Statement of
Additional Information dated February 14, 1995, which is incorporated by
reference herein. A copy of the Statement of Additional Information, which
has been filed with the Securities and Exchange Commission, is available
free of charge and shareholder inquiries can be made by writing to Eagle
Asset Management, Inc. or by calling (800) 237-3101.
FUND SHARES ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD,
OR ANY OTHER AGENCY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
880 Carillon Parkway
P.O. Box 10520
St. Petersburg, Florida 33733-0520
(800) 237-3101
<PAGE>
ABOUT THE PORTFOLIO
EXPENSE SUMMARY
Expenses are one of several factors to consider when investing in the
Portfolio. The following table summarizes your maximum transaction costs
from investing in the Portfolio and expenses that the Portfolio expects to
incur in its first fiscal year.
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases NONE
Deferred Sales Charge NONE
Wire Redemption Fee $5.00
ANNUAL PORTFOLIO OPERATING EXPENSES
(as a percentage of average net assets)
Management Fees 1.00%
Rule 12b-1 Fees (including shareholder servicing fees) 1.00%
Other Expenses (after reimbursement) 0.60%
Total Portfolio Operating Expenses (after reimbursement) 2.60%
The table is provided to help you understand the expense of investing in
the Portfolio and the operating expenses that the Portfolio expects to
incur during its first fiscal year. Since the Portfolio has no prior
operating history, "Other Expenses" are based on estimates for the
Portfolio's first fiscal year. The Portfolio's investment adviser, Eagle
Asset Management, Inc. ("Eagle"), will voluntarily reimburse the Portfolio
to the extent that "Total Portfolio Operating Expenses," exclusive of
foreign taxes paid, exceed 2.60% of the Portfolio's average daily net
assets during the Portfolio's first fiscal year. Absent such
reimbursement, "Other Expenses" are estimated at 1.00%, and "Total
Portfolio Operating Expenses" are estimated at 3.00%. Due to the
imposition of Rule 12b-1 Fees, it is possible that long-term shareholders
of the Portfolio may pay more in total sales charges than the economic
equivalent of the maximum front-end sales charge permitted by the National
Association of Securities Dealers, Inc. The following Example shows the
estimated cumulative expenses attributable to a hypothetical $1,000
investment in shares of the Portfolio over specified periods.
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EXAMPLE
Your investment of $1,000 would incur the following expenses, assuming 5%
annual return and redemption at the end of each period:
1 year 3 years
Total Portfolio Operating Expenses $26 $81
This Example does not represent past or future expense levels. Actual
Portfolio expenses may be more or less than those shown above. Federal
regulations require the Example to assume a 5% annual return, but actual
annual return will vary.
OBJECTIVE
The Portfolio seeks capital appreciation principally through investment in
an international portfolio of equity securities. Income is an incidental
consideration. There can be no assurance that the Portfolio's investment
objective will be achieved.
HOW THE OBJECTIVE IS PURSUED
Under normal market conditions, at least 65% of the Portfolio's total
assets will be invested in common stocks (which may or may not pay
dividends), convertible bonds, convertible preferred stocks, warrants,
rights or other equity securities of foreign issuers and sponsored and
unsponsored depository receipts representing the securities of foreign
issuers (including American Depository Receipts, European Depository
Receipts, Global Depository Receipts and International Depository
Receipts, among others). Its remaining assets may be invested in foreign
debt securities, securities issued or guaranteed by the U.S. Government,
its agencies and instrumentalities, repurchase agreements and foreign and
domestic short-term investments as discussed in the Statement of
Additional Information ("SAI"). In addition, the Portfolio may invest up
to 10% of its assets in securities of other investment companies, such as
closed-end investment companies that invest in foreign markets. As a
shareholder of an investment company, the Portfolio may indirectly bear
service fees, which are in addition to the fees the Portfolio pays to its
own service providers. The Portfolio may borrow up to 10% of its total
assets from banks as a temporary measure, such as to meet higher than
anticipated redemption requests. For a further discussion of these
investment objectives and policies, see "Investment Information --
Investment Policies" in the SAI.
The Portfolio normally will invest at least 50% of its investment
portfolio in securities traded in developed foreign securities markets,
such as those included in the Morgan Stanley Capital International Europe,
Australia, Far East Index ("EAFE Index"). Countries in the EAFE Index
include Japan, France, the United Kingdom, Germany, Hong Kong and
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<PAGE>
Malaysia, among others. The Portfolio also will invest in emerging markets
(which may include investments in countries such as India, Mexico, Poland
and Singapore, for example). Emerging markets are those of countries whose
markets may not yet fully reflect the potential of the developing economy.
The Portfolio may invest in foreign currency and purchase and sell foreign
currency forward contracts and futures contracts. See "Other Investment
Policies and Risk Factors -- Futures Transactions; Foreign Currency
Transactions" below.
The Portfolio will not limit its investments to any particular type or
size of company. It may invest in companies whose earnings are believed by
the Portfolio's investment subadviser, Martin Currie Inc. (the
"Subadviser"), to be in a relatively strong growth trend, or in companies
in which significant further growth is not anticipated but whose market
value per share is thought by the Subadviser to be undervalued. It may
invest in small and relatively less well known companies, which may have
more restricted product lines or more limited financial resources than
larger, more established companies and may be more severely affected by
economic downturns or other adverse developments. Trading volume of these
companies' securities may be low and their market values may be volatile.
While the Portfolio's investment strategy generally will emphasize equity
securities, the Portfolio may invest a portion of its assets in investment
grade fixed income securities when, in the opinion of the Subadviser,
equity securities appear to be overvalued or the Subadviser otherwise
believes investing in fixed income securities affords the Portfolio the
opportunity for capital growth, as in periods of declining interest rates.
In allocating the Portfolio's assets among the various securities markets
of the world, the Subadviser will consider such factors as the condition
and growth potential of the various economies and securities markets,
currency and taxation considerations and other pertinent financial,
social, national and political factors. Under certain adverse investment
conditions, the Portfolio may restrict the number of securities markets in
which its assets will be invested, although under normal market
circumstances the Portfolio's investments will involve securities
principally traded in at least three different countries. Otherwise, there
are no prescribed limits on geographic asset distribution and the
Portfolio has the authority to invest in securities traded in securities
markets of any country in the world. The Portfolio will invest only in
markets where, in the judgment of the Subadviser, there exists an
acceptable framework of market regulation and sufficient liquidity.
The securities markets of many nations can be expected to move relatively
independently of one another because business cycles and other economic or
political events that influence one country's securities markets may have
little effect on the securities markets of other countries. By investing
in an international securities portfolio, the Portfolio seeks to reduce
the risks associated with investing in the economy of only one country.
See "Other Investment Policies and Risk Factors -- Foreign Investments --
Risk Factors" below.
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<PAGE>
Although the Portfolio will not trade primarily for short-term profits,
the Subadviser may make investments with potential for short-term
appreciation when such action is deemed desirable and in the best
interests of shareholders. In addition, for temporary defensive purposes,
the Portfolio may invest all or a major portion of its assets in (1)
foreign debt securities, (2) debt and equity securities of U.S. issuers,
and (3) obligations issued or guaranteed by the United States or a foreign
government or their respective agencies, authorities or instrumentalities.
Portfolio shares will fluctuate in value as a result of changes in the
value of its portfolio investments.
OTHER INVESTMENT POLICIES AND RISK FACTORS
The Portfolio may engage in the following investment practices, among
others, each of which involves special risks. The SAI contains more
detailed information about these practices, including limitations designed
to reduce these risks. The Portfolio's investment objective is fundamental
and may not be changed without shareholder approval. All policies of the
Portfolio described in this Prospectus may be changed by the Board of
Trustees without shareholder approval. For a further discussion of the
Portfolio's investment policies and risks, see "Investment Information" in
the SAI.
Convertible Securities. The Portfolio may invest in convertible
securities that are rated as investment grade (BBB or above by Standard &
Poor's Ratings Group ("S&P") or Baa or above by Moody's Investors Service,
Inc. ("Moody's")) at the time of purchase, or unrated convertible
securities deemed to be of comparable quality by the Subadviser.
Securities rated in the lowest category of investment grade are considered
to have speculative characteristics, and changes in economic conditions or
other circumstances are more likely to lead to a weakened capacity to make
principal and interest payments than is the case with higher grade bonds.
The Portfolio may retain a security that subsequently has been downgraded
below investment grade if, in the Subadviser's opinion, it is in the
Portfolio's best interest. The Portfolio also may invest up to 5% of its
assets in convertible securities rated below investment grade by S&P or
Moody's or unrated securities deemed to be below investment grade by the
Subadviser. The price of lower-rated securities tends to be less sensitive
to interest rate changes than the price of 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 SAI for a discussion of the risks associated
with these lower-rated securities and the Appendix to the SAI for a
description of S&P's and Moody's corporate bond ratings.
Foreign Investments -- Risk Factors. The Portfolio's investments in
securities of foreign issuers, or securities principally traded overseas,
may involve certain special risks due to foreign economic, political and
legal developments, including favorable or unfavorable changes in currency
exchange rates, exchange control regulations, expropriation of assets or
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<PAGE>
nationalization, imposition of withholding taxes on dividend or interest
payments, and possible difficulty in obtaining and enforcing judgments
against foreign entities. Furthermore, foreign issuers are subject to
different, often less comprehensive, accounting, reporting and disclosure
requirements than domestic issuers. The securities of some foreign
companies and foreign securities markets are less liquid and at times more
volatile than securities of comparable U.S. companies and U.S. securities
markets. Foreign brokerage commissions and other fees are generally higher
than in the United States. Foreign settlement procedures and trade
regulation may involve certain risks (such as delay in payment or delivery
of securities or in the recovery of assets held abroad) and expenses not
present in the settlement of domestic investments. There also are special
tax considerations that apply to securities of foreign issuers and
securities principally traded overseas.
The Portfolio's investments in emerging markets include investments in
countries whose economies or securities markets are not yet highly
developed. Special considerations associated with these investments (in
addition to the considerations regarding foreign investments generally)
may include, among others, greater political uncertainties, an economy's
dependence on revenues from particular commodities or on international aid
or development assistance, currency transfer restrictions, a limited
number of potential buyers for such securities and delays and disruptions
in securities settlement procedures.
The Portfolio's investments in foreign currency denominated debt
obligations and hedging activities likely will produce a difference
between its book income and its taxable income. If the Portfolio's book
income exceeds its taxable income, a portion of the Portfolio's income
distributions would constitute returns of capital for tax purposes because
the Portfolio distributes substantially all of its net investment income.
See "How Distributions Are Made; Tax Information." In addition, if the
Portfolio's taxable income exceeds its book income, the Portfolio might
have to distribute all or part of that excess to qualify as a "regulated
investment company" for Federal tax purposes or to avoid the imposition of
a 4% excise tax on certain undistributed income and gains. See "Taxes" in
the SAI.
Forward Commitments, When-Issued and Delayed Delivery Transactions. The
Portfolio may purchase portfolio securities on a when-issued basis, may
purchase and sell such securities for delayed delivery and may make
contracts to purchase such securities for a fixed price at a future date
beyond normal settlement time ("forward commitments"). When-issued
transactions, delayed delivery purchases and forward commitments involve a
risk of loss if the value of the securities declines prior to the
settlement date, which risk is in addition to the risk of decline in the
value of the Portfolio's other assets. No income accrues to the purchaser
of such securities prior to delivery.
Illiquid Securities. The Portfolio may invest up to 10% of its net assets
in "illiquid securities," which are defined as securities that may not be
disposed of in the ordinary course of business at approximately the value
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<PAGE>
at which the Portfolio has valued such securities, and which includes
certain securities whose disposition is restricted by the securities laws.
Restricted securities eligible for resale pursuant to Rule 144A under the
Securities Act of 1933, as amended, which are determined to be liquid
under Board-approved guidelines, are not subject to the 10% limit.
Futures Transactions; Foreign Currency Transactions. The Portfolio may
engage in transactions in futures contracts and forward contracts to
adjust the risk/return characteristics of the Portfolio's investment
portfolio. The Portfolio may buy and sell stock index and currency futures
contracts. A currency futures contract is an agreement between two parties
to buy and sell the underlying currency for a set price on a future date.
A stock index future is an obligation to make or take a cash settlement,
in the future, based on price movements that occur in the specific stock
index underlying the contract.
If the Subadviser wants to hedge the Portfolio's exposure to a broad
decline in equity market prices, it might sell futures contracts on stock
indices. Then, if the value of the underlying securities declines, the
value of the futures contracts should increase. If, however, the value of
the underlying securities increases, the Portfolio should suffer a loss on
its futures contract position. Likewise, if the Portfolio expects stock
prices to rise, the Portfolio might purchase stock index futures contracts
to offset potential increases in the acquisition cost of securities that
the Portfolio intends to acquire. If, as expected, the market value of the
equity indices and futures contracts with respect thereto increase, the
Portfolio would benefit from a rise in the value of long-term securities
without actually buying them until the market had stabilized. However, if
the value of the equity indices decline, the value of the futures
contracts also will decline.
The Portfolio also may buy and sell foreign currencies, foreign currency
futures contracts and forward foreign currency contracts. A forward
foreign currency contract is an agreement between the Portfolio and a
contra party to buy or sell a specified currency at a specified price and
future date. If a decline in the value of a particular currency relative
to the U.S. dollar is anticipated, the Portfolio may enter into a futures
contract or forward contract to sell that currency as a hedge. If it is
anticipated that the value of a foreign currency will rise, the Portfolio
may purchase a currency futures contract or forward contract to protect
against an increase in the price of securities denominated in a particular
currency the Portfolio intends to purchase. These practices, however, may
present risks different from or in addition to the risks associated with
investments in foreign currencies.
The Portfolio might not use any of the strategies described above, and
there can be no assurance that any strategy used will succeed. If the
Subadviser incorrectly forecasts stock market or currency exchange rates
in utilizing a strategy for the Portfolio, the Portfolio would be in a
better position if it had not hedged at all. Although futures contracts
and forward contracts are intended to replicate movements in the cash
markets for the securities and currencies in which the Portfolio invests
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<PAGE>
without the large cash investments required for dealing in such markets,
they may subject the Portfolio to additional risks. The principal risks
associated with the use of futures and forward contracts are: (1)
imperfect correlation between movements in the market price of the
portfolio investment or currency (held or intended to be purchased) being
hedged and in the price of the futures contract or forward contract; (2)
possible lack of a liquid secondary market for closing out futures or
forward contract positions; (3) the need for additional portfolio
management skills and techniques; (4) the fact that, while hedging
strategies can reduce the risk of loss, they can also reduce the
opportunity for gain, or even result in losses, by offsetting favorable
price movements in hedged investments; and (5) the possible inability of
the Portfolio to purchase or sell a portfolio security at a time when it
would otherwise be favorable for it to do so, or the possible need for the
Portfolio to sell a security at a disadvantageous time, due to the need
for the Portfolio to maintain "cover" or to segregate securities in
connection with hedging transactions and the possible inability of the
Portfolio to close out or liquidate a hedged position.
For a hedge to be completely effective, the price change of the hedging
instrument should equal the price change of the security or currency being
hedged. Such equal price changes are not always possible because the
investment underlying the hedging instrument may not be the same
investment that is being hedged. The Subadviser will attempt to create a
closely correlated hedge, but hedging activity may not be completely
successful in eliminating market value fluctuation. The ordinary spreads
between prices in the cash and futures markets, due to differences in the
nature of those markets, are subject to distortion. Due to the possibility
of distortion, a correct forecast of currency exchange rate or stock
market trends by the Subadviser may still not result in a successful
transaction. The Subadviser may be incorrect in its expectations as to the
extent of various currency exchange rate or stock market movements or the
time span within which the movements take place.
Although hedging strategies are intended to reduce fluctuations in
Portfolio net asset value, the Portfolio nonetheless anticipates that its
net asset value will fluctuate.
Portfolio Turnover. Portfolio turnover is not a limiting factor with
respect to investment decisions. High portfolio turnover (e.g., over 100%)
involves correspondingly greater brokerage commissions and other
transaction costs, which will be borne directly by the Portfolio. It is
anticipated that the Portfolio's portfolio turnover will not exceed 150%
during its initial fiscal year.
Repurchase Agreements. Repurchase agreements are transactions in which
the Portfolio purchases securities and commits to resell the securities to
the original seller (a member bank of the Federal Reserve System or
securities dealers who are members of a national securities exchange or
are market makers in U.S. Government securities) at an agreed upon date
and price reflecting a market rate of interest unrelated to the coupon
rate or maturity of the purchased securities. Although repurchase
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<PAGE>
agreements carry certain risks not associated with direct investments in
securities, including possible decline in the market value of the
underlying securities and delays and costs to the Portfolio if the other
party to the repurchase agreement becomes bankrupt, the Portfolio intends
to enter into repurchase agreements only with banks and dealers in
transactions believed by Eagle to present minimal credit risks in
accordance with guidelines established by the Board of Trustees.
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<PAGE>
HOW PERFORMANCE IS SHOWN
TOTAL RETURN DATA MAY FROM TIME TO TIME BE INCLUDED IN ADVERTISEMENTS
ABOUT THE PORTFOLIO. "Total Return" for the one-, five- and ten-year
periods or, if such periods have not yet elapsed, at the end of a shorter
period corresponding to the life of the Portfolio through the most recent
calendar quarter represents the average annual compounded rate of return
on an investment of $1,000 in the Portfolio at the public offering price.
The Portfolio 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 will simply reflect the increase in net asset value per share
over a period of time, adjusted for dividends and other distributions. The
Portfolio's performance may be compared to various indices.
ALL DATA IS BASED ON THE PORTFOLIO'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
Portfolio's investment portfolio and the Portfolio's operating expenses.
Investment performance also often reflects the risks associated with the
Portfolio's investment objective and policies. These factors should be
considered when comparing the Portfolio's investment results to those of
other mutual funds and other investment vehicles. For more information on
investment performance, see the SAI.
HOW THE PORTFOLIO IS MANAGED
The Trustees are responsible for generally overseeing the conduct of the
Portfolio's business and affairs. Subject to this oversight, Eagle acts as
the Portfolio's investment adviser. The annual advisory fee paid monthly
by the Portfolio to Eagle is based on the Portfolio's average daily net
assets and is 1.00% on the first $100 million of assets and .80%
thereafter. While this fee is higher than that charged for most mutual
funds, it is comparable to that charged by many other mutual funds with
similar investment objectives and policies.
Eagle has been managing private accounts since 1976 for a diverse group of
clients, including individuals, corporations, municipalities and trusts.
Eagle managed approximately $1.5 billion for these clients as of January
1995. In addition to advising private accounts, Eagle acts as investment
subadviser to mutual funds, including Heritage Income-Growth Trust, the
Diversified Portfolio of Heritage Income Trust and the Value Equity Fund,
a series of Heritage Series Trust and two variable annuity portfolios
(Eagle Growth Equity Portfolio for American Skandia and Eagle Value Equity
Portfolio for Golden Select). Eagle 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.
Eagle has entered into a subadvisory agreement with Martin Currie Inc., a
New York corporation, to furnish a continuous investment program for the
Portfolio. The Subadviser is a wholly-owned subsidiary of Martin Currie
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Limited, a private limited company incorporated in the United Kingdom.
Martin Currie Limited is one of Scotland's largest professional money
managers and, together with the Subadviser, has $5.5 billion under
management as of December 31, 1994. Since 1881, Martin Currie Limited and
its predecessors have focused on providing their clients with investment
management services. The Subadviser makes investment decisions on behalf
of the Portfolio and places all orders for purchases and sales of
securities of the Portfolio. Under the agreement, the Subadviser receives
an annual fee from Eagle based on the Portfolio's average daily net assets
of .50% on the first $100 million of assets and .40% thereafter.
Investment decisions for the Portfolio are made by a Committee of the
Subadviser organized for that purpose, and no single person is primarily
responsible for making recommendations to the Committee. The Committee is
subject to the general oversight of the Subadviser, Eagle and the
Trustees.
In selecting broker-dealers, the Subadviser may consider research and
brokerage services furnished to it and its affiliates. Subject to seeking
the most favorable price and execution available, the Subadviser may
consider sales of shares of the Portfolio as a factor in the selection of
broker-dealers. See "Brokerage Practices" in the SAI. The Portfolio pays
all Portfolio expenses that are not assumed by Eagle, including Trustees'
fees and auditing, legal, custodian and transfer agency expenses. Payments
under the Portfolio's Distribution Plan are borne by the Portfolio.
Heritage Asset Management, Inc. ("Heritage"), an affiliate of Eagle, is
the Portfolio's transfer agent (the "Transfer Agent"). Heritage also is a
wholly-owned subsidiary of Raymond James Financial, Inc. In addition to
its duties as Transfer Agent, Heritage also may provide certain
administrative services for the Portfolio. Heritage receives a fee from
Eagle for performing these administrative services for the Portfolio.
DISTRIBUTION PLAN
The Portfolio has adopted a Distribution Plan (the "Plan") pursuant to
Rule 12b-1 under the Investment Company Act of 1940, as amended, that
permits the Portfolio to compensate Raymond James & Associates, Inc.
("Distributor") for services provided and expenses incurred by it in
promoting the sale of Portfolio shares, reducing redemptions, or
maintaining or improving services provided to shareholders by the
Distributor or participating dealers. The Plan provides for payments by
the Portfolio to the Distributor at the annual rate of up to .75% of the
Portfolio's average daily net assets, subject to the authority of the
Trustees to reduce the amount of payment or to suspend the Plan for such
periods as they may determine. Subject to these limitations, the amount of
such payments and the specific purposes for which they are made shall be
determined by the Trustees. If the Plan is terminated, the obligation of
the Portfolio to make payments to the Distributor pursuant to the Plan
will cease.
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In order to compensate dealers, including for this purpose certain
financial institutions, for services provided in connection with the
maintenance of shareholder accounts, the Plan also authorizes the payment
by the Portfolio to the Distributor at an annual rate of up to .25% of the
Portfolio's average net asset value.
ORGANIZATION AND HISTORY
The Portfolio is one of the separate series of shares ("Series") of
Heritage Series Trust (the "Trust"), a business trust organized under the
laws of the Commonwealth of Massachusetts on October 28, 1992. The Trust
is an open-end, diversified management investment company with an
unlimited number of authorized shares of beneficial interest. Each share
has one vote, with fractional shares voting proportionally. In matters
affecting only a particular Series or class of Series shares, only shares
of that Series or class of Series shares are entitled to vote. Any Series
may suspend the sale of its shares at any time and may refuse any order to
purchase shares. Although the Trust is not required to hold annual
meetings of its shareholders, shareholders of at least 10% of the
outstanding shares can call a meeting to elect or remove Trustees or to
take other actions as provided in the Declaration of Trust.
About Your Investment
HOW TO BUY SHARES
Initial Offerings of Shares. The Portfolio initially will offer its
shares during a period scheduled to end at the close of business on March
29, 1995 (the "Initial Offering Period"). During this period, indications
of interest for shares will be solicited through the Distributor or
participating dealers or banks at a fixed price of $20 per share. The
Portfolio intends to engage in a "second offering period" beginning on
March 30 and ending on or about April 28, 1995, whereby the Portfolio
would solicit further indications of interest to purchase additional
shares ("Second Offering Period"). At the end of the Initial and Second
Offering Periods, orders for shares will be accepted only if shareholders
have signed, completed and submitted to Eagle an Eagle New Account
Document. The Portfolio does not intend to engage in a continuous offering
of its shares until approximately May 1, 1995.
During the Initial Offering Period, the Distributor and participating
dealers and banks may obtain non-binding indications of interest prior to
actually confirming any orders. Indications of interest will be accepted
through the last day of the Initial Offering Period. On the last day of
the Initial Offering Period, the Distributor or participating dealer or
bank, as the case may be, will confirm indications of interest and convert
them to subscriptions for shares of the Portfolio and shareholders will
receive the net asset value next computed after such conversion. On April
5, 1995 (the "Closing Date"), subscriptions will be due and payable. To
the extent that payment is made to the Distributor or participating
dealers or banks prior to either Closing Date, such persons may benefit
from the temporary use of funds. The Portfolio reserves the right to
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withdraw, cancel or modify the offering of shares during the Initial
Offering Period without notice and the Portfolio reserves the right to
refuse any order in whole or in part, if the Portfolio determines that is
in its best interests.
During the Second Offering Period, the Distributor and participating
dealers and banks may obtain non-binding indications of interest for a
period scheduled to end on April 28, 1995. On that date, the Distributor
or participating dealer or bank, as the case may be, will confirm
indications of interest and convert them to subscriptions for shares of
the Portfolio and shareholders will receive the net asset value next
computed after such conversion. On May 5, 1995 (the "Second Closing
Date"), subscriptions will be due and payable. The Portfolio reserves the
right to withdraw, cancel or modify the offering of shares during the
Second Offering Period without notice and the Portfolio reserves the right
to refuse any order in whole or in part if the Portfolio determines that
it is in its best interest.
Offering of Shares. After the end of the Second Offering Period, initial
purchases for any account may be made by sending a signed and completed
Eagle New Account Document to Eagle International Equity Portfolio, P.O.
Box 10520, St. Petersburg, FL 33733. Upon receipt and acceptance by Eagle
of the Eagle New Account Document, the Transfer Agent will place your
order for Portfolio shares. Payment for initial purchases must be made
within five business days of the receipt of your order. After May 31,
1995, payment will be required within three business days.
Subsequent purchases may be made (1) through the Distributor, or through a
participating dealer or participating bank by placing an order for
Portfolio shares with the Distributor, a participating dealer or
participating bank and making payment within five business days of
purchase (three business days after May 31, 1995) to the Distributor,
participating dealer or participating bank, or (2) by making a check
payable to the Portfolio and sending it to Eagle International Equity
Portfolio, P.O. Box 10520, St. Petersburg, FL 33733. Certificates
evidencing share ownership will be provided only upon request.
After the end of the Second Offering Period, orders accepted by the
Distributor, participating dealer or participating bank before the close
of regular trading on the New York Stock Exchange ("Exchange") --
generally 4:00 p.m. New York City time -- and orders received by a
participating dealer or participating bank prior to the close of regular
trading on the Exchange and transmitted to the Distributor prior to 5:00
p.m. on that day will be executed at the net asset value as determined as
of the close of regular trading on the Exchange on that day. Orders
accepted after the close of regular trading on the Exchange will be
executed at the net asset value determined as of the close of regular
trading on the Exchange on the next trading day. Normally, orders will be
accepted upon receipt of funds and will be executed at the net asset value
next determined after such order is received.
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<PAGE>
Minimum Investment Required. The minimum initial investment in the
Portfolio is $50,000 ($25,000 for investors who have $100,000 or more with
Eagle in individually managed accounts when aggregated with the investor's
investment in the Portfolio). Additional investments into an existing
Portfolio account must meet a $1,000 minimum. If your account value falls
below $20,000 as a result of one or more redemptions, the Portfolio may
redeem your shares and send you the proceeds after giving you 30 days'
notice during which period you may increase your investment to the
required $20,000 account minimum. Eagle reserves the right, at its
discretion, to waive the minimum investment required.
HOW TO SELL SHARES
You can sell your shares to the Portfolio any day the Exchange is open,
either directly to the Portfolio or through the Distributor, a
participating dealer or participating bank. If you are selling shares that
have recently been purchased by personal check, the Portfolio may delay
mailing you the proceeds of the sale until the purchase check has cleared,
which may take up to seven days.
Selling shares directly to the Portfolio. Send a signed letter of
instruction or stock power form to Eagle International Equity Portfolio,
P.O. Box 10520, St. Petersburg, FL 33733, stating the amount or number of
shares you want redeemed and your account number. Any certificates
representing shares that you want to sell must be included with your
written instructions, and either the certificates must be endorsed for
transfer exactly as the name or names appear on the certificates or an
accompanying stock power must be attached. The price you will receive is
the next net asset value calculated after the Portfolio receives your
request in proper form. To receive that day's net asset value, the
Transfer Agent must receive your request before the close of regular
trading on the Exchange. If you sell shares having a net asset value of
$100,000 or more, or if you want your redemption proceeds sent to an
address other than your account's address of record, signatures of the
account's registered owners or their legal representative must be
guaranteed by a bank, broker-dealer or certain other financial
institutions that are deemed acceptable by the Transfer Agent under its
current signature guarantee program. See the SAI for more information
about where to obtain a signature guarantee. The Transfer Agent usually
requires additional documentation for the sale of shares by a corporation,
agent or fiduciary, or a surviving joint owner. Contact the Transfer Agent
for details.
The Portfolio usually sends you payment for your shares the business day
after your request is received. Under unusual circumstances, the Portfolio
may suspend repurchases, or postpone payment for more than seven days, as
permitted by Federal securities law.
Selling shares through your investment dealer. You also may redeem shares
through the Distributor, a participating dealer or participating bank.
Your dealer must receive your request before the close of regular trading
on the Exchange and transmit it to the Portfolio before 5:00 p.m. New York
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City time to receive that day's net asset value. Your dealer will be
responsible for furnishing all necessary documentation, and may charge for
its service.
Systematic Withdrawal Plan. Withdrawal plans are available which provide
for monthly, quarterly, semi-annual or annual withdrawals of $250 or more.
Under these plans, shares of the Portfolio are redeemed to provide the
amount of the periodic withdrawal payment. The amounts of withdrawals are
not necessarily related to dividends paid by the Portfolio. Thus, these
withdrawals may exceed dividends and may result in a depletion of the
shareholder's original investment in the Portfolio. The withdrawal plan
may be amended or terminated at any time by the shareholder or the
Portfolio on notice, and will terminate if the Portfolio is notified of
the shareholder's death. For the shareholder's protection, any change of
payee must be in writing. Accounts using this withdrawal plan are subject
to the minimum balance requirements. See "How to Buy Shares -- Minimum
Investment Required." Please contact a registered representative of the
Distributor or a participating dealer or participating bank for further
information. For more information on the Systematic Withdrawal Plan, see
"Redeeming Shares -- Systematic Withdrawal Plan" in the SAI.
HOW THE PORTFOLIO VALUES ITS SHARES
The Portfolio calculates the net asset value of its shares by dividing the
total value of its assets, less liabilities, by the number of its shares
outstanding. Shares are valued as of the close of regular trading on the
Exchange each day it is open. Portfolio securities and other assets for
which market quotations are readily available are stated at market value.
Short-term investments that will mature in 60 days or less are stated at
amortized cost, which approximates market value. All other securities and
assets are valued at their fair value following procedures approved by the
Trustees. 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 Portfolio calculates its daily net asset value per share.
Although the Portfolio values its assets in U.S. dollars on a daily basis,
it does not intend to convert holdings of foreign currencies into U.S.
dollars on a daily basis.
HOW DISTRIBUTIONS ARE MADE; TAX INFORMATION
The Portfolio distributes any net investment income at least annually. The
Portfolio distributes all net realized capital gains, and any net realized
gains from foreign currency transactions, after the end of the year in
which the gains are realized. Distributions from net capital gains are
made after applying any available capital loss carryovers.
You can choose from three distribution options. You can: (1) receive all
distributions in additional Portfolio shares; (2) receive distributions
from net investment income in cash and receive other distributions (that
is, distributions from net capital gains and net realized foreign currency
gains) in additional Portfolio shares; or (3) receive all distributions in
cash. You can change your distribution option by notifying the Transfer
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<PAGE>
Agent in writing. If you do not select an option, all distributions will
be paid in additional Portfolio shares. You will receive a statement
confirming distributions in additional Portfolio shares promptly following
the period in which the distribution occurs.
If a check representing a Portfolio distribution remains outstanding for
more than six months, the Transfer Agent reserves the right to redeposit
those funds into the shareholder's account. Similarly, if your
distribution check is returned as "undeliverable," distributions
automatically will be made to you in additional Portfolio shares.
The Portfolio intends to qualify as a "regulated investment company" under
Subchapter M of the Internal Revenue Code of 1986, as amended, and to meet
all other requirements that are necessary for it to be relieved of Federal
taxes on income and gains it distributes to shareholders.
The Portfolio's distributions will be taxable to you as ordinary income,
except for distributions of net capital gain (the excess of net long-term
capital gain over net short-term capital loss), which will be taxed to you
as long-term capital gain, regardless of how long you have held your
shares. Distributions will be so taxable whether received in cash or in
additional Portfolio shares. Early each year, the Portfolio will notify
you of the amount and tax status of distributions paid to you by the
Portfolio for the preceding year (and the extent, if any, to which you may
claim a deduction or credit for foreign taxes paid by the Portfolio for
that year).
The foregoing is a summary of some of the important Federal income tax
considerations generally affecting the Portfolio and its shareholders. See
the SAI for a further discussion. You should consult your tax adviser to
determine the precise effect of an investment in the Portfolio on your
particular tax situation (including possible liability for state and local
taxes).
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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, Eagle Asset
Management, Inc. or Raymond James & Associates, Inc. This Prospectus does
not constitute an offering in any state in which such offering may not
lawfully be made.
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STATEMENT OF ADDITIONAL INFORMATION
EAGLE INTERNATIONAL EQUITY PORTFOLIO
EAGLE CLASS
This Statement of Additional Information ("SAI") dated December
26, 1995, should be read with the Prospectus of Eagle International Equity
Portfolio-Eagle Class dated December 26, 1995. This SAI is not a
prospectus itself. To receive a copy of the Prospectus, write to Eagle
Asset Management, Inc. at the address below, or call (800) 237-3101.
Eagle Asset Management, Inc.
P.O. Box 10520
880 Carillon Parkway
St. Petersburg, Florida 33733
TABLE OF CONTENTS
Page
----
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 2
Investment Objective . . . . . . . . . . . . . . . . . . . . 2
Investment Policies . . . . . . . . . . . . . . . . . . . . 2
INVESTMENT RESTRICTIONS . . . . . . . . . . . . . . . . . . . . . . . 14
NET ASSET VALUE . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
PERFORMANCE INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 18
INVESTING IN THE PORTFOLIO . . . . . . . . . . . . . . . . . . . . . 19
REDEEMING SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Systematic Withdrawal Plan . . . . . . . . . . . . . . . . . 20
Redemption in Kind . . . . . . . . . . . . . . . . . . . . . 21
TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
PORTFOLIO INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . 24
Trustees and Officers . . . . . . . . . . . . . . . . . . . 25
Investment Adviser; Subadviser . . . . . . . . . . . . . . . 28
Brokerage Practices . . . . . . . . . . . . . . . . . . . . 30
Distribution of Shares . . . . . . . . . . . . . . . . . . . 31
Administration of the Portfolio . . . . . . . . . . . . . . 33
Potential Liability . . . . . . . . . . . . . . . . . . . . 34
APPENDIX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
REPORT OF THE INDEPENDENT ACCOUNTANTS . . . . . . . . . . . . . . . . A-5
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . A-6
<PAGE>
GENERAL INFORMATION
-------------------
Heritage Series Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated October
28, 1992. Eagle International Equity Portfolio (the "Portfolio") is one
of the Trust's separate investment portfolios. The Portfolio offers
multiple classes of shares designed to meet the needs of different groups
of investors. This Statement of Additional Information ("SAI") relates
only to the Eagle Class shares of the Portfolio ("Eagle Class shares").
The Portfolio is structured to combine the regional and global
presence of larger, well-known companies in established markets with the
potentially rapid growth of companies in the expanding economies of many
emerging countries.
Eagle Asset Management, Inc., the Portfolio's investment adviser
("Eagle"), has retained Martin Currie Inc. as the Portfolio's investment
subadviser (the "Subadviser"). The Subadviser's parent company, Martin
Currie Limited, is a privately owned international advisory firm that was
established in 1881. Martin Currie Limited, coupled with the Subadviser,
employs more than 30 investment professionals who comprise six geographic
investment teams that service more than $6 billion in investor's assets.
The Subadviser uses a top-down country allocation and a bottom-
up stock selection process. In choosing in which countries to invest
assets, the Subadviser considers the major economic trends in a country,
any political and economic changes in the country and the country's
capital flow. In choosing individual companies, the Subadviser, based on
a growth style with a value component, considers the company's business
strategy, relative value and earnings momentum.
