As filed with the Securities and Exchange Commission on June 5, 1998
1933 Act File No. 33-57986
1940 Act File No. 811-7470
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ X ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 18 [ X ]
--
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ X ]
Amendment No. 19
--
(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 Massachusetts Avenue, NW
Washington, D.C. 20036
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on January 2, 1998 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date) pursuant to paragraph (a)(1)
[x] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Page 1 of Pages
Exhibit Index Appears on Page
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HERITAGE SERIES TRUST
AGGRESSIVE GROWTH FUND
CONTENTS OF REGISTRATION STATEMENT
This registration document is comprised of the following:
Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Prospectus for the Aggressive Growth Fund
Statement of Additional Information for the Aggressive Growth Fund
Part C of Form N-1A
Signature Page
Exhibits
The sole purpose of this filing is to add a new series of the Trust, the
Aggressive Growth Fund. This filing does not affect the combined Prospectus or
Statement of Additional Information for Class A, Class B, and Class C shares of
Capital Appreciation Trust, Eagle International Equity Portfolio, Growth Equity
Fund, Income-Growth Trust, Mid Cap Growth Fund, Small Cap Stock Fund and Value
Equity Fund. It also does not affect the Eagle International Equity Portfolio
Eagle Class Prospectus and Statement of Additional Information.
<PAGE>
HERITAGE SERIES TRUST
AGGRESSIVE GROWTH FUND
FORM N-1A CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
PART A ITEM NO. PROSPECTUS CAPTION
- --------------- --------------------
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Total Fund Expenses
3. Condensed Financial Information Performance Information
4. General Description of Registrant Cover Page; About the Trust and the Fund;
Investment Objective, Policies and Risk Factors
5. Management of the Fund Management of the Fund
5A. Management's Discussion of Inapplicable
Fund Performance
6. Capital Stock and Other Securities Cover Page; About the Trust and the Fund;
Management of the Fund; Choosing a Class of
Shares; What Class A Shares Will Cost; What Class
B Shares Will Cost; What Class C Shares Will Cost;
Dividends and Other Distributions; Taxes;
Shareholder Information
7. Purchases of Securities Being Offered Net Asset Value; Purchase Procedures; Minimum
Investment Required/Accounts With Low Balances;
Systematic Investment Programs; Retirement Plans;
Choosing a Class of Shares; What Class A Shares
Will Cost; What Class B Shares Will Cost; What
Class C Shares Will Cost; Minimizing the
Contingent Deferred Sales Load; Waiver of the
Contingent Deferred Sales Load; Distribution Plans
8. Redemption or Repurchase Minimum Investment Required/Accounts With Low
Balances; Minimizing the Contingent Deferred Sales
Load; Waiver of the Contingent Deferred Sales
Load; How to Redeem Shares; Receiving Payment;
Exchange Privilege
<PAGE>
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
12. General Information and History General Information
13. Investment Objectives and Policies Investment Information; Investment Limit-ations
14. Management of the Fund Fund Information-Management of the Fund
15. Control Persons and Principal Holders Fund Information-Management of the Fund
of Securities
16. Investment Advisory and Other Services Fund Information-Management of the Fund,
-Investment Adviser and Administrator;
-Subadviser; -Distribution of Shares;
-Administration of the Fund
17. Brokerage Allocation Fund Information-Brokerage Practices
18. Capital Stock and Other Securities General Information; Fund Information -Management
of the Fund; -Potential Liability; Conversion of
Class B Shares
19. Purchase, Redemption and Pricing of Net Asset Value; Investing in the Fund; Redeeming
Securities Being Offered Shares; Exchange Privilege; Conversion of Class B
Shares
20. Tax Status Conversion of Class B Shares; Taxes
21. Underwriters Fund Information - Distribution of Shares
22. Calculation of Performance Data Performance Information
23. Financial Statements Inapplicable
</TABLE>
PART C
- ------
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>
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED __________ __, 1998
[REDHERRING] INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
HERITAGE
-----------------
SERIES TRUST(TRADEMARK)
-----------------
AGGRESSIVE GROWTH FUND
Heritage Series Trust-Aggressive Growth Fund (the "Fund") is a mutual fund
seeking long-term capital appreciation. The Fund seeks to achieve its investment
objective by investing primarily in the equity securities of companies that the
Fund's portfolio manager believes have significant growth potential.
The Fund offers Class A shares (sold subject to a 4.75% maximum front-end
sales load) ("Class A shares"), Class B shares (sold subject to a 5% maximum
contingent deferred sales load, declining over a six-year period) ("Class B
shares") and Class C shares (sold subject to a 1% contingent deferred sales
load) ("Class C shares"). The Fund requires a minimum initial investment of
$1,000, except for certain investment plans for which lower limits may apply.
This Prospectus contains information that should be read before investing in
the Fund and should be kept for future reference. A Statement of Additional
Information ("SAI") dated , 1998 relating to the Class A, Class B and Class C
shares of the Fund has been filed with the Securities and Exchange Commission
and is incorporated by reference in this Prospectus. A copy of the SAI is
available free of charge and shareholder inquiries can be made by writing to
Heritage Asset Management, Inc. or by calling (800) 421-4184.
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.
HERITAGE
ASSET MANAGEMENT, INC.
Registered Investment Advisor--SEC
880 Carillon Parkway
St. Petersburg, Florida 33716
(800) 421-4184
Prospectus Dated ________________, 1998
<PAGE>
TABLE OF CONTENTS
==============================================================================
GENERAL INFORMATION..........................................................1
Total Fund Expenses........................................................1
Investment Objective, Policies and Risk Factors............................2
Net Asset Value............................................................5
Performance Information....................................................6
INVESTING IN THE FUND........................................................7
Purchase Procedures........................................................7
Minimum Investment Required/Accounts With Low Balances.....................9
Systematic Investment Programs.............................................9
Retirement Plans...........................................................9
Choosing a Class of Shares................................................10
What Class A Shares Will Cost.............................................11
What Class B Shares Will Cost.............................................12
What Class C Shares Will Cost.............................................13
Minimizing the Contingent Deferred Sales Load.............................14
Waiver of the Contingent Deferred Sales Load..............................14
How to Redeem Shares......................................................14
Receiving Payment.........................................................16
Exchange Privilege........................................................17
MANAGEMENT OF THE FUND......................................................18
Board of Trustees.........................................................18
Investment Adviser, Fund Accountant, Administrator and Transfer Agent.....18
Subadviser................................................................18
Portfolio Management......................................................19
Brokerage Practices.......................................................19
SHAREHOLDER AND ACCOUNT POLICIES............................................19
Dividends and Other Distributions.........................................19
Distribution Plans........................................................20
Taxes.....................................................................21
About the Trust and the Fund..............................................21
Shareholder Information...................................................22
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GENERAL INFORMATION
TOTAL FUND EXPENSES
-------------------------------------------------------------
The following tables are intended to assist investors in
understanding the expenses associated with investing in each
class of shares of the Fund. Because the Fund's shares were not
offered for sale prior to the date of this Prospectus, all
annual operating expenses, including other expenses, are based
on estimated expenses.
SHAREHOLDER TRANSACTION EXPENSES:
CLASS A CLASS B CLASS C
------- ------- -------
Maximum Sales Load Imposed 4.75% None None
on Purchases (as a % of
offering price)
Maximum Contingent None 5%* 1%**
Deferred Sales Load (as a
% of original purchase
price or redemption
proceeds, whichever is
lower)
Wire Redemption Fee (per $5.00 $5.00 $5.00
transaction)
----------
* Declining over a six-year period as follows: 5% during the
first year, 4% during the second year, 3% during the third
and fourth years, 2% during the fifth year, 1% during the
sixth year and 0% thereafter. Class B shares will convert to
Class A shares eight years after purchase. See "What Class B
Shares Will Cost" below for a further discussion.
** Declining to 0% at the first year.
ANNUAL OPERATING EXPENSES:
CLASS A CLASS B CLASS C
------- ------- -------
Management fee (after fee 0.85% 0.85% 0.85%
waiver)
12b-1 fees 0.25% 1.00% 1.00%
Other expenses 0.55% 0.55% 0.55%
----- ----- -----
Total Fund operating 1.65% 2.40% 2.40%
expenses (after fee waiver) ===== ===== =====
The Fund's manager, Heritage Asset Management, Inc. (the
"Manager" or "Heritage"), voluntarily will waive its fees and,
if necessary, reimburse the Fund to the extent that Class A
annual operating expenses exceed 1.65% of the average daily net
assets and to the extent that Class B and Class C annual
operating expenses exceed 2.40% of the average daily net assets
attributable to that class for the fiscal year ending October
31, 1998. Absent such fee waivers, "Management fee" and "Total
Fund operating expenses" are expected to be 1.00% and 1.80%,
respectively, for Class A shares and 1.00% and 2.55%,
respectively, for Class B and Class C shares.
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EXAMPLES OF THE EFFECT OF FUND EXPENSES:
The impact of Fund operating expenses on earnings is
illustrated in the examples below assuming a hypothetical $1,000
investment and a 5% annual rate of return.
1 YEAR 3 YEARS
------ -------
Class A shares................. $63 $97
Class B shares (assuming sale
of all shares at end of
period) ...................... $74 $105
Class B shares (assuming no
sale of shares)................ $24 $75
Class C shares................. $24 $75
This is an illustration only and should not be considered a
representation of future expenses. Actual expenses and
performance may be greater or less than that shown above. The
purpose of the above tables is to assist investors in
understanding the various costs and expenses that will be borne
directly or indirectly by shareholders. Due to the imposition of
Rule 12b-1 fees, it is possible that long-term shareholders of
the Fund may pay more in total sales charges than the economic
equivalent of the maximum front-end sales load permitted by the
rules of the National Association of Securities Dealers, Inc.
For a further discussion of these costs and expenses, see
"Management of the Fund" and "Distribution Plans."
INVESTMENT OBJECTIVE, POLICIES AND RISK FACTORS
================================================================
BECAUSE THE The Fund's investment objective is long-term capital
FUND INVESTS appreciation. The Fund seeks to achieve this objective by
PRIMARILY IN investing primarily in the equity securities of companies that,
GROWTH in the opinion of the subadviser, Eagle Asset Management, Inc.
COMPANIES, THE ("Eagle" or the "Subadviser"), have significant growth potential
VALUE OF YOUR ("growth companies"). Current dividend income is only an
INVESTMENT MAY incidental consideration. The Fund is designed for aggressive
FLUCTUATE MORE investors who are willing to assume more volatility and
SHARPLY THAN investment risk than an investment in an ordinary capital
INVESTMENTS IN appreciation fund or a small capitalization fund. There can be
OTHER FUNDS. no assurance that the Fund's investment objective will be
YOU CAN LOSE achieved.
MONEY BY
INVESTING IN Eagle will pursue a flexible investment strategy in the
THE FUND. selection of equity securities of growth companies. Growth
companies frequently are characterized by above-average earnings
or sales growth and retention of earnings. In addition, growth
companies often command higher price to earnings ratios than the
securities of other companies. They are not limited to any
particular investment sector, industry or company size.
While Eagle believes that the growth companies in which the
Fund invests offer greater opportunities for capital
appreciation than that of the market averages, investment in
growth companies entails significant risks that you should
consider before investing. The prices of growth company
securities may rise and fall dramatically based, in part, on
investors' perceptions of the company rather than on fundamental
analysis of the securities. Investing in growth companies also
may involve more risk because these companies may have no
earnings or have experienced losses. In certain cases, Eagle may
identify a company as a growth company based on a belief that
actual or anticipated products or services will produce future
earnings. If the company fails to realize these products or
services, the price of its securities may decline sharply and
become less liquid.
The Fund will invest, under normal market conditions, at
least 65% of its total assets in equity securities. Equity
securities in which the Fund may invest include common stocks,
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preferred stocks, securities convertible into either common
stock or preferred stock, and warrants and rights exercisable
for equity securities. The Fund also may invest in American
Depository Receipts ("ADRs") and Real Estate Investment Trusts
("REITs"). The Fund may invest the remainder of its total assets
in U.S. Government securities, repurchase agreements or other
short-term money market instruments.
INVESTING IN The Fund will invest a majority of its assets in equity
SMALL AND securities of small and medium size companies, although the Fund
MEDIUM SIZE may invest a portion of its assets in securities of larger
COMPANIES MAY corporations that it believes have significant growth potential.
INVOLVE SPECIAL While small and medium size companies generally may have
OPPORTUNITIES potential for rapid growth, these investments often involve
AND RISKS. greater risks than investments in larger, more established
companies because small and medium companies may lack the
management experience, financial resources, product
diversification and competition strengths of larger companies.
The Fund may invest up to 10% of its net assets in foreign
securities (including depository receipts). The Fund may invest
in other investment companies, including index securities such
as Standard & Poor's Depositary Receipts and Standard & Poor's
MidCap 400 Depositary Receipts. The Fund also may invest up to
15% of its net assets in illiquid securities. The Fund may
purchase or sell a security without regard to the length of time
the security will be or has been held. Although the Fund will
not trade primarily for short-term profits, it may make
investments with potential for short-term appreciation when such
action is deemed desirable and in the best interest of the Fund.
For a discussion of these investments, see the SAI.
The Fund's investment objective is fundamental and may not
be changed without the vote of a majority of the outstanding
voting securities of the Fund, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act"). Except as
otherwise noted, all policies of the Fund described in this
Prospectus may be changed by the Board of Trustees without
shareholder approval. The SAI contains more detailed information
about the Fund's investment policies and risks.
Following is description of the significant policies and
risk factors that are applicable to the Fund:
AMERICAN DEPOSITORY RECEIPTS. The Fund may invest in ADRs,
which typically are issued by a U.S. bank or trust company and
evidence ownership of the underlying securities of foreign
issuers. Generally, ADRs are denominated in U.S. dollars and are
designed for use in the U.S. securities markets. Thus, these
securities are not denominated in the same currency as the
securities into which they may be converted. ADRs are subject to
many of the risks inherent in investing in foreign securities,
as described below. For a further discussion of ADRs and other
types of depository receipts, see the SAI.
CONVERTIBLE SECURITIES; RISK OF INVESTMENT IN LOWER RATED
CONVERTIBLE SECURITIES. The Fund may invest in convertible
securities rated investment grade and up to 5% of its net assets
in convertible securities rated below investment grade. A
convertible security is a bond, debenture, note, preferred stock
or other security that may be converted into or exchanged for a
prescribed amount of common stock of the same or a different
issue within a particular period of time at a specified price or
formula. A convertible security entitles the holder to receive
interest paid or accrued on debt or dividends paid on preferred
stock until the convertible stock matures or is redeemed,
converted or exchanged. Convertible securities have unique
investment characteristics in that they generally have higher
yields than common stocks, but lower yields than comparable
nonconvertible securities, are less subject to fluctuation in
value than the underlying stock because they have fixed-income
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characteristics and provide the potential for capital
appreciation if the market price of the underlying common stock
increases.
Investment grade securities include securities rated BBB or
above by Standard & Poor's ("S&P") or Baa by Moody's Investor
Services ("Moody's") or, if unrated, are 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
are more likely to lead to a weakened capacity to pay interest
and repay principal than is the case with higher grade bonds.
The Fund may retain a security that has been downgraded below
investment grade if, in the opinion of the Subadviser, it is in
the Fund's best interest.
As described above, the Fund may invest in convertible
securities rated below investment grade by S&P or Moody's, or
unrated convertible 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 investment grade and lower-rated
securities and the Appendix to the SAI for a description of S&P
and Moody's corporate bond ratings.