INVESTMENT INFORMATION
----------------------
Investment Objective
--------------------
The Portfolio's investment objective, as described in the
Prospectus, is capital appreciation. Income is an incidental
consideration. The Portfolio seeks to achieve this objective through
investing principally in an international portfolio of equity securities.
Investment Policies
-------------------
American Depository Receipts ("ADRs"), European Depository Receipts
("EDRs"), Global Depository Receipts ("GDRs") and International Depository
Receipts ("IDRs")
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The Portfolio may invest in sponsored or unsponsored ADRs, EDRs,
GDRs, IDRs or other similar securities representing interests in or
convertible into securities of foreign issuers ("Depository Receipts").
ADRs are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying foreign securities. EDRs and IDRs
are receipts typically issued by a European bank or trust company
evidencing ownership of the underlying foreign securities. GDRs are
issued globally for trading in non-U.S. securities markets and evidence a
similar ownership arrangement. Depositary Receipts may not necessarily be
denominated in the same currency as the underlying securities into which
they may be converted. In addition, the issuers of the securities
underlying unsponsored Depositary Receipts are not obligated to disclose
material information in the United States and, therefore, there may be
less information available regarding such issuers and there may not be a
correlation between such information and the market value of the
Depositary Receipts. Depositary Receipts also involve the risks of other
investments in foreign securities, as discussed below.
Convertible Securities
----------------------
The Portfolio may invest in convertible securities, as described
in the Prospectus. 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 Subadviser, on
behalf of the Portfolio, will decide to invest 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.
Convertible securities in which the Portfolio may invest include corporate
bonds, notes and preferred stock that can be converted into (exchanged
for) common stock. Convertible securities combine the fixed-income
characteristics of bonds and preferred stock with the potential for
capital appreciation. The market value of convertible securities tends to
decline as interest rates increase and, conversely, to increase as
interest rates decline. While convertible securities generally offer
lower interest or dividend yields than nonconvertible debt securities of
similar quality, they do enable the investor to benefit from increases in
the market price of the underlying common stock.
Forward Commitments
-------------------
As described in the Prospectus under the caption "Other
Investment Policies and Risk Factors - Forward Commitments, When- Issued
and Delayed Delivery Transactions," the Portfolio may make contracts to
purchase securities for a fixed price at a future date beyond customary
settlement time ("forward commitments"), if the Portfolio either (1)
holds, and maintains until the settlement date in a segregated account,
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cash or high-grade debt obligations in an amount sufficient to meet the
purchase price or (2) enters into an offsetting contract for the forward
sale of securities of equal value that it owns. Forward commitments may
be considered securities in themselves. They 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
Portfolio's other assets. The Portfolio may dispose of a commitment prior
to settlement and may realize short-term profits or losses upon such
disposition.
Futures and Forward Transactions
--------------------------------
The Prospectus describes the Portfolio's use of forward contracts
and futures contracts. See "Other Investment Policies and Risk Factors -
Futures Transactions; Foreign Currency Transactions," in the Prospectus.
The following discussion relates to the use of such strategies by the
Portfolio.
Cover. Transactions using forward contracts and futures
contracts expose the Portfolio to an obligation to another party. The
Portfolio will not enter into any such transactions unless it owns either
(1) an offsetting ("covered") position in securities, currencies or other
forward contracts or futures contracts or (2) cash, 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 Portfolio
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 contract or futures
contract is open, unless they are replaced with similar assets. As a
result, the commitment of a large portion of the Portfolio's assets to
cover or segregated accounts could impede portfolio management or the
Portfolio's ability to meet redemption requests or other current
obligations.
Forward Contracts. A forward foreign currency exchange contract
("forward contract") involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days (term)
from the date the forward contract is agreed upon by the parties, at a
price set at the time the forward contract is entered into. Forward
contracts are traded directly between the Portfolio and a contra party
(usually a large commercial bank). Because forward contracts usually are
entered into on a principal basis, no fees or commissions are involved.
When the Portfolio enters into a forward contract, it relies on its contra
party to make or take delivery of the underlying currency at the maturity
of the contract. Failure by the contra party to do so would result in the
loss of any expected benefit of the transaction.
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<PAGE>
The Portfolio may enter into forward contracts in order to
protect against uncertainty in the level of future foreign exchange rates.
Since investment in foreign companies usually will involve foreign
currencies, and since the Portfolio may temporarily hold funds in bank
deposits in foreign currencies during the course of investment programs,
the value of the assets of the Portfolio as measured in U.S. dollars may
be affected by changes in foreign currency exchange rates and exchange
control regulations, and the Portfolio may incur costs in connection with
conversion between various currencies. Accordingly, the Portfolio may use
forward contracts:
1. When the Subadviser wishes to "lock in" the U.S. dollar
price of a security denominated in a foreign currency
that the Portfolio is purchasing or selling or
anticipates receiving a dividend or interest payment
denominated in a foreign currency; or
2. When the Subadviser believes that the currency of a
particular foreign country may suffer a substantial
decline against the U.S. dollar, in which event the
Portfolio may enter into a forward contract to sell the
foreign currency for a fixed U.S. dollar amount
approximating the value of some or all of the Portfolio's
portfolio securities denominated in such foreign
currency.
As to the first circumstance, when the Portfolio enters into a
trade for the purchase or sale of a security denominated in a foreign
currency or anticipates receiving a dividend or interest payment in a
foreign currency, it may be desirable to establish (lock in) the U.S.
dollar cost or proceeds. By entering into forward contracts in U.S.
dollars for the purchase or sale of a foreign currency involved in an
underlying securities transaction, the Portfolio will be able to protect
itself against a possible loss between trade and settlement dates
resulting from an adverse change in the relationship between the U.S.
dollar and the subject foreign currency.
Under the second circumstance, when the Subadviser believes that
the currency of a particular country may suffer a substantial decline, the
Portfolio could enter into a forward contract to sell for a fixed U.S.
dollar amount the amount of the foreign currency approximating the value
of some or all of its portfolio securities denominated in such foreign
currency.
The precise matching of the forward contract amounts and the
value of the securities involved generally will not be possible since the
future value of such securities in foreign currencies will change as a
consequence of market movements in the value of those investments between
the date the forward contract is entered into and the date it matures.
Of course, the Portfolio is not required to enter into forward
contracts and will not do so unless deemed appropriate by the Subadviser.
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<PAGE>
The Portfolio generally will not enter into a forward contract with a term
of greater than one year. The Portfolio's ability to engage in forward
contracts may be limited by tax considerations.
Futures Contracts. The Portfolio may only purchase or sell stock
index or currency futures contracts. A futures contract sale creates an
obligation by the seller to deliver the type of commodity, currency or
financial instrument called for in the contract in a specified delivery
month for a stated price. A futures contract purchase creates an
obligation by the purchaser to take delivery of the underlying security or
currency in a specified delivery month at a stated price. A stock index
futures contract is similar except that the parties agree to take or make
delivery of an amount of cash equal to a specified dollar amount times the
difference between the stock index value at the close of the last trading
day of the contract and the price at which the futures contract is
originally struck. Futures contracts are traded only on commodity
exchanges -- known as "contract markets" -- approved for such trading by
the Commodity Futures Trading Commission ("CFTC") and must be executed
through a futures commission merchant or brokerage firm that is a member
of a contract market.
Although futures contracts by their terms call for actual
delivery or acceptance of currencies or financial instruments, in most
cases the contracts are closed out before the settlement date without the
making or taking of delivery. Closing out a futures contract sale is
effected by purchasing a futures contract for the same aggregate amount of
the specific type of financial instrument or currency and the same
delivery date. If the price of the initial sale of the futures contract
exceeds the price of the offsetting purchase, the seller is paid the
difference and realizes a gain. Conversely, if the price of the
offsetting purchase exceeds the price of the initial sale, the seller
realizes a loss. Similarly, the closing out of a futures contract
purchase is effected by the purchaser entering into a futures contract
sale. If the offsetting sale price exceeds the purchase price, the
purchaser realizes a gain, and if the purchase price exceeds the
offsetting sale price, he realizes a loss.
The purchase (that is, a long position) or sale (that is, a short
position) of a futures contract differs from the purchase or sale of a
security in that no price or premium is paid or received. Instead, an
amount of cash or U.S. Treasury bills generally not exceeding 5% of the
contract amount must be deposited with the broker. This amount is known
as "initial margin." Subsequent payments to and from the broker, known as
"variation margin," are made on a daily basis as the price of the
underlying futures contract fluctuates making the long and short positions
in the futures contract more or less valuable, a process known as "marking
to market." At any time prior to the settlement date of the futures
contract, the position may be closed out by taking an opposite position
that will operate to terminate the position in the futures contract. A
final determination of variation margin is then made, additional cash is
required to be paid to or released by the broker, and the purchaser or
- 6 -
<PAGE>
seller realizes a loss or gain. In addition, a commission is paid on each
completed purchase and sale transaction.
The Portfolio may engage in transactions in futures contracts for
the purpose of hedging against changes in the values of securities it owns
or intends to acquire. The Portfolio may sell stock index futures
contracts in anticipation of a decline in the value of its investments.
The risk of such a decline can be reduced without employing futures as a
hedge by selling securities. This strategy, however, entails increased
transaction costs in the form of brokerage commissions and dealer spreads.
The sale of futures contracts provides an alternative means of hedging the
Portfolio against a decline in the value of its investments. As such
values decline, the value of the Portfolio's position in the futures
contracts will tend to increase, thus offsetting all or a portion of the
depreciation in the market value of the Portfolio's securities that are
being hedged. While the Portfolio will incur commission expenses in
establishing and closing out futures positions, commissions on futures
transactions may be significantly lower than transaction costs incurred in
the sale of securities. Employing futures as a hedge also may permit the
Portfolio to assume a defensive posture without selling securities.
Currency Futures Contracts. A currency futures contract sale
creates an obligation by the Portfolio, as seller, to deliver the amount
of currency called for in the contract at a specified future time for a
stated price. A currency futures contract purchase creates an obligation
by the Portfolio, as purchaser, to take delivery of an amount of currency
at a specified future time at a stated price. Although the terms of
currency futures contracts specify actual delivery or receipt, in most
instances the contracts are closed out before the settlement date without
the making or taking of delivery of the currency. Closing out of the
currency futures contract is effected by entering into an offsetting
purchase or sale transaction.
Stock Index Futures Contracts. A stock index assigns relative
values to the common stocks comprising the index. A stock index futures
contract is a bilateral agreement pursuant to which two parties agree to
take or make delivery of an amount of cash equal to a specified dollar
amount times the difference between the stock index value at the close of
the last trading day of the contract and the price at which the futures
contract is originally struck. No physical delivery of the underlying
stocks in the index is made.
The Portfolio may engage in transactions in stock index futures
contracts as a hedge against changes resulting from market conditions in
the values of securities held in the Portfolio's portfolio or that the
Portfolio intends to purchase.
The risk of imperfect correlation between movements in the price
of a stock index futures contract and movements in the price of the
securities that are the subject of the hedge increases as the composition
of the Portfolio's portfolio diverges from the securities included in the
applicable index. The price of the stock index futures may move more than
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<PAGE>
or less than the price of the securities being hedged. If the price of
the futures contract moves less than the price of the securities that are
the subject of the hedge, the hedge will not be fully effective. If,
however, the price of the securities being hedged has moved in an
unfavorable direction, the Portfolio would be in a better position than if
it had not hedged at all. If the price of the securities being hedged has
moved in a favorable direction, this advantage will be partially offset by
the futures contract. If the price of the futures contract moves more than
the price of the securities, the Portfolio will experience either a loss
or a gain on the futures contract that will not be completely offset by
movements in the price of the securities that are the subject of the
hedge. To compensate for the imperfect correlation of movements in the
price of the securities being hedged and movements in the price of the
stock index futures contracts, the Portfolio may buy or sell stock index
futures contracts in a greater dollar amount than the dollar amount of
securities being hedged if the historical volatility of the prices of such
securities is more than the historical volatility of the stock index. It
also is possible that, when the Portfolio has sold futures contacts to
hedge its securities against decline in the market, the market may advance
and the value of securities held in the portfolio may decline. If this
occurred, the Portfolio would lose money on the futures contract and also
experience a decline in value in its portfolio securities. However, while
this could occur for a very brief period or to a very small degree, over
time the value of a diversified portfolio of securities will tend to move
in the same direction as the market indices upon which the futures
contracts are based.
Where stock index futures contracts are purchased to hedge
against a possible increase in the price of securities before the
Portfolio is able to invest in securities in an orderly fashion, it is
possible that the market may decline instead. If the Portfolio then
concludes not to invest in securities at that time because of concern as
to possible further market decline for other reasons, it will realize a
loss on the futures contract that is not offset by a reduction in the
price of the securities it had anticipated purchasing.
Limitations on the Use of Futures Portfolio Strategies. If the
Portfolio enters into futures contracts for other than bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin required
to establish these positions may not exceed 5% of the liquidation value of
the Portfolio's portfolio, after taking into account any unrealized
profits and unrealized losses on any such contracts into which it has
entered. This limitation does not limit the percentage of the Portfolio's
assets at risk to 5%.
In addition, for as long as required by applicable state
securities regulation, (1) the Portfolio only will buy or sell futures
contracts that are listed on a national commodities exchange and (2) the
aggregate margin deposits on all futures held at any time by the Portfolio
will not exceed 5% of the Portfolio's total assets.
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<PAGE>
The Portfolio's ability to engage in the futures strategies
described above will depend on the availability of liquid markets in such
instruments. Markets in certain futures are relatively new and still
developing. It is impossible to predict the amount of trading interest
that may exist in various types of futures. Therefore, no assurance can
be given that the Portfolio will be able to utilize these instruments
effectively for the purpose set forth above. Furthermore, the Portfolio's
ability to engage in futures transactions may be limited by tax
considerations.
Futures and Forward Transactions - Risk Factors
-----------------------------------------------
Futures and Forward Contracts. Investment by the Portfolio in
futures and forward contracts involves risk. Some of that risk may be
caused by an imperfect correlation between movements in the price of the
futures or forward contract and the price of the security or currency
being hedged. The hedge will not be fully effective when there is such
imperfect correlation. For example, if the price of the futures or
forward contract moves more than the price of the hedged security or
currency, the Portfolio would experience either a loss or gain on the
futures or forward contract that is not offset completely by movements in
the price of the hedged securities or currency. To compensate for
imperfect correlation, the Portfolio may purchase or sell futures or
forward contracts in a greater dollar amount than the hedged securities or
currency if the volatility of the hedged securities or currency is
historically greater than the volatility of the futures or forward
contracts. Conversely, the Portfolio may purchase or sell fewer contracts
if the volatility of the price of the hedged securities or currency is
historically less than that of the futures or forward contracts.
Futures or forward contracts may be used to hedge against a
possible increase in the price of securities or currencies that the
Portfolio anticipates purchasing. In such instances, it is possible that
the market may instead decline. If the Portfolio does not then invest in
such securities or currencies because of concern as to possible further
market decline or for other reasons, the Portfolio may realize a loss on
the futures or forward contract that is not offset by a reduction in the
price of the securities or currencies purchased.
The liquidity of a secondary market in a futures contract may be
adversely affected by "daily price fluctuation limits" established by
commodity exchanges, which limit the amount of fluctuation in a futures
contract price during a single trading day. Once the daily limit has been
reached in the contract, no trades may be entered into at a price beyond
the limit, thus preventing the liquidation of open positions. Prices have
in the past exceeded the daily limit on a number of consecutive trading
days.
The successful use of transactions in futures and forward
contracts also depends on the ability of the Subadviser to forecast
correctly the direction and extent of stock market and currency exchange
- 9 -
<PAGE>
rate movements within a given time frame. To the extent prices or rates
remain stable during the period in which a futures or forward contract is
held by the Portfolio or such prices or rates move in a direction opposite
to that anticipated, the Portfolio may realize a loss on the hedging
transaction that is not fully or partially offset by an increase in the
value of portfolio securities or currency position. As a result, the
Portfolio's total return for such period may be less than if it had not
engaged in the hedging transaction.
Foreign Currency Strategies. The Portfolio may use futures on
foreign currencies and forward contracts to hedge against movements in the
values of the foreign currencies in which the Portfolio's securities are
denominated. Such currency hedges can protect against price movements in
a security that the Portfolio owns or intends to acquire that are
attributable to changes in the value of the currency in which it is
denominated. Such hedges do not, however, protect against price movements
in the securities that are attributable to other causes.
The value of futures and forward 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 futures or
forward contracts, the Portfolio 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 requirements 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, around-the-clock market. To the
extent the U.S. futures markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements
might take place in the underlying markets that cannot be reflected in the
markets for the futures contracts until they reopen.
Settlement of futures and forward contracts involving foreign
currencies might be required to take place within the country issuing the
underlying currency. Thus, the Portfolio 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.
Illiquid Securities
-------------------
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<PAGE>
As stated in the Prospectus, the Portfolio will not purchase or
otherwise acquire any security if, as a result, more than 10% of its net
assets (taken at current value) would be invested in securities that are
illiquid by virtue of the absence of a readily available market or legal
or contractual restrictions on resale. This policy includes repurchase
agreements maturing in more than seven days.
Loans of Portfolio Securities
-----------------------------
The Portfolio may lend its securities. Securities loans are made
to broker-dealers or other financial institutions pursuant to agreements
requiring that loans be continuously secured by collateral in cash or
short-term debt obligations at least equal at all times to the value of
the securities lent. The borrower pays the Portfolio an amount equal to
any dividends or interest received on the securities lent. The Portfolio
retains all or a portion of the interest received on investments of the
cash collateral or receives a fee from the borrower. The Portfolio may
call such loans in order to sell the securities involved. In the event
that the Portfolio reinvests cash collateral, it is subject to the risk
that both the reinvested collateral and the loaned securities will decline
in value. In addition, in such event, it is possible that the securities
loan may not be fully collateralized.
Lower Rated Securities - Risk Factors
-------------------------------------
The Portfolio may invest in convertible securities that are rated
below BBB by Standard & Poor's ("S&P") or Baa by Moody's Investors
Service, Inc. ("Moody's"), or if unrated, are considered by the Subadviser
to be below investment grade (sometimes referred to as "junk bonds"). The
prices of these lower rated securities tend to be less sensitive to
interest rate changes than higher rated investments, but more sensitive to
adverse economic changes or individual corporate developments. During
economic downturns or periods of rising interest rates, highly leveraged
issuers may experience financial stress that adversely affects their
ability to service principal and interest payment obligations, to meet
projected business goals, or to obtain additional financing, and the
markets for their securities may be more volatile. If an issuer defaults,
the Portfolio may incur additional expenses to seek recovery. In
addition, lower rated securities may contain redemption or call
provisions. If an issuer exercises these provisions in a declining
interest rate market, the Portfolio would have to replace the security
with a lower yielding security.
To the extent that there is no established retail secondary
market, there may be thin trading of lower rated securities. This may
lessen the Portfolio's ability to accurately value these securities and
its ability to dispose of them. Additionally, adverse publicity and
investor perceptions, whether or not based on fundamental analysis, may
decrease the values and liquidity of high yielding securities, especially
in a thinly traded market. Certain lower rated securities may involve
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<PAGE>
special registration responsibilities, liabilities and costs and liquidity
and valuation difficulties; thus, the responsibilities of the Board of
Trustees to value lower rated securities in the Portfolio becomes more
difficult with judgment playing a greater role.
Frequently, the higher yields of lower rated securities may not
reflect the value of the income stream that holders of such securities may
expect, but rather the risk that such securities may lose a substantial
portion of their value as a result of their issuer's financial
restructuring or default. Additionally, an economic downturn or an
increase in interest rates could have a negative effect on the lower rated
securities market and on the market value of the lower rated securities
held by the Portfolio, as well as on the ability of the issuers of such
securities to repay principal and interest on their borrowings. Proposed
new laws may impact the market for lower rated fixed income securities.
Preferred Stock
---------------
Preferred stock has preference over common stock in the receipt
of dividends and in any residual assets after payment to creditors should
the issuer be dissolved. A preferred stock is a blend of the
characteristics of a bond and common stock. It can offer the higher yield
of a bond and has priority over common stock in equity ownership, but does
not have the seniority of a bond and its participation in the issuer's
growth is limited. Although the dividend is set at a fixed annual rate,
it can be changed or omitted by the issuer at any time.
Repurchase Agreements
---------------------
The Portfolio may enter into repurchase agreements with domestic
commercial banks or registered broker/dealers. A repurchase agreement is
a contract under which the Portfolio would acquire a security for a
relatively short period (usually not more than one week) subject to the
obligation of the seller to repurchase and the Portfolio to resell such
security at a fixed time and price (representing the Portfolio's costs
plus interest). The value of the underlying securities (or collateral)
will be at least equal at all times to the total amount of the repurchase
obligation, including the interest factor. The Portfolio bears the risk
of loss in the event that the other party to a repurchase agreement
defaults on its obligations and the Portfolio is delayed or prevented from
exercising its rights to dispose of the collateral securities. Eagle and
the Subadviser, as appropriate, will monitor the creditworthiness of the
counterparties.
Short-Term Investments
----------------------
Euro/Yankee Bonds. The Portfolio may invest in U.S. dollar
denominated bonds issued by foreign branches of domestic banks
("Eurobonds") and U.S. dollar denominated bonds issued by U.S. branches of
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<PAGE>
foreign banks and sold in the United States ("Yankee bonds"). Investment
in Eurobonds and Yankee bonds entails certain risks similar to investment
in foreign securities in general, as previously discussed.
Money Market Instruments. Investments in commercial paper are
limited to obligations rated Prime-1 by Moody's or A-1 by S&P. Commercial
paper includes notes, drafts or similar instruments payable on demand or
having a maturity at the time of issuance not exceeding nine months,
exclusive of days of grace or any renewal thereof. Investments in
certificates of deposit are made only with domestic institutions with
assets in excess of $1.0 billion. See the Appendix for a description of
commercial paper ratings
Warrants and Rights
-------------------
The Portfolio may invest up to 5% of its net assets in warrants
or rights (valued at the lower of cost or market) that entitle the holder
to buy equity securities at a specific price for a specified period of
time, provided that no more than 2% of its net assets are invested in
warrants not listed on the New York Stock Exchange or American Stock
Exchange. The Portfolio may invest in warrants or rights acquired by it
as part of a unit or attached to securities at the time of purchase
without limitation.
When-Issued and Delayed Delivery Transactions
---------------------------------------------
As described in the Prospectus under "Other Investment Policies
and Risk Factors--Forward Commitments, When-Issued and Delayed Delivery
Transactions," the Portfolio may enter into agreements with banks or
broker-dealers for the purchase or sale of securities at an agreed-upon
price on a specified future date. Such agreements might be entered into,
for example, when the Portfolio anticipates a decline in interest rates
and is able to obtain a more advantageous yield by committing currently to
purchase securities to be issued later. When the Portfolio purchases
securities on a when-issued or delayed delivery basis, it is required
either (1) to create a segregated account with the Portfolio's custodian
and to maintain in that account cash, U.S. Government securities or other
high-grade debt obligations in an amount equal on a daily basis to the
amount of the Portfolio's when-issued or delayed delivery commitments or
(2) to enter into an offsetting forward sale of securities it owns equal
in value to those purchased. The Portfolio only will make commitments to
purchase securities on a when-issued or delayed-delivery basis with the
intention of actually acquiring the securities. However, the Portfolio
may sell these securities before the settlement date if it is deemed
advisable as a matter of investment strategy. When the time comes to pay
for when-issued or delayed-delivery securities, the Portfolio will meet
its obligations from then available cash flow or the sale of securities
or, although it would not normally expect to do so, from the sale of the
when-issued or delayed delivery securities themselves (which may have a
value greater or less than the Portfolio's payment obligation).
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<PAGE>
Note on Shareholder Approval
----------------------------
Unless otherwise indicated, the investment policies of the
Portfolio may be changed without shareholder approval.
INVESTMENT RESTRICTIONS
-----------------------
In addition to the limits disclosed in "Investment Policies"
above and the investment limitations described in the Prospectus, the
Portfolio is subject to the following investment limitations, which are
fundamental policies of the Portfolio and may not be changed without the
vote of a majority of the outstanding voting securities of the Portfolio.
Under the Investment Company Act of 1940, as amended (the "1940 Act"), a
"vote of a majority of the outstanding voting securities" of the Portfolio
means the affirmative vote of the lesser of (1) more than 50% of the
outstanding shares of the Portfolio 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. The
Portfolio will not:
(1) Borrow money in excess of 10% of the value (taken at the
lower of cost or current value) of the Portfolio's total assets (not
including the amount borrowed) at the time the borrowing is made, and then
only from banks as a temporary measure, such as to facilitate the meeting
of higher redemption requests than anticipated (not for leverage) that
might otherwise require the untimely disposition of portfolio investments
or for extraordinary or emergency purposes. As a matter of nonfundamental
investment policy, the Portfolio may not make any additional investments
if, immediately after such investments, outstanding borrowings of money
would exceed 5% of the current value of the Portfolio's total assets.
(2) Purchase securities on margin, except such short-term
credits as may be necessary for the clearance of purchases and sales of
securities. (For this purpose, the deposit or payment by the Portfolio of
initial or variation margin in connection with futures contracts, forward
contracts or options is not considered the purchase of a security on
margin.)
(3) Make short sales of securities or maintain a short
position, except that the Portfolio may maintain short positions in
connection with its use of options, futures contracts, forward contracts
and options on futures contracts, and the Portfolio may sell short
"against the box." As a matter of nonfundamental investment policy, the
Portfolio will not sell securities short "against the box."
(4) Underwrite securities issued by other persons except to
the extent that, in connection with the disposition of its portfolio
investments, it may be deemed to be an underwriter under federal
securities laws.
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<PAGE>
(5) Purchase or sell real estate, although it may purchase
securities of issuers who deal in real estate, including securities of
real estate investment trusts, and may purchase securities that are
secured by interests in real estate.
(6) Purchase or sell commodities or commodity contracts,
except the Portfolio may purchase and sell forward contracts, futures
contracts, options and foreign currency.
(7) Make loans, except by purchase of debt obligations or by
entering into repurchase agreements or lending its portfolio securities.
(8) With respect to 75% of its total assets, invest in
securities of any issuer if, immediately after such investment, more than
5% of its total assets (taken at current value) would be invested in the
securities of such issuer; provided that this limitation does not apply
to obligations issued or guaranteed as to interest and principal by the
U.S. Government or its agencies or instrumentalities.
(9) With respect to 75% of its total assets, acquire more
than 10% of the voting securities of any issuer.
(10) Concentrate more than 25% of the value of its total
assets in any one industry.
(11) Issue senior securities, except as permitted by the in-
vestment objective and policies and investment limitations of the
Portfolio or with respect to transactions involving options, futures,
forward currency contracts or other financial instruments.
It is contrary to the Trust's present policy with respect to the
Portfolio, which is nonfundamental and may be changed by the Trustees
without shareholder approval, to:
(1) Invest in securities of an issuer that, together with any
predecessors or controlling persons, has been in operation for less than
three consecutive years if, as a result, the aggregate of such investments
would exceed 5% of the value of the Portfolio's net assets; provided,
however, that this restriction shall not apply to any obligation of the
U.S. Government or its instrumentalities or agencies.
(2) Buy or sell oil, gas or other mineral leases, rights or
royalty contracts.
(3) Make investments for the purpose of gaining control of a
company's management.
(4) Invest in securities of any issuer if, to the knowledge
of the Trust, any officers and Trustees of the Trust and officers and
directors of Eagle who individually own beneficially more than 1/2 of 1%
of the securities of that issuer, own beneficially in the aggregate more
than 5%.
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<PAGE>
(5) Invest more than 10% of its total assets in securities of
other investment companies. For purposes of this restriction, foreign
banks and foreign insurance companies or their respective agents or
subsidiaries are not considered investment companies. (Under the 1940
Act, no registered investment company may (a) invest more than 10% of its
total assets (taken at current value) in securities of other investment
companies, (b) own securities of any one investment company having a value
in excess of 5% of its total assets (taken at current value), or (c) own
more than 3% of the outstanding voting stock of any one investment
company.) In addition, the Portfolio may invest in the securities of
other investment companies in connection with a merger, consolidation or
acquisition of assets or other reorganization approved by the Portfolio's
shareholders. The Portfolio may incur duplicate advisory or management
fees when investing in another investment company.
(6) Purchase or sell options, other than warrants.
All percentage limitations on investments set forth herein and in
the Prospectus will apply at the time of the making of an investment and
shall not be considered violated unless an excess or deficiency occurs or
exists immediately after and as a result of such investment.
NET ASSET VALUE
---------------
Net asset value per Eagle Class share is 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"). The net asset value per Eagle Class share is calculated
by dividing the value of the total assets of the Portfolio attributable to
the Eagle Class, less all liabilities (including accrued expenses)
attributable to the Eagle Class, by the number of Eagle Class shares
outstanding, the result being adjusted to the nearest whole cent. A
security listed or traded on an exchange is valued at its last sales price
on the principal exchange on which it is traded prior to the time when
assets are valued. If no sale is reported at that time, the last reported
bid price is used. All other securities for which over-the-counter market
quotations are readily available are valued at the last reported bid
price. When market quotations for futures positions held by the Portfolio
are readily available, those positions will be valued based upon such
quotations. 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. Short-term investments having a maturity of 60 days or
less are valued at cost with accrued interest or discount earned included
in interest receivable. 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 Portfolio calculates the daily net asset
value per Eagle Class share.
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<PAGE>
The Portfolio is open for business on days on which the Exchange
is open for business (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 Portfolio's close of business on
each Business Day. In addition, European or Far Eastern securities
trading generally or in a particular country or countries may not take
place on all Business Days. Furthermore, trading takes place in Japanese
markets on certain Saturdays and in various foreign capital markets on
days that are not Business Days and on which the Eagle Class shares' net
asset value is not calculated. Calculation of the Eagle Class 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. If events materially affecting the value of such securities
occur between the time when their price is determined and the time when
the Eagle Class shares' net asset value is calculated, such securities are
valued at fair value 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 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 Portfolio of securities owned by it is not reasonably
practicable or it is not reasonably practical for the Portfolio 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 the Eagle
Class shares.
PERFORMANCE INFORMATION
-----------------------
The Portfolio's performance data for the Eagle Class shares
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 the Eagle Class used in the
Portfolio's advertising and promotional materials are calculated according
to the following formula:
P(1+T)n = 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.
- 17 -
<PAGE>
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.
Based on this formula, the average annualized total return for
the Eagle Class shares for the period May 1, 1995 (commencement of
operations) to October 31, 1995 was 8.32%.
In connection with communicating its total return to current or
prospective shareholders, the Portfolio 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. The Portfolio may compare its return to relevant
global, international and domestic indexes. Examples include, but are not
limited to, the Morgan Stanley Capital International World Index
(containing 1,468 securities listed on the exchanges of the United States,
Europe, Canada, Australia, New Zealand and the Far East), the Morgan
Stanley Capital International Europe, Australia, Far East Index
(containing over 1,000 companies representing the stock markets of Europe,
Australia, and the Far East), and the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500") (containing 500 of the largest U.S.
companies). These indexes are widely followed, capitalization weighted
indexes of publicly traded stocks. All index returns are translated into
U.S. dollars.
The Portfolio also 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 example, in comparing the
total return for the Eagle Class shares 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 S&P 500, the
Portfolio calculates its aggregate total return for the specified periods
of time by assuming an investment of $10,000 in Eagle Class shares 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.
INVESTING IN THE PORTFOLIO
--------------------------
Eagle Class shares are sold at their next determined net asset
value on days the Exchange is open for business. The procedure for
purchasing Eagle Class shares is explained in the prospectus under "How to
Buy Shares." The Portfolio's distributor, Raymond James & Associates,
Inc. ("RJA" or the "Distributor"), has agreed that it will hold the
Portfolio harmless in the event of loss as a result of cancellation of
trades in Eagle Class shares by the Distributor, its affiliates or its
customers.
REDEEMING SHARES
- 18 -
<PAGE>
----------------
The methods of redemption are described in the section of the
prospectus entitled "How to Sell Shares."
A redemption request will be considered to be received in "good
order" only if: the number of Eagle Class shares to be redeemed and the
shareholder account number are indicated in writing; the written request
is signed by a shareholder and by any co-owner of the account with exactly
the same name or names used in establishing the account; the written
request is accompanied by any certificates representing the Eagle Class
shares that have been issued 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 the
written redemption request exceeding $100,000 and on any certificates for
Eagle Class 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 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
Heritage Asset Management, Inc., the Portfolio's transfer agent ("Transfer
Agent" or "Heritage"), under its current signature guarantee program.
Systematic Withdrawal Plan
--------------------------
Shareholders also may elect to make systematic withdrawals from
their Portfolio account of a minimum of $250 on a periodic basis. The
amounts paid each period are obtained by redeeming sufficient Eagle Class
shares from the shareholder's account to provide the withdrawal amount
specified. The Systematic Withdrawal Plan is not currently available for
shares held in an Individual Retirement Account, simplified employee
pension plan or other retirement plan. Shareholders may change the amount
to be paid without charge not more than once a year by written notice to
the Distributor or Transfer Agent. Redemptions will be made at net asset
value determined as of the close of regular trading on the Exchange on the
5th or 20th day of each month, whichever is applicable based upon the date
the shareholder elects to receive payments. 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. The check for the withdrawal payment usually will
be mailed on the next business day following redemption. If shareholders
elect to participate in the Systematic Withdrawal Plan, dividends and
other distributions on all Eagle Class shares in the account must be
automatically reinvested in Eagle Class shares. Shareholders may
terminate the Systematic Withdrawal Plan at any time without charge or
penalty by giving written notice to the Distributor or the Transfer Agent.
The Portfolio, the Transfer Agent and the Distributor also reserve the
right to modify or terminate the Systematic Withdrawal Plan at any time.
- 19 -
<PAGE>
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 other distributions, the amount of the original investment
may be correspondingly reduced.
Ordinarily, shareholders should not purchase additional Eagle
Class shares if maintaining a Systematic Withdrawal Plan because they may
incur tax liabilities in connection with such purchases and withdrawals.
The Portfolio will not knowingly accept purchase orders from shareholders
for additional Eagle Class shares if they maintain a Systematic Withdrawal
Plan unless the purchase is equal to at least one year's scheduled
withdrawals.
Redemption in Kind
------------------
The Portfolio is obligated to redeem Eagle Class shares for any
shareholder for cash during any 90-day period up to $250,000 or 1% of the
Portfolio's net asset value, whichever is less. Any redemption beyond
this amount also will be in cash unless the Trustees determine that
further cash payments will have a material adverse effect on remaining
shareholders. In such a case, the Portfolio will pay all or a portion of
the remainder of the redemption in portfolio instruments, valued in the
same way as the Portfolio determines net asset value. The portfolio
instruments will be selected in a manner that the Trustees deem fair and
equitable. Redemption in kind is not as liquid as a cash redemption. If
redemption is made in kind, shareholders receiving portfolio instruments
could receive less than the redemption value of their securities and could
incur certain transaction costs.
TAXES
-----
General. In order to continue to qualify for treatment as a
regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended ("Code"), the Portfolio -- which is treated as a separate
corporation for these purposes -- must distribute to its shareholders for
each taxable year at least 90% of its investment company taxable income
(consisting generally 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
Portfolio 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 futures or forward con-
tracts) derived with respect to its business of investing in securities or
those currencies ("Income Requirement"); (2) the Portfolio must derive
less than 30% of its gross income each taxable year from the sale or other
disposition of securities, or any of the following, that were held for
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<PAGE>
less than three months -- futures (other than those on foreign
currencies), or foreign currencies (or futures or forward contracts
thereon) that are not directly related to the Portfolio's principal
business of investing in securities (or futures with respect to
securities) ("Short-Short Limitation"); (3) at the close of each quarter
of the Portfolio'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 Portfolio'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 Portfolio'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.
If Portfolio 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 any dividend or capital
gain distribution, the shareholder will pay full price for the shares and
receive some portion of the purchase price back as a taxable distribution.
The Portfolio 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
capital gain net income for the one-year period ending on October 31 of
that year, plus certain other amounts.