Lower-rated securities (commonly referred to as "junk
bonds") generally offer a higher current yield than that
available for higher-grade issues. However, lower-rated
securities involve higher risks, in that they are especially
subject to adverse changes in general economic conditions and in
the industries in which the issuers are engaged, to changes in
the financial condition of the issuers and to price fluctuations
in response to changes in interest rates. During periods of
economic downturn or rising interest rates, highly leveraged
issuers may experience financial stress that could affect
adversely their ability to make payments of interest and
principal and increase the possibility of default. In addition,
the market for lower rated securities has expanded rapidly in
recent years, and its growth paralleled a long economic
expansion. The market for lower-rated securities generally is
thinner and less active than that for higher-quality securities,
which may limit the Fund's ability to sell such securities at
fair value in response to changes in the economy or financial
markets. Adverse publicity and investor perceptions, whether or
not based on fundamental analysis, also may decrease the values
and liquidity of lower-rated securities, especially in a thinly
traded market.
FOREIGN SECURITIES. The Fund may invest in foreign
securities. 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 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 generally are 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 foreign currency denominated securities.
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REAL ESTATE INVESTMENT TRUSTS. The Fund may invest in REITs,
including equity REITs, which own real estate properties, and
mortgage REITs, which make construction, development and
long-term mortgage loans. The value of an equity REIT may be
affected by changes in the value of the underlying property,
while a mortgage REIT may be affected by the quality of the
credit extended. The performance of both types of REITs depends
upon conditions in the real estate industry, management skills
and the amount of cash flow. The risks associated with REITs
include defaults by borrowers, self-liquidation, failure to
qualify as a pass-through entity under the Federal tax law,
failure to qualify as an exempt entity under the 1940 Act, and
the fact that REITs are not diversified.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase
agreements. Repurchase agreements are transactions in which the
Fund 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 agreements carry
certain risks not associated with direct investment in
securities, including possible declines in the market value of
the underlying securities and delays and costs to the Fund if
the other party becomes bankrupt, the Fund intends to enter into
repurchase agreements only with banks and dealers in
transactions believed by the Subadviser to present minimal
credit risks in accordance with guidelines established by the
Board of Trustees.
TEMPORARY DEFENSIVE PURPOSES. For temporary defensive
purposes during anticipated periods of general market decline,
the Fund may invest up to 100% of its net assets in money market
instruments, including securities issued by the U.S. Government,
its agencies or instrumentalities and repurchase agreements
secured thereby, as well as bank certificates of deposit and
banker's acceptances issued by banks having net assets of at
least $1 billion as of the end of their most recent fiscal year,
high-grade commercial paper, and other long- and short-term debt
instruments that are rated A or higher by S&P or Moody's. For a
description of S&P or Moody's commercial paper and corporate
debt ratings, see the Appendix to the SAI.
NET ASSET VALUE
================================================================
THE NET ASSET The net asset value of the Fund's shares fluctuates and is
VALUE OF THE determined separately for each class as of the close of regular
FUND'S SHARES trading - normally 4:00 p.m. Eastern time - of the New York
IS CALCULATED Stock Exchange ("Exchange") each day it is open. The Fund's net
DAILY AS OF asset value per share is calculated by dividing the value of the
THE CLOSE OF total assets, less liabilities, by the total number of Fund
REGULAR shares outstanding. The per share net asset value of each class
TRADING ON THE of shares may differ as a result of the different daily expense
NEW YORK STOCK accruals applicable to that class.
EXCHANGE.
The Fund values its securities and other assets based on
their market value based on the last sales price as reported by
the principal securities exchange on which the securities are
traded. If no sale is reported, market value is based on the
most recent quoted bid price. In the absence of a readily
available market quote, or if the Manager or the Subadviser has
reason to question the validity of market quotations it
receives, securities and other assets are valued using such
methods as the Board of Trustees believes would reflect fair
value. Short-term investments that will mature in 60 days or
less are valued at amortized cost, which approximates market
value. Securities that are quoted in a foreign currency will be
Page 5
<PAGE>
valued daily in U.S. dollars at the foreign currency exchange
rate prevailing at the time the Fund calculates its net asset
value per share.
Trading in foreign markets is usually completed each day
prior to the close of the Exchange. However, events may occur
that affect the values of such securities and the exchange rates
between the time of valuation and the close of the Exchange.
Should events materially affect the value of such securities
during the period, the securities are priced at fair value, as
determined in good faith and pursuant to procedures approved by
the Board.
For more information on the calculation of net asset value,
see `Net Asset Value" in the SAI.
PERFORMANCE INFORMATION
================================================================
Total return data of each class from time to time may be
included in advertisements about the Fund. Performance
information is computed separately for each class in accordance
with the methods described below. Because Class B shares and
Class C shares bear higher Rule 12b-1 fees, the performance of
Class B shares and Class C shares of the Fund likely will be
lower than that of Class A shares.
Total return with respect to a class for the one-, five- and
ten-year periods or, if such periods have not yet elapsed, the
period since the establishment of that class through the most
recent calendar quarter represents the average annual compounded
rate of return on an investment of $1,000 in that class at the
public offering price (in the case of Class A shares, giving
effect to the maximum initial sales load of 4.75% and, in the
case of Class B shares and Class C shares, giving effect to the
deduction of any contingent deferred sales load ("CDSL") that
would be payable). In addition, the Fund may advertise its total
return in the same manner, but without taking into account the
initial sales load or CDSL. The Fund also may advertise total
return calculated without annualizing the return, and total
return may be presented for other periods. By not annualizing
the returns, the total return calculated in this manner simply
will reflect the increase in net asset value per Class A share,
Class B share and Class C share over a period of time, adjusted
for dividends and other distributions. Class A share, Class B
share and Class C share performance may be compared with various
indices.
All data is based on the Fund'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 Fund's investment portfolio
and the Fund's operating expenses. Investment performance also
often reflects the risks associated with the Fund's investment
objective and policies. These factors should be considered when
comparing the Fund's investment results to those of other mutual
funds and other investment vehicles.
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INVESTING IN THE FUND
PURCHASE PROCEDURES
================================================================
HOW TO BUY Shares of the Fund will be offered continuously once the
SHARES: Fund commences operations through the Fund's principal
underwriter, Raymond James & Associates, Inc. (the
"Distributor"), and through other participating dealers or banks
that have dealer agreements with the Distributor. The
Distributor receives commissions consisting of that portion of
the sales load remaining after the dealer concession is paid to
participating dealers or banks. Such dealers may be deemed to be
underwriters pursuant to the Securities Act of 1933, as amended.
For a discussion of the classes of shares offered by the Fund,
see "Choosing a Class of Shares."
When placing an order to buy shares, you should specify
whether the order is for Class A shares, Class B shares or Class
C shares of the Fund. All purchase orders that fail to specify a
class automatically will be invested in Class A shares, which
include a front-end sales load. The Fund and the Distributor
reserve the right to reject any purchase order and to suspend
the offering of Fund shares for a period of time. Certificates
will not be issued for Class B shares.
INITIAL OFFERING OF SHARES
. SUBSCRIPTIONS The Fund initially will offer its shares for sale during a
FOR SHARES period scheduled to end at the close of business on August 20,
WILL BE 1998 (the "Initial Offering Period"). During this period, shares
ACCEPTED will be offered through the Distributor, participating dealers
DURING AN or participating banks at a price of $14.29 per Class A share,
INITIAL plus the applicable sales load with a maximum offering price of
OFFERING $15.00 per share, and $14.29 per Class B share and Class C
PERIOD. share. The Fund reserves the right to extend the Initial
Offering Period.
During the Initial Offering Period, a Financial Advisor of
the Distributor, a participating dealer or a participating bank
("Financial Advisor") may obtain subscription orders.
Subscriptions for shares will be accepted through the last day
of the Initial Offering Period. On the third business day after
the close of the Initial Offering Period (the "Closing Date"),
subscriptions will be due and payable, shares will be issued,
and the Fund will commence investment operations. To the extent
that payment is made to the Distributor or a Financial Advisor
prior to the Closing Date, such persons may benefit from the
temporary use of funds. The Fund reserves the right to withdraw,
cancel or modify the offering of shares during the Initial
Offering Period without notice and the Fund reserves the right
to refuse any order in whole or in part, if the Fund determines
that it is in the best interests to do so.
During the Initial Offering Period, shares of the Fund may
be purchased by:
. placing an order for Fund shares with your Financial
Advisor
. making payment within three business days of purchase to
the Distributor or a Financial Advisor
. by placing an order to exchange from an existing account
in any other another registered mutual fund advised or
administered by the Manager ("Heritage Mutual Fund") on
the Closing Date.
Page 7
<PAGE>
CONTINUOUS OFFERING OF SHARES
YOU MAY BUY When the Fund commences continuous offering of its shares,
SHARES OF THE shares of the Fund may be purchased by placing an order for Fund
FUND ONCE shares with your Financial Advisor and remitting payment to the
SHARES ARE Distributor, participating dealer or bank within three business
OFFERED days.
CONTINUOUSLY
BY: All purchase orders received by the Distributor prior to
the close of regular trading on the Exchange - generally 4:00
p.m., Eastern time - will be executed at that day's offering
. CALLING price. Purchase orders received by your Financial Advisor prior
YOUR to the close of regular trading on the Exchange and transmitted
FINANCIAL to the Distributor before 5:00 p.m. Eastern time, on that day
ADVISOR; also will receive that day's offering price. Otherwise, all
purchase orders accepted after the offering price is determined
will be executed at the offering price determined as of the
. COMPLETING close of regular trading on the Exchange on the next trading
THE ACCOUNT day. See "What Class A Shares Will Cost," "What Class B Shares
APPLICATION Will Cost" and "What Class C Shares Will Cost."
CONTAINED IN
THIS You also may purchase shares of the Fund directly by
PROSPECTUS completing and signing the Account Application found in this
AND SENDING Prospectus and mailing it, along with your payment, to Heritage
YOUR CHECK; Series Trust - Aggressive Growth Fund, P.O. Box 33022, St.
OR Petersburg, FL 33733. Indicate the class of shares and the
amount you wish to invest. Your check should be made payable to
the Fund and class of shares you are purchasing.
. SENDING A Shares may be purchased with Federal funds (a commercial
FEDERAL bank's deposit with the Federal Reserve Bank that can be
FUNDS WIRE. transferred to another member bank on the same day) sent by
Federal Reserve or bank wire to:
State Street Bank and Trust Company
Boston, Massachusetts
ABA #011-000-028
Account # 3196-769-8
Heritage Series Trust - Aggressive Growth Fund
The class of shares to be purchased
(Your Account Number Assigned by the Fund)
(Your Name)
To open a new account with Federal funds or by wire, you
must contact the Manager or your Financial Advisor to obtain a
Heritage Mutual Fund account number. Commercial banks may elect
to charge a fee for wiring funds to State Street Bank and Trust
Company. For more information on how to buy shares, see
"Investing in the Fund" in the SAI.
Page 8
<PAGE>
MINIMUM INVESTMENT REQUIRED/ACCOUNTS WITH LOW BALANCES
================================================================
AN INITIAL Except as provided under "Systematic Investment Programs,"
INVESTMENT the minimum initial investment in the Fund is $1,000, and a
MUST BE AT minimum account balance of $500 must be maintained. These
LEAST $1,000. minimum requirements may be waived at the discretion of the
A MINIMUM Manager. In addition, initial investments in Individual
BALANCE OF Retirement Accounts ("IRAs") may be reduced or waived under
$500 MUST BE certain circumstances. Contact the Manager or your Financial
MAINTAINED. Advisor for further information.
Due to the high cost of maintaining accounts with low
balances, it is currently the Fund's policy to redeem Fund
shares in any account if the account balance falls below the
required minimum value of $500, except for retirement accounts.
You will be given 30 days' notice to bring your account balance
to the minimum required or the Fund may redeem shares in the
account and pay you the proceeds. The Fund does not apply this
minimum account balance requirement to accounts that fall below
the minimum due to market fluctuation.
SYSTEMATIC INVESTMENT PROGRAMS
================================================================
THE FUND A variety of systematic investment options are available
OFFERS for the purchase of Fund shares. These options provide for
INVESTORS A systematic monthly investments of $50 or more through systematic
VARIETY OF investing, payroll or government direct deposit, or exchange
CONVENIENT from another registered mutual fund advised or administered by
FEATURES AND Heritage ("Heritage Mutual Fund"). You may change the amount to
BENEFITS, be invested automatically or may discontinue this service at any
INCLUDING time without penalty. If you discontinue this service before
DOLLAR COST reaching the required account minimum, the account must be
AVERAGING. brought up to the minimum in order to remain open. You will
receive a periodic confirmation of all activity for your
account. For additional information on these options, see the
Account Application or contact the Manager at (800) 421-4184 or
your Financial Advisor.
RETIREMENT PLANS
================================================================
Share of the Fund may be purchased as an investment in
Heritage IRA plans. In addition, shares may be purchased as an
investment for self-directed IRAs, Section 403(b) annuity plans,
defined contribution plans, self-employed individual retirement
plans ("Keogh Plans"), Simplified Employee Pension Plans
("SEPs"), Savings Incentive Match Plans for Employees
("SIMPLEs") and other retirement plans. For more detailed
information on retirement plans, contact the Manager at (800)
421-4184 or your Financial Advisor and see "Investing in the
Fund" in the SAI.
Page 9
<PAGE>
CHOOSING A CLASS OF SHARES
================================================================
The Fund offers three classes of shares, Class A shares,
Class B shares and Class C shares. The primary difference among
these classes lies in their sales load structures and ongoing
expenses.
. CLASS A SHARES. Class A shares may be purchased at a price
equal to their net asset value per share next determined
after receipt of an order, plus a maximum sales load of
4.75% imposed at the time of purchase. No CDSL is charged
for Class A shares. Ongoing Rule 12b-1 fees for Class A
shares are lower than the ongoing Rule 12b-1 fees for Class
B shares and Class C shares.
. CLASS B SHARES. Class B shares may be purchased at net
asset value with no initial sales charge. As a result, the
entire amount of your purchase is invested immediately.
Class B shares are subject to higher ongoing Rule 12b-1
fees than Class A shares. A maximum CDSL of 5% may be
imposed on redemptions of Class B shares made within six
years of purchase. After eight years, Class B shares
convert to Class A shares, which have lower ongoing Rule
12b-1 fees and no CDSL.
. CLASS C SHARES. Class C shares may be purchased at net
asset value with no initial sales charge. As a result, the
entire amount of your purchase is invested immediately.
Class C shares are subject to higher ongoing Rule 12b-1
fees than Class A shares. A maximum CDSL of 1% may be
imposed on redemptions of Class C shares made in less than
one year of purchase. Class C shares do not convert to any
other class of shares.
The purchase plans offered by the Fund enable you to c
the class of shares that you believe will be most benef
given the amount of your intended purchase, the length of
you expect to hold the shares and other circumstances.
YOU SHOULD You should consider whether, during the anticipated length
CHOOSE A SHARE of your intended investment in the Fund, the accumulated ongoing
CLASS THAT Rule 12b-1 fees plus the CDSL on Class B shares and Class C
MEETS YOUR shares would exceed the initial sales load plus accumulated
INVESTMENT ongoing Rule 12b-1 fees on Class A shares purchased at the same
OBJECTIVES. time. For short-term investments, Class A shares are subject to
PLEASE CONSULT higher costs than Class B shares and Class C shares because of
WITH YOUR the initial sales charge. For longer investments, Class A shares
FINANCIAL are more suitable than Class B shares and Class C shares because
ADVISOR. Class A shares are subject to lower ongoing Rule 12b-1 fees.