Income from Foreign Securities. Dividends and interest received
by the Portfolio 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. If more than 50% in the value of the
Portfolio's total assets at the close of any taxable year consists of
securities of foreign corporations, the Portfolio will be eligible to, and
may, file an election with the Internal Revenue Service that will enable
its shareholders, in effect, to receive the benefit of the foreign tax
credit with respect to any foreign and U.S. possessions income taxes paid
by it. Pursuant to any such election, the Portfolio would treat those
taxes as dividends paid to its shareholders and each shareholder would be
required to (1) include in gross income, and treat as paid by the
shareholder, the shareholder's proportionate share of those taxes, (2)
treat the shareholder's share of those taxes and of any dividend paid by
the Portfolio that represents income from foreign or U.S. possessions
sources as the shareholder's own income from those sources, and (3) either
deduct the taxes deemed paid by the shareholder in computing the share-
holder's taxable income or, alternatively, use the foregoing information
in calculating the foreign tax credit against the shareholder's federal
- 21 -
<PAGE>
income tax. The Portfolio will report to its shareholders shortly after
each taxable year their respective shares of the Portfolio's income from
sources within, and taxes paid to, foreign countries and U.S. possessions
if it makes this election.
The Portfolio may invest in the stock of "passive foreign invest-
ment 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 Portfolio will be subject to Federal income tax on a
portion of any "excess distribution" received on the stock of a PFIC or of
any gain on disposition of the stock (collectively "PFIC income"), plus
interest thereon, even if the Portfolio distributes the PFIC income as a
taxable dividend to its shareholders. The balance of the PFIC income will
be included in the Portfolio'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 Portfolio 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 Portfolio would 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 most likely 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 Portfolio. 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
Portfolio, 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 such 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).
Gains or losses (1) from the disposition of foreign currencies,
(2) from the disposition of debt securities denominated in foreign
currency that are attributable to fluctuations in the value of the foreign
currency between the date of acquisition of each security and the date of
disposition, and (3) that are attributable to fluctuations in exchange
rates that occur between the time the Portfolio accrues interest,
dividends or other receivables or accrues expenses or other liabilities
denominated in a foreign currency and the time the Portfolio actually
collects the receivables or pays the liabilities, generally will be
treated as ordinary income or loss. These gains or losses, referred to
under the Code as "section 988" gains or losses, may increase or decrease
the amount of the Portfolio's investment company taxable income to be
distributed to its shareholders.
- 22 -
<PAGE>
Hedging Strategies. 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 Portfolio realizes in connection therewith. Income from foreign
currencies (except certain gains therefrom that may be excluded by future
regulations), and income from transactions in futures and forward
contracts derived by the Portfolio 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 futures contracts (other than those on foreign currencies) will be
subject to the Short-Short Limitation if they are held for less than three
months. Income from the disposition of foreign currencies, and futures
and forward contracts thereon, that are not directly related to the
Portfolio's principal business of investing in securities (or futures with
respect thereto) also will be subject to the Short-Short Limitation if
they are held for less than three months.
If the Portfolio satisfies certain requirements, any increase in
value of a position that is part of a "designated hedge" will be offset by
any decrease in value (whether realized or not) of the offsetting hedging
position during the period of the hedge for purposes of determining
whether the Portfolio satisfies the Short-Short Limitation. Thus, only
the net gain (if any) from the designated hedge will be included in gross
income for purposes of that limitation. The Portfolio will consider
whether it should seek to qualify for this treatment for its hedging
transactions. To the extent it does not so qualify, it may be forced to
defer the closing out of certain futures and forward contracts beyond the
time when it otherwise would be advantageous to do so, in order for the
Portfolio to continue to qualify as a RIC.
Certain futures in which the Portfolio may invest will be
"section 1256 contracts." Section 1256 contracts held by the Portfolio at
the end of each taxable year, other than section 1256 contracts that are
part of a "mixed straddle" with respect to which the Portfolio has made an
election not to have the following rules apply, must be "marked-to-market"
(that is, treated as sold for their fair market value) for Federal income
tax purposes, with the result that unrealized gains or losses will be
treated as though they were realized. Sixty percent of any net gain or
loss recognized on these deemed sales, and 60% of any net realized gain or
loss from any actual sales of section 1256 contracts, will be treated as
long-term capital gain or loss, and the balance will be treated as short-
term capital gain or loss. Section 1256 contracts also may be marked-to-
market for purposes of the Excise Tax.
PORTFOLIO INFORMATION
---------------------
Trustees and Officers. Trustees and officers are listed with
their addresses, principal occupations and present positions, including
any affiliation with Raymond James Financial, Inc. ("RJF"), RJA, Eagle and
Heritage.
- 23 -
<PAGE>
<TABLE>
<CAPTION>
Position with Principal Occupation During
Name and Address the Trust Past Five Years
<S> <C> <C>
Thomas A. James* Trustee Chairman of the Board since
880 Carillon Parkway 1986, Chief Executive Officer
St. Petersburg, FL since 1969 and President from
33716 1972-1986 of RJF; Chairman of
the Board of RJA since 1986
and President of RJA 1972-
1990; Chairman of the Board
of Eagle since 1984 and Chief
Executive Officer of Eagle
since July 1994.
Richard K. Riess* Trustee President of Eagle since
880 Carillon Parkway January 1995; Chief Operating
St. Petersburg, FL Officer of Eagle since July
33716 1988; Executive Vice Presi-
dent of Eagle from July 1988-
December 1994; President of
Heritage Mutual Funds, June
1985-November 1991; President
of Heritage, June 1985-March
1989; Senior Vice President
of RJA, August 1987-March
1989.
Donald W. Burton Trustee President of South Atlantic
614 W. Bay Street Capital Corporation (venture
Suite 200 capital) since October 1981.
Tampa, FL 33606
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; Chairman
of the Board of Quinoco
Petroleum, Inc., 1985-1986;
Chief Executive Officer and
Chairman of the Board of
Emcor Petroleum, Inc. (oil
and gas exploration and
production), 1977-1985.
- 24 -
<PAGE>
Position with Principal Occupation During
Name and Address the Trust Past Five Years
David M. Phillips Trustee Chairman and Chief Executive
World Trade Center Officer of CCC Information
Chicago Services, Inc. since 1994 and
444 Merchandise Mart of InfoVest Corporation
Chicago, IL 60654 (information services to the
insurance and auto industries
and consumer households)
since October 1982.
Eric Stattin Trustee Litigation Consultant/Expert
2455 Meadows Drive Witness and Private Investor
Park City, UT 84060 since February 1988; Chairman
of the Board, September 1986-
February 1988, and President,
June 1985-February 1988 of
Florida Federal Savings and
Loan Association; Managing
Director of Shearson Lehman
Brothers in Los Angeles,
1979-June 1985.
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 Au-
Administration gust 1986, University of
Tampa, FL 33620 South Florida; Academic Dean
of the Graduate School of
Banking, Madison, Wisconsin,
1983-1986, Professor of
School of Business Adminis-
tration at University of
Wisconsin, 1968-1986; Board
Member, Marine Bank, Dane
County, 1983-1986.
Stephen G. Hill President Chief Executive Officer and
880 Carillon Parkway President of Heritage since
St. Petersburg, FL April 1989.
33716
Brian C. Lee Senior Vice Senior Vice President of
880 Carillon Parkway President Eagle since November 1991;
St. Petersburg, FL prior to 1991, Vice President
33716 and National Product Manager
for the Consulting Services
Division of Shearson Lehman
Brothers.
- 25 -
<PAGE>
Position with Principal Occupation During
Name and Address the Trust Past Five Years
Donald H. Glassman Treasurer Treasurer of Heritage since
880 Carillon Parkway May 1989; Treasurer, Heritage
St. Petersburg, FL Mutual Funds since May 1989.
33716
Clifford J. Alexander Secretary Partner, Kirkpatrick &
1800 M Street, N.W. Lockhart LLP (law firm).
Washington, D.C.
20036
Patricia Schneider Assistant Compliance Administrator
880 Carillon Parkway Secretary
St. Petersburg, FL
33716
Steven W. Faber Assistant Corporate Counsel of Eagle
880 Carillon Parkway Secretary from 1990 to present;
St. Petersburg, FL Associate Corporate Counsel
33716 of RJF from 1989-1990.
Robert J. Zutz Assistant Partner, Kirkpatrick &
1800 M Street, N.W. Secretary Lockhart LLP (law firm).
Washington, D.C.
20036
</TABLE>
* These Trustees are "interested persons" as such term is
defined under the 1940 Act.
The Trustees and officers of the Trust, as a group, own less than
1% of the Eagle Class shares. 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 Eagle performs substantially all of the
services necessary for the operation of the Portfolio, the Portfolio
requires no employees. No officer, director or employee of Eagle receives
any compensation from the Portfolio for acting as a director or officer.
The following table shows the anticipated compensation to be earned by
each Trustee who is not an "interested person of the Trust" for the fiscal
year ending October 31, 1996.
- 26 -
<PAGE>
<TABLE>
<CAPTION>
Compensation Table
Pension or Total Compensation
Aggregate Retirement Benefits From the Trust and
Compensation Accrued as Part of Estimated Annual the Heritage
Name of Person, From the the Trust's Benefits Upon Family of Funds
Position Trust Expenses Retirement Paid to Trustees
<S> <C> <C> <C> <C>
Donald W. Burton, Trustee $1,554 $0 $0 $14,000
C. Andrew Graham, Trustee $1,776 $0 $0 $16,000
David M. Phillips, Trustee $1,554 $0 $0 $14,000
Eric Stattin, $1,776 $0 $0 $16,000
Trustee
James L. Pappas, $1,776 $0 $0 $16,000
Trustee
Richard K. Riess, $0 $0 $0 $0
Trustee
Thomas A. James, $0 $0 $0 $0
Trustee
</TABLE>
Investment Adviser; Subadviser
------------------------------
The Portfolio's investment adviser, Eagle Asset Management, Inc.,
was organized as a Florida corporation in 1976. All the capital stock of
Eagle is owned by RJF. RJF is a holding company that, through its
subsidiaries, is engaged primarily in providing customers with a wide
variety of financial services in connection with securities, limited
partnerships, options, investment banking and related fields.
Under an Investment Advisory and Administration Agreement
("Advisory Agreement") dated February 14, 1995, between the Trust, on
behalf of the Portfolio, and Eagle, and subject to the control and
direction of the Trustees, Eagle is responsible for overseeing the
Portfolio's investment and noninvestment affairs. Under a Subadvisory
Agreement, the Subadviser, subject to direction by Eagle and the Board of
Trustees, will provide investment advice and portfolio management services
to the Portfolio for a fee payable by Eagle.
Eagle also is obligated to furnish the Portfolio with office
space, administrative, and certain other services as well as executive and
- 27 -
<PAGE>
other personnel necessary for the operation of the Portfolio. Eagle and
its affiliates also pay all the compensation of Trustees of the Trust who
are employees of Eagle and its affiliates. The Portfolio pays all its
other expenses that are not assumed by Eagle as described in the
Prospectus. The Portfolio also is liable for such nonrecurring expenses
as may arise, including litigation to which the Portfolio may be a party.
The Portfolio 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 Trustees (including all of the Trustees who are not
"interested persons" of Eagle or the Subadviser) and Eagle, as sole
shareholder of the Portfolio, in compliance with the 1940 Act. Each
Agreement will continue in force for a period of two years 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 Eagle, the 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 Portfolio. The
Advisory and Subadvisory Agreement 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 Eagle to the
Portfolio, and the Subadvisory Agreement may be terminated on not less
than 60 days' written notice by Eagle or 90 days' written notice by the
Subadviser. Under the terms of the Advisory Agreement, Eagle
automatically becomes responsible for the obligations of the Subadviser
upon termination of the Subadvisory Agreement. In the event Eagle ceases
to be the adviser of the Portfolio or the Distributor ceases to be
principal distributor of the Portfolio's shares, the right of the
Portfolio to use the identifying name of "Eagle" may be withdrawn.
Eagle and the Subadviser shall not be liable to the Portfolio 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
with the Portfolio or for any losses that may be sustained in the
purchase, holding or sale of any security.
Advisory Fee. The annual investment advisory fee paid monthly by
the Portfolio to Eagle is set forth in the Prospectus. Eagle has
voluntarily agreed to waive management fees to the extent that the
Portfolio's total operating expenses, exclusive of foreign taxes paid,
exceed 2.60% of average daily net assets during the fiscal year ended
October 31, 1995. Eagle has entered into an agreement with the Subadviser
to provide investment advice and portfolio management services to the
Portfolio for a fee based on the Portfolio's average daily net assets paid
by Eagle to the Subadviser equal to .50% on the first $100 million and
.40% thereafter, without regard to any reduction in fees actually paid to
Eagle as a result of expense limitations.
- 28 -
<PAGE>
For the fiscal period ended October 31, 1995, investment advisory
fees amounted to $32,303. For the same period, Eagle waived its fees in
the amount of $32,303 and reimbursed the Portfolio for expenses totalling
$48,001. For the fiscal period ended October 31, 1995, Eagle paid
subadviser fees of $16,152.
Class-Specific Expenses. The Portfolio may determine to allocate
certain of its expenses (in addition to distribution fees) to the specific
classes of the Portfolio'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 Portfolio's operating expenses (including
the investment advisory fee, but not including distribution fees,
brokerage commissions, interest, taxes and extraordinary expenses) exceed
these expense limitations, the investment advisory fee paid will be
reduced on a monthly basis by the amount of the excess. If applicable
state expense limitations are exceeded, the amount to be reimbursed by
Eagle will be limited by the amount of the investment advisory fee and the
Portfolio may have to cease offering its shares for sale in certain states
until the expense ratio declines. Any fees waived by Eagle can be
recovered by it from the Portfolio when such recovery would not cause the
Portfolio to exceed its expense limits. The most restrictive current
state expense limit is 2.5% of the Portfolio's first $30 million in
average net assets, 2.0% of the next $70 million in assets and 1.5% of all
excess average net assets.
Brokerage Practices
-------------------
Eagle and the Subadviser are responsible for the execution of the
Portfolio's portfolio transactions and must seek the most favorable price
and execution for such transactions. Best execution, however, does not
mean that the Portfolio necessarily will be paying the lowest commission
or spread available. Rather, the Portfolio 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.
Consistent with the policy of most favorable price and execution,
Eagle or the Subadviser may give consideration to research, statistical
and other services furnished by brokers to them for their use. In
addition, Eagle or 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
they determine 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 Eagle or the Subadviser in
connection with services to clients other than the Portfolio. The
Portfolio also may purchase and sell portfolio securities to and from
- 29 -
<PAGE>
dealers who provide it with research services. However, portfolio
transactions will not be directed by the Portfolio to dealers on the basis
of such research services.
The Portfolio may use the Distributor or its affiliates or
affiliates of the Subadviser as a 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 or its affiliates 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."
Eagle and the Subadviser also may select other brokers to execute
portfolio transactions. In the over-the-counter market, the Portfolio
generally deals with primary market-makers unless a more favorable
execution can otherwise be obtained.
The Portfolio may not buy securities from, or sell securities to
the Distributor or its affiliates as principal. However, the Board of
Trustees has adopted procedures in conformity with Rule 10f-3 under the
1940 Act whereby the Portfolio may purchase securities that are offered in
underwritings in which the Distributor or its affiliates are participants.
The Board of Trustees will consider the possibilities of seeking to
recapture for the benefit of the Portfolio 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, its affiliates or certain
affiliates of the Subadviser, 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.
Section 11(a) of the Securities Exchange Act of 1934, as amended,
prohibits the Distributor from executing transactions on an exchange for
the Portfolio except pursuant to written consent by the Portfolio.
Distribution of Shares
----------------------
The Distributor and participating dealers or participating banks
with whom it has entered into dealer agreements offer shares of the
Portfolio as agents on a best efforts basis and are not obligated to sell
any specific amount of shares. Pursuant to its Distribution Agreement
with the Trust on behalf of the Portfolio with respect to Eagle Class
shares, the Distributor bears the cost of making information about the
Portfolio 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 or
- 30 -
<PAGE>
servicing efforts. The Distributor also pays service fees to dealers for
providing personal services to Eagle Class shareholders and for
maintaining shareholder accounts. The Portfolio 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 the
Eagle Class shares, the Portfolio pays the Distributor a distribution fee
in an amount up to 1.00% of the Portfolio's average daily net assets in
accordance with the Eagle Class Plan described below. The distribution
fee is accrued daily and paid monthly. The Distributor uses only .25 of
1% of this fee as a service fee to compensate participating dealers or
participating banks including, for this purpose, certain financial
institutions for services provided in connection with the maintenance of
shareholder accounts. For the fiscal period ended October 31, 1995, the
Distributor received Rule 12b-1 fees in the amount of $32,303, all of
which was used to compensate the Distributor's representatives.
In reporting amounts expended under the Plan to the Trustees, the
Distributor will allocate expenses attributable to the sale of Eagle Class
shares to that class based on the ratio of sales of shares of that class
to the sales of all the classes of shares of the Portfolio. The fees paid
by one class of shares will not be used to subsidize the sale of any other
class of shares.
The Portfolio has adopted a Distribution Plan for the Eagle Class
shares (the "Plan") that, among other things, permits it to pay the
Distributor the monthly distribution fee out of its net assets to finance
activity that is intended to result in the sale and retention of Eagle
Class shares. As required by Rule l2b-1 under the 1940 Act, the Plan was
approved by Eagle, as the sole shareholder of the Portfolio, and the Board
of Trustees, including a majority of the Trustees who are not interested
persons of the Portfolio (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 Portfolio and Eagle Class
shareholders will benefit from the Plan.
The Plan may be terminated by vote of a majority of the
Independent Trustees, or by vote of a majority of the outstanding voting
securities of the Eagle Class shares. The Trustees review quarterly a
written report of Plan costs and the purposes for which such costs have
been incurred. The Plan may be amended by vote of the Trustees, including
a majority of the Independent Trustees, cast in person at a meeting called
for such purpose. Any change in the Plan that would materially increase
the distribution cost to the Eagle Class requires Eagle Class shareholder
approval.
The Distribution Agreement may be terminated at any time on 60
days' written notice without payment of any penalty by either party. The
- 31 -
<PAGE>
Portfolio may effect such termination by vote of a majority of the
outstanding voting securities of the Portfolio or by vote of a majority of
the Independent Trustees. For so long as the Plan is in effect, selection
and nomination of those Trustees who are not interested persons of the
Portfolio shall be committed to the discretion of such disinterested
persons.
The Distribution Agreement and the Plan 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.
Administration of the Portfolio
-------------------------------
Administrative and Transfer Agent Services. Eagle, subject to
the control of the Trustees, will manage, supervise and conduct the
administrative and business affairs of the Portfolio; furnish office space
and equipment; oversee the activities of the Subadviser and the
Portfolio's custodian and fund accountant; and pay all salaries, fees and
expenses of officers and Trustees of the Trust who are affiliated with
Eagle and its affiliates. Eagle also will provide certain shareholder
servicing activities for customers of the Portfolio. Heritage is the
transfer and dividend disbursing agent for the Portfolio. The Portfolio
pays Heritage a fee equal to its cost plus ten percent for its services as
transfer and dividend disbursing agent. For the fiscal period ended
October 31, 1995, Heritage earned approximately $1,016 for its services as
transfer and dividend disbursement agent.
Under a separate Administration Agreement between Eagle and
Heritage, Heritage will provide certain noninvestment services to the
Portfolio for a fee payable by Eagle equal to .10% on the first $100
million of average daily net assets, and .05% thereafter. For the fiscal
period ended October 31, 1995, Eagle paid Heritage $12,500 for such
services.
Custodian. State Street Bank and Trust Company, P.0. Box 1912,
Boston, Massachusetts 02105, serves as custodian of the Portfolio's assets
and provides portfolio accounting and certain other services.
Legal Counsel. Kirkpatrick & Lockhart LLP, 1800 M Street, N.W.,
Washington, D.C. 20036, serves as counsel to the Trust and Eagle.
Schifino & Fleischer, P.A., 1 Tampa City Center, Suite 2700, Tampa,
Florida 33602, serves as counsel to the Distributor.
Independent Accountants. Coopers & Lybrand L.L.P., One Post
Office Square, Boston, Massachusetts 02109, is the independent accountants
for the Trust. The Financial Statements and Financial Highlights of the
Portfolio that appear in this Statement of Additional Information have
been audited by Coopers & Lybrand L.L.P., whose report thereon has been
- 32 -
<PAGE>
included herein in reliance upon the report of Coopers & Lybrand L.L.P.,
which is given upon its 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
Portfolio. 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 Portfolio. These documents
require notice of this disclaimer to be given in each agreement,
obligation or instrument the Portfolio or its Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the
Portfolio's obligations, the Portfolio is required to use its property to
protect or compensate the shareholder. On request, the Portfolio will
defend any claim made and pay any judgment against a shareholder for any
act or obligation of the Portfolio. Therefore, financial loss resulting
from liability as a shareholder will occur only if the Portfolio itself
cannot meet its obligations to indemnify shareholders and pay judgments
against them.
- 33 -
<PAGE>
APPENDIX
CORPORATE BOND RATINGS
STANDARD & POOR'S CORPORATE BOND RATINGS
----------------------------------------
AAA Debt rated "AAA" has the highest rating assigned by S&P.
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 categories.
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 in higher
rated categories.
BB, B, CCC Debt rated "BB," "B" and "CCC" is regarded, on
balance, as predominantly speculative with respect to capacity to pay
interest and repay principal in accordance with the terms of the
obligation. "BB" indicates the lowest degree of speculation. While such
debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
conditions.
BB 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 which could lead to inadequate capacity to meet timely interest
and principal payments. The "BB" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "BBB-"
rating.
B 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 will
likely impair capacity or willingness to pay interest and repay principal.
The "B" rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied "BB" or "BB-" rating.
CCC Debt rated "CCC" has a currently identifiable vulnerability
to default and is dependent upon favorable business, financial and
economic conditions to meet timely payment of interest and repayment of
A - 1
<PAGE>
principal. In the event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay interest and
repay principal. The "CCC" rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied "B" or
"B-" rating.
CC The rating "CC" is typically applied to debt subordinated
to senior debt that is assigned an actual or impled "CCC" rating.
C The rating "C" is typically applied to debt subordinated
to senior debt which is assigned an actual or implied "CCC-" debt rating.
The "C" rating may be used to cover a situation where a bankruptcy
petition has been filed, but debt service payments are continued.
CI The rating "CI" is reserved for income bonds on which no
interest is being paid.
D Debt rated "D" is in payment default. The "D" rating
category is used when interest payments or principal payments are not made
on the date due even if the applicable grace period has not expired,
unless S&P believes that such payments will be made during such grace
period. The "D" rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
Plus (+) or Minus (-): The ratings from "AA" to "CCC" may be
modified by the addition of a plus or minus sign to show relative standing
within the major categories.
NR indicates that no public rating has been requested, that there
is insufficient information on which to base a rating, or that S&P does
not rate a particular type of obligation as a matter of policy.
MOODY'S INVESTORS SERVICE, INC. CORPORATE BOND RATINGS
------------------------------------------------------
Aaa Bonds which are rated Aaa are judged to be of the best
quality. They carry the smallest degree of investment risk and are
generally referred to as "gilt edged." Interest payments are protected by
a large or 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 which are rated Aa are judged to be of high quality by
all standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than the best
bonds because margins of protection may not be as large as in Aaa
securities, fluctuation of protective elements may be of greater amplitude
or there may be other elements present which make the long-term risk
appear somewhat greater than in Aaa securities.
A - 2
<PAGE>
A Bonds which 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 which suggest a susceptibility to impairment
some time in the future.
Baa Bonds which 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 characteristically
unreliable over any great length of time. Such bonds lack outstanding
investment characteristics and in fact have speculative characteristics as
well.
Ba Bonds which 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 which 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.
Caa Bonds which are rated Caa are of poor standing. Such issues
may be in default or there may be present elements of danger with respect
to principal or interest.
Ca Bonds which are rated Ca represent obligations which are
speculative in a high degree. Such issues are often in default or have
other marked shortcomings.
C Bonds which are rated C are the lowest rated class of
bonds, and issues so rated can be regarded as having extremely poor
prospects of ever attaining any real investment standing.
Moody's applies numerical modifiers, 1, 2 and 3 in each generic
rating classification from Aa through B in its corporate bond rating
system. The modifier 1 indicates that the company ranks in the higher end
of its generic rating category; the modifier 2 indicates a mid-range
ranking and the modifier 3 indicates that the company ranks in the lower
end of its generic rating category.
A - 3
<PAGE>
COMMERCIAL PAPER RATINGS
The rating services' descriptions of commercial paper ratings in which the
Portfolios may invest are:
Description of Standard & Poor's Ratings Group'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.
Description of Moody's Investors Service, Inc.'s Commercial Paper Ratings
-------------------------------------------------------------------------
Prime-l. 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 will often 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 alternate liquidity.
A - 4
<PAGE>
<PAGE> 1
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
----------
<S> <C>
REPURCHASE AGREEMENT--6.2%
Repurchase Agreement with State Street Bank and Trust Company, dated October 31, 1995, @ 5.82%, to
be repurchased at $620,100 on November 1, 1995, collateralized by $580,000 United States Treasury
Notes, 7.25%, due August 15, 2004, (market value $639,119 including interest) (cost $620,000) ..... $ 620,000
----------
</TABLE>
<TABLE>
<CAPTION>
SHARES
------
<C> <S> <C>
COMMON STOCK--91.1%
- --------------------
ARGENTINA--1.0%
--------------
8,700 Capex SA............................................................................... 104,400
----------
AUSTRALIA--2.1%
-------------
13,600 Broken Hill Proprietary Company, Ltd................................................... 184,193
17,000 Qantas Airways, Ltd.................................................................... 30,043
----------
214,236
----------
BRAZIL--1.8%
-----------
3,800 Usiminas, SA........................................................................... 36,328
3,500 Telecomunicacoes Brasileiras, SA....................................................... 140,438
----------
176,766
----------
FRANCE--5.8%
-----------
2,100 Peugeot SA............................................................................. 273,553
7,840 Schneider SA........................................................................... 302,371
----------
575,924
----------
GERMANY--3.0%
-------------
7,200 VEBA AG................................................................................ 295,601
----------
HONG KONG--7.2%
---------------
31,000 China Light & Power Company, Ltd....................................................... 165,190
18,800 HSBC Holdings.......................................................................... 273,549
50,000 Hutchison Whampoa, Ltd................................................................. 275,489
----------
714,228
----------
INDIA--0.8%
----------
8,032 Indian Opportunities Fund, Ltd......................................................... 84,418
----------
ITALY--1.9%
---------
31,950 La Rinascente.......................................................................... 189,415
----------
JAPAN--29.4%
------------
15,000 Canon, Incorporated.................................................................... 256,611
22,000 Hitachi Metals, Ltd.................................................................... 270,981
33,000 Asahi Chemicals Industry Company, Ltd.................................................. 231,624
31 DDI Corporation........................................................................ 251,224
39,000 Itochu Corporation..................................................................... 231,038
5,000 Ito-Yokado Company, Ltd................................................................ 273,229
29,000 Kamigumi Company, Ltd.................................................................. 262,232
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 2
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET
------ VALUE
----------
<C> <S> <C>
JAPAN--(CONTINUED)
-----------------
3,000 Kyocera Corporation.................................................................... $ 245,760
14,000 Mitsubishi Heavy Industries, Ltd....................................................... 107,982
27,000 Nippon Express Company, Ltd............................................................ 219,072
1,000 Rohm Company, Ltd...................................................................... 60,707
11,000 Shin-Etsu Chemical Company, Ltd........................................................ 224,742
1,000 Sony Corporation....................................................................... 44,968
18,000 Sumitomo Forestry Company, Ltd......................................................... 253,385
----------
2,933,555
----------
MALAYSIA--4.7%
-------------
9,000 AMMB Holdings BHD...................................................................... 111,570
14,000 Edaran Otomobil Nasional BHD........................................................... 110,193
14,000 Genting BHD............................................................................ 120,661
20,000 United Engineers BHD................................................................... 124,360
----------
466,784
----------
MEXICO--0.7%
------------
15,000 Grupo Industrial San Luis SA........................................................... 70,526
----------
NETHERLANDS--3.3%
----------------
3,600 Wolters Kluwer CVA..................................................................... 327,646
----------
SINGAPORE--3.6%
--------------
12,000 Development Bank of Singapore, Ltd. (Alien Market)..................................... 137,580
14,000 Jardine Matheson & Company, Ltd........................................................ 85,400
9,000 Singapore Press Holdings, Ltd. (Alien Market).......................................... 140,764
----------
363,744
----------
SOUTH AFRICA--0.5%
-----------------
1,600 South African Breweries, Ltd........................................................... 52,532
----------
SPAIN--1.9%
----------
4,345 Banco de Santander SA.................................................................. 189,385
----------
SWEDEN--1.7%
------------
4,000 Electrolux, AB......................................................................... 171,069
----------
SWITZERLAND--3.2%
----------------
300 Nestle, SA............................................................................. 314,454
----------
TAIWAN--1.6%
------------
1,000 Taipei Fund, IDR....................................................................... 74,060
10,800 Taiwan Opportunities Fund, Ltd......................................................... 85,752
----------
159,812
----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 3
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES MARKET
------ VALUE
----------
<C> <S> <C>
THAILAND--1.6%
-------------
40,000 Thai Military Bank, PCL (Alien Market)................................................. $ 157,361
----------
UNITED KINGDOM--15.3%
---------------------
33,500 Argyll Group, PLC...................................................................... 170,281
46,000 BTR, PLC............................................................................... 53,818
25,000 British Airways, PLC................................................................... 179,842
11,000 East Midlands Electricity, PLC......................................................... 151,043
15,500 Glaxo Wellcome, PLC.................................................................... 209,036
16,200 Granada Group, PLC..................................................................... 173,398
71,000 Ladbroke Group, Ltd, PLC............................................................... 186,340
2,000 TSB Group, PLC......................................................................... 11,794
10,000 Unilever, PLC.......................................................................... 194,308
31,000 Wolseley, PLC.......................................................................... 192,126
----------
1,521,986
----------
PRINCIPAL Total Common Stocks (cost $9,077,759).................................................. 9,083,842
----------
BONDS--2.0%
-----------
JAPAN--2.0%
-------------
$ 90,000 Bank of Tokyo, Ltd, 3.375%, due 3/31/2004, (c)......................................... 97,538
110,000 Mitsubishi Bank, Ltd, 3.5%, due 3/31/2004, (c)......................................... 102,850
----------
Total Bonds (cost $244,384)............................................................ 200,388
----------
TOTAL INVESTMENT PORTFOLIO (cost $9,942,143)(b), 99.3%(a)................................................ 9,904,230
OTHER ASSETS AND LIABILITIES, NET 0.7%(a)................................................................ 66,329
----------
NET ASSETS, 100.0%....................................................................................... $9,970,559
=========
</TABLE>
(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 depreciation of $37,913, which consists
of aggregate gross unrealized appreciation for all securities in which there
is an excess of market value over tax cost of $315,240 and aggregate gross
unrealized depreciation for all securities in which there is an excess of
tax cost over market value of $353,153.
(c) Convertible security.
IDR -- International Depository Receipt (one IDR equals 1,000 shares).
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
-------------------- ---------- --------
<S> <C> <C>
Common Stocks
Airlines............................................................................... $ 179,842 1.80%
Automotive............................................................................. 383,746 3.85
Banks.................................................................................. 881,240 8.84
Basic Industries....................................................................... 184,193 1.85
Broadcasting........................................................................... 173,398 1.74
Building Materials..................................................................... 192,126 1.93
Capital Goods.......................................................................... 800,887 8.03
Casinos................................................................................ 120,661 1.21
Chemicals.............................................................................. 456,366 4.58
Construction........................................................................... 377,745 3.79
Consumer Goods......................................................................... 223,601 2.24
Diversified Holding.................................................................... 275,489 2.76
Electronics............................................................................ 608,045 6.10
Fabricated Metal....................................................................... 270,981 2.72
Finance................................................................................ 244,230 2.45
Food................................................................................... 679,043 6.81
Industrial............................................................................. 161,800 1.62
Lodging................................................................................ 186,340 1.87
Overseas Trading....................................................................... 316,438 3.17
Pharmaceuticals........................................................................ 209,036 2.10
Publishing............................................................................. 468,410 4.70
Retailers.............................................................................. 462,644 4.64
Transportation......................................................................... 511,347 5.13
Utilities.............................................................................. 716,235 7.18
Bonds...................................................................................... 200,388 2.01
Repurchase Agreement....................................................................... 620,000 6.22
---------- --------
Total Investments.......................................................................... 9,904,230 99.33
Other Assets and Liabilities, net.......................................................... 66,329 0.67
---------- --------
Net Assets................................................................................. $9,970,559 100.00%
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at market value (identified cost $9,322,143) (Note 1)......................... $ 9,284,230
Repurchase agreement (identified cost $620,000) (Note 1)................................... 620,000
Cash....................................................................................... 302
Receivables:
Foreign currency......................................................................... 50,651
Fund shares sold......................................................................... 248,613
Dividends and interest................................................................... 15,625
From Manager............................................................................. 16,811
Foreign taxes recoverable................................................................ 1,846
Deferred organizational expenses (Note 1).................................................. 46,800
Deferred state registration expenses (Note 1).............................................. 9,175
Prepaid insurance.......................................................................... 1,036
-----------
Total assets....................................................................... 10,295,089
Liabilities
Payables (Note 4):
Investments purchased.................................................................... $137,734
Foreign currency purchased............................................................... 50,651
Accrued distribution fee................................................................. 32,303
Other accrued expenses................................................................... 48,098
Foreign taxes withheld................................................................... 1,931
Foreign currency sold short, at value (proceeds $53,813)................................. 53,813
--------
Total liabilities.................................................................. 324,530
-----------
Net assets, at market value................................................................ $ 9,970,559
==========
Net Assets
Net assets consist of:
Net unrealized gain on foreign currency related transactions............................. 194
Net unrealized depreciation on investments............................................... (37,913)
Accumulated net realized gain (Note 1)................................................... 242,845
Accumulated net realized gain on foreign currency transactions........................... 1,440
Paid-in capital.......................................................................... 9,763,993
-----------
Net assets, at market value................................................................ $ 9,970,559
==========
Net asset value, redemption and offering price per share ($9,970,559 divided by 479,563
shares of beneficial interest outstanding, no par value) (Note 2)........................ $20.79
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE PERIOD MAY 1, 1995 (COMMENCEMENT OF OPERATIONS) TO OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends (net of $7,068 foreign withholding taxes)........................................ $ 46,873
Interest (net of $26 foreign withholding taxes)............................................ 26,429
--------
Total income......................................................................... 73,302
Expenses (Notes 1 and 4):
Management fee............................................................................. $ 32,303
Distribution fee........................................................................... 32,303
Amortization of state registration expenses................................................ 27,235
Custodian/Fund accounting fees............................................................. 20,908
Professional fees.......................................................................... 29,679
Shareholder servicing fees................................................................. 1,016
Reports to shareholders.................................................................... 7,500
Amortization of organization expenses...................................................... 5,200
Trustees' fees and expenses................................................................ 4,200
Federal registration fees.................................................................. 1,954
Insurance.................................................................................. 1,744
Other...................................................................................... 250
--------
Expenses before waiver and reimbursement............................................. 164,292
Fees waived by Manager............................................................... (32,303)
Expenses reimbursed by Manager....................................................... (48,001) 83,988
-------- --------
Net investment loss.......................................................................... (10,686)
--------
Realized and Unrealized Gain (Loss) on Investments
Net realized gain from investment transactions............................................... 253,531
Net realized gains from foreign currency transactions (net of $2,799 capital gains tax
withheld).................................................................................. 1,440
Net increase in unrealized depreciation of investments during the period..................... (37,913)
Net increase in unrealized appreciation from foreign currency................................ 194
--------
Net gain on investments.............................................................. 217,252
--------
Net increase in net assets resulting from operations......................................... $206,566
========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD MAY 1, 1995
(COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1995
-------------------------------------
<S> <C>
Increase in net assets:
Operations:
Net investment loss...................................................... $ (10,686)
Net realized gains from foreign currency transactions
(net of $2,799 capital gains tax withheld)............................. 1,440
Net realized gain from investment transactions........................... 253,531
Net increase in unrealized appreciation from foreign currency............ 194
Net increase in unrealized depreciation of investments during the
period................................................................. (37,913)
-----------
Net increase in net assets resulting from operations..................... 206,566
Increase in net assets from Fund share transactions (Note 2)............... 9,762,993
-----------
Increase in net assets..................................................... 9,969,559
Net assets, beginning of period (initial seed capital)..................... 1,000
-----------
Net assets, end of period.................................................. $ 9,970,559
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
1995+*
------
<S> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD............................................................ $20.00
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss(a)............................................................................ (.03)
Net realized and unrealized gain on investments................................................... 0.82
------
Total from investment operations.................................................................... 0.79
------
NET ASSET VALUE, END OF THE PERIOD.................................................................. $20.79
======
TOTAL RETURN (%)(C)................................................................................. 3.95
RATIOS (%)/SUPPLEMENTAL DATA:
Ratio of operating expenses, net, to average daily net assets(a).................................. 2.60(b)
Ratio of net investment loss to average daily net assets.......................................... (0.33)(b)
Portfolio turnover rate........................................................................... 61(b)
Net assets, end of period (millions).............................................................. $10
</TABLE>
- ---------------
* Per share amounts have been calculated using the monthly average share
method.
+ For the period May 1, 1995 (commencement of operations) to October 31, 1995.
(a) Excludes management fees waived and expenses reimbursed by the Manager in
fiscal 1995 of $.17 per share. The operating expense ratio including such
items would be 5.09% (annualized).
(b) Annualized.
(c) Not annualized.
10
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") 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 consisting of four separate investment
Portfolios, the Eagle International Equity Portfolio (The "Fund"), the
Small Cap Stock Fund, the Value Equity Fund and the Growth Equity Fund.
The policies described below are followed by the Fund in the preparation
of its financial statements in conformity with generally accepted
accounting principles. Financial statements for the Small Cap Stock
Fund, the Value Equity Fund and the Growth Equity Fund are presented
separately.
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, the last bid price is used and in the absence of a market
quote, securities are valued using such methods as the Board of Trustees
believes would reflect fair 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 Fund calculates its
daily net asset value per share. Although the Fund values its assets in
U.S. dollars on a daily basis, it does not intend to convert holdings of
foreign currencies into U.S. dollars on a daily basis. 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.
Foreign Currency Transactions: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency transactions are translated
into U.S. dollars on the following basis: (i) market value of investment
securities, other assets and other liabilities at the daily rates of
exchange, and (ii) purchases and sales of investment securities,
dividend and interest income and certain expenses at the rates of
exchange prevailing on the respective dates of such transactions. The
Fund does not isolate that portion of gains and losses on investments
which is due to change in foreign exchange rates from that which is due
to changes in market prices of the investments. Such fluctuations are
included with the net realized and unrealized gains and losses from
investments. Net realized gain (loss) and unrealized appreciation
(depreciation) from currency transactions include gains and losses
between trade and settlement date on securities transactions, gains and
losses arising from the sales of foreign currency and gains and losses
between the ex and payment dates on dividends, interest, and foreign
withholding taxes.
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 in 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 Net Realized Gains. Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to the
Fund, will be distributed to shareholders in the following fiscal year.
The Fund uses the identified cost method for determining realized gain
or loss on investments for both financial and federal income tax
reporting purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Organization Expenses: Expenses incurred in connection with the
formation of the Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.
Capital Accounts: The Fund reports the undistributed net investment
income (accumulated net investment loss) and accumulated net realized
gain (loss) accounts on a basis approximating amounts available for
future tax distributions (or to offset future taxable realized gains
when a capital loss carryforward is available). Accordingly, the Fund
may periodically make reclassifications among certain capital accounts
without impacting the net asset value of the Fund. As a result, the net
investment loss for the period ended October 31, 1995 has been charged
to accumulated net realized gain.
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.
11
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 2: FUND SHARES. At October 31, 1995, there was an unlimited number of
shares of beneficial interest of no par value authorized. Transactions
in shares of the Fund for the period May 1, 1995 (commencement of
operations) to October 31, 1995 were as follows:
<TABLE>
<CAPTION>
SHARES AMOUNT
------- -----------
<S> <C> <C>
Shares sold............................................................................ 493,157 $10,046,244
Shares redeemed........................................................................ (13,644) (283,251)
------- -----------
Net increase........................................................................... 479,513 $ 9,762,993
==========
Shares outstanding:
Beginning of period (seed shares).................................................... 50
-------
End of period........................................................................ 479,563
=======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the period May 1, 1995
(commencement of operations) to October 31, 1995, purchases and sales of
investment securities (excluding repurchase agreements and short term
obligations) aggregated $10,712,255 and $1,643,743, respectively.
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administration
Agreement with Eagle Asset Management, Inc. ( the "Manager"), the Fund
agrees to pay to the Manager a fee equal to an annualized rate of 1.00%
of the Fund's average daily 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 2.60%
on an annual basis of the Fund's average daily net assets. This
agreement is more restrictive than any state expense limitation at the
current level of net assets. Under the agreement, management fees waived
and expenses reimbursed totaled $80,304 ($.17 per share) for the period
ended October 31, 1995. If Fund expenses fall below the expense
limitation agreed to by the Manager before the end of the year ending
October 31, 1997, the Fund may be required to pay the Manager all or a
portion of the waived management fees.
The Manager has entered into an agreement with Martin Currie, Inc., a
New York Corporation, (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 average daily
net assets on the first $100 million of assets and .40% thereafter
without regard to any reduction due to the imposition of expense
limitations.
Heritage Asset Management, Inc. ("Heritage"), an affiliate of Eagle, is
the Dividend Paying and Shareholder Servicing Agent for the Fund.
Heritage also may provide certain administrative services for the Fund
and may receive a fee from Eagle for performing these administrative
services.
Pursuant to a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund paid Raymond James
& Associates, Inc. (the "Distributor") a fee equal to 1.00% of average
daily net assets for the services it provides in connection with the
promotion and distribution of Fund shares. Such fee is accrued daily and
payable monthly. The Manager, the Distributor, the Shareholder Servicing
Agent are all wholly-owned subsidiaries of Raymond James Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust,
Heritage Income Trust and Heritage U.S. Government Income Fund,
investment companies which are also advised by the Manager (collectively
referred to as the Heritage funds). Each Trustee of the Heritage funds
who is not an interested person of the Manager received an annual fee of
$8,000 and an additional fee of $2,000 for each combined quarterly
meeting of the Heritage funds attended. Trustees' fees and expenses are
paid equally by each of the Heritage funds.
12
<PAGE> 10
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Series Trust-Eagle International Equity Portfolio:
We have audited the accompanying statement of assets and liabilities of
Heritage Series Trust-Eagle International Equity Portfolio, including the
investment portfolio, as of October 31, 1995, and the related statements of
operations and changes in net assets, and the financial highlights for the
period May 1, 1995 (commencement of operations) to October 31, 1995. 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 audit.
We conducted our audit 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
October 31, 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 audit provides 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 Series Trust-Eagle International Equity Portfolio, as of October 31,
1995, the results of its operations, the changes in its net assets, and the
financial highlights for the period May 1, 1995 (commencement of operations) to
October 31, 1995 in conformity with generally accepted accounting principles.
Boston, Massachusetts
November 29, 1995
Cooper & Lybrand LLP
13
A - 5
<PAGE>
HERITAGE SERIES TRUST -
EAGLE INTERNATIONAL EQUITY PORTFOLIO
------------------------------------
PART C. OTHER INFORMATION
-------------------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements included as a part of this
Registration Statement:
Included in Part A of the Registration Statement:
Financial Highlights for the period May 1, 1995
(commencement of operations) to October 31, 1995.
Included in Part B of the Registration Statement:
Investment Portfolio as at October 31, 1995;
Statement of Assets and Liabilities as at
October 31, 1995;
Statement of Operations for the period May 1,
1995 (commencement of operations) to October 31,
1995;
Statement of Changes in Net Assets for the period
May 1, 1995 (commencement of operations) to
October 31, 1995;
Financial Highlights for the period May 1, 1995
(commencement of operations) to October 31,
1995;
Notes to Financial Statements;
Report of Coopers & Lybrand L.L.P., Independent
Accountants, dated November 29, 1995
(b) Exhibits:
(1) Declaration of Trust (filed herewith)
(2) Bylaws (filed herewith)
(3) Voting trust agreement -- none
(4) (a)(i) Specimen security Small Cap
Stock Fund Class A**
(a)(ii) Specimen security Small Cap
Stock Fund Class C**
(b)(i) Specimen security Value Equity
Fund Class A**
<PAGE>
(b)(ii) Specimen security Value Equity
Fund Class C**
(c)(i) Specimen security Eagle
International Equity Portfolio
Eagle Class**
(c)(ii) Specimen security Eagle
International Equity Portfolio
Class A**
(c)(iii) Specimen security Eagle
International Equity Portfolio
Class C**
(d)(i) Specimen security Growth Equity
Fund Class A**
(d)(ii) Specimen security Growth Equity
Fund Class C**
(5) (a)(i) Investment Advisory and
Administration Agreement (filed
herewith)
(a)(ii) Amended Schedule A relating to
the addition of the Value Equity
Fund (filed herewith)
(a)(iii) Amended Schedule A relating to
the addition of the Growth
Equity Fund (filed herewith)
(b) Investment Advisory and
Administration Agreement between
Eagle Asset Management, Inc. and
Eagle International Equity
Portfolio (filed herewith)
(c)(i) Subadvisory Agreement between
Heritage Asset Management, Inc.
and Raymond James & Associates,
Inc. relating to Small Cap Stock
Fund (filed herewith)
(c)(ii) Subadvisory Agreement between
Heritage Asset Management, Inc.
and Awad & Associates, a
division of Raymond James and
Associates, Inc. relating to
Small Cap Stock Fund (filed
herewith)
<PAGE>
(d)(i) Form of Subadvisory Agreement
between Heritage Asset
Management, Inc. and Eagle Asset
Management, Inc. relating to
Value Equity Fund (filed
herewith)
(d)(ii) Amended Schedule A relating to
the addition of the Small Cap
Stock Fund (filed herewith)
(d)(iii) Amended Schedule A relating to
the addition of the Growth
Equity Fund (filed herewith)
(e) Form of Subadvisory Agreement
between Eagle Asset Management,
Inc. and Martin Currie Inc.
relating to Eagle International
Equity Portfolio (filed
herewith)
(6) Distribution Agreement (filed herewith)
(7) Bonus, profit sharing or pension plans
-- none
(8) Form of Custodian Agreement (filed
herewith)
(9) (a) Form of Transfer Agency and
Service Agreement (filed
herewith)
(b) Form of 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)(i) Class A Plan pursuant to Rule
12b-1 (filed herewith)
<PAGE>
(a)(ii) Amended Schedule A relating to
the addition of the Value Equity
Fund (filed herewith)
(a)(iii) Amended Schedule A relating to
the addition of the Growth
Equity Fund (filed herewith)
(a)(iv) Amended Schedule A relating to
the addition of the Eagle
International Equity Portfolio
(filed herewith)
(b)(i) Class C Plan pursuant to Rule
12b-1 (filed herewith)
(b)(ii) Amended Schedule A relating to
the addition of the Growth
Equity Fund (filed herewith)
(b)(iii) Amended Schedule A relating to
the addition of the Eagle
International Equity Portfolio
(filed herewith)
(c) Eagle Class Plan pursuant to
Rule 12b-1 (filed herewith)
(16) Performance Computation Schedule:
(a) Small Cap Stock Fund (filed
herewith)
(b) Growth Equity Fund**
(c) Eagle International Equity
Portfolio (filed herewith)
(d) Value Equity Fund --
inapplicable
(17) Financial Data Schedule for Electronic
Filers:
(a) Small Cap Stock Fund**
(b) Value Equity Fund**
(c) Eagle International Equity
Portfolio (filed herewith)
(d) Growth Equity Fund --
inapplicable
<PAGE>
(18) Form of Plan pursuant to Rule 18f-3
(filed herewith)
* Incorporated by reference to the Trust's
Rule 24f-2 Notice, filed previously on
November 14, 1995
** To be filed by subsequent amendment.
Item 25. Persons Controlled by or under
Common Control with Registrant
------------------------------
None.
Item 26. Number of Holders of Securities
-------------------------------
Number of Record Holders
Title of Class October 31, 1995
_____________________ ___________________________
Shares of beneficial interest
Small Cap Stock Fund
Class A Shares 5,258
Class C Share 412
Value Equity Fund
Class A Shares 1,279
Class C Shares 512
Growth Equity Fund
Class A Shares 0
Class C Shares 0
Eagle International
Equity Portfolio
Class A Shares 0
Class C Shares 0
Eagle Class Shares 159
Item 27. Indemnification
---------------
Article XI, Section 2 of Heritage Series Trust's Declaration of
Trust provides that:
(a) Subject to the exceptions and limitations contained in
paragraph (b) below:
<PAGE>
(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 appropriate portfolios to the fullest extent
permitted by law against liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue
of his being or having been a Trustee or officer and against amounts paid
or incurred by him in the settlement thereof;
(ii) the words "claim," "action," "suit," or
"proceeding" shall apply to all claims, actions, suits or proceedings
(civil, criminal or other, including appeals), actual or threatened while
in office or thereafter, and the words "liability" and "expenses" shall
include, without limitation, attorneys' fees, costs, judgments, amounts
paid in settlement, fines, penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a
Covered Person:
(i) who shall have been adjudicated by a court or
body before which the proceeding was brought (A) to be liable to the Trust
or its Shareholders by reason of willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of
his office or (B) not to have acted in good faith in the reasonable belief
that his action was in the best interest of the Trust; or
(ii) in the event of a settlement, unless there has
been a determination that such Trustee or officer did not engage in
willful misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office (A) by the court or other
body approving the settlement; (B) by at least a majority of those
Trustees who are neither interested persons of the Trust nor are parties
to the matter based upon a 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
applicable Portfolio from time to time prior to final disposition thereof
upon receipt of an undertaking by or on behalf of such Covered Person that
<PAGE>
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
personally to any person extending credit to, contracting with or having
any claim against the Trust, a particular Portfolio or the Trustees. 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.
Article XII, Section 2 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.
Paragraph 8 of the Investment Advisory and Administration Agreement
("Advisory Agreement") between the Trust, on behalf of Eagle International
Equity Portfolio, and Eagle Asset Management, Inc. ("Eagle"), provides
that Eagle shall not be liable for any error of judgment or mistake of law
for any loss suffered by the Trust or any Portfolio in connection with the
matters to which the Advisory Agreement relate 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 Eagle, who may be
or become an officer, trustee, 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 Eagle even though paid by it.
Paragraph 9 of the Subadvisory Agreement ("Subadvisory Agreement") between
Eagle and Martin Currie Inc. ("Subadviser") provides that, 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 under the
Subadvisory Agreement, the Subadviser shall not be subject to any
liability to Eagle, the Trust, or their directors, trustees, officers or
<PAGE>
shareholders, for any act or omission in the course of, or connected with,
rendering services under the Subadvisory Agreement.
Paragraph 7 of the Distribution Agreement between the Trust, on behalf of
the Eagle International Equity Portfolio 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 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
shareholders to which Raymond James would otherwise be subject by reason
of willful misfeasance, bad faith, or gross negligence in the performance
of its duties, or by reason of its reckless disregard of its obligations
and duties under the Distribution Agreement.
Paragraph 13 of the Heritage Funds Accounting and Pricing
Services Agreement ("Accounting Agreement") between the Trust and Heritage
Asset Management, Inc. ("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
------------------------------
Eagle Asset Management, Inc., a Florida corporation, is a
registered investment adviser. All of its stock is owned by Raymond James
Financial, Inc. Eagle is primarily engaged in the investment advisory
business. Eagle provides investment advisory services to the Eagle
International Equity Portfolio. 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.
<PAGE>
Heritage Asset Management, Inc. is a Florida corporation that
offers investment management services. Heritage provides investment
advisory services to the Small Cap Stock, Value Equity, and Growth Equity
Funds of the Trust. Information as to the directors and officers of
Heritage is included in its current Form ADV filed with the SEC
(registration number 801-25067) and is incorporated by reference herein.
II. Business and Other Connections of Subadviser
--------------------------------------------
Martin Currie Inc., a New York corporation, is a wholly-owned
subsidiary of Martin Currie Limited. Martin Currie Inc. is primarily
engaged in the investment advisory business. Martin Currie Inc. provides
subadvisory services to the Eagle International Equity Portfolio of the
Trust. Information as to the officers and directors of Martin Currie Inc.
is included in its current Form ADV filed with the Securities and Exchange
Commission and is incorporated by reference herein.
Raymond James is a registered investment adviser. All of its
stock is owned by Raymond James Financial, Inc. It is primarily in the
financial services business. The Research Department and Awad &
Associates is a division of RJA. Information as to the officers and
directors of RJA and Awad is included in RJA's current Form ADV filed with
the SEC (registration number 801-10418) and is incorporated by reference
herein.
Eagle Asset Management, Inc., a Florida corporation, is a
registered investment adviser. All of its stock is owned by Raymond James
Financial, Inc. Eagle is primarily engaged in the investment advisory
business. Information as to the officers and directors of Eagle is
included in the current Form ADV filed with the SEC and is incorporated by
reference herein.
Item 29. Principal Underwriter
---------------------
(a) Raymond James & Associates, Inc. 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 and Heritage Series Trust.
(b) The directors and officers of the Registrant's
principal underwriter are:
Name Positions & Offices Position
with Underwriter with Registrant
[S] [C] [C]
Thomas A. James Chief Executive Officer, Trustee
Director
<PAGE>
Robert F. Shuck Executive V.P., Director None
Thomas S. Franke President, Chief None
Operating Officer,
Director
Lynn Pippenger Secretary/Treasurer, None
Chief Financial Officer,
Director
Dennis Zank Executive VP of None
Operations and
Administration, Director
Item 30. Location of Accounts and Records
--------------------------------
The books and other documents required by Rule 31a-1 under the
Investment Company Act of 1940, as amended, are maintained in the physical
possession of the Trust's custodian, except that: Eagle will maintain some
or all of the records required by Rule 31a-1(b)(l), (2) and (8); and the
Subadviser will maintain some or all of the records required by Rule
31a-1(b) (2), (5), (6), (9), (10) and (11).
Item 31. Management Services
-------------------
Not applicable.
Item 32. Undertakings
------------
Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered with a copy of its latest annual report to
Shareholders, upon request and without charge.
<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 the requirements for effectiveness of
this amendment to its Registration Statement under Rule 485(b) under the
Securities Act of 1933 and has duly caused this Post-Effective Amendment
No. 10 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 November 30, 1995. No other
material event requiring prospectus disclosure has occurred since the
latest of the three dates specified in Rule 485(b)(2).
HERITAGE SERIES 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. 10 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 November 30, 1995
________________________
Stephen G. Hill
Thomas A. James* Trustee November 30, 1995
________________________
Thomas A. James
Richard K. Riess* Trustee November 30, 1995
________________________
Richard K. Riess
<PAGE>
C. Andrew Graham* Trustee November 30, 1995
________________________
C. Andrew Graham
David M. Phillips* Trustee November 30, 1995
________________________
David M. Phillips
James L. Pappas* Trustee November 30, 1995
________________________
James L. Pappas
Donald W. Burton* Trustee November 30, 1995
________________________
Donald W. Burton
Eric Stattin Trustee November 30, 1995
________________________
Eric Stattin*
Treasurer November 30, 1995
/s/ Donald H. Glassman
________________________
Donald H. Glassman
*By /s/ Donald H. Glassman
------------------------
Donald H. Glassman, Attorney-In-Fact
</TABLE>
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
1 Declaration of Trust (filed herewith)
2 Bylaws (filed herewith)
3 Voting trust agreement -- none
4(a)(i) Specimen security Small Cap Stock Fund Class A**
(a)(ii) Specimen security Small Cap Stock Fund Class C**
(b)(i) Specimen security Value Equity Fund Class A**
(b)(ii) Specimen security Value Equity Fund Class C**
(c)(i) Specimen security Eagle International Equity
Portfolio Eagle Class**
(c)(ii) Specimen security Eagle International Equity
Portfolio Class A**
(c)(iii) Specimen security Eagle International Equity
Portfolio Class C**
(d)(i) Specimen security Growth Equity Fund Class A**
(d)(ii) Specimen security Growth Equity Fund Class
C**
5(a)(i) Investment Advisory and Administration Agreement
(filed herewith)
(a)(ii) Amended Schedule A relating to the addition
of the Value Equity Fund (filed herewith)
(a)(iii) Amended Schedule A relating to the addition
of the Growth Equity Fund (filed herewith)
(b) Investment Advisory and Administration Agreement
between Eagle Asset Management, Inc. and Eagle
International Equity Portfolio (filed herewith)
(c)(i) Subadvisory Agreement between Heritage Asset
Management, Inc. and Raymond James & Associates,
Inc. relating to Small Cap Stock Fund (filed
herewith)
<PAGE>
(c)(ii) Subadvisory Agreement between Heritage Asset
Management, Inc. and Awad & Associates, a
division of Raymond James and Associates,
Inc. relating to Small Cap Stock Fund (filed
herewith)
(d)(i) Form of Subadvisory Agreement between Heritage
Asset Management, Inc. and Eagle Asset
Management, Inc. relating to Value Equity Fund
(filed herewith)
(d)(ii) Amended Schedule A relating to the addition
of the Small Cap Stock Fund (filed herewith)
(d)(iii) Amended Schedule A relating to the addition
of the Growth Equity Fund (filed herewith)
(e) Form of Subadvisory Agreement between Eagle Asset
Management, Inc. and Martin Currie Inc. relating
to Eagle International Equity Portfolio (filed
herewith)
6 Distribution Agreement (filed herewith)
7 Bonus, profit sharing or pension plans -- none
8 Form of Custodian Agreement (filed herewith)
9(a) Form of Transfer Agency and Service Agreement (filed
herewith)
(b) Form of 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)(i) Class A Plan pursuant to Rule 12b-1 (filed
herewith)
(a)(ii) Amended Schedule A relating to the addition
of the Value Equity Fund (filed herewith)
- 2 -
<PAGE>
(a)(iii) Amended Schedule A relating to the addition
of the Growth Equity Fund (filed herewith)
(a)(iv) Amended Schedule A relating to the addition
of the Eagle International Equity Portfolio
(filed herewith)
(b)(i) Class C Plan pursuant to Rule 12b-1 (filed
herewith)
(b)(ii) Amended Schedule A relating to the addition
of the Growth Equity Fund (filed herewith)
(b)(iii) Amended Schedule A relating to the addition
of the Eagle International Equity Portfolio
(filed herewith)
(c) Eagle Class Plan pursuant to Rule 12b-1 (filed
herewith)
16 Performance Computation Schedule:
(a) Small Cap Stock Fund (filed herewith)
(b) Growth Equity Fund**
(c) Eagle International Equity Portfolio (filed herewith)
(d) Value Equity Fund -- inapplicable
17 Financial Data Schedule for Electronic Filers:
(a) Small Cap Stock Fund**
(b) Value Equity Fund**
(c) Eagle International Equity Portfolio (filed
herewith)
(d) Growth Equity Fund -- inapplicable
18 Form of Plan pursuant to Rule 18f-3 (filed
herewith)
* Incorporated by reference to the Trust's Rule 24f-2 Notice, filed
previously on November 14, 1995.
** To be filed by subsequent amendment.
- 3 -
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
DECLARATION OF TRUST
TABLE OF CONTENTS
PAGE
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Trust . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1: Name . . . . . . . . . . . . . . . . . . . 1
Section 2: Principal Place of Business . . . . . . . 1
Section 3: Resident Agent . . . . . . . . . . . . . . 1
Section 4: Definitions . . . . . . . . . . . . . . . . 1
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . 3
Purpose of the Trust . . . . . . . . . . . . . . . . . . 3
ARTICLE III . . . . . . . . . . . . . . . . . . . . . 3
Beneficial Interest . . . . . . . . . . . . . . . . . . . 3
Section 1: Shares of Beneficial Interest . . . . . . . 3
Section 2: Ownership of Shares . . . . . . . . . . . . 3
Section 3: Investment in the Trust . . . . . . . . . . 3
Section 4: Assets and Liabilities of the Trust . . . . 4
Section 5: No Preemptive Rights . . . . . . . . . . . 4
Section 6: Limitation on Personal Liability . . . . . 4
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . 5
The Trustees . . . . . . . . . . . . . . . . . . . . . . 5
Section 1: Management of the Trust . . . . . . . . . . 5
Section 2: Election: Initial Trustees . . . . . . . . 5
Section 3: Term of Office of Trustees . . . . . . . . 5
Section 4: Resignation and Appointment of Trustees . . 5
Section 5: Temporary Absence of Trustee . . . . . . . 6
Section 6: Number of Trustees . . . . . . . . . . . . 6
Section 7: Effect of Death, Resignation, Etc. of a
Trustee . . . . . . . . . . . . . . 6
Section 8: Ownership of Trust Assets . . . . . . . . . 6
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . 7
Powers of the Trustee . . . . . . . . . . . . . . . . . . 7
Section 1: Powers . . . . . . . . . . . . . . . . . . 7
Section 2: Trustees and Officers as Shareholder . . . 9
Section 3: Action by the Trustees . . . . . . . . . . 10
Section 4: Chairman of the Trustees . . . . . . . . . 10
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . 10
Expenses of the Trust . . . . . . . . . . . . . . . . . . 10
<PAGE>
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . 11
Investment Adviser, Principal Underwriter
and Transfer Agent . . . . . . . . . . . . . . . . 11
Section 1: Investment Adviser . . . . . . . . . . . . 11
Section 2: Principal Underwriter . . . . . . . . . . . 11
Section 3: Transfer Agent . . . . . . . . . . . . . . 12
Section 4: Parties to Contract . . . . . . . . . . . 12
Section 5: Provisions and Amendments . . . . . . . . . 12
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . 13
Shareholders' Voting Powers and Meetings . . . . . . . . 13
Section 1: Voting Powers . . . . . . . . . . . . . . . 13
Section 2: Meetings . . . . . . . . . . . . . . . . . 13
Section 3: Quorum and Required Vote . . . . . . . . . 14
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . 14
Custodian . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 1: Appointment and Duties . . . . . . . . . . 14
Section 2: Employment of Sub-Custodian . . . . . . . 15
Section 3: Central Certificate System . . . . . . . 15
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . 15
Distributions and Redemptions . . . . . . . . . . . . . . 15
Section 1: Distributions . . . . . . . . . . . . . . . 15
Section 2: Redemptions . . . . . . . . . . . . . . . . 16
Section 3: Determination of Net Asset Value
and Valuation of Portfolio Assets 16
Section 4: Suspension of the Right of Redemption . . . 17
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . 17
Limitation of Liability and Indemnification . . . . . . . 17
Section 1: Limitation of Liability . . . . . . . . . . 17
Section 2: Indemnification . . . . . . . . . . . . . . 17
Section 3: Shareholders . . . . . . . . . . . . . . . 19
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . 20
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . 20
Section 1: Trust Not a Partnership . . . . . . . . . . 20
Section 2: Trustee's Good Faith Action, Expert
Advice, No Bond or Surety . . . . . . . . . . . . 20
Section 3: Establishment of Record Dates . . . . . . . 20
Section 4: Termination of Trust . . . . . . . . . . . 21
Section 5: Filing of Copies, References, Headings . 22
Section 6: Applicable Law . . . . . . . . . . . . . 22
Section 7: Amendments . . . . . . . . . . . . . . . 23
Section 8: Fiscal Year . . . . . . . . . . . . . . . 23
Section 9: Use of the Word "Heritage" . . . . . . . 23
Section 10: Notice to Other Parties . . . . . . . . . . 23
<PAGE>
HERITAGE SERIES TRUST
DECLARATION OF TRUST
DECLARATION OF TRUST, made this 2nd day of November,
1992 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.
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 here 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
THE TRUST
NAME
Section 1. This Trust shall be known as "Heritage
Series 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.
PRINCIPAL PLACE OF BUSINESS
Section 2. The principal place of business of the
Trust shall be 880 Carillon Parkway, St. Petersburg, Florida
33716
RESIDENT AGENT
Section 3. The resident agent for the Trust in
Massachusetts shall be James E. Howard, Esq., c/o Kirkpatrick
& Lockhart, One International Place, Boston, Massachusetts
02110.
1
<PAGE>
DEFINITIONS
Section 4. Wherever used herein, unless otherwise
required by the context or specifically provided:
(a) The terms "Affiliated Person,"
"Assignment," "Commission," "Interested Person,"
"Majority Shareholder Vote" (the 67% or 50%
requirement of the third sentence of Section 2(a)(42)
of the 1940 Act, whichever may be applicable) and
"Principal Underwriter" shall have the meanings given
them in the 1940 Act, as amended from time to time;
(b) The "Trust" refers to Heritage Series
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;
(i) "Bylaws" shall mean the Bylaws of the
Trust as amended or restated from time to time; and
(j) "Portfolios" refers to Portfolios of
the Trust established in accordance with the
provisions of Article III.
(k) "Class" refers to interests in a
Portfolio which typically will be identical in all
respects except those specified by the Trustees,
2
<PAGE>
including, but not limited to, differences in the
allocation of distribution, administration or support
service expenses, related incremental expenses, voting
rights and/or dividends payments differences.
ARTICLE II
PURPOSE OF TRUST
The purpose of this Trust is to provide investors,
through one or more investment Portfolios 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 separate and distinct Portfolios and/or classes as
the Trustees may, without shareholder approval, authorize.
Each Portfolio shall be preferred over all other Portfolios in
respect of the assets allocated to that Portfolio. The
beneficial interest in each Portfolio shall at all times be
divided into Shares, with or without par value as the Trustees
may specify, each of which shall represent an equal
proportionate interest in the Portfolio with each other Share
of the same Portfolio, none having priority or preference over
another. Each Portfolio shall be represented by one or more
classes of Shares, with each class possessing such rights
(including, notwithstanding any contrary provision herein,
voting rights) as the Trustees, without shareholder approval,
authorize. 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 Portfolio or class into a greater or lesser number
without thereby changing the proportionate beneficial
interests in the Portfolio.
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.
3
<PAGE>
INVESTMENT IN THE TRUST
Section 3. The Trustees shall accept investments in
the Trust from such persons and on such terms as they may from
time to time authorize. 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) 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. The Trustees shall have the right to refuse to accept
investments in the Trust at any time without any cause or
reason
whatsoever.
ASSETS AND LIABILITIES OF THE TRUST
Section 4. All consideration received by the Trust
for the issue or sale of Shares of a particular Portfolio,
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" that Portfolio and shall be held by the Trustees
in Trust for the benefit of the Shareholders of that
Portfolio. The assets belonging to each particular Portfolio
shall be charged with the liabilities of that Portfolio and
all expenses, costs, charges and reserves attributable to that
Portfolio. In addition, any assets, income, earnings,
profits, and proceeds thereof, funds, or payments or any
general liabilities, expenses, costs, charges or reserves of
the Trust which are not readily identifiable as belonging to
or chargeable to any particular Portfolio shall be allocated
by the Trustees between and among one or more of the
Portfolios in such manner as they, in their sole discretion,
deem fair and equitable. Each such allocation shall be
conclusive and binding upon the Shareholders of all Portfolios
for all purposes, and shall be referred to as assets belonging
to that Portfolio. Any creditor of any Portfolio may look
only to the assets of that Portfolio to satisfy such
creditor's debt.
4
<PAGE>
NO PREEMPTIVE RIGHTS
Section 5. Shareholders shall have no preemptive or
other right to subscribe to any additional Shares or other
securities issued by the Trust or the Trustees.
LIMITATION ON PERSONAL LIABILITY
Section 6. The Trustees shall have no power to bind
any Shareholder personally or to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other
than such as the Shareholder may at any time personally agree
to pay by way of subscription for any Shares or otherwise.
Every note, bond, contract or other undertaking issued by or
on behalf of the Trust or the Trustees relating to the Trust
shall include a recitation limiting the obligation represented
thereby to the Trust and its assets (but the omission of such
a recitation shall not operate to bind any Shareholder).
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 5 of this 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,
with cause, 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
5
<PAGE>
effective; and (c) a Trustee may be removed at any Special
Meeting of Shareholders of the Trust, called for that purpose,
by a vote of two-thirds of the outstanding Shares. Upon the
resignation or removal of a Trustee, or his otherwise ceasing
to be a Trustee, he shall execute and deliver such documents
as the remaining Trustees shall require for the purpose of
conveying to the Trust or the remaining Trustees any Trust
Property held in the name of the resigning or removed Trustee.
Upon the incapacity or death of any Trustee, his legal
representative shall execute and deliver on his behalf such
documents as the remaining Trustees shall require as provided
in the preceding sentence.
RESIGNATION AND APPOINTMENT OF TRUSTEES
Section 4. Any vacancy on the Board of Trustees that
results from an increase in the number of Trustees may be
filled by a majority of the entire Board of Trustees, provided
that a quorum is present,and any other vacancy that shall
exist for any reason, including, but not limited to,
declination to assume office, death, resignation, or removal,
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.
6
<PAGE>
NUMBER OF TRUSTEES
Section 6. Following the appointment of additional
Trustees by the initial Trustees pursuant to Section 2 of
Article IV, 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).
Whenever a vacancy in the Board of Trustees shall occur, until
such vacancy is filled, or while any Trustee is absent from
the Commonwealth of Massachusetts or, if not a domiciliary of
Massachusetts, is absent from his state of domicile, or is
physically or mentally incapacitated by reason of disease or
otherwise, the other Trustees shall have all the powers
hereunder and the certificate of the other Trustees of such
vacancy, absence or incapacity, shall be conclusive.
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 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
7
<PAGE>
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 of the assets of the
Trust;
(b) To adopt Bylaws not inconsistent with
this Declaration of Trust providing for the conduct of
the business of the Trust and to amend and repeal them
to the extent that the rights of amendment and repeal
are not reserved to Shareholders;
(c) To elect and remove such officers and
appoint and terminate such agents as they consider
appropriate;
(d) To employ a bank or trust company as
Custodian of any assets of the Trust subject to any
conditions set forth in this Declaration of Trust or
in the Bylaws, if any;
(e) To retain a transfer agent and
Shareholder servicing agent, or both;
(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
8
<PAGE>
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 as permitted
by applicable law;
(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;
(r) To retain an administrator, investment
adviser and/or investment subadviser;
(s) To establish separate and distinct
Portfolios of shares with separately defined
investment objectives, policies and purposes, and to
9
<PAGE>
allocate assets, liabilities and expenses of the Trust
to a particular Portfolio of Shares or to apportion
the same among two or more Portfolios, provided that
any liability or expense incurred by a particular
Portfolio of Shares shall be payable solely out of the
assets of that Portfolio; and
(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.
No one dealing with the Trustees shall be under any
obligation to make any inquiry concerning the authority of
the Trustees, or to see to the application of any payments
made or property transferred to the Trustees or upon their
order.
TRUSTEES AND OFFICERS AS SHAREHOLDERS
Section 2. Subject only to the general limitations
herein contained as to the sale and purchase of Trust Shares
and any restrictions that may be contained in the Bylaws:
(a) Any Trustee, officer or other agent of
the Trust may acquire, own and dispose of Shares to
the same extent as if he were not a Trustee, officer
or agent; and
(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.
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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
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 appropriate Portfolio, 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,
insurance expenses, association membership dues and for such
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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 or any
Portfolio thereof 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
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other party its sales agent for such Shares. In either case,
the agreement shall be on such terms and conditions as may be
prescribed in the Bylaws, if any, and such further terms and
conditions as the Trustees may in their discretion determine
to be not inconsistent with the provisions of this Article
VII, or of the Bylaws, if any; and such agreement may also
provide for the repurchase or sale of Shares by such other
party as principal or as agent of the Trust. The Trustees may
in their discretion adopt a plan or plans of distribution and
enter into any related agreements whereby the Trust finances
directly or indirectly any activity which is primarily
intended to result in sales of Shares. Such plan or plans of
distribution and any related agreements may contain such terms
and conditions as the Trustees may in their discretion
determine subject to the requirements of Section 12 of the
1940 Act, Rule 12b-1 thereunder and any other applicable rules
and regulations.