Depending on the number of years you hold Class A shares, the
continuing Rule 12b-1 fees on Class B shares or Class C shares
eventually would exceed the initial sales load plus the ongoing
Rule 12b-1 fees on Class A shares during the life of your
investment.
You might determine that it would be more advantageous to
purchase Class B shares or Class C shares in order to invest all
of your purchase payment initially. However, your investment
would remain subject to higher ongoing Rule 12b-1 fees and
subject to a CDSL if you redeem Class B shares during the first
six years after purchase and Class C shares less than one year
after purchase. Another factor to consider is whether the
potentially higher yield of Class A shares due to lower ongoing
charges will offset the initial sales load paid on such shares.
Page 10
<PAGE>
If you purchase sufficient shares to qualify for a reduced
sales load, you may prefer to purchase Class A shares because
similar reductions are not available for purchases of Class B
shares or Class C shares. For example, if you intend to invest
more than $1,000,000 in the Fund, you should purchase Class A
shares to take advantage of the sales load waiver.
Financial Advisors may receive different compensation for
sales of Class A shares than sales of Class B shares or Class C
shares.
WHAT CLASS A SHARES WILL COST
================================================================
THE SALES LOAD The Fund's public offering price for Class A shares is the
ON CLASS A next determined net asset value per share plus a sales load
SHARES WILL determined in accordance with the following schedule:
VARY DEPENDING
ON THE AMOUNT
YOU INVEST.
SALES LOAD AS A PERCENTAGE OF
Net Amount
Invested
Offering (Net Asset Dealer
Amount Of Purchase Price Value) Reallowance(1)
------------------ ----- ------ --------------
Less than $25,000 4.75% 4.99% 4.25%
$25,000-$49,999 4.25% 4.44% 3.75%
$50,000-$99,999 3.75% 3.90% 3.25%
$l00,000-$249,999 3.25% 3.36% 2.75%
$250,000-$499,999 2.50% 2.56% 2.00%
$500,000-$999,999 1.50% 1.52% 1.25%
$1,000,000 and over 0.00% 0.00% 0.00%(2)
-----------------------------------
(1)During certain periods, the Distributor may pay 100% of the
sales load to participating dealers. Otherwise, it will pay
the dealer concession shown above.
(2)For purchases of $1 million or more, the Manager may pay
from its own resources up to 1.00% of the purchase amount on
the first $3 million and 0.80% on assets thereafter. This
amount will be paid to the Distributor pro rata over an
18-month period.
In addition, Class A shares are subject to a Rule 12b-1 fee of
0.25% of their respective average daily net assets.
THE SALES LOAD Class A shares may be sold at net asset value without any
ON CLASS A sales load to: the Manager and Eagle; current and retired
SHARES MAY BE officers and Trustees of the Heritage Series Trust; directors,
WAIVED UNDER officers and full-time employees of the Manager, Eagle, the
CERTAIN subadviser of any Heritage Mutual Fund, the Distributor and
CIRCUMSTANCES. their affiliates; registered Financial Advisors and employees of
broker-dealers that are parties to dealer agreements with the
Distributor (or financial institutions that have arrangements
with such broker-dealers); directors, officers and full-time
employees of banks that are party to agency agreements with the
Distributor, and all such persons' immediate relatives and their
beneficial accounts. In addition, the American Psychiatric
Association has entered into an agreement with the Distributor
that allows its members to purchase Class A shares at a sales
load equal to two-thirds of the percentages in the above table.
The dealer concession also will be adjusted in a like manner.
Class A shares also may be purchased without sales loads by
investors who participate in certain broker-dealer wrap fee
investment programs.
Page 11
<PAGE>
COMBINED PURCHASE PRIVILEGE (RIGHT OF ACCUMULATION)
YOU MAY You may qualify for the sales load reductions indicated in
QUALIFY FOR the above sales load schedule by combining purchases of Class A
A REDUCED shares into a single "purchase" if the resulting "purchase"
SALES totals at least $25,000. For additional information regarding
LOAD BY the Combined Purchase Privilege, see the Account Application or
COMBINING "Investing in the Fund" in the SAI.
PURCHASES.
STATEMENT OF INTENTION
A STATEMENT OF You also may obtain the reduced sales loads shown in the
INTENTION above sales load schedule by means of a written Statement of
ALLOWS YOU TO Intention, which expresses your intention to invest not less
REDUCE THE than $25,000 within a period of 13 months in Class A shares of
SALES LOAD ON the Fund or Class A shares of any other Heritage Mutual Fund
COMBINED subject to a sales load ("Statement of Intention"). If you
PURCHASES OF qualify for the Combined Purchase Privilege, you may purchase
$25,000 OR Class A shares of the Heritage Mutual Funds under a single
MORE OVER ANY Statement of Intention. In addition, if you own Class A shares
13-MONTH of any other Heritage Mutual Fund subject to a sales load, you
PERIOD. may include those shares in computing the amount necessary to
qualify for a sales load reduction. The Statement of Intention
is not a binding obligation upon the investor to purchase the
full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. If you would like
to enter into a Statement of Intention in conjunction with your
initial investment in Class A shares of the Fund, please
complete the appropriate portion of the Account Application
found in this Prospectus. Current Fund shareholders can obtain a
Statement of Intention from the Manager or the Distributor at
the address or telephone number listed on the cover of this
Prospectus or from their Financial Advisor.
For more information on the reduction or waiver of the sales
load, see "Investing in the Fund" in the SAI.
WHAT CLASS B SHARES WILL COST
=============================================================
THE CDSL Class B shares may be purchased at net asset value without
IMPOSED ON a front-end sales charge, but are subject to a 5% maximum CDSL
REDEMPTIONS OF on redemption of Class B shares held for less than a six-year
CLASS B SHARES period. In addition, Class B shares are subject to a Rule 12b-1
WILL DEPEND ON fee of 1.00% of their respective average daily net assets. Class
THE AMOUNT OF B shares are offered for sale only for purchases of less than
TIME YOU HAVE $250,000.
HELD CLASS B
SHARES. The CDSL imposed on redemptions of Class B shares will be
calculated by multiplying the offering price (net asset value at
THE CDSL, IF the time of purchase) or the net asset value of the shares at
APPLICABLE, IS the time of redemption, whichever is less, by the percentage
BASED ON THE shown on the following chart. The CDSL will not be imposed on
LOWER OF the redemption of Class B shares acquired as dividends or other
PURCHASE PRICE distributions, or on any increase in the net asset value of the
OR REDEMPTION redeemed Class B shares above the original purchase price. Thus,
PRICE. the CDSL will be imposed on the lower of net asset value or
purchase price.
CDSL as a Percentage
of the Lesser of Net Asset Value
at Redemption or the
Redemption During: Original Purchase Price
------------------ -----------------------
1st year since purchase 5%
2nd year since purchase 4%
3rd year since purchase 3%
4th year since purchase 3%
5th year since purchase 2%
6th year since purchase 1%
Thereafter 0%
Page 12
<PAGE>
The CDSL imposed depends on the amount of time you have
held Class B shares. For example, if you invest $10,000 in the
Fund's Class B shares and redeem those shares within one year of
investment you will be charged a CDSL of 5% or $500. If you own
Class B shares for more than six years, you do not have to pay a
sales charge when redeeming those shares. Any period of time
during which Class B shares are held in the Heritage Cash
Trust-Money Market Fund ("Money Market Fund") will be excluded
from calculating the holding period. Class B shares of the Money
Market Fund obtained through an exchange from another Heritage
Mutual Fund are subject to any applicable CDSL due at
redemption.
Under certain circumstances, the CDSL will be waived. See
"Waiver of the Contingent Deferred Sales Load" below.
CLASS B SHARES Class B shares will convert to Class A shares eight years
WILL CONVERT after the end of the calendar month in which the shareholder's
TO CLASS A order to purchase was accepted. The conversion will be effected
SHARES IF YOU at the net asset value per share. Dividends and other
HAVE HELD THEM distributions paid to shareholders by the Fund in the form of
FOR MORE THAN additional Class B shares also will convert to Class A shares on
EIGHT YEARS. a pro rata basis. A conversion to Class B shares will benefit
the shareholder because Class A shares have lower ongoing Rule
12b-1 fees than Class B shares. If you have exchanged Class B
shares between Heritage Mutual Funds, the length of the holding
period will be calculated from the date of original purchase,
excluding any periods during which you held Class B shares of
the Money Market Fund. Such conversion will not be treated as a
taxable event.
The Distributor may pay sales commissions to dealers who
sell the Fund's Class B shares at the time of the sale. Payments
with respect to Class B shares will equal 4% of the purchase
price of the Class B shares.
WHAT CLASS C SHARES WILL COST
================================================================
A CDSL WILL BE A CDSL of 1% is imposed on Class C shares if, less than one
IMPOSED ON THE year from the date of purchase, you redeem an amount that causes
REDEMPTION OF the current value of your account to fall below the total dollar
CLASS C SHARES amount of Class C shares purchased subject to the CDSL. The CDSL
IF YOU HAVE will not be imposed on the redemption of Class C shares acquired
HELD THEM FOR as dividends or other distributions, or on any increase in the
LESS THAN ONE net asset value of the redeemed Class C shares above the
YEAR. original purchase price. Thus, the CDSL will be imposed on the
lower of net asset value or purchase price. Class C shares will
THE CDSL, IF not convert to Class A shares. In addition, Class C shares are
APPLICABLE, IS subject to a Rule 12b-1 fee of 1.00% of their respective average
BASED ON THE daily net assets.
LOWER OF
PURCHASE PRICE Under certain circumstances, the CDSL will be waived. See
OR REDEMPTION "Waiver of the Contingent Deferred Sales Load" below.
PRICE.
The Distributor may pay sales commissions to dealers who
sell the Fund's Class C shares at the time of the sale. Payments
with respect to Class C shares will equal 1% of the purchase
price of the Class C shares.
MINIMIZING THE CONTINGENT DEFERRED SALES LOAD
================================================================
When you redeem Class B shares and Class C shares, the Fund
automatically will minimize the CDSL by assuming you are
selling:
Page 13
<PAGE>
. First, Class B shares or Class C shares owned through
reinvested dividends, upon which no CDSL is imposed; and
. Second, Class B shares or Class C shares held in the
customer's account the longest.
WAIVER OF THE CONTINGENT DEFERRED SALES LOAD
=============================================================
THE CDSL ON The CDSL for Class B shares and Class C shares currently is
CLASS B waived for: (1) any partial or complete redemption in connection
SHARES AND with a distribution without penalty under Section 72(t) of the
CLASS C Internal Revenue Code of 1986, as amended (the "Code"), from a
SHARES WILL qualified retirement plan, including a Keogh Plan or IRA upon
BE WAIVED attaining age 70 1/2; (2) any redemption resulting from a
FOR CERTAIN tax-free return of an excess contribution to a qualified
SHAREHOLDERS. employer retirement plan or an IRA; (3) any partial or complete
redemption following death or disability (as defined in Section
72(m) (7) of the Code) of a shareholder (including one who owns
the shares as joint tenant with his spouse) from an account in
which the deceased or disabled is named, provided the redemption
is requested within one year of the death or initial
determination of disability; (4) certain periodic redemptions
under the Systematic Withdrawal Plan from an account meeting
certain minimum balance requirements, in amounts representing
certain maximums established from time to time by the
Distributor (currently a maximum of 12% annually of the account
balance at the beginning of the Systematic Withdrawal Plan); or
(5) involuntary redemptions by the Fund of Class B shares or
Class C shares in shareholder accounts that do not comply with
the minimum balance requirements. The Distributor may require
proof of documentation prior to waiver of the CDSL described in
sections (1) through (4) above, including distribution letters,
certification by plan administrators, applicable tax forms or
death or physicians certificates.
For more information about Class B shares and Class C shares,
see "Reinstatement Privilege" and "Exchange
Privilege."
HOW TO REDEEM SHARES
=============================================================
THERE ARE Redemption of Fund shares can be made by:
SEVERAL WAYS
FOR YOU TO CONTACTING YOUR FINANCIAL ADVISOR. Your Financial Advisor
REDEEM YOUR will transmit an order to the Fund for redemption by the Fund
SHARES. and may charge you a fee for this service.
TELEPHONE REQUEST. You may redeem shares by placing a
telephone request to the Fund (800-421-4184) prior to the close
of regular trading on the Exchange. If you do not wish to have
telephone exchange/redemption privileges, you should so elect by
completing the appropriate section of the Account Application.
The Fund, the Manager, the Distributor and their Trustees,
directors, officers and employees are not liable for any loss
arising out of telephone instructions they reasonably believe
are authentic. These parties will employ reasonable procedures
to confirm that telephone instructions are authentic. To the
extent that the Fund, the Manager, the Distributor and their
Trustees, directors, officers and employees do not follow
reasonable procedures, some or all of them may be liable for
losses due to unauthorized or fraudulent transactions. For more
information on these procedures, see "Redeeming Shares -
Telephone Transactions" in the SAI. You may elect to have
redemption proceeds wired to the bank account specified on the
Account Application. Redemption proceeds normally will be sent
the next business day, and you will be charged a wire fee by the
Page 14
<PAGE>
Manager (currently $5.00). For redemptions of less than $50,000,
you may request that the check be mailed to your address of
record, providing that such address has not been changed in the
past 30 days. For your protection, the proceeds of all other
redemptions will be transferred to the bank account specified on
the Account Application.
WRITTEN REQUEST. Fund shares may be redeemed by sending a
written request for redemption to Heritage Series Trust -
Aggressive Growth Fund, P.O. Box 33022, St. Petersburg, FL
33733. Indicate the class and the number or dollar amount of
shares you wish to redeem, along with your account number.
Signature guarantees will be required on the following types of
requests: redemptions from any account that has had an address
change in the past 30 days, redemptions greater than $50,000,
redemptions that are sent to an address other than the address
of record and exchanges or transfers into other Heritage
accounts that have different titles. The Manager will transmit
the order to the Fund for redemption.
SYSTEMATIC WITHDRAWAL PLAN. Withdrawal plans are available
that provide for regular periodic withdrawals of $50 or more on
a monthly, quarterly, semiannual or annual basis. Under these
plans, sufficient shares of the Fund are redeemed to provide the
amount of the periodic withdrawal payment. The purchase of Class
A shares while participating in the Systematic Withdrawal Plan
ordinarily will be disadvantageous to you because you will be
paying a sales load on the purchase of those shares at the same
time that you are redeeming Class A shares upon which you may
already have paid a sales load. Therefore, the Fund will not
knowingly permit the purchase of Class A shares through the
Systematic Investment Plan if you are at the same time making
systematic withdrawals of Class A shares. The Manager reserves
the right to cancel systematic withdrawals if insufficient
shares are available for two or more consecutive months.
YOU WILL NOT REINSTATEMENT PRIVILEGE. If you redeem any or all of your
BE CHARGED A Class A shares of the Fund, you may reinvest all or any portion
SALES LOAD ON of the redemption proceeds in Class A shares at net asset value
CLASS A SHARES without any sales load, provided that such reinvestment is made
REDEEMED AND within 90 calendar days after the redemption date. If you redeem
REINVESTED any or all of your Class B shares or Class C shares of the Fund
WITHIN 90 DAYS and paid a CDSL on those shares or held those shares long enough
OF REDEMPTION. so that the CDSL no longer applies, you may reinvest all or any
YOU MUST portion of the redemption proceeds in the same class of shares
NOTIFY THE at net asset value without paying a CDSL on future redemptions
FUND WHEN YOU of those shares, provided that such reinvestment is made within
EXERCISE THIS 90 calendar days after the redemption date. A reinstatement
PRIVILEGE. pursuant to this privilege will not cancel the redemption
transaction; therefore, (1) any gain realized on the transaction
will be recognized for Federal income tax purposes, while (2)
any loss realized will not be recognized to the extent the
proceeds are reinvested in shares of the Fund. The reinstatement
privilege may be utilized by a shareholder only once,
irrespective of the number of shares redeemed, except that the
privilege may be utilized without limitation in connection with
transactions whose sole purpose is to transfer a shareholder's
interest in the Fund to his defined contribution plan, IRA, SEP
or SIMPLE. You must notify the Fund if you intend to exercise
the reinstatement privilege.