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, including one or more agents of such
other party.
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 of this Article VII or Article
IX, and any individual may be financially interested or
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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 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
Sections 12 and 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.
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, provided, however, that a Shareholder of a
particular Portfolio shall not be entitled to bring any
derivative or class action on behalf of any other Portfolio of
the Trust, 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, all Shares
shall be voted in the aggregate and not by individual
Portfolios; except that, (i) when required by the 1940 Act or
(ii) when the Trustees have determined that the matter affects
only the interests of one or more Portfolios, then only the
Shareholders of such Portfolio(s) shall be entitled to vote
thereon. 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
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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.
QUORUM AND REQUIRED VOTE
Section 3. A majority of Shares entitled to vote in
person or by proxy shall be a quorum for the transaction of
business at a Shareholders' meeting, except that where any
provision of law or of this Declaration of Trust permits or
requires that holders of any Portfolio shall vote, as a
Portfolio, then a majority of the aggregate number of Shares
of that Portfolio entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that
Portfolio. 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 By-Laws or law, a majority of the Shares voted
in person or by proxy shall decide any questions and a
plurality shall elect a Trustee, provided that where any
provision of law or of this Declaration of Trust permits or
requires that the holders of any Portfolio shall vote as a
Portfolio, then a majority of the Shares of that Portfolio
voted on the matter shall decide that matter insofar as that
Portfolio is concerned.
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ARTICLE IX
CUSTODIAN
APPOINTMENT AND DUTIES
Section 1. The Trustees shall at all times employ an
appropriate institution as permitted under the 1940 Act as
Custodian of the Trust 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;
(e) to compute, if authorized to do so by the
Trustees, the Trust's Net Asset Value of any Portfolio in
accordance with the provisions hereof; and
(f) to take such other actions as approved by the
Board of Trustees.
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 an appropriate depository, permitted
under the 1940 Act as from time to time amended, or any such
other person permitted by the Commission.
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
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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 of a
particular Class or Portfolio, from the assets belonging to
such Class or Portfolio, which dividends, at the election of
the Trustees, may be paid daily or otherwise pursuant to a
standing resolution or resolutions adopted only once or with
such frequency as the Trustees may determine, and may be
payable in Shares of that Class or Portfolio at the election
of each Shareholder of that Class or Portfolio.
(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 of a particular
Class or Portfolio a "stock dividend."
REDEMPTIONS
Section 2. In case any Shareholder of record of
Shares of a particular Portfolio 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 Portfolio shall make
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payment for any such Shares to be redeemed, as aforesaid, in
cash to the extent required by federal law, and securities
from such Portfolio's assets, and payment for such Shares
shall be made by the Portfolio or the principal underwriter to
the Shareholder of record within seven (7) days after the date
upon which the request is effective; provided, however, that
if Shares being redeemed have been purchased by check, the
Portfolio may postpone payment until the Trust has assurance
that good payment has been collected for the purchase of the
Shares. The Trust may require Shareholders to pay a sales
charge to the Trust, the underwriter or any other person
designated by the Trustees upon redemption or repurchase of
Shares of any Portfolio in such amount as shall be determined
from time to time by the Trustees. The amount of such sales
charge may but need not vary depending on various factors,
including without limitation the holding period of the
redeemed or repurchase Shares. The Trustees may also charge a
redemption or repurchase fee in such amount as may be
determined from time to time by the Trustees.
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 that 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 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
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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
of 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 appropriate Portfolios 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:
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(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 applicable Portfolio 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
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(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 any Portfolio 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 assets belonging to the applicable
Portfolio 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, a particular Portfolio or the Trustees shall look only
to the assets of the applicable Portfolio 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, nor any other Portfolio shall be personally
liable therefor. Nothing in this Declaration of Trust shall
protect a Trustee against any liability to which the Trustee
would otherwise be subject by reason of willful misfeasance,
bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee
hereunder.
TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR SURETY
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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 90 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.
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(b) Subject to a Majority Shareholder Vote of each
Portfolio affected by the matter or, if applicable, to a
majority Shareholder Vote of the Trust, the Trustees may:
(i) sell and convey the assets of the Trust or any
affected Portfolio 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 or
any affected Portfolio 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 or any affected Portfolio.
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 of the Trust or any affected Portfolio then
outstanding.
The Trustees may take any of the actions specified in
clauses (i) and (ii) above without obtaining a Majority
Shareholder Vote of any Portfolio or the Trust if a majority
of the Trustees makes a determination that the continuation of
a Portfolio or the Trust is not in the best interests of such
Portfolio, the Trust or their respective Shareholders as a
result of factors or events adversely affecting the ability of
such Portfolio or the Trust to conduct its business and
operations in an economically viable manner. Such factors and
events may include the inability of a Portfolio or the Trust
to maintain its assets at an appropriate size, changes in laws
or regulations governing the Portfolio or Trust or affecting
assets of the type in which such Portfolio or the Trust
invests or economic developments or trends having a
significant adverse impact on the business or operations of
such Portfolio or the Trust.
(c) Upon completion of the distribution of the
remaining assets as provided in paragraph (b), the Trust or
any affected Portfolio 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
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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, as well as any other governmental office where
such filing may from time to time be required. Anyone dealing
with the Trust may rely on a certificate by an officer or
Trustee of the Trust as to whether or not any such
supplemental declarations of trust have been made and as to
any matters in connection with the Trust hereunder, and with
the same effect as if it were the original, may rely on a copy
certified by an officer or Trustee of the Trust to be a copy
of this instrument or of any such supplemental declaration of
trust. In this instrument or in any such supplemental
declaration of trust, references to this instrument, and the
expressions "herein," "hereof" and "hereunder," shall be
deemed to refer to this instrument as amended or affected by
any such supplemental declaration of trust. Headings are
placed herein for convenience of reference only and in case of
any conflict, the text of this instrument, rather than the
headings, shall control. This instrument may be executed in
any number of counterparts each of which shall be deemed an
original.
APPLICABLE LAW
Section 6. The trust set forth in this instrument is
made in the Commonwealth of Massachusetts, and it is created
under and is to be governed by and construed and administered
according to the laws of said Commonwealth. The Trust shall
be of the type commonly called a Massachusetts business trust,
and without limiting the provisions hereof, the Trust may
exercise all powers which are ordinarily exercised by such a
trust.
AMENDMENTS
Section 7. If authorized by votes of the Trustees and
a Majority Shareholder Vote, or by any larger vote which may
be required by applicable law or this Declaration of Trust in
any particular case, the Trustees shall amend or otherwise
supplement this instrument, by making a declaration of trust
supplemental hereto, which thereafter shall form a part
hereof. Amendments having the purpose of changing the name of
the Trust or of supplying any omission, curing any ambiguity
or curing, correcting or supplementing any defective or
inconsistent provision contained herein shall not require
authorization by Shareholder vote. Copies of the supplemental
24
<PAGE>
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 Heritage Asset 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 Heritage Asset Management,
Inc. or another subsidiary or affiliate of Raymond James as
investment adviser.
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 the
applicable Portfolio 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.
25
<PAGE>
IN WITNESS WHEREOF, the undersigned, being all of the
initial Trustees of the Trust, have executed this instrument
as of the day and year first written above.
STATE OF FLORIDA
COUNTY OF PINELLAS
WITNESS my hand and official seal.
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
880 Carillon Parkway
St. Petersburg, FL 33716
WITNESS my hand and official seal,
this _____ day of _____, 1992.
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
880 Carillon Parkway
St. Petersburg, FL 33716
WITNESS my hand and official seal,
this ___ day of _____________, 1992.
26
<PAGE>
<PAGE>
BY-LAWS
of
HERITAGE SERIES 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
Section 10: Other Officers . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Shareholder's Meetings . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1: Special Meetings . . . . . . . . . . . . . . . . . . . 3
Section 2: Notice of Meeting . . . . . . . . . . . . . . . . . . . 4
Section 3: Place of Meeting . . . . . . . . . . . . . . . . . . . 4
Section 4: Ballots . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 5: Proxies . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Trustees' Meetings . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1: Regular Meetings . . . . . . . . . . . . . . . . . . . 5
Section 2: Special Meetings . . . . . . . . . . . . . . . . . . . 5
Section 3: Quorum . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 4: Notices of Meeting . . . . . . . . . . . . . . . . . . 5
Section 5: Special Action . . . . . . . . . . . . . . . . . . . . 6
Section 6: Action by Consent . . . . . . . . . . . . . . . . . . . 6
ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Shares of Beneficial Interest . . . . . . . . . . . . . . . . . . . . 6
Section 1: Beneficial Interest . . . . . . . . . . . . . . . . . . 6
Section 2: Transfer of Shares . . . . . . . . . . . . . . . . . . 6
Section 3: Equitable Interest Not Recognized . . . . . . . . . . . 6
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Inspection of Books . . . . . . . . . . . . . . . . . . . . . . . . . 7
<PAGE>
ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Provisions Relating to the Conduct of the
Trust's Business . . . . . . . . . . . . . . . . . . . . . . . 7
Section 1: Right to Engage in Business . . . . . . . . . . . . . . 7
Section 2: Dealings in Securities of the Trust . . . . . . . . . . 7
Section 3: Limitation on Certain Loans . . . . . . . . . . . . . . 7
Section 4: Custodian . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Seal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE X . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Distribution Arrangements . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reports to Shareholders . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE XIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Principal Office of the Trust . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
BY-LAWS
of
HERITAGE SERIES TRUST
These By-laws of the Heritage Series Trust (the "Trust"), a
Massachusetts business trust which offers shares of stock (the "Shares")
in distinct portfolios (the "Portfolios"), are subject to the Trust's
Declaration of Trust as from time to time amended (the "Declaration of
Trust").
ARTICLE I
OFFICERS AND THEIR ELECTION
OFFICERS
Section 1. The officers of the Trust shall be a President, a
Treasurer, a Secretary, and such other officers as the Trustees may from
time to time may 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. 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 in the name
of and to the credit of the Trust to such custodians or depositories as
designated by the Trustees. He or she shall have the custody of the seal
of the Trust. He or she shall make annual reports regarding the business
and condition of the Trust, which reports shall be preserved in Trust
records, and he or she shall furnish such other reports regarding the
business and condition of the Trust as the Trustees may from time to time
require. The Treasurer shall perform such additional duties as the
Trustees may from time to time designate.
SECRETARY
Section 6. The Secretary shall record in books kept for the
purpose all votes and proceedings of the Trustees and the Shareholders at
their respective meetings. The Secretary shall perform such additional
duties as the Trustees may from time to time designate.
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<PAGE>
VICE PRESIDENT
Section 7. Any Vice President of the Trust shall perform such
duties as the Trustees may from time to time designate.
ASSISTANT TREASURER
Section 8. Any Assistant Treasurer of the Trust shall perform
such duties as the Trustees may from time to time designate.
ASSISTANT SECRETARY
Section 9. Any Assistant Secretary of the Trust shall perform
such duties as the Trustees may from time to time designate.
OTHER OFFICERS
Section 10. The Trustees from time to time may appoint such
other officers or agents as they may deem advisable, each of whom shall
have such title, hold office for such period, have such authority and
perform such duties as the Trustees may determine. The Trustees from time
to time may delegate to one or more officers or agents the power to
appoint any such subordinate officers or agents and to prescribe their
respective rights, terms of office, authorities and duties.
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 Portfolios, but not a meeting
of all shareholders of the Trust, then only the shareholders of such one
or more Portfolios shall be entitled to notice of and to vote at such
meeting.
NOTICE OF MEETING
Section 2. Except as above provided, notices of the place, date,
hour and purposes or purpose of any special meeting of the shareholders
shall be given by the Secretary by delivering or mailing, postage prepaid,
- 3 -
<PAGE>
to each Shareholder entitled to vote at said meeting, a written or printed
notification of such meeting, at least 15 days before the meeting, to such
address as appears on the record of the Trust at the time of such meeting.
Notice of any Shareholders' meeting need not be given to any
Shareholder if a written waiver of notice, executed before or after such
meeting, is filed with the record of such meeting, or to any Shareholder
who shall attend such meeting in person or by proxy. Notice of
adjournment of a Shareholders' meeting to another time or place need not
be given, if such time and place are announced at the meeting.
PLACE OF MEETING
Section 3. 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.
BALLOTS
Section 4. The vote upon any question shall be by ballot
whenever requested by any person entitled to vote, but, unless such a
request is made, voting may be conducted in any way approved by the
meeting.
PROXIES
Section 5. Shareholders entitled to vote may vote either in
person or by proxy, provided that an instrument authorizing such proxy to
act is executed by the Shareholder in writing and dated not more than
eleven months before the meeting, unless the instrument specifically
provides for a longer period. Proxies shall be delivered to the Secretary
of the Trust or other person responsible for recording the proceedings
before being voted. A proxy with respect to shares held in the name of
two or more persons shall be valid if executed by one of them unless at or
prior to exercise of such proxy the Trust receives a specific written
notice to the contrary from any one of them. Unless otherwise
specifically limited by their terms, proxies shall entitle the holder
thereof to vote at any adjournment of a meeting. A proxy purporting to be
exercised by or on behalf of a Shareholder shall be deemed valid unless
challenged at or prior to its exercise and the burden of providing
invalidity shall rest on the challenger. At all meetings of the
Shareholders, unless the voting is conducted by inspectors, all questions
relating to the qualifications of voters, the validity of proxies, and the
acceptance of rejection of votes shall be decided by the chairman of the
meeting.
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<PAGE>
ARTICLE IV
TRUSTEES' MEETINGS
REGULAR MEETINGS
Section 1. 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 in the
manner as provided in Section 4 of this Article.
SPECIAL MEETINGS
Section 2. 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. 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.
QUORUM
Section 3. A majority of the Trustees shall constitute a quorum
for the transaction of business at any meeting of the Trustees.
NOTICES OF MEETING
Section 4. Except as otherwise provided, notice of any special
meeting of the Trustees shall be given by the Secretary to each Trustee
orally or by mail, hand delivery or telegram. Such notice may be mailed,
postage prepaid, addressed to him at his address as registered on the
books of the Trust or, if not so registered, at his last known address at
least three days before the meeting or delivered to him at least two days
before the meeting, provided orally by telephone at least 24 hours before
the meeting or sent to him at least 24 hours before the meeting, by
prepaid telegram addressed to him at said registered address, if any, or
if he has no such registered address, at his last known address.
SPECIAL ACTION
Section 5. 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.
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<PAGE>
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. Such shares may be divided into Portfolios or into classes, as
provided for in the Declaration of Trust. Each Share shall represent an
equal proportionate interest in the Portfolio or class with each other
Share of the Portfolio or class outstanding, none having priority or
preference over another.
TRANSFER OF SHARES
Section 2. The Shares of the Trust shall be transferable, so as
to affect the rights of the Trust, only by transfer recorded on the books
of the Trust, in person or by attorney.
EQUITABLE INTEREST NOT RECOGNIZED
Section 3. The Trust shall be entitled to treat the holder of
record of any Share or Shares of stock as the holder in fact thereof, and
shall not be bound to recognize any equitable or other claim or interest
in such Share or Shares on the part of any other person except as may be
otherwise expressly provided by law.
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.
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<PAGE>
ARTICLE VII
PROVISIONS RELATING TO THE
CONDUCT OF THE TRUST'S BUSINESS
RIGHT TO ENGAGE IN BUSINESS
Section 1. 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 2. 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
such persons, no such purchase to be in contravention of any applicable
state or federal requirements.
LIMITATION ON CERTAIN LOANS
Section 3. 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 4. All securities and cash owned by the Trust shall be
maintained in the custody of a Custodian (the "Custodian") as provided in
the Declaration of Trust; 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
- 7 -
<PAGE>
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.
ARTICLE VIII
SEAL
The seal of the Trust shall be circular in form bearing the name
of the Trust and the year of its organization. The absence of the seal on
any document or other paper executed by or on behalf of the Trust shall
not impair the validity of such document or paper.
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 Shares of the Trust
pursuant to Article VII, Section 2 of the Declaration of Trust shall
require the other party thereto, whether acting as principal or as agent,
to use all reasonable efforts consistent with the other business of such
other party to secure purchasers for the Shares.
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<PAGE>
ARTICLE XII
REPORTS TO SHAREHOLDERS
The Trustees shall at least semi-annually submit to the
Shareholders a written financial report of the transactions of the Trust
including financial statements which shall be certified at least annually
by independent public accountants.
ARTICLE XIII
PRINCIPAL OFFICE OF THE TRUST
The principal place of business of the Trust shall be located
within or without the Commonwealth of Massachusetts as the Trustees may
determine or as they may authorize.
Dated: November 2, 1992
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<PAGE>
<PAGE>
HERITAGE SERIES TRUST
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
Agreement made as of this 29th day of March, 1993 between
Heritage Series Trust, a Massachusetts business trust (the "Trust"), and
Heritage Asset Management, Inc. (the "Manager"), a Florida corporation.
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company consisting of one or more series (portfolios) of shares, each
having its own investment policies; and
WHEREAS, the Manager is an investment adviser under the
Investment Advisers Act of 1940, as amended; 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 with respect to its
existing portfolio and such other portfolios as the Trust and the Manager
shall agree upon (collectively, the "Portfolios"), 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 Heritage Asset
Management, Inc. as investment adviser and administrator of the Trust and
each Portfolio listed on Schedule A of this Agreement (as such schedule
may be amended from time to time) for the period and on the terms set
forth in this Agreement. Heritage Asset Management, Inc. accepts such
appointment and agrees to render the services herein set forth for the
compensation as set forth on Schedule A. In the performance of its
duties, the Manager will act in the best interests of the Trust and each
Portfolio and will comply with (a) applicable laws and regulations,
including, but not limited to, the 1940 Act, (b) the terms of this
Agreement, (c) the Trust's Declaration of Trust, By-Laws and currently
effective registration statement under the Securities Act of 1933, as
amended, and the 1940 Act, and any amendments thereto, (d) relevant
undertakings to state securities regulators which also have been provided
to the Manager, (e) the stated investment objective, policies and
restrictions of each applicable Portfolio, and (f) such other guidelines
as the Board of Trustees of the Trust ("Board of Trustees") reasonably may
establish.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision of the Board of Trustees, the
Manager will provide a continuous investment program for each Portfolio,
including investment research and management with respect to all
securities, investments and cash equivalents in each Portfolio. The
Manager will determine from time to time what securities and other
investments will be purchased, retained or sold by each Portfolio. The
<PAGE>
Manager will exercise full discretion and act for each Portfolio in the
same manner and with the same force and effect as such Portfolio itself
might or could do with respect to purchases, sales, or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Manager will place orders pursuant to its investment
determinations for each Portfolio either directly with the issuer or
through other brokers. In the selection of brokers and the placement of
orders for the purchase and sale of portfolio investments for the
Portfolios, the Manager shall use its best efforts to obtain for the
Portfolios 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
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 involved and the quality of service
rendered by the broker in other transactions. Subject to such policies as
the Board of Trustees 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 a Portfolio
to pay a broker 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 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,
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 of any Portfolio be purchased from
or sold to the Manager or any affiliated person of the Manager. The Trust
agrees that any entity or person associated with the Manager which is a
member of a national securities exchange is authorized to effect any
transaction on such exchange for the account of the Trust which is
permitted by Section 11(a) of the Securities Exchange Act of 1934, as
amended, and Rule lla2-2(T) thereunder, and the Trust has consented to the
retention of compensation for such transactions in accordance with Rule
lla2-2(T)(a)(2)(iv).
(c) The Manager will provide the Board of Trustees 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.
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<PAGE>
(d) Any of the foregoing functions with respect to any or all
Portfolios may be delegated by the Manager, at the Manager's expense, to
another appropriate party (including an affiliated party), subject to such
approval by the Board of Trustees and shareholders of each affected
Portfolio 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 with quarterly evaluations and analyses concerning the
performance of delegated responsibilities by those parties.
3. DUTIES AS ADMINISTRATOR. The Manager will assist in
administering the affairs of the Trust subject to the supervision of the
Board of Trustees and the following understandings:
(a) The Manager will supervise all aspects of the operations of
the Trust except as hereinafter set forth; provided, however, that nothing
herein contained shall be deemed to relieve or deprive the Board of
Trustees 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 Board of Trustees, select necessary service companies to conduct
certain operations of the Trust, including the Trust's custodian, transfer
agent, dividend disbursing agent, independent public accountant and
attorney.
(c) The Manager will provide the Trust with such administrative
and clerical services as are deemed necessary or advisable by the Board of
Trustees, including the maintenance of certain books and records of the
Trust and each Portfolio which are not maintained by the Trust's custodian
or any subadviser.
(d) The Manager will arrange, but not pay, for the periodic
updating of Prospectuses and supplements thereto, proxy material, tax
returns and reports to 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 hold itself available to respond to
Shareholder inquiries.
4. SERVICES NOT EXCLUSIVE. The services furnished by the
Manager hereunder are not to be deemed exclusive and the Manager shall be
free to furnish similar services to others so long as its services under
this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 3la-3 under the 1940 Act, the Manager hereby agrees that all records
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<PAGE>
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 3la-2 under the 1940 Act the records required to be
maintained by Rule 3la-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 its shares. Expenses borne by the Trust
will include, but not be limited to, the following (or each Portfolio's
proportionate share of the following): (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 and the
Portfolios; (d) filing fees and expenses relating to the registration and
qualification of the Trust's shares and the Trust under federal or state
securities laws and maintaining such registrations and qualifications; (e)
distribution fees; (f) fees and salaries payable to the members of the
Board of Trustees 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 distributor 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 trustees; (k)
charges of custodians, transfer agents and other agents; (l) 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 or any Portfolio
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 or
Portfolio for any excess up to the amount of the fee payable to it during
that fiscal year pursuant to paragraph 7 hereof. However, the Manager may
recover any expenses reimbursed in the two previous years if the recovery
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<PAGE>
does not cause the Trust or any Portfolio to exceed applicable state
expense limitations.
7. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement with respect to each Portfolio, the
Trust will pay the Manager, effective from the date of this Agreement, a
fee which is computed daily and paid monthly from each Portfolio's assets
at the annual rates as percentages of that Portfolio's average daily net
assets as set forth in the attached Schedule A, which schedule can be
modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from the terms of this Agreement,
subject to appropriate approvals required by the 1940 Act. If this
Agreement becomes effective or terminates with respect to any Portfolio
before the end of any month, the fee for the period from the effective
date to the end of the month or from the beginning of such month to the
date of termination, as the case may be, shall be prorated according to
the proportion that such period bears to the full month in which such
effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust or any Portfolio in connection with the matters to
which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an officer,
partner, employee, or agent of the Manager, who may be or become an
officer, trustee, 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; provided, that with respect to any Portfolio
now existing or hereafter created, this agreement shall not take effect
unless it first has been approved (i) by a vote of the majority of those
trustees of the Trust who are not parties to this Agreement or interested
persons of such party, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by vote of a majority of that
Portfolio's outstanding voting securities. This Agreement shall remain in
full force and effect continuously thereafter until terminated without the
payment of any penalty as follows:
(a) By vote of a majority of its trustees, or by the affirmative
vote of a majority of the outstanding Shares of such Portfolio, the Trust
may at any time terminate this Agreement with respect to any or all
Portfolios by providing not more than 60 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager at its
principal offices; or
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<PAGE>
(b) With respect to any Portfolio, if (i) the trustees or the
shareholders of that Portfolio by the affirmative vote of a majority of
the outstanding shares of such Portfolio, and (ii) a majority of the
trustees who are not interested persons of the Trust or of the Manager or
of any 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 a Portfolio 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 with respect to that Portfolio; or
(c) The Manager may at any time terminate this Agreement with
respect to any or all Portfolios by not less than 60 days' written notice
delivered or mailed by registered mail, postage prepaid to the Trust.
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
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 material
amendment of this Agreement with respect to any Portfolio shall be
effective until approved by vote of the holders of a majority of that
Portfolio's outstanding voting securities.
11. NAME OF TRUST. The Trust may use the name "Heritage" or
"Heritage Series 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 Series Trust, Raymond James &
Associates, Inc., or Heritage Asset Management, Inc., or any successor
organization.
12. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
13. DEFINITIONS. As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person," and
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<PAGE>
"assignment" shall have the same meanings as such terms have in the 1940
Act.
14. SEVERABILITY. 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.
15. 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.
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.
Attest: HERITAGE SERIES TRUST
By: ________________________ By: ______________________________
Attest: HERITAGE ASSET MANAGEMENT, INC.
By: ________________________ By: ______________________________
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<PAGE>
Schedule A
to the
Investment Advisory and
Administration Agreement
between
Heritage Asset Management, Inc.
and
Heritage Series Trust
As compensation pursuant to section 7 of the Investment Advisory
and Administrative Agreement between Heritage Asset Management, Inc. (the
"Manager") and Heritage Series Trust (the "Trust"), the Trust shall pay to
the Manager a fee, computed daily and paid monthly, at the following
annual rates as percentages of each Portfolio's average daily net assets:
(1) For the Heritage Small Cap Stock Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
Up to and including $50 million 1.00%
In excess of $50 million .75%
Dated: March 29, 1993
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<PAGE>
<PAGE>
Amended Schedule A
to the
Investment Advisory and
Administration Agreement
between
Heritage Asset Management, Inc.
and
Heritage Series Trust
As compensation pursuant to section 7 of the Investment Advisory
and Administrative Agreement between Heritage Asset Management, Inc. (the
"Manager") and Heritage Series Trust (the "Trust"), the Trust shall pay to
the Manager a fee, computed daily and paid monthly, at the following
annual rates as percentages of each Portfolio's average daily net assets:
(1) For the Heritage Small Cap Stock Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
_______________ __________________________
Up to and including $50 million 1.00%
In excess of $50 million .75%
(2) For the Heritage Value Equity Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
__________________ __________________________
All .75%
Dated: March 29, 1993, as amended on December 29, 1994
<PAGE>
<PAGE>
Amended Schedule A
to the
Investment Advisory and
Administration Agreement
between
Heritage Asset Management, Inc.
and
Heritage Series Trust
As compensation pursuant to section 7 of the Investment Advisory
and Administrative Agreement between Heritage Asset Management, Inc. (the
"Manager") and Heritage Series Trust (the "Trust"), the Trust shall pay to
the Manager a fee, computed daily and paid monthly, at the following
annual rates as percentages of each Portfolio's average daily net assets:
(1) For the Heritage Small Cap Stock Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
________________ __________________________
Up to and including $50 million 1.00%
In excess of $50 million .75%
(2) For the Heritage Value Equity Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
_______________ __________________________
All .75%
(3) For the Heritage Value Equity Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
_______________ __________________________
All .75%
Dated: March 29, 1993, as amended on December 29, 1994 and
November 16, 1995
<PAGE>
<PAGE>
Exhibit (5)(b)
HERITAGE SERIES TRUST
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
Agreement made as of this 14th day of February, 1995 between
Heritage Series Trust, a Massachusetts business trust (the "Trust"), and
Eagle Asset Management, Inc. (the "Manager"), a Florida corporation.
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company consisting of one or more series (portfolios) of shares, each
having its own investment policies; and
WHEREAS, the Manager is an investment adviser under the
Investment Advisers Act of 1940, as amended; 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 with respect to such
portfolios as the Trust and the Manager shall agree upon from time to time
(collectively, the "Portfolios"), 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 Eagle Asset
Management, Inc. as investment adviser and administrator of each Portfolio
listed on Schedule A of this Agreement (as such schedule may be amended
from time to time) for the period and on the terms set forth in this
Agreement. Eagle Asset Management, Inc. accepts such appointment and
agrees to render the services herein set forth for the compensation as set
forth on Schedule A. In the performance of its duties, the Manager will
act in the best interests of the Trust and each Portfolio and will comply
with (a) applicable laws and regulations, including, but not limited to,
the 1940 Act, (b) the terms of this Agreement, (c) the Trust's Declaration
of Trust, By-Laws and currently effective registration statement under the
Securities Act of 1933, as amended, and the 1940 Act, and any amendments
thereto, (d) relevant undertakings to state securities regulators which
also have been provided to the Manager, (e) the stated investment
objective, policies and restrictions of each applicable Portfolio, and (f)
such other guidelines as the Board of Trustees of the Trust ("Board of
Trustees") reasonably may establish.
2. Duties as Investment Adviser.
(a) Subject to the supervision of the Board of Trustees, the
Manager will provide a continuous investment program for each Portfolio,
including investment research and management with respect to all
securities, investments and cash equivalents in each Portfolio. The
Manager will determine from time to time what securities and other
<PAGE>
investments will be purchased, retained or sold by each Portfolio. The
Manager will exercise full discretion and act for each Portfolio in the
same manner and with the same force and effect as such Portfolio itself
might or could do with respect to purchases, sales, or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Manager will place orders pursuant to its investment
determinations for each Portfolio either directly with the issuer or
through other brokers. In the selection of brokers and the placement of
orders for the purchase and sale of portfolio investments for the
Portfolios, the Manager shall use its best efforts to obtain for the
Portfolios 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
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 involved and the quality of service
rendered by the broker in other transactions. Subject to such policies as
the Board of Trustees 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 a Portfolio
to pay a broker 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 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,
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. The
Trust agrees that any entity or person associated with the Manager that 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, and the Trust consents to the retention of compensation for such
transactions.
(c) The Manager will provide the Board of Trustees 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.
3. Duties as Administrator. The Manager will assist in
administering the affairs of the Trust, as they relate to the Portfolios,
subject to the supervision of the Board of Trustees and the following
understandings:
<PAGE>
(a) The Manager will supervise all aspects of the operations of
the Portfolios except as hereinafter set forth; provided, however, that
nothing herein contained shall be deemed to relieve or deprive the Board
of Trustees of its responsibility for and control of the conduct of the
Portfolio's affairs.
(b) The Manager will investigate and, with appropriate approval
of the Board of Trustees, select necessary service companies to conduct
certain operations of the Portfolios, including the Portfolio's custodian,
transfer agent, dividend disbursing agent, independent public accountant
and attorney.
(c) The Manager will provide the Portfolio with such
administrative and clerical services as are deemed necessary or advisable
by the Board of Trustees, including the maintenance of certain books and
records of the Trust and each Portfolio which are not maintained by the
Trust's custodian or any subadviser.
(d) The Manager will arrange on behalf of the Portfolios, but
not pay, for the periodic updating of the Portfolios' Prospectuses and
supplements thereto, proxy material, tax returns and reports to
shareholders and the Securities and Exchange Commission.
(e) The Manager will provide the Portfolio 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 hold itself available to respond to
shareholder inquiries.
4. Delegation of Duties Hereunder. Any of the foregoing
functions with respect to the Managers's duty as investment adviser or
administrator to any or all Portfolios may be delegated by the Manager, at
the Manager's expense, to another appropriate party (including an
affiliated party), subject to such approval by the Board of Trustees and,
to the extent applicable, shareholders of each affected Portfolio 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 with
quarterly evaluations and analyses concerning the performance of delegated
responsibilities by those parties.
5. Services Not Exclusive. The services furnished by the
Manager hereunder are not to be deemed exclusive and the Manager shall be
free to furnish similar services to others so long as its services under
this Agreement are not impaired thereby.
6. 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
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<PAGE>
Trust's request. The Manager further agrees to preserve for the periods
prescribed by Rule 3la-2 under the 1940 Act the records required to be
maintained by Rule 3la-1 under the 1940 Act.
7. 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 its shares. Expenses borne by the Trust
will include, but not be limited to, the following (or each Portfolio's
proportionate share of the following): (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 and the
Portfolios; (d) filing fees and expenses relating to the registration and
qualification of the Trust's shares and the Trust under federal or state
securities laws and maintaining such registrations and qualifications; (e)
distribution fees; (f) fees and salaries payable to the members of the
Board of Trustees 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 distributor 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 trustees; (k)
charges of custodians, transfer agents and other agents; (l) 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 8 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 or any Portfolio
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 or
Portfolio for any excess up to the amount of the fee payable to it during
that fiscal year pursuant to paragraph 8 hereof. However, the Manager may
recover any expenses reimbursed in the two previous years if the recovery
does not cause the Trust or any Portfolio to exceed applicable state
expense limitations.
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<PAGE>
8. Compensation. For the services provided and the expenses
assumed pursuant to this Agreement with respect to each Portfolio, the
Trust will pay the Manager, effective from the date of this Agreement, a
fee which is computed daily and paid monthly from each Portfolio's assets
at the annual rates as percentages of that Portfolio's average daily net
assets as set forth in the attached Schedule A, which schedule can be
modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from the terms of this Agreement,
subject to appropriate approvals required by the 1940 Act. If this
Agreement becomes effective or terminates with respect to any Portfolio
before the end of any month, the fee for the period from the effective
date to the end of the month or from the beginning of such month to the
date of termination, as the case may be, shall be prorated according to
the proportion that such period bears to the full month in which such
effectiveness or termination occurs.
9. Limitation of Liability of the Manager. The Manager shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust or any Portfolio in connection with the matters to
which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an officer,
partner, employee, or agent of the Manager, who may be or become an
officer, trustee, 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.
10. Duration and Termination. This Agreement shall become
effective upon its execution; provided, that with respect to any Portfolio
now existing or hereafter created, this agreement shall not take effect
unless it first has been approved (i) by a vote of the majority of those
trustees of the Trust who are not parties to this Agreement or interested
persons of such party, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by vote of a majority of that
Portfolio's outstanding voting securities. This Agreement shall remain in
full force and effect continuously thereafter until terminated without the
payment of any penalty as follows:
(a) By vote of a majority of its trustees, or by the affirmative
vote of a majority of the outstanding Shares of such Portfolio, the Trust
may at any time terminate this Agreement with respect to any or all
Portfolios by providing not more than 60 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager at its
principal offices; or
(b) With respect to any Portfolio, if (i) the trustees or the
shareholders of that Portfolio by the affirmative vote of a majority of
the outstanding shares of such Portfolio, and (ii) a majority of the
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<PAGE>
trustees who are not interested persons of the Trust or of the Manager or
of any 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 a Portfolio 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 with respect to that Portfolio; or
(c) The Manager may at any time terminate this Agreement with
respect to any or all Portfolios by not less than 60 days' written notice
delivered or mailed by registered mail, postage prepaid to the Trust.
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
11. 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 material
amendment of this Agreement with respect to any Portfolio shall be
effective until approved by vote of the holders of a majority of that
Portfolio's outstanding voting securities.
12. Name of Trust. Unless agreed to in writing by Heritage
Asset Management, Inc., the Trust may use the name "Heritage" or "Heritage
Series 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 that shall have succeeded to the business of the
Manager. At such time as such an agreement shall no longer be in effect,
the Trust, and the Portfolios, will (to the extent that it lawfully can)
cease to use any name derived from Heritage Series Trust, Raymond James &
Associates, Inc., Heritage Asset Management, Inc. or Eagle Asset
Management, Inc., or any successor organization, unless the Trust secures
the written approval of any and all of those parties.
13. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
14. Definitions. As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person," and
"assignment" shall have the same meanings as such terms have in the 1940
Act.
- 6 -
<PAGE>
15. Severability. 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.
16. 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.
- 7 -
<PAGE>
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.
Attest: HERITAGE SERIES TRUST
By: ________________________ By: ___________________________
Attest: EAGLE ASSET MANAGEMENT, INC.
By: ________________________ By: ___________________________
- 8 -
<PAGE>
Schedule A
to the
Investment Advisory and
Administration Agreement
between
Eagle Asset Management, Inc.
and
Heritage Series Trust
As compensation pursuant to paragraph 8 of the Investment
Advisory and Administrative Agreement between Eagle Asset Management, Inc.