Contact the Manager or your Financial Advisor for further
information or see "Redeeming Shares" in the SAI.
RECEIVING PAYMENT
=============================================================
THE REDEMPTION If a request for redemption is received by the Fund in good
PRICE order (as described below) before the close of regular trading
GENERALLY IS on the Exchange, the shares will be redeemed at the net asset
THE NEXT NAV value per share determined at the close of regular trading on
Page 15
<PAGE>
COMPUTED AFTER the Exchange on that day, less any applicable CDSL for Class B
THE RECEIPT OF shares or Class C shares. Requests for redemption received by
YOUR the Fund after the close of regular trading on the Exchange will
REDEMPTION be executed at the net asset value determined at the close of
REQUEST. regular trading on the Exchange on the next trading day, less
any applicable CDSL for Class B shares or Class C shares.
Payment for shares redeemed by the Fund normally will be made
on the business day after redemption was made. Proceeds from a
redemption of shares by check or pre-authorized automatic
purchase may be delayed until the funds have cleared, which may
take up to 15 days. This delay can be avoided by wiring funds
for purchases. The proceeds of a redemption may be more or less
than the original cost of Fund shares.
A redemption request will be considered to be received in
"good order" if:
. the number or amount of shares and the class of shares to be
redeemed and shareholder account number have been indicated;
. any written request is signed by a shareholder and by all
co-owners of the account with exactly the same name or names
used in establishing the account;
. any written request is accompanied by certificates
representing the shares that have been issued, if any, and
the certificates have been endorsed for transfer exactly as
the name or names appear on the certificates or an
accompanying stock power has been attached; and
. the signatures on any written redemption request of $50,000
or more and on any certificates for shares (or an
accompanying stock power) have been guaranteed by a national
bank, a state bank that is insured by the Federal Deposit
Insurance Corporation, a trust company, or by any member firm
of the New York, American, Boston, Chicago, Pacific or
Philadelphia Stock Exchanges. Signature guarantees also will
be accepted from savings banks and certain other financial
institutions that are deemed acceptable by the Manager, as
transfer agent, under its current signature guarantee
program.
The Fund has the right to suspend redemption or postpone
payment at times when the Exchange is closed (other than
customary weekend or holiday closings) or during periods of
emergency or other periods as permitted by the Securities and
Exchange Commission. In the case of any such suspension, you may
either withdraw your request for redemption or receive payment
based upon the net asset value next determined, less any
applicable CDSL, after the suspension is lifted. If a redemption
check remains outstanding after six months, the Manager reserves
the right to redeposit those funds into your account. For more
information on receiving payment, see "Redeeming Shares" in the
SAI.
EXCHANGE PRIVILEGE
=============================================================
YOU CAN If you have held Class A shares, Class B shares or Class C
EXCHANGE shares for at least 30 days, you may exchange some or all of
SHARES OF ONE your shares for shares of the same class of any other Heritage
HERITAGE Mutual Fund. All exchanges will be based on the respective net
MUTUAL FUND asset values of the Heritage Mutual Funds involved. All
FOR SHARES OF exchanges are subject to the minimum investment requirements and
THE SAME CLASS any other applicable terms set forth in the prospectus for the
OF ANOTHER Heritage Mutual Fund whose shares are being acquired. Exchanges
Page 16
<PAGE>
HERITAGE of shares of Heritage Mutual Funds generally will result in the
MUTUAL FUND. realization of a taxable gain or loss for Federal income tax
purposes. See "Taxes."
For purposes of calculating the commencement of the CDSL
holding period for shares exchanged from the Fund to the Class B
shares or Class C shares of any other Heritage Mutual Fund,
except the Money Market Fund, the original purchase date of
those shares exchanged will be used. Any time period that the
exchanged shares were held in the Money Market Fund will not be
included in this calculation. As a result, if you redeem Class B
shares or Class C shares of the Money Market Fund before the
expiration of the CDSL holding period, you will be subject to
the applicable CDSL.
If you exchange Class A shares, Class B shares or Class C
shares for corresponding shares of the Money Market Fund, you
may, at any time thereafter, exchange such shares for the
corresponding class of shares of any other Heritage Mutual Fund.
If you exchange shares of the Money Market Fund acquired by
purchase (rather than exchange) for shares of another Heritage
Mutual Fund, you will be subject to the sales load, if any, that
would be applicable to a purchase of that Heritage Mutual Fund.
Class A shares of the Fund may be exchanged for Class A
shares of the Heritage Cash Trust-Municipal Money Fund, which is
the only class of shares offered by that fund. If you exchange
shares of the Heritage Cash Trust-Municipal Money Market Fund
acquired by purchase (rather than exchange) for shares of
another Heritage Mutual Fund, you also will be subject to the
sales load, if any, that would be applicable to a purchase of
that Heritage Mutual Fund. Class B shares and Class C shares are
not eligible for exchange into the Heritage Cash Trust-Municipal
Money Market Fund.
Shares acquired pursuant to a telephone request for exchange
will be held under the same account registration as the shares
redeemed through such an exchange. For a discussion of
limitation of liability of certain entities, see "How to Redeem
Shares-Telephone Request."
Telephone exchanges can be effected by calling the Manager at
(800) 421-4184 or by calling your Financial Advisor. In the
event that you or your Financial Advisor are unable to reach the
Manager by telephone, an exchange can be effected by sending a
telegram to the Manager. Due to the volume of calls or other
unusual circumstances, telephone exchanges may be difficult to
implement during certain time periods.
Each Heritage Mutual Fund reserves the right to reject any
order to acquire its shares through exchange or otherwise to
restrict or terminate the exchange privilege at any time. In
addition, each Heritage Mutual Fund may terminate this exchange
privilege upon 60 days' notice. For further information on this
exchange privilege and for a copy of any Heritage Mutual Fund
prospectus, contact the Manager or your Financial Advisor and
see "Exchange Privilege" in the SAI.
MANAGEMENT OF THE FUND
BOARD OF TRUSTEES
=============================================================
The business and affairs of the Fund are managed by or under
the direction of the Board of Trustees. The Trustees are
responsible for managing the Fund's business affairs and for
exercising all the Fund's powers except those reserved to the
shareholders. A Trustee may be removed by the other Trustees or
by a two-thirds vote of the outstanding Trust shares.
Page 17
<PAGE>
INVESTMENT ADVISER, FUND ACCOUNTANT, ADMINISTRATOR AND
TRANSFER AGENT
=============================================================
HERITAGE ASSET Heritage Asset Management, Inc. is the Fund's investment
MANAGEMENT, adviser, fund accountant, administrator and transfer agent. The
INC. SERVES AS Manager is responsible for reviewing and establishing investment
INVESTMENT policies for the Fund as well as administering its
ADVISER TO THE non-investment affairs. The Manager is a wholly owned subsidiary
FUND. of Raymond James Financial, Inc., which, together with its
subsidiaries, provides a wide range of financial services to
retail and institutional clients. The Manager manages,
supervises and conducts the business and administrative affairs
of the Fund and the other Heritage Mutual Funds with net assets
totaling approximately $3.8 billion as of April 30, 1998.