(the "Manager") and Heritage Series Trust (the "Trust"), the Trust shall
pay to the Manager a fee, computed daily and paid monthly, at the
following annual rates as percentages of each Portfolio's average daily
net assets:
(1) For the Eagle International Equity Portfolio:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
------------- ------------------------
Up to $100 million 1.00%
In excess of $100 million 0.80%
Dated: February 14, 1995
- 9 -
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of March 29, 1993, between
Heritage Asset Management, Inc., a Florida corporation (the "Manager"),
and Raymond James & Associates, 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 Series Trust
("Trust"), a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end diversified
management investment company consisting of one or more investment series
of shares, each having its own assets and investment policies;
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 with respect to its
existing portfolio and such other portfolios as the Trust and the Manager
shall agree upon and so specify from time to time in one or more Schedules
attached hereto (collectively, the "Portfolios"), and the Subadviser is
willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and
supervision of the Board of Trustees of the Trust and the
Manager, the Subadviser shall, at its expense, continuously
furnish to the Portfolios an investment program for such portion,
if any, of Portfolio assets which is allocated to it by the
Manager from time to time. With respect to such assets, the
Subadviser will make investment decisions and will place all
orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Subadviser will act in the best
interests of the Portfolios and will comply with (i) applicable
laws and regulations, including, but not limited to, the 1940
Act, (ii) the terms of this Agreement, (iii) the stated
investment objective, policies and restrictions of the
Portfolios, and (iv) such other guidelines as the Trustees or
Manager may establish. The Manager shall be responsible for
providing the Subadviser with current copies of the materials
specified in Subsections (a)(iii) and (iv) of this Section 1.
(b) Availability of Personnel. The Subadviser, at
its expense, will make available to the Trustees and the Manager at
<PAGE>
reasonable times its portfolio managers and other appropriate
personnel in order to review investment policies of the
Portfolios and to consult with the Trustees and the Manager
regarding the investment affairs of the Portfolios, including
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.
(c) Salaries and Facilities. The Subadviser, at its
expense, will pay for all salaries of personnel and facilities
required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadviser, at its
expense will, provide the Manager with such compliance reports
relating to its duties under this Agreement as may be agreed upon
by such parties from time to time.
(e) Valuation. The Subadviser, at its expense, will
provide the Trust's custodian with market price information
relating to the assets of the Portfolios for which the Subadviser
has responsibility at such times as the parties hereto may agree
upon from time to time.
(f) Executing Portfolio Transactions. The Subadviser
will place orders pursuant to its investment determinations for
each Portfolio either directly with the issuer or through other
brokers. In the selection of brokers and the placement of orders
for the purchase and sale of portfolio investments for the
Portfolios, the Subadviser shall use its best efforts to obtain
for the Portfolios 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
involved and the quality of service rendered by the broker in
other transactions. Subject to such policies as the Board of
Trustees 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
a Portfolio to pay a broker 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 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,
- 2 -
<PAGE>
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. In no instance will portfolio
securities of any Portfolio be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Trust
agrees that any entity or person associated with the Manager or
the Subadviser 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, and Rule
lla2-2(T) thereunder, and the Trust has consented to the
retention of compensation for such transactions in accordance
with Rule lla2-2(T)(a)(2)(iv).
(g) Expenses. The Subadviser shall not be obligated
to pay any expenses of or for the Trust not expressly assumed by
the Subadviser pursuant to this Agreement.
2. Books and Records. Pursuant to Rule 31a-3 under the 1940
Act, the Subadviser agrees that: (a) all records it maintains for the
Trust are the property of the Trust; (b) it will surrender promptly to the
Trust or the Manager any such records upon the Trust's or Manager's
request; (c) it will maintain for the Trust the records that the Trust is
required to maintain pursuant to Rule 31a-1 insofar as such records relate
to the investment affairs of the Portfolios for which the Subadviser has
responsibility under this Agreement; and (d) it will preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Trust.
3. Other Agreements. The Subadviser and persons controlled
by or under common control with the Subadviser have and may have advisory,
management service or other agreements with other organizations and
persons, and may have other interests and businesses. Nothing in this
Agreement is intended to preclude such other business relationships.
4. Compensation. The Manager will pay to the Subadviser as
compensation for the Subadviser's services rendered pursuant to this
Agreement a subadvisory fee as set forth in Schedule A, which schedule can
be modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from this Agreement, subject to
appropriate approvals required by the 1940 Act. Such fees 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 fees shall be payable for
each month within 15 business days after the end of such month. If the
Subadviser shall serve for less than the whole of a month, the
compensation as specified shall be prorated.
5. Assignment and Amendment of Agreement. This Agreement
automatically shall terminate without the payment of any penalty in the
event of its assignment or if the Investment Advisory and Administration
- 3 -
<PAGE>
Agreement between the Manager and the Trust shall terminate for any
reason. This Agreement shall not be materially amended unless such
amendment is approved by the affirmative vote of a majority of the
outstanding shares of each applicable Portfolio, and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of
a majority of the members of the Board of Trustees who are not interested
persons of the Trust, the Manager or the Subadviser (the "Independent
Trustees"). The Subadviser agrees to notify the Manager of any change in
control of the Subadviser within a reasonable time after such change.
6. Duration and Termination of the Agreement. This
Agreement shall become effective upon its execution; provided, however,
that this Agreement shall not become effective with respect to any
Portfolio now existing or hereafter created unless it first has been
approved (a) by a vote of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by an
affirmative vote of a majority of the outstanding voting shares of that
Portfolio. This Agreement shall remain in full force and effect
continuously thereafter without the payment of any penalty as follows:
(a) By vote of a majority of the (i) Independent
Trustees, or (ii) outstanding voting shares of the applicable
Portfolios, the Trust may at any time terminate this Agreement
with respect to any or all Portfolios by providing not more than
60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager and the Subadviser.
(b) This Agreement will terminate automatically with
respect to a Portfolio unless, within two years after its initial
effectiveness with respect to such Portfolio and at least
annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Board of Trustees or the
shareholders of such Portfolio by the affirmative vote of a
majority of the outstanding shares of such Portfolio, and (ii) a
majority of the Independent Trustees, by vote cast in person at a
meeting called for the purpose of voting on such approval. If
the continuance of this Agreement is submitted to the
shareholders of any Portfolio for their approval and such
shareholders fail to approve such continuance as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder.
(c) The Manager may at any time terminate this
Agreement with respect to any or all Portfolios 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 with respect to any or all
Portfolios by not less than 90 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager.
- 4 -
<PAGE>
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
Upon termination of this Agreement with respect to any Portfolio,
the duties of the Manager delegated to the Subadviser under this Agreement
with respect to such Portfolio automatically shall revert to the Manager.
7. Notification of the Manager. The Subadviser promptly
shall 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 Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or
otherwise have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board or body, involving the affairs of the Trust or any
Portfolio; or
(c) any other occurrence that might affect the
ability of the Subadviser to provide the services provided for
under this Agreement.
8. Definitions. For the purposes of this Agreement, the
terms "vote of a majority of the outstanding shares," "affiliated person,"
"control," "interested person" and "assignment" shall have their
respective meanings as 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; and
references to annual approvals by the Board of Trustees shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. Liability of the Subadviser. In the absence of its
willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties hereunder, the Subadviser shall not be subject
to any liability to the Manager, the Trust or their directors, Trustees,
officers or shareholders, for any act or omission in the course of, or
connected with, rendering services hereunder. However, the Subadviser
shall indemnify and hold harmless such parties from any and all claims,
losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from Subadviser's willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties hereunder.
10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
- 5 -
<PAGE>
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Massachusetts Business Trust. Subadviser hereby
acknowledges that, although this Agreement is executed by an officer
and/or trustee of the Trust, the obligations of this Agreement are not
binding upon any of them individually or upon the Trust's shareholders
individually; rather, these obligations are binding only upon the assets
and property of the Trust.
12. Severability. 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.
13. 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.
IN WITNESS WHEREOF, Heritage Asset Management, Inc. and Raymond
James & Associated, 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.
Attest: HERITAGE ASSET MANAGEMENT, INC.
By:__________________________ By:____________________________
Attest: RAYMOND JAMES & ASSOCIATES, INC.
By:__________________________ By:_____________________________
- 6 -
<PAGE>
Schedule A
to the
Heritage Series Trust
Subadvisory Agreement
between
Heritage Asset Management, Inc.
and
Raymond James & Associates, Inc.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and
Raymond James & Associates, Inc. (the "Subadviser"), the Manager shall pay
the Subadviser a subadvisory fee, computed and paid monthly, at the
following percentage rates of each Portfolio's average daily net assets
under management by the Subadviser:
(1) For the Heritage Small Cap Stock Fund:
Advisory Fee as % of
Average Daily Net Assets Average Daily Net
of the Entire Portfolio: Assets Under Management
------------------------ -----------------------
Up to and including $50 million .500%
In excess of $50 million .375%
Dated: March 29, 1993, as amended on August 7, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of March 29, 1993, between
Heritage Asset Management, Inc., a Florida corporation (the "Manager"),
and Awad & Associates, a division of Raymond James & Associates, 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 Series Trust
("Trust"), a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end diversified
management investment company consisting of one or more investment series
of shares, each having its own assets and investment policies;
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 with respect to its
existing portfolio and such other portfolios as the Trust and the Manager
shall agree upon and so specify from time to time in one or more Schedules
attached hereto (collectively, the "Portfolios"), and the Subadviser is
willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and
supervision of the Board of Trustees of the Trust and the
Manager, the Subadviser shall, at its expense, continuously
furnish to the Portfolios an investment program for such portion,
if any, of Portfolio assets which is allocated to it by the
Manager from time to time. With respect to such assets, the
Subadviser will make investment decisions and will place all
orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Subadviser will act in the best
interests of the Portfolios and will comply with (i) applicable
laws and regulations, including, but not limited to, the 1940
Act, (ii) the terms of this Agreement, (iii) the stated
investment objective, policies and restrictions of the
Portfolios, and (iv) such other guidelines as the Trustees or
Manager may establish. The Manager shall be responsible for
providing the Subadviser with current copies of the materials
specified in Subsections (a)(iii) and (iv) of this Section 1.
- 1 -
<PAGE>
(b) Availability of Personnel. The Subadviser, at
its expense, will make available to the Trustees and the Manager
at reasonable times its portfolio managers and other appropriate
personnel in order to review investment policies of the
Portfolios and to consult with the Trustees and the Manager
regarding the investment affairs of the Portfolios, including
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.
(c) Salaries and Facilities. The Subadviser, at its
expense, will pay for all salaries of personnel and facilities
required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadviser, at its
expense will, provide the Manager with such compliance reports
relating to its duties under this Agreement as may be agreed upon
by such parties from time to time.
(e) Valuation. The Subadviser, at its expense, will
provide the Trust's custodian with market price information
relating to the assets of the Portfolios for which the Subadviser
has responsibility at such times as the parties hereto may agree
upon from time to time.
(f) Executing Portfolio Transactions. The Subadviser
will place orders pursuant to its investment determinations for
each Portfolio either directly with the issuer or through other
brokers. In the selection of brokers and the placement of orders
for the purchase and sale of portfolio investments for the
Portfolios, the Subadviser shall use its best efforts to obtain
for the Portfolios 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
involved and the quality of service rendered by the broker in
other transactions. Subject to such policies as the Board of
Trustees 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
a Portfolio to pay a broker 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 would have charged for effecting that
transaction if the Subadviser determines in good faith that such
- 2 -
<PAGE>
amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker,
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. In no instance will portfolio
securities of any Portfolio be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Trust
agrees that any entity or person associated with the Manager or
the Subadviser 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, and Rule
lla2-2(T) thereunder, and the Trust has consented to the
retention of compensation for such transactions in accordance
with Rule lla2-2(T)(a)(2)(iv).
(g) Expenses. The Subadviser shall not be obligated
to pay any expenses of or for the Trust not expressly assumed by
the Subadviser pursuant to this Agreement.
2. Books and Records. Pursuant to Rule 31a-3 under the 1940
Act, the Subadviser agrees that: (a) all records it maintains for the
Trust are the property of the Trust; (b) it will surrender promptly to the
Trust or the Manager any such records upon the Trust's or Manager's
request; (c) it will maintain for the Trust the records that the Trust is
required to maintain pursuant to Rule 31a-1 insofar as such records relate
to the investment affairs of the Portfolios for which the Subadviser has
responsibility under this Agreement; and (d) it will preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Trust.
3. Other Agreements. The Subadviser and persons controlled
by or under common control with the Subadviser have and may have advisory,
management service or other agreements with other organizations and
persons, and may have other interests and businesses. Nothing in this
Agreement is intended to preclude such other business relationships.
4. Compensation. The Manager will pay to the Subadviser as
compensation for the Subadviser's services rendered pursuant to this
Agreement a subadvisory fee as set forth in Schedule A, which schedule can
be modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from this Agreement, subject to
appropriate approvals required by the 1940 Act. Such fees 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 fees shall be payable for
each month within 15 business days after the end of such month. If the
Subadviser shall serve for less than the whole of a month, the
compensation as specified shall be prorated.
- 3 -
<PAGE>
5. Assignment and Amendment of Agreement. This Agreement
automatically shall terminate without the payment of any penalty in the
event of its assignment or if the Investment Advisory and Administration
Agreement between the Manager and the Trust shall terminate for any
reason. This Agreement shall not be materially amended unless such
amendment is approved by the affirmative vote of a majority of the
outstanding shares of each applicable Portfolio, and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of
a majority of the members of the Board of Trustees who are not interested
persons of the Trust, the Manager or the Subadviser (the "Independent
Trustees"). The Subadviser agrees to notify the Manager of any change in
control of the Subadviser within a reasonable time after such change.
6. Duration and Termination of the Agreement. This
Agreement shall become effective upon its execution; provided, however,
that this Agreement shall not become effective with respect to any
Portfolio now existing or hereafter created unless it has first been
approved (a) by a vote of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by an
affirmative vote of a majority of the outstanding voting shares of that
Portfolio. This Agreement shall remain in full force and effect
continuously thereafter without the payment of any penalty as follows:
(a) By vote of a majority of the (i) Independent
Trustees, or (ii) outstanding voting shares of the applicable
Portfolios, the Trust may at any time terminate this Agreement
with respect to any or all Portfolios by providing not more than
60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager and the Subadviser.
(b) This Agreement will terminate automatically with
respect to a Portfolio unless, within two years after its initial
effectiveness with respect to such Portfolio and at least
annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Board of Trustees or the
shareholders of such Portfolio by the affirmative vote of a
majority of the outstanding shares of such Portfolio, and (ii) a
majority of the Independent Trustees, by vote cast in person at a
meeting called for the purpose of voting on such approval. If
the continuance of this Agreement is submitted to the
shareholders of any Portfolio for their approval and such
shareholders fail to approve such continuance as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder.
(c) The Manager may at any time terminate this
Agreement with respect to any or all Portfolios 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 with respect to any or all
- 4 -
<PAGE>
Portfolios by not less than 90 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager.
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
Upon termination of this Agreement with respect to any Portfolio,
the duties of the Manager delegated to the Subadviser under this Agreement
with respect to such Portfolio automatically shall revert to the Manager.
7. Notification of the Manager. The Subadviser promptly
shall 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 Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or
otherwise have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board or body, involving the affairs of the Trust or any
Portfolio; or
(c) any other occurrence that might affect the
ability of the Subadviser to provide the services provided for
under this Agreement.
8. Definitions. For the purposes of this Agreement, the
terms "vote of a majority of the outstanding shares," "affiliated person,"
"control," "interested person" and "assignment" shall have their
respective meanings as 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; and
references to annual approvals by the Board of Trustees shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. Liability of the Subadviser. In the absence of its
willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties hereunder, the Subadviser shall not be subject
to any liability to the Manager, the Trust or their directors, Trustees,
officers or shareholders, for any act or omission in the course of, or
connected with, rendering services hereunder. However, the Subadviser
shall indemnify and hold harmless such parties from any and all claims,
losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from Subadviser's willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties hereunder.
- 5 -
<PAGE>
10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Massachusetts Business Trust. Subadviser hereby
acknowledges that, although this Agreement is executed by an officer
and/or trustee of the Trust, the obligations of this Agreement are not
binding upon any of them individually or upon the Trust's shareholders
individually; rather, these obligations are binding only upon the assets
and property of the Trust.
12. Severability. 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.
13. 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.
IN WITNESS WHEREOF, Heritage Asset Management, Inc. and Raymond
James & Associated, 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.
Attest: HERITAGE ASSET MANAGEMENT, INC.
By:__________________________ By______________________________
AWAD & ASSOCIATES, A DIVISION OF
Attest: RAYMOND JAMES & ASSOCIATES, INC.
By:__________________________ By_____________________________
- 6 -
<PAGE>
SCHEDULE A
TO THE
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
AWAD & ASSOCIATES, A DIVISION OF
RAYMOND JAMES & ASSOCIATES, INC.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and Awad
& Associates, a division of Raymond James & Associates, Inc. (the
"Subadviser"), the Manager shall pay the Subadviser a subadvisory fee,
computed and paid monthly, at the following percentage rates of each
Portfolio's average daily net assets under management by the Subadviser:
(1) For the Heritage Small Cap Stock Fund:
Advisory Fee as % of
Average Daily Net Assets Average Daily Net
of the Entire Portfolio: Assets Under Management
________________________ _______________________
Up to and including $50 million .500%
In excess of $50 million .375%
Dated: March 29, 1993, as amended on August 7, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of December 29, 1994,
between Heritage Asset 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 Series Trust
("Trust"), a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end diversified
management investment company consisting of one or more investment series
of shares, each having its own assets and investment policies;
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 with respect to one of
its existing portfolios and such other portfolios as the Trust and the
Manager shall agree upon and so specify from time to time in one or more
Schedules attached hereto (collectively, the "Portfolios"), and the
Subadviser is willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and
supervision of the Board of Trustees of the Trust and the
Manager, the Subadviser shall, at its expense, continuously
furnish to the Portfolios an investment program for such portion,
if any, of Portfolio assets which is allocated to it by the
Manager from time to time. With respect to such assets, the
Subadviser will make investment decisions and will place all
orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Subadviser will act in the best
interests of the Portfolios and will comply with (i) applicable
laws and regulations, including, but not limited to, the 1940
Act, (ii) the terms of this Agreement, (iii) the stated
investment objective, policies and restrictions of the
Portfolios, and (iv) such other guidelines as the Trustees or
Manager may establish. The Manager shall be responsible for
providing the Subadviser with current copies of the materials
specified in Subsections (a)(iii) and (iv) of this Section 1.
- 1 -
<PAGE>
(b) Availability of Personnel. The Subadviser, at
its expense, will make available to the Trustees and the Manager
at reasonable times its portfolio managers and other appropriate
personnel in order to review investment policies of the
Portfolios and to consult with the Trustees and the Manager
regarding the investment affairs of the Portfolios, including
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.
(c) Salaries and Facilities. The Subadviser, at its
expense, will pay for all salaries of personnel and
facilities required for it to execute its duties under this
Agreement.
(d) Compliance Reports. The Subadviser, at its
expense will, provide the Manager with such compliance reports
relating to its duties under this Agreement as may be agreed upon
by such parties from time to time.
(e) Valuation. The Subadviser, at its expense, will
provide the Trust's fund accountant (or such other persons as the
Trust may request) with market price information relating to the
assets of the Portfolios for which the Subadviser has
responsibility at such times as the parties hereto may agree upon
from time to time.
(f) Executing Portfolio Transactions. The Subadviser
will place orders pursuant to its investment determinations for
each Portfolio either directly with the issuer or through other
brokers. In the selection of brokers and the placement of orders
for the purchase and sale of portfolio investments for the
Portfolios, the Subadviser shall use its best efforts to obtain
for the Portfolios 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
involved and the quality of service rendered by the broker in
other transactions. Subject to such policies as the Board of
Trustees 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
a Portfolio to pay a broker 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
- 2 -
<PAGE>
commission another broker 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,
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. In no instance will portfolio
securities of any Portfolio be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Trust
agrees that any entity or person associated with the Manager or
the Subadviser 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, and the Trust
consents to the retention of compensation for such transactions.
(g) Expenses. The Subadviser shall not be obligated
to pay any expenses of or for the Trust not expressly assumed by
the Subadviser pursuant to this Agreement.
2. Books and Records. Pursuant to Rule 31a-3 under the 1940
Act, the Subadviser agrees that: (a) all records it maintains for the
Trust are the property of the Trust; (b) it will surrender promptly to the
Trust or the Manager any such records upon the Trust's or Manager's
request; (c) it will maintain for the Trust the records that the Trust is
required to maintain pursuant to Rule 31a-1 insofar as such records relate
to the investment affairs of the Portfolios for which the Subadviser has
responsibility under this Agreement; and (d) it will preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Trust.
3. Other Agreements. The Subadviser and persons controlled
by or under common control with the Subadviser have and may have advisory,
management service or other agreements with other organizations and
persons, and may have other interests and businesses. Nothing in this
Agreement is intended to preclude such other business relationships.
4. Compensation. The Manager will pay to the Subadviser as
compensation for the Subadviser's services rendered pursuant to this
Agreement a subadvisory fee as set forth in Schedule A, which schedule can
be modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from this Agreement, subject to
appropriate approvals required by the 1940 Act. Such fees 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 fees shall be payable for
each month within 15 business days after the end of such month. If the
Subadviser shall serve for less than the whole of a month, the
compensation as specified shall be prorated.
- 3 -
<PAGE>
5. Assignment and Amendment of Agreement. This Agreement
automatically shall terminate without the payment of any penalty in the
event of its assignment or if the Investment Advisory and Administration
Agreement between the Manager and the Trust shall terminate for any
reason. This Agreement shall not be materially amended unless such
amendment is approved by the affirmative vote of a majority of the
outstanding shares of each applicable Portfolio, and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of
a majority of the members of the Board of Trustees who are not interested
persons of the Trust, the Manager or the Subadviser (the "Independent
Trustees"). The Subadviser agrees to notify the Manager of any change in
control of the Subadviser within a reasonable time after such change.
6. Duration and Termination of the Agreement. This
Agreement shall become effective upon its execution; provided, however,
that this Agreement shall not become effective with respect to any
Portfolio now existing or hereafter created unless it first has been
approved (a) by a vote of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by an
affirmative vote of a majority of the outstanding voting shares of that
Portfolio. This Agreement shall remain in full force and effect
continuously thereafter without the payment of any penalty as follows:
(a) By vote of a majority of the (i) Independent
Trustees, or (ii) outstanding voting shares of the applicable
Portfolios, the Trust may at any time terminate this Agreement
with respect to any or all Portfolios by providing not more than
60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager and the Subadviser.
(b) This Agreement will terminate automatically with
respect to a Portfolio unless, within two years after its initial
effectiveness with respect to such Portfolio and at least
annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Board of Trustees or the
shareholders of such Portfolio by the affirmative vote of a
majority of the outstanding shares of such Portfolio, and (ii) a
majority of the Independent Trustees, by vote cast in person at a
meeting called for the purpose of voting on such approval. If
the continuance of this Agreement is submitted to the
shareholders of any Portfolio for their approval and such
shareholders fail to approve such continuance as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder.
(c) The Manager may at any time terminate this
Agreement with respect to any or all Portfolios 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 with respect to any or all
- 4 -
<PAGE>
Portfolios by not less than 90 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager.
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
Upon termination of this Agreement with respect to any Portfolio,
the duties of the Manager delegated to the Subadviser under this Agreement
with respect to such Portfolio automatically shall revert to the Manager.
7. Notification of the Manager. The Subadviser promptly
shall 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 Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or
otherwise have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board or body, involving the affairs of the Trust or any
Portfolio; or
(c) any other occurrence that might affect the
ability of the Subadviser to provide the services provided for
under this Agreement.
8. Definitions. For the purposes of this Agreement, the
terms "vote of a majority of the outstanding shares," "affiliated person,"
"control," "interested person" and "assignment" shall have their
respective meanings as 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; and
references to annual approvals by the Board of Trustees shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. Liability of the Subadviser. In the absence of its
willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties hereunder, the Subadviser shall not be subject
to any liability to the Manager, the Trust or their directors, Trustees,
officers or shareholders, for any act or omission in the course of, or
connected with, rendering services hereunder. However, the Subadviser
shall indemnify and hold harmless such parties from any and all claims,
losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from Subadviser's willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties hereunder.
- 5 -
<PAGE>
10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Massachusetts Business Trust. Subadviser hereby
acknowledges that, although this Agreement is executed by an officer
and/or trustee of the Trust, the obligations of this Agreement are not
binding upon any of them individually or upon the Trust's shareholders
individually; rather, these obligations are binding only upon the assets
and property of the Trust.
12. Severability. 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.
13. 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.
IN WITNESS WHEREOF, Heritage Asset Management, Inc. and Eagle
Asset Management, 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.
Attest: HERITAGE ASSET MANAGEMENT, INC.
By:_______________________ By:_____________________________
Attest: EAGLE ASSET MANAGEMENT, INC.
By:___________________________ By:____________________________
- 6 -
<PAGE>
SCHEDULE A
TO THE
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
EAGLE ASSET MANAGEMENT, INC.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and
Eagle Asset Management, Inc. (the "Subadviser"), the Manager shall pay the
Subadviser a subadvisory fee, computed and paid monthly, at the following
percentage rates of each Portfolio's average daily net assets under
management by the Subadviser:
(1) For the Value Equity Fund: .375%
Dated: December 29, 1994
<PAGE>
<PAGE>
AMENDED SCHEDULE A
TO THE
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
EAGLE ASSET MANAGEMENT, INC.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and
Eagle Asset Management, Inc. (the "Subadviser"), the Manager shall pay the
Subadviser a subadvisory fee, computed and paid monthly, at the following
percentage rates of each Portfolio's average daily net assets under
management by the Subadviser:
(1) For the Value Equity Fund: .375%
(2) For the Small Cap Stock Fund:
Advisory Fee as % of
Average Daily Net Assets Average Daily Net
of the Entire Portfolio: Assets Under Management
------------------------ -----------------------
Up to and including $50 million .500%
In excess of $50 million .375%
Dated: December 29, 1994, as amended on August 7, 1995
<PAGE>
<PAGE>
AMENDED SCHEDULE A
TO THE
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
EAGLE ASSET MANAGEMENT, INC.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and
Eagle Asset Management, Inc. (the "Subadviser"), the Manager shall pay the
Subadviser a subadvisory fee, computed and paid monthly, at the following
percentage rates of each Portfolio's average daily net assets under
management by the Subadviser:
(1) For the Value Equity Fund: .375%
(2) For the Small Cap Stock Fund:
Advisory Fee as % of
Average Daily Net Assets Average Daily Net
of the Entire Portfolio: Assets Under Management
------------------------ -----------------------
Up to and including $50 million .500%
In excess of $50 million .375%
(3) For the Growth Equity Fund: .375%
Dated: December 29, 1994, as amended on August 7, 1995 and
November 16, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
EAGLE INTERNATIONAL EQUITY PORTFOLIO
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of February 14, 1995,
between Eagle Asset Management, Inc., a Florida corporation (the
"Manager"), and Martin Currie Inc., a New York corporation (the
"Subadviser").
WHEREAS, the Manager has by separate contract agreed to serve as
the investment adviser to Eagle International Equity Portfolio ("Fund"),
an investment portfolio of Heritage Series Trust ("Trust"), a
Massachusetts business trust registered under the Investment Company Act
of 1940, as amended ("1940 Act"), as an open-end diversified management
investment company consisting of one or more investment series of shares,
each having its own assets and investment policies;
WHEREAS, the Manager's contract with the Trust allows it to
delegate certain investment advisory services to other parties; and
WHEREAS, the Manager desires to retain the Subadviser to perform
certain investment advisory services for the Trust with respect to the
Fund, and the Subadviser is willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and
supervision of the Board of Trustees of the Trust and the
Manager, the Subadviser shall, at its expense, continuously
furnish to the Fund an investment program for such portion, if
any, of Fund assets that is allocated to it by the Manager from
time to time. With respect to such assets, the Subadviser will
make investment decisions and will place all orders for the
purchase and sale of portfolio securities. In the performance of
its duties, the Subadviser will act in the best interests of the
Fund and will comply with (i) applicable laws and regulations,
including, but not limited to, the 1940 Act, (ii) the terms of
this Agreement, (iii) the stated investment objective, policies
and restrictions of the Fund, as stated in the then-current
Registration Statement of the Trust, and (iv) such other
guidelines as the Trustees or Manager may establish. The Manager
shall be responsible for providing the Subadviser with current
copies of the materials specified in Subsections (a)(iii) and
(iv) of this Section 1. At such times as may be reasonably
requested by the Board or the Manager, the Subadviser will
provide them with economic and investment analysis and reports,
and make available to the Board any economical, statistical, or
<PAGE>
investment services normally available to similar investment
company clients of the Subadviser.
(b) Availability of Personnel. The Subadviser, at
its expense, will make available to the Trustees and the Manager
at reasonable times its portfolio managers and other appropriate
personnel in order to review investment policies of the Fund and
to consult with the Trustees and the Manager regarding the
investment affairs of the Fund, including 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.
(c) Salaries and Facilities. The Subadviser, at its
expense, will pay for all salaries of personnel and facilities
required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadviser, at its
expense, will provide the Manager with such compliance reports
relating to its duties under this Agreement as may be agreed upon
by such parties from time to time.
(e) Valuation. The Subadviser, at its expense, will
provide the Trust's custodian with market price information
relating to the assets of the Fund at such times as the parties
hereto may agree upon from time to time.
(f) Executing Portfolio Transactions. The Subadviser
will place orders pursuant to its investment determinations for
the Fund either directly with the issuer or through brokers. In
the selection of brokers and the placement of orders for the
purchase and sale of portfolio investments for the Fund, the
Subadviser shall use its best efforts to obtain for the Fund 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 Fund'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 involved and the quality of
service rendered by the broker in other transactions. Subject to
such policies as the Board of Trustees 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 Fund to pay a broker
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
- 2 -
<PAGE>
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, 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. In no instance will portfolio
securities of the Fund be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Trust
agrees that any entity or person associated with the Manager or
the Subadviser 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, and the Trust
consents to the retention of compensation for such transactions.
(g) Expenses. The Subadviser shall not be obligated
to pay any expenses of or for the Trust or the Fund not expressly
assumed by the Subadviser pursuant to this Agreement.
2. Books and Records. Pursuant to Rule 31a-3 under the 1940
Act, the Subadviser agrees that: (a) all records it maintains for the
Trust are the property of the Trust; (b) it will surrender promptly to the
Trust or the Manager any such records upon the Trust's or Manager's
request; (c) it will maintain for the Trust the records that the Trust is
required to maintain pursuant to Rule 31a-1 insofar as such records relate
to the investment affairs of the Fund; and (d) it will preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Trust.
3. Other Agreements. The Subadviser and persons controlled
by or under common control with the Subadviser have and may have advisory,
management service or other agreements with other organizations and
persons, and may have other interests and businesses. Nothing in this
Agreement is intended to preclude such other business relationships.
4. Compensation. The Manager will pay to the Subadviser as
compensation for the Subadviser's services rendered pursuant to this
Agreement a subadvisory fee equal to .50% of the Fund's average daily net
assets on the first $100 million of net assets and .40% thereafter. Such
fees 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 fees shall
be payable for each month within 15 business days after the end of such
month. If the Subadviser shall serve for less than the whole of a month,
the compensation as specified shall be prorated.
5. Amendment of Agreement. This Agreement shall not be
materially amended unless such amendment is approved by the affirmative
vote of a majority of the outstanding shares of the Fund, and by the vote,
cast in person at a meeting called for the purpose of voting on such
- 3 -
<PAGE>
approval, of a majority of the members of the Board of Trustees who are
not interested persons of the Trust, the Manager or the Subadviser (the
"Independent Trustees"). The Subadviser agrees to notify the Manager of
any anticipated change in control of the Subadviser as soon as such change
is anticipated and, in any event, prior to such change.
6. Duration and Termination of the Agreement. This
Agreement shall become effective upon its execution; provided, however,
that this Agreement shall not become effective unless it has first been
approved (a) by a vote of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by an
affirmative vote of a majority of the outstanding voting shares of the
Fund. This Agreement shall remain in full force and effect continuously
thereafter, except as follows:
(a) By vote of a majority of the (i) Independent
Trustees, or (ii) outstanding voting shares of the Fund, the
Trust may at any time terminate this Agreement, without the
payment of any penalty, by providing not more than 60 days'
written notice delivered or mailed by registered mail, postage
prepaid, to the Manager and the Subadviser.
(b) This Agreement will terminate automatically,
without the payment of any penalty, unless within two years after
its initial effectiveness and at least annually thereafter, the
continuance of the Agreement is specifically approved by (i) the
Board of Trustees or the shareholders of the Fund by the
affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Independent Trustees, by vote
cast in person at a meeting called for the purpose of voting on
such approval. If the continuance of this Agreement is submitted
to the shareholders of the Fund for their approval and such
shareholders fail to approve such continuance as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder.
(c) The Manager may at any time terminate this
Agreement, without the payment of any penalty, 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, without the payment of any penalty, terminate this
Agreement by not less than 90 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager.
(d) This Agreement automatically and immediately
shall terminate, without the payment of any penalty, in the event
of its assignment or if the Investment Advisory Agreement between
the Manager and the Trust shall terminate for any reason.
(e) Any notice of termination served on the
Subadviser by the Manager shall be without prejudice to the
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<PAGE>
obligation of the Subadviser to complete transactions already
initiated or acted upon with respect to the Fund. Upon
termination without reasonable notice by the Manager, the
Subadviser will be paid certain previously agreed upon expenses
the Subadviser necessarily incurs in terminating the Agreement.
Upon termination of this Agreement, the duties of the Manager
delegated to the Subadviser under this Agreement automatically shall
revert to the Manager.
7. Notification of the Manager. The Subadviser promptly
shall 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 Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or
otherwise have notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court,
public board or body, involving the affairs of the Trust or any
Portfolio; or
(c) any other occurrence that might affect the
ability of the Subadviser to provide the services provided for
under this Agreement.
8. Definitions. For the purposes of this Agreement, the
terms "vote of a majority of the outstanding shares," "affiliated person,"
"control," "interested person" and "assignment" shall have their
respective meanings as 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; and
references to annual approvals by the Board of Trustees shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. Liability of the Subadviser. In the absence of its bad
faith, negligence or disregard of its obligations and duties hereunder,
the Subadviser shall not be subject to any liability to the Manager, the
Trust or their directors, Trustees, officers or shareholders, for any act
or omission in the course of, or connected with, rendering services
hereunder. However, the Subadviser shall indemnify and hold harmless such
parties from any and all claims, losses, expenses, obligations and
liabilities (including reasonable attorneys fees) which arise or result
from the Subadviser's bad faith, negligence or disregard of its duties
hereunder.
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<PAGE>
10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Severability. 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.
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.
Where the effect of a requirement of the 1940 Act reflected in any
provision of this Agreement is made less restrictive by a rule, regulation
or order of the Securities and Exchange Commission, whether of special or
general application, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
IN WITNESS WHEREOF, Eagle Asset Management, Inc. and Martin
Currie 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.
Attest: EAGLE ASSET MANAGEMENT, INC.
By:_____________________ By:_________________________
Attest: MARTIN CURRIE INC.
By:_____________________ By:_________________________
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<PAGE>
<PAGE>
HERITAGE SERIES TRUST
DISTRIBUTION AGREEMENT
This Distribution Agreement is made this 29th day of March,.
1933, by and between Heritage Series Trust, a Massachusetts business trust
(the "Trust"), and Raymond James & Associates, Inc. ("Raymond James" or
the "Distributor"), a Florida corporation.
WHEREAS, the Trust is registered as an open-end, diversified
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"), and has registered and intends to register 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 intends to offer for public sale one or more
distinct series of shares of beneficial interest, each corresponding to a
distinct portfolio ("Portfolio"); and
WHEREAS, the Trust wishes to retain Raymond James as the Trust's
Distributor in connection with the offering and sale of the Shares of each
Portfolio 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 Board
of Trustees of the Trust 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. Appointment of Distributor. 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, By-Laws and current Prospectus and Statement of Additional
Information of the Trust: (a) to promote the Portfolios; (b) to solicit
orders for the purchase of the Shares of the Portfolios subject to such
terms and conditions as the Trust may specify; and (c) to hold itself
available to receive orders for the purchase of the Shares of the
Portfolios and to accept such orders on behalf of the Trust as of the time
of receipt of such orders and promptly transmit such orders as are
accepted to the Trust and its transfer agent. Purchase orders shall be
deemed effective at the time and in the manner set forth in the
Registration Statement. Raymond James shall offer the Shares of each
Portfolio on an agency or "best efforts" basis under which the Trust shall
only issue such Shares as are actually sold. In connection with such
sales and offers of sales, the Distributor shall give only such
information as is permitted by applicable law, and the Trust shall not be
<PAGE>
responsible in any way for any other information, statements or
representations given or made by the Distributor or its representatives,
or agents. The Trust reserves the right at any time to withdraw all
offerings of the Shares of any or all Portfolios by written notice to the
Distributor at its principal office.
2. Trust Obligations. The Trust shall keep the Distributor fully
informed of its affairs and shall make available to Distributor copies of
all information, financial statements, and other papers which Distributor
may reasonably request for use in connection with the distribution of
shares, including, without limitation, certified copies of any financial
statements prepared for the Trust by its independent public accountant and
such reasonable number of copies of the most current prospectus, statement
of additional information, and annual and interim reports of a Portfolio
as the Distributor may request, and the Trust shall cooperate fully in the
efforts of the Distributor to sell and arrange for the sale of the Shares
and in the performance of the Distributor under this Agreement.
3. Sales to Dealers. The Distributor, at its discretion,
may enter into agreements to sell shares to such registered and qualified
retail dealers, as it may select.
4. Public Offering Price. The public offering price of the
Shares of each Portfolio shall be the net asset value per share (as
determined by the Trust) of the outstanding Shares of the Portfolio plus
any applicable sales charge as set forth in the then effective
Registration Statement of the Trust. The Trust shall furnish (or arrange
for another person to furnish) the Distributor with a quotation of public
offering price on each business day.
5. Compensation. As compensation for providing services
under this contract the Distributor shall retain the sales charge, if any,
on purchases of Shares as set forth in the Registration Statement. The
Distributor is authorized to collect the gross proceeds derived from the
sale of the Shares, remit the net asset value thereof to the Trust upon
receipt of the proceeds and retain the sales charge, if any. The
Distributor may reallow any or all of such sales charges to such dealers
as it may from time to time determine. Whether a sales charge shall be
retained by the Distributor shall be determined in accordance with the
Registration Statement. The Distributor also shall receive from each
Portfolio distribution and/or service fees at the rate and under the terms
and conditions of the Distribution Plan ("Plan") adopted by the Trust with
respect to such Portfolio, as such Plan is in effect from time to time,
and subject to any further limitations on such fee as the Board of
Trustees may impose.
6. Distributor's Expenses. Raymond James shall finance
activity which is intended to result in the sale and retention of Shares
of each Portfolio 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,
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<PAGE>
advertising, salaries and other expenses of the Distributor relating to
selling or servicing efforts, expenses of organizing and conducting sale
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. Except as specifically provided in this Agreement,
the Trust and the Portfolios shall bear none of the expenses of Raymond
James in connection with its offer and sale of the Shares.
7. Trust Expenses. 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, Statements of Additional Information, amendments, reports
and other documents as may be necessary to maintain the Registration
Statement. Each Portfolio 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 Portfolio's communications
with persons who are shareholders of that Portfolio.
8. Indemnification By the Trust. The Trust agrees to
indemnify, defend and hold harmless Raymond James, its several offices 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 offices or trustees, or any
such controlling person may incur under the 1933 Act or under common law
or otherwise arising out of or based upon any alleged untrue statement of
a material fact contained in the Registration Statement, Prospectus or
Statement of Additional Information or arising out of or based upon any
alleged omission to state a material fact required to be stated in either
thereof or necessary to make the statements in either thereof not
misleading, provided that in no event shall anything contained in this
Agreement be construed so as to protect Raymond James against any
liability to the Trust or its shareholders to which Raymond James would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.
9. Indemnification by Raymond James. Raymond James agrees
to indemnify, defend and hold harmless the Trust and its Portfolios, its
several officers and trustees, 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
offices 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
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<PAGE>
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.
10. Share Certificates. 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. Repurchase of Shares. Raymond James at its sole
discretion may repurchase Shares offered for sale by the shareholders.
Repurchase of Shares of any Portfolio by Raymond James shall be at the net
asset value of the applicable Portfolio next determined after a repurchase
order has been received. Raymond James will receive no commission or
other remuneration for repurchasing Shares. 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 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 in cash or in
the form of a credit against moneys due the Trust from Raymond James as
proceeds from the sale of Shares. The Trust reserves the right to suspend
such purchases with respect to any or all Portfolios 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. Status of Distributor. 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. Non-Exclusive Services. 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. Reports of the Distributor. Raymond James shall prepare
reports for the Board of Trustees upon request showing information
concerning expenditures related to this Agreement as from time to time
shall be reasonably requested by the Board.
15. Definitions. 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
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<PAGE>
current form of Prospectus(es) and Statement(s) of Additional Information
filed by the Trust as part of the Registration Statement. Additionally,
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. Effectiveness of Agreement. This Agreement shall become
effective upon the date hereabove written, provided that, with respect to
a Portfolio, this Agreement shall not take effect unless such action has
first been approved by vote of a majority of the Board of Trustees and by
vote of a majority of those trustees who are not interested persons of the
Trust and have no direct or indirect financial interest in the operation
of the Plan or in any agreements related thereto (all such trustees
collectively being referred to herein as the "Independent Trustees"), cast
in person at a meeting called for the purpose of voting on such action.
17. Termination of Agreement. Unless sooner terminated as
provided herein, this Agreement shall continue in effect for one year from
the above written date. Thereafter, if not terminated, this Agreement
shall continue automatically for successive periods of twelve months each,
provided that such continuance is specifically approved at least annually
(a) by a vote of a majority of the Independent Trustees, cast in person at
a meeting called for the purpose of voting on such approval, and (b) by
the Board of Trustees or with respect to any given series by vote of a
majority of the outstanding voting securities of such Portfolio.
Notwithstanding the foregoing, with respect to any Portfolio, this
Agreement may be terminated at any time, without the payment of any
penalty, by vote of the Board of Trustees, by vote of a majority of the
Independent Trustees or by vote of a majority of the outstanding voting
securities of such Portfolio on 60 days' written notice to the Distributor
or by the Distributor at any time, without the payment of any penalty, on
60 days' written notice to the Trust or such Portfolio. Termination of
this Agreement with respect to any given Portfolio shall in no way affect
the continued validity of this Agreement or the performance thereunder
with respect to any other Portfolio. This Agreement automatically will
terminate in the event of its assignment.
18. Amendments. 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.
19. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and the 1940 Act. To the extend
that the applicable laws of the State of Florida conflict with the
applicable provisions of the 1940 Act, however, the latter shall control.
- 5 -
<PAGE>
20. Notice. Any notice required or permitted to be given by
either party to the other shall be deemed sufficient upon receipt in
writing at the other party's principal offices.
21. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed by their officers thereunto duly authorized.
Attest: HERITAGE SERIES TRUST
By: ________________________ By:_____________________________
Attest: RAYMOND JAMES & ASSOCIATES, INC.
By: ________________________ By:_____________________________
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<PAGE>
<PAGE>
CUSTODIAN CONTRACT
Between
HERITAGE SERIES 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 . . . . . . . . . . . . . . 4
2.4 Bank Accounts . . . . . . . . . . . . . . . . . . . . 5
2.5 Availability of Federal Funds . . . . . . . . . . . . 5
2.6 Collection of Income . . . . . . . . . . . . . . . . . 5
2.7 Payment of Fund Monies . . . . . . . . . . . . . . . . 6
2.8 Liability for Payment in Advance of
Receipt of Securities Purchased . . . . . . . . . . . 7
2.9 Appointment of Agents . . . . . . . . . . . . . . . . 7
2.10 Deposit of Fund Assets in Securities
System . . . . . . . . . . . . . . . . . . . . . . . . 8
2.10A Fund Assets Held in the Custodian's
Direct Paper System . . . . . . . . . . . . . . . . . 9
2.11 Segregated Account . . . . . . . . . . . . . . . . . . 10
2.12 Ownership Certificates for Tax Purposes . . . . . . . 11
2.13 Proxies . . . . . . . . . . . . . . . . . . . . . . . 11
2.14 Communications Relating to Fund
Portfolio Securities . . . . . . . . . . . . . . . . . 11
2.15 Proper Instructions . . . . . . . . . . . . . . . . . 11
2.16 Actions Permitted Without Express Authority . . . . . 12
2.17 Evidence of Authority . . . . . . . . . . . . . . . . 12
2.18 Mitigation by Custodian . . . . . . . . . . . . . . . 13
2.19 Notice of Litigation . . . . . . . . . . . . . . . . . 13
3. Powers and Duties of the Custodian with Respect to the
Appointment of Subcustodians . . . . . . . . . . . . . . . . . 14
4. Payments for Sales or Repurchases and Redemptions of Shares of
the Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
5. Duties of Custodian With Respect to the Books of Account and
Calculation of Net Asset Value and Net Income . . . . . . . . 16
6. Records . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
7. Opinion of Fund's Independent Accountant . . . . . . . . . . . 17
8. Reports to Fund by Independent Public Accountants . . . . . . 17
9. Compensation of Custodian . . . . . . . . . . . . . . . . . . 17
10. Responsibility of Custodian . . . . . . . . . . . . . . . . . 17
11. Custodian Advances . . . . . . . . . . . . . . . . . . . . . . 18
<PAGE>
12. Security for Obligations to Custodian . . . . . . . . . . . . 19
13. Effective Period, Termination and Amendment . . . . . . . . . 19
14. Successor Custodian . . . . . . . . . . . . . . . . . . . . . 20
15. Interpretive and Additional Provisions . . . . . . . . . . . . 21
16. Massachusetts Law to Apply . . . . . . . . . . . . . . . . . . 22
17. Prior Contracts . . . . . . . . . . . . . . . . . . . . . . . 22
18. Shareholder Communications Election . . . . . . . . . . . . . 22
19. Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 22
20. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 23
21. Limitation of Liability . . . . . . . . . . . . . . . . . . . 23
22. Additional Funds . . . . . . . . . . . . . . . . . . . . . . . 23
<PAGE>
CUSTODIAN CONTRACT
------------------
This Contract between Heritage Series Trust, a business trust
organized and existing under the laws of the Commonwealth of
Massachusetts, having its principal place of business at 880 Carillon
Parkway, St. Petersburg, Florida, 33716 hereinafter called the "Fund", and
State Street Bank and Trust Company, a Massachusetts trust company, having
its principal place of business at 225 Franklin Street, Boston,
Massachusetts, 02110, hereinafter called the "Custodian",
WHEREAS, the Fund is authorized to issue shares in separate
series, with each such series representing interests in a separate
portfolio of securities and other assets; and
WHEREAS, the Fund intends to initially offer shares in one
series, the Small Capitalization Stock Fund (such series, together with
all other series subsequently established by the Fund and made subject to
this Contract in accordance with paragraph 22, being herein referred to as
the "Portfolio(s)");
NOW THEREFORE, 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 the
assets of the Portfolios of the Fund pursuant to the provisions
of the Declaration of Trust. The Fund agrees to deliver to the
Custodian all securities, cash and other property owned by the
Portfolios, and all payments of income, payments of principal or
capital distributions received by it with respect to all
securities owned by the Portfolios from time to time, and the
cash consideration received by the Portfolios for such new or
treasury shares of beneficial interest ("Shares") of the Fund
representing interests in the Portfolios as may be issued or sold
from time to time. The Custodian shall not be responsible for any
property of the Portfolios held or received by the Fund on behalf
of any Portfolio and not delivered to the Custodian.
Upon receipt of "Proper Instructions" (within the meaning of
Section 2.15), the Custodian shall on behalf of the applicable
Portfolios from time to time employ one or more sub-custodians in
accordance with the provisions of Article 3 hereof.
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 each Portfolio all non-cash
property, including all securities owned by the Portfolio, other
than (a) securities which are maintained pursuant to Section 2.10
in a clearing agency which acts as a securities depository or in
a book-entry system authorized by the U.S. Department of the
<PAGE>
Treasury, collectively referred to herein as "Securities System"
and (b) commercial paper of an issuer for which State Street Bank
and Trust Company acts as issuing and paying agent ("Direct
Paper") which is deposited and/or maintained in the Direct Paper
System of the Custodian pursuant to Section 2.10A.
2.2 Delivery of Securities. The Custodian shall promptly release and
deliver securities owned by a Portfolio held by the Custodian or
in a Securities System account of the Custodian or in the
Custodian's Direct Paper book entry system account ("Direct Paper
System Account") only upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, and only in the following cases:
1) Upon sale of such securities for the account of the
Portfolio and receipt of payment therefor;
2) Upon the receipt of payment in connection with any
repurchase agreement related to such securities entered
into by the Fund on behalf of the Portfolio;
3) In the case of a sale effected through a Securities
System, in accordance with the provisions of Section 2.10
hereof;
4) To the depository agent in connection with tender or
other similar offers for portfolio securities of the
Portfolio;
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 Portfolio 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 2.9 or
into the name or nominee name of any sub-custodian
appointed pursuant to Article 3; 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
Portfolio, 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;
<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, rights or similar securities,
the surrender thereof in the exercise of such warrants,
rights or similar securities or the surrender of interim
receipts or temporary securities for definitive
securities; 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 Portfolio, but only against receipt of
adequate collateral as agreed upon in writing from time
to time by the Custodian and the Fund on behalf of the
Portfolio, which may be in the form of cash or
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 Portfolio prior to
the receipt of such collateral;
11) For delivery as security in connection with any
borrowings by the Portfolio requiring a pledge of assets
by the Portfolio, but only against receipt of amounts
borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and
a member of The National Association of Securities
Dealers, Inc. ("NASD"), relating to compliance with the
rules of The Options Clearing Corporation and of any
registered national securities exchange, or of any
similar organization or organizations, regarding escrow
or other arrangements in connection with transactions by
the Fund on behalf of the Portfolio;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, 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
<PAGE>
organization or organizations, regarding account deposits
in connection with transactions by the Fund on behalf of
the Portfolio; and
14) 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 naming the person or persons to whom
delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian on
behalf of a Portfolio (other than bearer securities) shall be
registered in the name of the Portfolio or in the name of any
nominee of the Portfolio or of any nominee of the Custodian which
nominee shall be assigned exclusively to the Portfolio, 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 Portfolio, or in the
name or nominee name of any agent appointed pursuant to Section
2.9 or in the name or nominee name of any sub-custodian appointed
pursuant to Article 3. All securities accepted by the Custodian
on behalf of a Portfolio under the terms of this Contract shall
be in "street name" or other good delivery form. If, however, the
Fund on behalf of a Portfolio directs the Custodian to maintain
securities in "street name", the Custodian shall utilize its best
efforts only to timely collect income due the Portfolio on such
securities and to notify the Portfolio on a best efforts basis
only of relevant corporate actions including, without limitation,
pendency of calls, maturities, tender or exchange offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate
bank account or accounts in the name of each Portfolio or a
nominee of the Custodian for the account of a Portfolio which
shall contain only property held by Custodian as Custodian for
the Portfolio, 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 the Custodian from or for the account of the
Portfolio, other than cash maintained by the Portfolio in a bank
account established and used in accordance with Rule 17f-3 under
the Investment Company Act of 1940. Funds held by the Custodian
for a Portfolio may be deposited by the Custodian to the
Custodian's credit as Custodian in the Banking Department of the
Custodian or in such other banks or trust companies as the
Custodian 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 Investment Company Act
of 1940 and that each such bank or trust company and the funds to
be deposited with each such bank or trust company shall be
<PAGE>
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. The accounts established with the
Custodian for the Portfolios shall be demand deposit accounts and
the Custodian's responsibilities with respect to such accounts
shall be the same as for any other demand deposit accounts
maintained at the Custodian. The authorization by the Fund under
Article 3 hereof to appoint a subcustodian as such shall
constitute a Proper Instruction to open a bank account subject to
the provisions of this paragraph with such subcustodian.
2.5 Availability of Federal Funds. Upon mutual agreement between the
Fund on behalf of a Portfolio and the Custodian, the Custodian
shall, upon the receipt of Proper Instructions, make federal
funds available to the Portfolio 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 Portfolio
which are deposited into the Portfolio's account.
2.6 Collection of Income. Subject to the provisions of Section 2.3,
the Custodian shall collect on a timely basis all income and
other payments with respect to registered securities held
hereunder to which a Portfolio shall be entitled either by law or
pursuant to custom in the securities business, and shall collect
on a timely basis all income 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, as collected, to the Portfolio's
custodian account. Without limiting the generality of the
foregoing, the Custodian shall promptly 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 a Portfolio on
securities loaned pursuant to the provisions of Section 2.2 (10)
shall be the responsibility of the Portfolio. The Custodian will
have no duty or responsibility in connection therewith, other
than promptly to provide the Portfolio with such information or
data as may be necessary to assist the Portfolio in arranging for
the timely delivery to the Custodian of the income to which the
Portfolio is properly entitled.
2.7 Payment of Portfolio Monies. Upon receipt of Proper Instructions,
which may be continuing instructions when deemed appropriate by
the parties, the Custodian shall pay out monies of a Portfolio in
the following cases only:
1) Upon the purchase of securities, options, futures
contracts or options on futures contracts for the account
of the Portfolio but only (a) against the delivery of
such securities or evidence of title to such options,
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
<PAGE>
qualified under the Investment Company Act of 1940, as
amended, to act as a custodian and has been designated by
the Custodian as its agent for this purpose) registered
in the name of the Portfolio 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 2.10 hereof; (c) in
the case of a purchase involving the Direct Paper System,
in accordance with the conditions set forth in Section
2.10A; (d) in the case of repurchase agreements entered
into between the Fund on behalf of the Portfolio 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 or (ii) against delivery of the receipt
evidencing purchase by the Portfolio of securities owned
by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities
from the Portfolio or (e) for transfer to a time deposit
account of the Portfolio in any bank, whether domestic or
foreign; such transfer may be effected prior to receipt
of a confirmation from a broker and/or the applicable
bank pursuant to Proper Instructions from the Portfolio
as defined in Section 2.15;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section
2.2 hereof;
3) For the payment of any expense or liability incurred by
the Portfolio, including but not limited to the following
payments for the account of the Portfolio: interest,
taxes, management, accounting, transfer agent and legal
fees, and operating expenses of the Portfolio whether or
not such expenses are to be in whole or part capitalized
or treated as deferred expenses;
4) For the payment of any dividends declared pursuant to the
governing documents of the Fund;
5) For payment of the amount of dividends received in
respect of securities sold short;
6) 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.
<PAGE>
2.8 LIABILITY FOR PAYMENT IN ADVANCE OF RECEIPT OF SECURITIES
PURCHASED.
Except as specifically stated otherwise in this Contract, in any
and every case where payment for purchase of securities for the
account of a Portfolio is made by the Custodian in advance of
receipt of the securities purchased in the absence of specific
written instructions from the Portfolio to so pay in advance, the
Custodian shall be absolutely liable to the Portfolio for such
securities to the same extent as if the securities had been
received by the Custodian.
2.9 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 pursuant to the
Investment Company Act of 1940, as amended, and its rules or
regulations, 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 by the Custodian (as distinguished from a
subcustodian appointed pursuant to Section 3) shall not relieve
the Custodian of its responsibilities or liabilities hereunder.
In the event of any loss, damage or expense suffered or incurred
by a Portfolio caused by or resulting from the negligence or
willful misconduct of any agent appointed by the Custodian
pursuant to this paragraph 2.9, the Custodian shall promptly
reimburse the Portfolio in the amount of such loss, damage or
expense.
2.10 Deposit of Portfolio Assets in Securities Systems. The Custodian
may deposit and/or maintain securities owned by a Portfolio in a
clearing agency registered with the Securities and Exchange
Commission under Section 17A of the Securities Exchange Act of
1934, which acts as a securities depository, or in the book-entry
system authorized by the U.S. Department of the Treasury and
certain federal agencies, collectively referred to herein as
"Securities System" in accordance with applicable Federal Reserve
Board and Securities and Exchange Commission rules and
regulations, if any, and subject to the following provisions:
1) The Custodian may deposit and/or maintain securities of
the Portfolio in a Securities System provided that such
securities are represented in an account ("Account") of
the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities
of the Portfolio which are maintained in a Securities
System shall identify by book-entry those securities
belonging to the Portfolio;
<PAGE>
3) The Custodian shall pay for securities purchased for the
account of the Portfolio 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 Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio 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
Portfolio. Copies of all advices from the Securities
System of transfers of securities for the account of the
Portfolio shall identify the Portfolio, be maintained for
the Portfolio by the Custodian and be provided to the
Portfolio at its request. The Custodian shall furnish the
Portfolio confirmation of each transfer to or from the
account of the Portfolio in the form of a written advice
or notice and shall furnish to the Portfolio copies of
daily transaction sheets reflecting each day's
transactions in the Securities System for the account of
the Portfolio on the next business day;
4) The Custodian shall provide the Portfolio with any report
obtained by the Custodian (or by any agent appointed by
the Custodian pursuant to Section 2.9 and furnished to
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) At the request of the Fund on behalf of the Portfolio,
the Custodian will terminate the use of any such
Securities System on behalf of the Portfolio as promptly
as practicable; and
7) Anything to the contrary in this Contract
notwithstanding, the Custodian shall be liable to the
Portfolio for any loss, damage or expense to the
Portfolio resulting from use of the Securities System by
reason of any negligence, misfeasance or misconduct of
the Custodian or any of its agents or of any of its or
their employees or from failure of the Custodian or any
such agent to enforce effectively such rights as it may
have against the Securities System; at the election of
the Fund on behalf of the Portfolio, 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
<PAGE>
consequence of any such loss, damage or expense if and to
the extent that the Portfolio has not been made whole for
any such loss, damage or expense. The Custodian agrees to
cooperate with the Fund in connection with the
enforcement of the Fund's subrogation rights.
2.10A Portfolio Assets Held in the Custodian's Direct Paper System. The
Custodian may deposit and/or maintain securities owned by a
Portfolio in the Direct Paper System of the Custodian subject to
the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper
Instructions;
2) The Custodian may deposit and or maintain securities of
the Portfolio in the Direct Paper System only if such
securities are represented in an account ("Account") of
the Custodian in the Direct Paper System which shall not
include any assets of the Custodian other than assets
held as a fiduciary, custodian or otherwise for
customers;
3) The records of the Custodian with respect to securities
of the Portfolio which are maintained in the Direct Paper
System shall identify by book-entry those securities
belonging to the Portfolio;
4) The Custodian shall pay for securities purchased for the
account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such payment and
transfer of securities to the account of the Portfolio.
The Custodian shall transfer securities sold for the
account of the Portfolio upon the making of an entry on
the records of the Custodian to reflect such transfer and
receipt of payment for the account of the Portfolio;
5) The Custodian shall furnish the Portfolio confirmation of
each transfer to or from the account of the Portfolio, in
the form of a written advice or notice, of Direct Paper
on the next business day following such transfer and
shall furnish to the Portfolio copies of daily
transaction sheets reflecting each day's transaction in
the Securities System for the account of the Portfolio;
6) The Custodian and any agent appointed pursuant to
paragraph 2.9 shall provide the Portfolio with reports on
their respective systems of internal accounting control
as the Portfolio may reasonably request from time to
time.
2.11 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or
accounts for and on behalf of a Portfolio, into which account or
<PAGE>
accounts may be transferred cash and/or securities, including
securities maintained in an account by the Custodian pursuant to
Section 2.10 hereof, (i) in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, 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
Portfolio, (ii) for purposes of segregating cash or government
securities in connection with options purchased, sold or written
by the Fund on behalf of the Portfolio or commodity futures
contracts or options thereon purchased or sold by the Fund on
behalf of the Portfolio, (iii) for the purposes of compliance by
the Portfolio 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 or (iv) as mutually agreed upon from time to time in
writing by the Custodian and the Fund on behalf of the Portfolio.
2.12 Ownership Certificates for Tax Purposes. The Custodian shall
promptly 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 each
Portfolio held by it and in connection with transfers of
securities.
2.13 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 a Portfolio or a nominee of a Portfolio, all
proxies, without indication of the manner in which such proxies
are to be voted, and shall promptly deliver to the Portfolios
such proxies, all proxy soliciting materials and all notices
relating to such securities. Neither the Custodian nor any
nominee shall vote any such securities or execute any proxy
thereon or give any consent to take any other action with respect
thereto (except as otherwise provided herein) unless ordered to
do so by Proper Instructions.
2.14 Communications Relating to Portfolio Securities. Subject to the
provisions of Section 2.3, the Custodian shall transmit promptly
to each Portfolio 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 Portfolio and the
maturity of futures contracts purchased or sold by the Portfolio)
received by the Custodian from issuers of the securities being
held for the Portfolio. With respect to tender or exchange
offers, the Custodian shall transmit promptly to each Portfolio
<PAGE>
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 a
Portfolio desires to take action with respect to any tender
offer, exchange offer or any other similar transaction, the
Portfolio shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
2.15 Proper Instructions. Proper Instructions as used throughout this
Article 2 means a tested telex or a writing signed or initialled
by two or more persons as the Board of Trustees shall have from
time to time authorized; provided, however, that no such
instructions directing the delivery of securities or the payment
of funds to an authorized signatory of a Portfolio shall be
signed by such authorized signatory. Those persons authorized to
give Proper Instructions may be identified by the Fund's Board of
Trustees by name, title or position and will include at least one
officer empowered by the Board to name other individuals who are
authorized to give Proper Instructions on behalf of the
Portfolios. 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, and
may be in the form of standing instructions. 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 Portfolios 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
Portfolios assets. For purposes of this Section, Proper
Instructions shall include instructions received by the Custodian
pursuant to any three-party agreement which requires a segregated
asset account in accordance with Section 2.11.
2.16 Actions Permitted without Express Authority. The Custodian may in
its discretion, without express authority from a Portfolio:
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 Portfolios;
2) surrender securities in temporary form for securities in
definitive form;
3) endorse for collection, in the name of a Portfolio,
checks, drafts and other negotiable instruments; and
<PAGE>
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 Portfolio except as otherwise
directed by the Board of Trustees of the Fund.
2.17 Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or
other instrument or paper reasonably believed by it to be genuine
and to have been properly executed by or on behalf of the
Portfolio. The Custodian may receive and accept a certified copy
of a vote 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 (b) of any determination or of any action by
the Board of Trustees pursuant to the Declaration of Trust as
described in such vote, and such vote may be considered as in
full force and effect until receipt by the Custodian of written
notice to the contrary.
2.18 Mitigation by Custodian. Upon the occurrence of any event
connected with the duties of the Custodian under this Contract
which causes or may cause any loss, damage or expense to a
Portfolio, (i) the Custodian shall, and (ii) shall exercise
reasonable efforts to cause any subcustodian to, use reasonable
efforts and take all reasonable steps under the circumstances to
mitigate the effects of such event and to avoid continuing harm
to the Portfolio.
2.19 Notification of Litigation; Right to Proceed. The Fund shall not
be liable for indemnification under this Contract to the extent
that the Fund's ability to defend against any litigation or
proceeding brought against the Custodian in respect of which
indemnity may be sought under this Contract is prejudiced by the
Custodian's failure to give prompt notice of the commencement of
any such litigation or proceeding. With respect to claims in such
litigation or proceedings for which indemnity by the Fund may be
sought and subject to applicable law and the ruling of any court
of competent jurisdiction, the Fund shall be entitled to
participate in any such litigation or proceeding and, after
written notice from the Fund to the Custodian, the Fund may
assume the defense of such litigation or proceeding with counsel
of its choice at its own expense in respect of that portion of
the litigation for which the Fund may be subject to an
indemnification obligation; provided, however, that the Custodian
shall be entitled to participate in the defense of any such
litigation or proceeding. If the Fund has acknowledged in writing
its obligation to indemnify the Custodian with respect to such
litigation or proceeding, the Custodian's participation shall be
at its own expense and the Fund shall control the defense of the
litigation or proceeding. If the Fund is not permitted to
participate in or control such litigation or proceeding under
applicable law or by a ruling of a court of competent
jurisdiction, the Custodian shall reasonably prosecute such
litigation or proceeding. The Custodian shall not consent to the
<PAGE>
entry of any judgment or enter into any settlement in any such
litigation or proceeding without providing the Fund with adequate
notice of any such settlement or judgment, and without the Fund's
prior written consent. The Custodian shall submit written
evidence to the Fund with respect to any cost or expense for
which it is seeking indemnification in such form and detail as
the Fund may reasonably request.
3. POWERS AND DUTIES OF THE CUSTODIAN WITH RESPECT TO THE
APPOINTMENT OF SUBCUSTODIANS.
The Custodian may, at any time and from time to time, appoint,
subject to approval of the Fund on behalf of a Portfolio, any
bank as defined in Section 2(a)(5) of the Investment Company Act
of 1940 meeting the requirements of a custodian under Section
17(f) of the Investment Company Act of 1940 and the rules and
regulations thereunder, to act on behalf of the Portfolio as a
subcustodian for purposes of holding securities, cash and other
assets of the Portfolio and performing other functions of the
Custodian within the United States. The Fund on behalf of the
Portfolio shall approve in writing the appointment of such
Subcustodian and the subcustodian agreement to be entered into
between such Subcustodian and the Custodian. Upon such approval
by the Fund, the Custodian is authorized on behalf of the
Portfolio to notify the Subcustodian of its appointment as such.
The Custodian shall monitor the performance and financial
condition of the Subcustodian to the extent practicable and shall
promptly report to the Portfolio any material adverse facts of
which it becomes aware. Upon request of the Fund on behalf of a
Portfolio, the Custodian shall deliver to the Fund a certificate
stating: (i) the identity of each Subcustodian then acting on
behalf of the Custodian with respect to such Portfolio; and (ii)
the securities depositories and clearing agents through which
each such Custodian or Subcustodian is then holding cash,
securities and other property of the Portfolio.
With respect to securities and funds held by a subcustodian,
either directly or indirectly, notwithstanding any provision of
this Contract to the contrary, payment for securities purchased
and delivery of securities sold may be made prior to receipt of
the securities or payment, respectively, and securities or
payment may be received in a form in accordance with governmental
regulations.
In the event that any subcustodian appointed pursuant to the
provisions of this Section 3 fails to perform any of its
obligations under the terms and conditions of the applicable
subcustodian agreement, the Custodian shall use its best efforts
to cause such subcustodian to perform such obligations. In the
event that the Custodian is unable to cause such subcustodian to
perform fully its obligations thereunder, the Custodian shall
forthwith upon the Fund's request on behalf of a Portfolio
<PAGE>
terminate such subcustodian as a subcustodian for the Portfolio
in accordance with the termination provisions under the
applicable subcustodian agreement and, if necessary or desirable,
appoint another subcustodian in accordance with the provisions of
this Section 3. At the election of the Fund, it shall have the
right to enforce, to the extent permitted by the subcustodian
agreement and applicable law, the Custodian's rights against any
such subcustodian for loss, damage or expense caused a Portfolio
by such subcustodian. The Custodian agrees to cooperate with the
Fund and take all actions reasonably requested by the Fund, at
the Fund's expense, in connection with the enforcement of any
rights of the Fund or the Custodian.
The Custodian will not amend any subcustodian agreement or agree
to change or permit any changes thereunder in respect of a
Portfolio except upon the prior written approval of the Fund.
The Custodian shall be liable for its own negligence in
transmitting to a subcustodian any instructions received by the
Custodian from a Portfolio and for its own negligence in
connection with the delivery of any securities, funds or other
property held by the Custodian on behalf of a Portfolio to a
subcustodian. The Custodian shall be liable for the actions or
omissions of a subcustodian appointed pursuant to this Article 3
only to the extent that the subcustodian is liable to the
Custodian.
4. PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES OF THE
PORTFOLIOS.
The Custodian shall receive from the distributor for the Shares
or from the Transfer Agent of the Fund and deposit into the
account of the appropriate Portfolio such payments as are
received for Shares of that Portfolio issued or sold from time to
time by the Fund. The Custodian will provide timely notification
to the Fund on behalf of each Portfolio and the Transfer Agent of
any receipt by it of payments for Shares of such Portfolio.
From such funds as may be available for the purpose but subject
to the limitations of the Declaration of Trust and any applicable
votes 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. In connection with the redemption or
repurchase of Shares of a Portfolio, 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. 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
<PAGE>
mutually agreed upon from time to time between the Fund and the
Custodian.
5. 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
Portfolios and/or compute the net asset value per share of the
outstanding shares of the Portfolios or, if directed in writing
to do so by the Fund pursuant to Proper Instructions, shall
itself keep such books of account and/or compute such net asset
value per share. The net asset value per share will be computed
by dividing the value of the securities held by the Portfolio
plus any cash or other assets (including interest and dividends
accrued but not yet received and earned discount) minus all
liabilities (including accrued expenses) by the total number of
shares outstanding at such time. If so directed, the Custodian
shall also calculate daily the net income of the Portfolio as
described in the Portfolio's currently effective prospectus and
shall advise the Portfolio and the Transfer Agent daily of the
total amounts of such net income and, if instructed in writing by
an officer of the Fund on behalf of a Portfolio 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 each Portfolio
shall be made at the time or times described from time to time in
the Portfolio's currently effective prospectus.
6. RECORDS
The Custodian shall create, maintain and retain all records
relating to its activities and obligations under this Contract in
such manner as will meet the obligations of each Portfolio under
the Investment Company Act of 1940 and the rules and regulations
thereunder, including Section 31 thereof and Rules 31a-1 and
31a-2 thereunder. All such records shall be the property of the
Fund and in the event of termination of this Contract shall be
delivered to the Fund or a successor custodian as instructed by
the Fund. All such records shall at all times during the regular
business hours of the Custodian be open for inspection and audit
by duly authorized officers, employees or agents of, attorneys
for and auditors employed by, 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 each Portfolio 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.
<PAGE>
7. OPINION OF FUND'S INDEPENDENT ACCOUNTANT
The Custodian shall take all reasonable action, as the Fund may
from time to time request, to obtain from year to year favorable
opinions from the Fund's independent accountants with respect to
its activities hereunder in connection with the preparation of
the Fund's Form N-2, and Form N-SAR or other annual reports to
the Securities and Exchange Commission and with respect to any
other requirements of such Commission.
8. REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS
The Custodian shall provide the Fund, at such times as the Fund
may reasonably require, with reports by independent 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.
9. COMPENSATION OF CUSTODIAN
The Custodian shall be entitled to reasonable compensation for
its services and expenses as Custodian, as agreed upon in writing
from time to time between the Fund on behalf of the Portfolios
and the Custodian.
10. 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, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options
agreement. The Custodian shall be held to the exercise of
reasonable care and diligence in carrying out the provisions of
this Contract and shall be liable to the Portfolios for all
losses, damages and expenses suffered or incurred by the
Portfolios resulting from the failure of the Custodian to
exercise such reasonable care and diligence. The Fund agrees to
indemnify and hold harmless the Custodian from all claims and
liabilities incurred by or assessed against the Custodian for any
action taken or omitted by it in good faith without negligence.
The Custodian shall be entitled to rely on and may act upon
advice of counsel (who may be counsel for the Fund) on all
<PAGE>
matters, and shall be without liability for any action reasonably
taken or omitted pursuant to such advice.
If a Portfolio 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 Portfolio 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 equal to the Custodian's reasonable
estimate of the amount to be paid or for which the Custodian may
potentially be liable and in a form satisfactory to the
Custodian.
11. CUSTODIAN ADVANCES
In the event that the Custodian is directed by Proper
Instructions to make any payment or transfer of funds on behalf
of a Portfolio for which there would be, at the close of business
on the date of such payment or transfer, insufficient funds held
by the Custodian on behalf of the Portfolio, the Custodian may,
in its discretion without further Proper Instructions, provide an
advance ("Advance") to the Portfolio in an amount sufficient to
allow the completion of the transaction by reason of which such
payment or transfer of funds is to be made. In addition, in the
event the Custodian is directed by Proper Instructions to make
any payment or transfer of funds on behalf of a Portfolio as to
which it is subsequently determined that the Portfolio has
overdrawn its cash account with the Custodian as of the close of
business on the date of such payment or transfer, said overdraft
shall constitute an Advance. Any Advance shall be payable by the
Portfolio on demand by Custodian, unless otherwise agreed by the
Portfolio and the Custodian, and shall accrue interest from the
date of the Advance to the date of payment by the Portfolio or
the Custodian at a rate agreed upon in writing from time to time
by the Custodian and the Fund on behalf of the Portfolio. It is
understood that any transaction in respect of which the Custodian
shall have made an Advance, including but not limited to a
foreign exchange contract or transaction in respect of which the
Custodian is not acting as a principal, is for the account of and
at the risk of the Portfolio, and not, by reason of such Advance,
deemed to be a transaction undertaken by the Custodian for its
own account and risk. The Custodian and the Fund on behalf of the
Portfolios acknowledge that the purpose of Advances is to finance
temporarily the purchase or sale of securities for prompt
delivery in accordance with the settlement terms of such
transactions or to meet emergency expenses not reasonably
foreseeable by the Fund. The Custodian shall promptly notify the
Fund of any Advance. Such notification shall be sent by facsimile
transmission or in such other manner as the Fund and the
Custodian may agree.
<PAGE>
12. Security for Obligations to Custodian. If the Custodian or any
nominee thereof shall incur or be assessed any taxes, charges,
expenses, assessments, claims or liabilities in connection with
the performance of this Contract (collectively "Liability"),
except such as may arise from its or such nominee's breach of the
relevant standard of care set forth in this Contract, or if the
Custodian shall make any Advance to a Portfolio, then in such
event property equal in value to not more than 100% of such
Advance and accrued interest thereon or the anticipated amount of
such liability shall be held as security for such Liability or
for such Advance and the interest thereon.
The Portfolios shall reimburse the Custodian promptly for any
Liability and shall pay any Advances on demand after notice from
the Custodian to the applicable Portfolio of the existence of the
Advance. If, after notification, the Portfolio shall fail to
promptly pay such Advance or interest when due or shall fail to
reimburse the Custodian promptly in respect of a Liability, the
Custodian shall be entitled to utilize available cash or dispose
of the Portfolio's property to the extent, and only to the
extent, necessary to obtain repayment or reimbursement.
13. EFFECTIVE PERIOD, TERMINATION AND AMENDMENT
This Contract shall become effective as of its execution, shall
continue in full force and effect until terminated as hereinafter
provided, may be amended at any time by mutual agreement in
writing of the parties hereto and may be terminated by either
party by an instrument in writing signed by the party seeking
termination delivered or mailed, postage prepaid to the other
party, such termination to take effect not sooner than thirty
(30) days after the date of such delivery or mailing; provided,
however that the Custodian shall not act under Section 2.10
hereof in the absence of receipt of an initial certificate of the
Secretary or an Assistant Secretary that the Board of Trustees of
the Fund has approved the initial use of a particular Securities
System by a Portfolio and the receipt of an annual certificate of
the Secretary or an Assistant Secretary that the Board of
Trustees has reviewed the use by the Portfolio of such Securities
System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian
shall not act under Section 2.10A hereof in the absence of
receipt of an initial certificate of the Secretary or an
Assistant Secretary that the Board of Trustees has approved the
initial use of the Direct Paper System by a Portfolio and the
receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Trustees has reviewed the use by the
Portfolio of the Direct Paper System; 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, 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)
<PAGE>
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.
14. Successor Custodian. If a successor custodian for a Portfolio
shall be appointed by the Board of Trustees of the Fund, the
Custodian shall, upon termination, promptly deliver to such
successor custodian at the office of the Custodian, duly endorsed
and in the form for transfer, all securities then held by it
hereunder for such Portfolio and shall promptly transfer to an
account of the successor custodian all of the Portfolio's
securities held in a Securities System unless otherwise
instructed by the Fund. In the event that no written order
designating a successor custodian shall have been delivered to
the Custodian on or before the date when such termination 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 Investment Company Act of 1940, 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 for the applicable
Portfolio and all instruments held by the Custodian relative
thereto and all other property held by it for such Portfolio
under this Contract and to transfer to an account of such
successor custodian all of the Portfolio's securities held in any
Securities System. Thereafter, such bank or trust company shall
be the successor of the Custodian under this Contract.
In the event that securities, funds and other properties of a
Portfolio remain in the possession of the Custodian after the
date of termination hereof owing to failure of the Fund to
procure the certified copy of the vote referred to 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. The Custodian agrees to
cooperate with the successor custodian and the Fund in execution
of documents and performance of other actions necessary or
desirable in order to substitute the successor custodian for the
Custodian.
<PAGE>
15. 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.
16. 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.
17. PRIOR CONTRACTS
This Contract supersedes and terminates, as of the date hereof,
all prior contracts between the Fund and the Custodian relating
to the custody of the Portfolio's assets.
18. SHAREHOLDER COMMUNICATIONS ELECTION
Securities and Exchange Commission Rule 14b-2 requires banks
which hold securities for the account of customers to respond to
requests by issuers of securities for the names, addresses and
holdings of beneficial owners of securities of that issuer held
by the bank unless the beneficial owner has expressly objected to
disclosure of this information. In order to comply with the rule,
the Custodian needs the Fund on behalf of the Portfolios to
indicate whether it authorizes the Custodian to provide the
Portfolios name, address, and share position to requesting
companies whose securities the Portfolios own. If the Fund tells
the Custodian "no", the Custodian will not provide this
information to requesting companies. If the Fund tells the
Custodian "yes" or does not check either "yes" or "no" below, the
Custodian is required by the rule to treat the Fund as consenting
to disclosure of this information for all securities owned by the
Portfolios or any funds or accounts established by the Fund. For
the Portfolios' protection, the Rule prohibits the requesting
company from using the Portfolio's name and address for any
purpose other than corporate communications. Please indicate
below whether the Fund on behalf of the Portfolios consents or
objects by checking one of the alternatives below.
YES [ ] The Custodian is authorized to release the Portfolios'
names, addresses, and share positions.
<PAGE>
NO [ ] The Custodian is not authorized to release the Portfolios'
names, addresses, and share positions.
19. ASSIGNMENT.
Neither the Fund nor the Custodian shall have the right to assign
any of its rights or obligations under this Contract without the
prior written consent of the other party.
20. SEVERABILITY.
If any provision of this Contract is held to be unenforceable as
a matter of law, the other terms and provisions hereof shall not
be affected thereby and shall remain in full force and effect.
21. LIMITATION OF LIABILITY.
A copy of the Declaration of Trust of the Fund is on file with
the Secretary of State of the Commonwealth of Massachusetts. The
Custodian acknowledges that such instrument is executed on behalf
of the Fund by the Trustees as trustees and not individually and
that the obligations of or arising out of this Contract are not
binding on any of the trustees, officers or shareholders of the
Fund or the Portfolios individually, but are binding only on the
assets and property of the Portfolios.
22. ADDITIONAL FUNDS
In the event that the Fund establishes one or more series of
Shares in addition to the Small Capitalization Stock Fund 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 series of Shares shall become a
Portfolio hereunder.
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 ____ day of
March, 1993.
ATTEST HERITAGE SERIES TRUST
______________________ By _________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
_____________________ By _________________________
Executive Vice President
<PAGE>
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
between
HERITAGE SERIES TRUST
and
HERITAGE ASSET MANAGEMENT, INC.
<PAGE>
TABLE OF CONTENTS
Page
Article 1 Terms of Appointment; Duties of the Agent . . . . . . 1
Article 2 Fees and Expenses . . . . . . . . . . . . . . . . . . 5
Article 3 Representations and Warranties of the Agent . . . . . 6
Article 4 Representations and Warranties of the Fund . . . . . . 6
Article 5 Indemnification . . . . . . . . . . . . . . . . . . . 7
Article 6 Covenants of the Fund and the Agent . . . . . . . . . 11
Article 7 Termination of Agreement . . . . . . . . . . . . . . . 13
Article 8 Assignment . . . . . . . . . . . . . . . . . . . . . . 13
Article 9 Amendment . . . . . . . . . . . . . . . . . . . . . . 14
Article 10 Merger of Agreement . . . . . . . . . . . . . . . . . 14
Article 11 Miscellaneous . . . . . . . . . . . . . . . . . . . . 14
Article 12 Florida Law to Apply . . . . . . . . . . . . . . . . . 15
<PAGE>
TRANSFER AGENCY AND SERVICE AGREEMENT
=====================================
AGREEMENT made as of the 29th day of March, 1993, by and
between HERITAGE SERIES TRUST, a Massachusetts business trust, having its
principal office and place of business at 880 Carillon Parkway, St.
Petersburg, Florida 33716 (the "Fund"), and HERITAGE ASSET MANAGEMENT,
INC., a Florida corporation and a duly registered transfer agent pursuant
to the Securities Exchange Act of 1934, having its principal office and
place of business at 880 Carillon Parkway, St. Petersburg, Florida 33716
(the "Agent").
WHEREAS, the Fund desires to appoint the Agent as its
transfer agent, dividend disbursing agent and agent in connection with
certain other activities, and the Agent desires to accept such
appointment;
WHEREAS, the Fund is authorized to issue Shares of
beneficial interest, without par value ("Shares"), in separate series,
portfolios or classes ("Portfolios");
NOW, THEREFORE, in consideration of the mutual covenants
herein contained, the parties hereto agree as follows:
Article 1 TERMS OF APPOINTMENT; DUTIES OF THE AGENT
1.01 Subject to the terms and conditions set forth in
this Agreement, the Fund hereby employs and appoints the Agent to act as,
and the Agent agrees to act as its transfer agent for the Fund's
authorized and issued Shares; its dividend disbursing agent and its agent
<PAGE>
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 Agent agrees that it will perform the
following services in connection with each of the Fund's Portfolios:
(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 Agent, the Agent shall:
(i) receive for acceptance, orders for the purchase of
Shares, and promptly deliver payment and appropriate
documentation therefor to the Custodian of the Fund (the
"Custodian");
(ii) pursuant to purchase orders, issue the appropriate number
of Shares and hold such Shares in the appropriate account
of the Shareholder;
(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 Agent 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;
2
<PAGE>
(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. Agent 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 Agent 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
3
<PAGE>
accounts, preparing Shareholder meeting lists, mailing
proxies, receiving and tabulating proxies, mailing
Shareholder reports and prospectuses to current
Shareholders, withholding taxes on non-resident alien
accounts, preparing and filing U.S. Treasury Department
Forms 1099 and other appropriate forms required with
respect to dividends and distributions by federal
authorities for all shareholders, preparing and mailing
confirmation forms and statements of account to
Shareholders for all purchases and redemptions of shares
and other confirmable transactions in Shareholder
accounts (which shall also indicate redemptions by check
if the Shareholder has elected the checkwriting
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 Agent 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
Agent for the Fund's blue sky State registration status
is solely limited to the initial establishment of
4
<PAGE>
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 Agent 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 Agent to perform such service hereunder.
Article 2 FEES AND EXPENSES
2.01 For the duties and obligations to be performed by
the Agent pursuant to this Agreement, the Fund agrees to pay the agent an
annual maintenance fee for each Shareholder account as set out in the fee
schedule attached hereto. Such fees and outof-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 Agent.
2.02 In addition to the fee paid under Section 2.01
above, the Fund agrees to promptly reimburse the Agent for reasonable
out-of-pocket expenses or advances incurred by the Agent for the items set
out in the fee schedule attached hereto. In addition, any other expenses
incurred by the Agent at the request or with the consent of the Fund which
are not properly borne by the agent 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 Agent by the Fund at least
seven (7) days prior to the mailing date of such materials.
5
<PAGE>
Article 3 REPRESENTATIONS AND WARRANTIES OF THE AGENT
The Agent 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 State of Florida.
3.02 It is duly qualified to carry on its business in the
State of Florida.
3.03 It is empowered under applicable laws and by its
charter and by-laws to enter into and perform this Agreement.
3.04 All requisite corporate proceedings have been taken
to authorize it to enter into and perform this Agreement.
3.05 It has and will continue to have access to the
necessary facilities, equipment and personnel to perform its duties and
obligations under this Agreement in accordance with procedures established
from time to time by mutual agreement between the Fund and the Agent.
Article 4 REPRESENTATIONS AND WARRANTIES OF THE FUND
The Fund represents and warrants to the Agent 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, as amended.
6
<PAGE>
4.05 A Registration Statement containing a Prospectus and
Statement of Additional Information under the Securities Act of 1933, as
amended is currently effective and appropriate state securities law
filings have been made with respect to all Shares of the Fund being
offered for sale.
Article 5 INDEMNIFICATION
5.01 The Agent shall not be responsible for, and the Fund
shall indemnify and hold the Agent harmless from and against, any and all
losses, damages, and any and all reasonable costs, charges, counsel fees,
payments, expenses and liability arising out of or attributable to:
(a) All actions of the Agent or its agents or
subcontractors required to be taken by the Agent pursuant to this
Agreement, provided the Agent 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 Agent, its agents or
subcontractors of information, records and documents which (i) are
received by the Agent 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 Agent or
its agents or subcontractors of any written instructions of the Fund.
"Written Instructions" means written instructions delivered by mail,
7
<PAGE>
tested telegram cable, telex or facsimile sending device and received by
the Agent, 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 Agent
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
Agent's failure to comply with the terms of this Agreement or any action
or failure or omission to act by the Agent as a result of the lack of good
faith, negligence or willful misconduct of the Agent 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 Agent
hereunder.
5.03 At any time the Agent 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 Agent under this Agreement, and Agent
and its agents and subcontractors shall not be liable and shall be
indemnified by the Fund for any 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 Agent, its agents and
8
<PAGE>
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 Agent to be genuine and to have been signed by the proper person or
persons, or upon any instruction, information, data, records or documents
provided the Agent 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
Agent, its agents and subcontractors shall also be protected and
indemnified in recognizing stock certificates which are reasonably
believed to bear the proper manual or facsimile signatures of the officers
of the Fund, and 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 Agent 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 Agent
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 Agent shall use its best efforts to
mitigate the effects of such occurrence.
9
<PAGE>
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 AGENT
6.01 The Fund shall promptly furnish to the Agent the
following:
(a) A certified copy of the resolution of the Board of
Trustees of the Fund authorizing the appointment of the Agent and the
execution and delivery of this Agreement.
(b) A copy of the Declaration of Trust and By-Laws of the
Fund and all amendments thereto.
6.02 The Agent represents and warrants that to the best
of its knowledge, the various procedures and systems which the Agent has
implemented with regard to safeguarding from loss or damage the stock
10
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certificates, check forms, facsimile signature imprinting devices, and
other property used in the performance of its obligations hereunder are
adequate and will enable the Agent to perform satisfactorily its
obligations hereunder and that the Agent 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 Agent shall keep all records relating to the
services to be performed hereunder, in the form and manner it may deem
advisable. To the extend required by Section 31 of the Investment Company
Act of 1940, as amended, and the Rules thereunder, the Agent agrees that
all such records prepared or maintained by the Agent relating to the
services to be performed by the Agent 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 Agent 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 Agent will endeavor
to notify the Fund and to secure instructions from an authorized officer
of the Fund as to such inspection. The Agent reserves the right, however,
to exhibit the Shareholder records to any person whenever it is advised by
11
<PAGE>
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 Agent 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 Agent's
obligations hereunder, the Agent 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 Agent hereunder.
Article 8 ASSIGNMENT
8.01 Except as provided in Section 8.03 below, neither
this Agreement nor any rights or obligations hereunder may be assigned by
the Agent without the written consent of the Fund.
8.02 This Agreement shall insure to the benefit of and be
binding upon the parties and their respective permitted successors and
assigns.
8.03 The Agent may, without further consent on the part
of the Fund, subcontract for the performance hereof with (i) Sungard
Shareholder Systems, Inc., or (ii) Raymond James & Associates, Inc., for
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<PAGE>
the performance of certain duties in connection with the Agent's
performance of this Agreement;
provided, however, that the Agent shall be as fully responsible to the
Fund for the acts and omissions of any subcontractor referred to in (i)
above as it is for its own acts and omissions.
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 Agent render services as transfer agent, dividend disbursing agent and
agent under the terms hereof, it shall so notify the Agent in writing, and
if the Agent 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 Agent to provide Raymond
James & Associates, Inc., any information it provides or makes available
to the Fund in connection with this Agreement.
11.02 The Agent agrees to treat all records and other
information relative to the Fund and its prior, present or potential
Shareholders confidentially and the Agent on behalf of itself and its
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<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 Agent
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 FLORIDA LAW TO APPLY
12.01 This Agreement shall be construed and the
provisions thereof interpreted under and in accordance with the laws of
the State of Florida.
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 SERIES TRUST
BY:___________________________
Treasurer
ATTEST:
_________________________
HERITAGE ASSET MANAGEMENT, INC.
BY:_____________________________
ATTEST:
___________________________
Assistant Secretary
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HERITAGE ASSET MANAGEMENT
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
Original contract dated March 29, 1993:
Original fee schedule dated March 29, 1993
and amended on November 15, 1993
HERITAGE SERIES 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 Series
Trust the actual cost of servicing accounts, not to exceed a charge of
$7.20 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 $7.20 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 SERIES TRUST HERITAGE ASSET MANAGEMENT, INC.
By_____________________________________________________
Title__________________________________________________
Date:__________________________________________________
<PAGE>
HERITAGE ASSET MANAGEMENT
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
Original contract dated March 29, 1993:
Original fee schedule dated March 29, 1993
and amended on November 15, 1993
HERITAGE SERIES 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 Series
Trust the actual cost of servicing accounts, not to exceed a charge of
$7.20 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 $7.20 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 SERIES TRUST HERITAGE ASSET MANAGEMENT, INC.
By:______________________ ______________________________
Title:___________________ ______________________________
Date:____________________ ______________________________
<PAGE>
HERITAGE ASSET MANAGEMENT
Fee Information for Services as
Plan, Transfer and Dividend Disbursing Agent
HERITAGE SERIES TRUST
GENERAL - Fees are based on actual cost of services provided with a per
account, annual limit plus out-of-pocket expenses. Specific charges are
listed below.
ACCOUNT CHARGES - Heritage Asset Management will charge Heritage Series
Trust the actual cost of servicing accounts, not to exceed a charge of
$7.20 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 $7.20 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 SERIES TRUST HERITAGE ASSET MANAGEMENT, INC.
By:______________________ ______________________________
Title:___________________ ______________________________
Date:____________________ ______________________________
<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).
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
<PAGE>
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) 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;
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<PAGE>
(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
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:
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<PAGE>
(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
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.
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<PAGE>
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
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
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<PAGE>
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
(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.
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<PAGE>
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.
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.
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<PAGE>
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.
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.
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<PAGE>
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: _____________________________
Stephen G. Hill
President
HERITAGE ASSET MANAGEMENT, INC.
By: _____________________________
Donald H. Glassman
Treasurer
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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
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<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
To the Trustees of Heritage
Series Trust:
We consent to the inclusion of Post-Effective Amendment No. 10 to
the Registration Statement of Heritage Series Trust on Form N-1A of our
report dated November 29, 1995, on our audit of the financial statements
and financial highlights of Heritage Series Trust-Eagle International
Equity Portfolio, which is 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.
November 29, 1995
<PAGE>
<PAGE>
Heritage
______________________
ASSET MANAGEMENT, INC.
______________________
Registered Investment Advisor-SEC
March 8, 1993
Heritage Small Cap Stock Fund
Heritage Series Trust
880 Carillon Parkway
St. Petersburg, Florida 33716
Gentlemen/Ladies:
Please be advised that the 6,997.901 shares of beneficial interest of the
Heritage Small Cap Stock Fund, a series of Heritage Series Trust, which we
have today purchased from you in the aggregate amount of $100,000, were
purchased for investment purposes only with no present intention of
redeeming or selling such shares.
Very truly yours,
HERITAGE ASSET MANAGEMENT INC.
By: /s/ Stephen G. Hill
______________________________
Stephen G. Hill
President and Chief Executive
Officer
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS A
DISTRIBUTION PLAN
WHEREAS, Heritage Series Trust (the "Trust") is engaged in
business as an open-end management investment company and is registered as
such under the Investment Company Act of 1940, as amended (the "1940
Act"); and
WHEREAS, the Trust, on behalf of its one or more designated
series presently existing or hereafter established (hereinafter referred
to as "Portfolios"), desires to adopt a Class A ("Class") Distribution
Plan pursuant to Rule l2b-1 under the 1940 Act and the Board of Trustees
of the Trust has determined that there is a reasonable likelihood that
adoption of this Distribution Plan will benefit the Trust and the Class A
shareholders; and
WHEREAS, the Trust intends to employ a registered broker-dealer
as Distributor of the securities of which it is the issuer;
NOW, THEREFORE, the Trust, with respect to its Class A shares,
hereby adopts this Distribution Plan (the "Plan") in accordance with Rule
l2b-1 under the 1940 Act on the following terms and conditions:
1. Payment of Fees. The Trust is authorized to pay
distribution fees for the Class A shares of each Portfolio listed on
Schedule A of this Plan, as such schedule may be amended from time to
time, on an annualized basis, at such rates as shall be determined from
time to time by the Board of Trustees in the manner provided for approval
of this Plan in Paragraph 5, up to the maximum rates set forth in Schedule
A, as such schedule may be amended from time to time. Such fees shall be
calculated and accrued daily and paid monthly or at such other intervals
as shall be determined by the Board in the manner provided for approval of
this Plan in Paragraph 5. The distribution and service fees shall be
payable by the Trust on behalf of the Class A shares of a Portfolio
regardless of whether those fees exceed or are less than the actual
expenses, described in Paragraph 2 below, incurred by the Distributor with
respect to such Class in a particular year.
2. Distribution Expenses. The fee authorized by Paragraph 1
of this Plan shall be paid pursuant to an appropriate Distribution
Agreement in payment for any activities or expenses intended to result in
the sale and retention of Trust shares, including, but not limited to,
compensation paid to registered representatives of the Distributor and to
participating dealers 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,
- 1 -
<PAGE>
preparation and distribution of advertising material and sales literature
and other sales promotion expenses, or 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 of a Portfolio until it has been
approved by a vote of at least a majority of such Class' outstanding
voting securities, as defined in the 1940 Act, voting separately from any
other Class or Portfolio of the Trust.
5. Board Approval. This Plan shall not take effect with
respect to any Class until it has been approved, together with any related
agreements, by vote of a majority of both (a) the Board of Trustees and
(b) those members of the Board who are not "interested persons" of the
Trust, as defined in the 1940 Act, and have no direct or indirect
financial interest in the operation of this Plan or any agreements related
to it (the "Independent Trustees"), cast in person at a meeting or
meetings called for the purpose of voting on this Plan and such related
agreements.
6. Renewal of Plan. This Plan shall continue in full force
and effect with respect to the Class A shares of a Portfolio for
successive periods of one year from its approval as set forth in
Paragraphs 4 and 5 for so long as such continuance is specifically
approved at least annually in the manner provided for approval of this
Plan in Paragraph 5.
7. Reports. Any Distribution Agreement entered into
pursuant to this Plan shall provide that the Distributor shall provide to
the Board of Trustees and the Board shall review, at least quarterly, or
at such other intervals as reasonably requested by the Board, a written
report of the amounts so expended and the purposes for which such
expenditures were made.
8. Termination. This Plan may be terminated with respect to
the Class A shares of a Portfolio at any time by vote of a majority of the
Independent Trustees or by a vote of a majority of the outstanding voting
securities of such Class, voting separately from any other Class of the
Trust.
9. Amendments. Any change to the Plan that would materially
increase the distribution costs to the Class A shares of a Portfolio may
not be instituted unless such amendment is approved in the manner provided
for initial approval in Paragraphs 4 and 5 hereof. Any other material
change to the Plan may not be instituted unless such change is approved in
the manner provided for initial approval in Paragraph 5 hereof.
- 2 -
<PAGE>
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: March 29, 1993, as restated on April 3, 1995
- 3 -
<PAGE>
HERITAGE SERIES TRUST
CLASS A
DISTRIBUTION PLAN
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
0.35% of the average daily net assets
Dated: March 29, 1993
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS A
DISTRIBUTION PLAN
AMENDED
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
VALUE EQUITY FUND
0.35% of the average daily net assets
Dated: March 29, 1993, as amended on December 29, 1994
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS A
DISTRIBUTION PLAN
AMENDED
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
VALUE EQUITY FUND
GROWTH EQUITY FUND
0.35% of the average daily net assets
Dated: March 29, 1993, as amended on December 29, 1994, November 16,
1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS A
DISTRIBUTION PLAN
AMENDED
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
VALUE EQUITY FUND
GROWTH EQUITY FUND
EAGLE INTERNATIONAL EQUITY PORTFOLIO
0.35% of the average daily net assets
Dated: March 29, 1993, as amended on December 29, 1994, November 16,
1995 and August 7, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS C
DISTRIBUTION PLAN
WHEREAS, Heritage Series 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 of each Portfolio listed on
Schedule A of this Plan, as such schedule may be amended from time to
time, on an annualized basis, at such rates as shall be determined from
time to time by the Board of Trustees in the manner provided for approval
of this Plan in Paragraph 5 up to the maximum rates set forth in Schedule
A, as such schedule may be amended from time to time. Such fees shall be
calculated and accrued daily and paid monthly or at such other intervals
as shall be determined by the Board in the manner provided for approval of
this Plan in Paragraph 5. The distribution and service fees shall be
payable by the Trust on behalf of the Class C shares of a Portfolio
regardless of whether those fees exceed or are less than the actual
expenses, described in Paragraph 2 below, incurred by the Distributor with
respect to such Class in a particular year.
2. Distribution Expenses. The fee authorized by Paragraph 1
of this Plan shall be paid pursuant to an appropriate Distribution
Agreement in payment for any activities or expenses intended to result in
the sale and retention of Trust shares, including, but not limited to,
compensation paid to registered representatives of the Distributor and to
participating dealers 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,
- 1 -
<PAGE>
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
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.
- 2 -
<PAGE>
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: April 3, 1995
- 3 -
<PAGE>
HERITAGE SERIES TRUST
CLASS C
DISTRIBUTION PLAN
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
VALUE EQUITY FUND
1.00% of the average daily net assets
Dated: April 3, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS C
DISTRIBUTION PLAN
AMENDED
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
VALUE EQUITY FUND
GROWTH EQUITY FUND
1.00% of the average daily net assets
Dated: April 3, 1995, as amended on November 16, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
CLASS C
DISTRIBUTION PLAN
AMENDED
SCHEDULE A
The maximum annualized fee rate pursuant to Paragraph 1 of the
Heritage Series Trust Distribution Plan shall be as follows:
SMALL CAP STOCK FUND
VALUE EQUITY FUND
GROWTH EQUITY FUND
EAGLE INTERNATIONAL EQUITY PORTFOLIO
1.00% of the average daily net assets
Dated: April 3, 1995, as amended on November 16, 1995 and August 7, 1995
<PAGE>
<PAGE>
HERITAGE SERIES TRUST
EAGLE CLASS
DISTRIBUTION PLAN
WHEREAS, Heritage Series 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 an Eagle Class ("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 Eagle Class 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 Eagle Class
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 Eagle Class shares of each Portfolio listed on
Schedule A of this Plan, as such schedule may be amended from time to
time, on an annualized basis, at such rates as shall be determined from
time to time by the Board of Trustees in the manner provided for approval
of this Plan in Paragraph 5, up to the maximum rates set forth in Schedule
A, as such schedule may be amended from time to time. Such fees shall be
calculated and accrued daily and paid monthly or at such other intervals
as shall be determined by the Board in the manner provided for approval of
this Plan in Paragraph 5. The distribution and service fees shall be
payable by the Trust on behalf of the Eagle Class 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,
- 1 -
<PAGE>
preparation and distribution of advertising material and sales literature
and other sales promotion expenses, or for providing ongoing services to
Eagle Class 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 Eagle Class 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 Eagle Class 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 Eagle Class 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 Eagle Class 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
- 2 -
<PAGE>
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: February 14, 1995
- 3 -
<PAGE>
HERITAGE SERIES TRUST
EAGLE CLASS
DISTRIBUTION PLAN
SCHEDULE A
EAGLE INTERNATIONAL EQUITY PORTFOLIO
1.00% of the average daily net assets
Date: February 14, 1995
<PAGE>
<PAGE>
Heritage Series Trust-Small Cap Stock Fund
Calculation of Return
Return Since Inception
Ending Date 10/31/93
Inception Date 5/7/93
----------
Days Since Inception 177
==========
Years Since Inception 0.48
Beginning Offering Price 15.00
Ending Net Asset Value 15.57
Annualized return 7.99%
Formula for since inception (((15.57)/(15.00))^(1/.48))-1
Beginning NAV 14.29
Ending Net Asset Value 15.57
Cumulative Total Return 8.96%
Formula for since inception (15.57-14.29)/14.29
<PAGE>
<PAGE>
Heritage Series Trust-Eagle International Equity Portfolio
Calculation of Return
Return Since Inception
Ending Date 10/31/95
Inception Date 5/7/95
---------
Days Since Inception 177
=========
Years Since Inception 0.48
Beginning Offering Price 20.00
Ending Net Asset Value 20.79
Dividend Factor 1.000000
---------
Ending Net Asset Value 20.7900
---------
Adjusted for Dividend
Reinvestments
Annualized return 8.32%
Formula for since inception ((20.79)/(20.00))^(1/.84))-1
Beginning NAV 20.00
Ending Net Asset Value 20.79
Dividend Factor 1.000000
---------
Ending Net Asset Value 20.7900
---------
Adjusted for Dividend
Reinvestment
Cumulative Total Return 3.95%
Formula for since inception (20.79-20.00)/20.00
<PAGE>
<PAGE>
HERITAGE SERIES TRUST:
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Multiple Class Plan Pursuant to Rule 18f-3
Heritage Series Trust ("Trust") hereby adopts this Multiple Class
Plan pursuant to Rule 18f-3 under the Investment Company Act of 1940, as
amended (the "1940 Act") on behalf of its Eagle International Equity
Portfolio series ("Portfolio"). This Plan describes the classes of shares
1995 ("Implementation Date").
A. CLASSES OFFERED. The Portfolio offers the following classes of
shares:
1. Eagle Class. Eagle Class shares are offered to all
investors without the imposition of an initial sales charge or a
contingent deferred sales load. Eagle Class shares require an
initial investment of $50,000, except for investors who already
maintain an account with Eagle Asset Management, Inc. for which a
$25,000 minimum initial investment applies. Eagle Class
shareholders incur an annual service fee of .25% of average daily
net assets and a distribution fee of .75% of average daily net
assets of the Eagle Class shares of the Portfolio, each paid
pursuant to a plan of distribution adopted pursuant to Rule 12b-1
under the 1940 Act ("Rule 12b-1"). All of the shares of the
Portfolio issued pursuant to a Portfolio prospectus effective
prior to the Implementation Date and that are outstanding on the
Implementation Date will be designated as Eagle Class shares.
2. Class A. Class A shares are offered to all investors
subject to an initial sales charge. The maximum sales charge is
4.75% of the amount invested and declines to 1.00% based on
discounts for volume purchases. The initial sales charge may be
waived for certain eligible purchasers or under certain
circumstances. Class A shares also are subject to an annual
service fee of .25% of the average daily net assets of the Class
A shares paid pursuant to a plan of distribution adopted pursuant
to Rule 12b-1. Class A shares require an initial investment of
$1,000, except for certain retirement accounts and investment
plans for which lower limits may apply.
3. Class C. Class C shares are offered to all investors
subject to a contingent deferred sales load ("CDSL") on
redemptions of shares held less than one year. The Class C CDSL
is equal to 1% of the lower of: (1) the net asset value of the
shares at the time of purchase or (2) the net asset value of the
shares at the time of redemption. Class C shares held one year
or longer and Class C shares acquired through reinvestment of
dividends or capital gains distributions on shares otherwise
subject to a Class C CDSL are not subject to the DCSL. The DCSL
for Class C shares of the Portfolio may be waived under certain
circumstances. Class C shares are subject to an annual service
fee of .25% of average daily net assets and a distribution fee of
.75% of average daily net assets of the Class C shares of the
<PAGE>
Portfolio, each paid pursuant to a plan of distribution adopted
pursuant to Rule 12b-1. Class C shares require an initial
investment of $1,000, except for certain retirement accounts and
investment plans for which lower limits may apply.
B. EXPENSE ALLOCATIONS OF EACH CLASS. Certain expenses may be
attributable to a particular class of shares of the Portfolio ("Class
Expenses"). Class Expenses are charged directly to the net assets of the
particular class and, thus are borne on a pro rata basis by the
outstanding shares of that class.
In addition to the distribution and service fees described above,
each class also may pay a different amount of the following other
expenses: (1) 12b-1 fees, (2) transfer agent fees identified as being
attributable to a specific class, (3) stationery, printing, postage, and
delivery expenses related to preparing and distributing materials such as
shareholder reports, prospectuses, and proxy statements to current
shareholders of a class, (4) Blue Sky registration fees incurred by a
specific class of shares, (5) Securities and Exchange Commission
registration fees incurred by a specific class of shares, (6) expenses of
administrative personnel and services required to support the shareholders
of a specific class, (7) trustees' fees or expenses incurred as a result
of issues relating to a specific class of shares, (8) accounting expenses
relating solely to a specific lass of shares, (9) auditors' fees,
litigation expenses, and legal fees and expenses relating to a specific
class of shares, and (10) expenses incurred in connection with
shareholders meetings as a result of issues relating to a specific class
of shares.
C. EXCHANGE FEATURES. If an investor has held Class A or Class C
shares for at least 30 days, the investor may exchange those classes of
shares for shares of the corresponding class of any other mutual fund for
which Heritage Asset Management, Inc. serves as investment adviser
("Heritage mutual funds"). All exchanges are subject to the minimum
investment requirements and any other applicable terms set forth in the
prospectus for the Heritage mutual funds whose shares are being acquired.
Class C shares, however, are not eligible for exchange into the Heritage
Municipal Money Market Fund.
These exchange privileges may be modified or terminated by the
Portfolio, and exchanges may be made only into funds that are registered
legally for sale in the investor's state of residence.
D. ADDITIONAL INFORMATION. This Multiple Class Plan is qualified by
and subject to the terms of the then current prospectus for the applicable
classes; provided, however, that none of the terms set forth in any such
prospectus shall be inconsistent with the terms of the classes contained
in this Plan. The prospectuses for the Eagle Class and for the Class A
and Class C contain additional information about those classes and the
Portfolio's multiple class structure.
Dated: December __, 1995
<PAGE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<CIK> 0000897111
<NAME> HERITAGE SERIES TRUST
<SERIES>
<NUMBER> 3
<NAME> EAGLE INTERNATIONAL EQUITY PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1995
<PERIOD-START> MAY-1-1995
<PERIOD-END> OCT-31-1995
<INVESTMENTS-AT-COST> 9,942,143
<INVESTMENTS-AT-VALUE> 9,904,230
<RECEIVABLES> 333,546
<ASSETS-OTHER> 9,961,543
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 10,295,089
<PAYABLE-FOR-SECURITIES> 137,734
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 186,796
<TOTAL-LIABILITIES> 324,530
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 9,763,993
<SHARES-COMMON-STOCK> 479,563
<SHARES-COMMON-PRIOR> 50
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 244,285
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (37,719)
<NET-ASSETS> 9,970,559
<DIVIDEND-INCOME> 46,873
<INTEREST-INCOME> 26,429
<OTHER-INCOME> 0
<EXPENSES-NET> 83,988
<NET-INVESTMENT-INCOME> (10,686)
<REALIZED-GAINS-CURRENT> 254,971
<APPREC-INCREASE-CURRENT> (37,719)
<NET-CHANGE-FROM-OPS> 206,566
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 493,157
<NUMBER-OF-SHARES-REDEEMED> 13,644
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 9,969,559
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 164,292
<AVERAGE-NET-ASSETS> 6,406,871
<PER-SHARE-NAV-BEGIN> 20.00
<PER-SHARE-NII> (0.03)
<PER-SHARE-GAIN-APPREC> 0.82
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 20.79
<EXPENSE-RATIO> 2.60
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