The Manager's annual investment advisory and administration
fee for the Fund is 1% of the Fund's average daily net assets on
the first $50 million and 0.75% on average daily net assets over
$50 million. This fee is computed daily and paid monthly. The
Manager voluntarily waives fees or reimburses expenses as
explained under "Total Fund Expenses" and reserves the right to
discontinue any voluntary waiver of its fees or reimbursements
to the Fund in the future. The Manager may recover fees
previously waived. In addition, the Manager provides the Fund
with fund accounting and transfer agent services for which the
Manager receives an additional fee directly from the Fund.
The Manager may recommend subadvisers to the Board based upon
its continuing quantitative and qualitative evaluation of the
subadvisers' skills in managing Fund assets using specific
styles and strategies. Subject to receiving approval from the
SEC, the Manager may be permitted to enter into new or modified
subadvisory agreements with existing or new subadvisers without
approval of Fund shareholders, but subject to approval of the
Board. Upon SEC approval of such authority, the SEC would issue
an exemptive order that would eliminate the need for shareholder
approval, subject to compliance with certain conditions. These
conditions generally include the requirement that within 90 days
of hiring a new subadviser or implementing a material change
with respect to a subadvisory contract, the Fund must send a
notice to shareholders containing information about the change
that would be included in a proxy statement.
SUBADVISER
=============================================================
THE MANAGER The Manager has entered into an agreement with Eagle to
EMPLOYS A provide investment advice and portfolio management services,
SUBADVISER FOR including placement of brokerage orders, on behalf of the Fund.
PROVIDING For these services, the Manager pays Eagle a fee equal to 50% of
INVESTMENT the fees payable to the Manager by the Fund without regard to
ADVICE AND any reduction in fees actually paid to the Manager as a result
PORTFOLIO of voluntary fee waivers by the Manager.
MANAGEMENT
SERVICE TO Eagle has been managing private accounts since 1976 for a
THE FUND. diverse group of clients, including individuals, corporations,
municipalities and trusts. Eagle managed approximately $5.5
EAGLE ASSET billion for these clients as of April 30, 1998. In addition to
MANAGEMENT, advising private accounts, Eagle currently acts as investment
INC. IS THE adviser or subadviser to mutual funds, including Heritage
Page 18
<PAGE>
FUND'S Income-Growth Trust, the Eagle International Equity Fund, Small
INVESTMENT Cap Stock Fund, Growth Equity Fund, Mid Cap Growth Fund and
SUBADVISER. Value Equity Fund series of Heritage Series Trust and Heritage
Capital Appreciation Trust (although no assets currently are
allocated to Eagle), four variable annuity portfolios (Eagle
Core Equity Series and Eagle Small Cap Equity Series for Jackson
National Life, Value Equity Series for Golden Select and Eagle
Growth Equity Portfolio for New York Life) and a Puerto Rican
investment company. 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.
PORTFOLIO MANAGEMENT
=============================================================
BERT L. BOKSEN Bert L. Boksen will serve as portfolio manager of the Fund.
WILL SERVE AS He will be responsible for the day-to-day management of the
THE PORTFOLIO Fund's investment portfolio, subject to the general oversight of
MANAGER FOR Heritage and the Board. Mr. Boksen has been a Senior Vice
THE FUND. President of Eagle since 1995. Prior to that, he was employed
for 16 years by Raymond James & Associates, Inc. in its
institutional research and sales department. While employed by
Raymond James & Associates, Inc., Mr. Boksen served as co-head
of Research, Chief Investment Officer, and Chairman of the
Raymond James & Associates, Inc. Focus List Committee.
BROKERAGE PRACTICES
=============================================================
The Fund may use the Distributor or other affiliated
broker-dealers as broker for agency transactions in listed and
over-the-counter securities at commission rates and under
circumstances consistent with the policy of best price and
execution.
In selecting broker-dealers, the Manager or the Subadviser,
as applicable, may consider research and brokerage services
furnished to it and its affiliates. Subject to seeking the most
favorable price and execution available, the Manager or the
Subadviser may consider sales of shares of the Fund as a factor
in the selection of broker-dealers. See "Brokerage Practices" in
the SAI.
SHAREHOLDER AND ACCOUNT POLICIES
DIVIDENDS AND OTHER DISTRIBUTIONS
=============================================================
SEVERAL Dividends from net investment income are declared and paid
OPTIONS EXIST annually by the Fund. The Fund also distributes to its
FOR RECEIVING shareholders substantially all of its net realized capital gains
DIVIDENDS AND on portfolio securities [and net realized gains from foreign
OTHER currency transactions] after the end of the year in which the
DISTRIBUTIONS. gains are realized. Dividends and other distributions on shares
held in retirement plans and by shareholders maintaining a
Systematic Withdrawal Plan generally are paid in additional Fund
shares. Other shareholders may elect to:
. receive both dividends and other distributions in
additional Fund shares;
. receive dividends in cash and other distributions in
additional Fund shares;
. receive both dividends and other distributions in cash; or
Page 19
<PAGE>
. receive both dividends and other distributions in cash for
investment into another Heritage Mutual Fund.
If you select none of these options, the first option will
apply. In any case when you receive a dividend or other
distribution in additional Fund shares, your account will be
credited with shares valued at their net asset value determined
at the close of regular trading on the Exchange on the day
following the record date for the dividend or other
distribution. Distribution options can be changed at any time by
notifying the Manager in writing.
Dividends paid by the Fund with respect to its Class A
shares, Class B shares and Class C shares are calculated in the
same manner and at the same time and will be in the same amount
relative to the aggregate net asset value of the shares in each
class, except that dividends on Class B shares and Class C
shares of the Fund may be lower than dividends on its Class A
shares primarily as a result of the higher distribution fee and
class-specific expenses applicable to Class B shares and Class C
shares.
DISTRIBUTION PLANS
=============================================================
THE FUND PAYS As compensation for services rendered and expenses borne by
SERVICE AND the Distributor in connection with the distribution of Class A
DISTRIBUTION shares and in connection with personal services rendered to
FEES TO THE Class A shareholders and the maintenance of Class A shareholder
DISTRIBUTOR. accounts, the Fund may pay the Distributor distribution and
service fees of up to 0.35% of the Fund's average daily net
assets attributable to Class A shares of the Fund. The Fund will
pay the Distributor a fee of up to 0.25% of its average daily
net assets attributable to Class A shares. This fee is computed
daily and paid monthly.
As compensation for services rendered and expenses borne by
the Distributor in connection with the distribution of Class B
shares and Class C shares and in connection with personal
services rendered to Class B and Class C shareholders and the
maintenance of Class B and Class C shareholder accounts, the
Fund will pay the Distributor a service fee of 0.25% and a
distribution fee of' 0.75% of the Fund's average daily net
assets attributable to Class B shares and Class C shares. These
fees are computed daily and paid monthly.
The above-referenced fees are paid to the Distributor under
Distribution Plans adopted pursuant to Rule 12b-l under the 1940
Act. These Plans authorize the Distributor to spend such fees on
any activities or expenses intended to result in the sale of the
Fund's Class A shares, Class B shares and Class C shares,
including compensation (in addition to the sales load) paid to
Financial Advisors; advertising; salaries and other expenses of
the Distributor relating to selling or servicing efforts;
expenses of organizing and conducting sales seminars; printing
of prospectuses, statements of additional information and
reports for other than existing shareholders; and preparation
and distribution of advertising material and sales literature
and other sales promotion expenses. The Distributor has entered
into dealer agreements with participating dealers and/or banks
who also will distribute shares of the Fund.
If a Plan is terminated, the obligation of the Fund to make
payments to the Distributor pursuant to the Plan will cease and
the Fund will not be required to make any payment past the date
the Plan terminates.
Page 20
<PAGE>
TAXES
=============================================================
THE FUND IS The Fund intends to qualify for treatment as a regulated
NOT EXPECTED investment company under the Code. By doing so, the Fund (but
TO HAVE ANY not its shareholders) will be relieved of Federal income tax on
FEDERAL TAX that part of its investment company taxable income (generally
LIABILITY. consisting of net investment income, net short-term capital
HOWEVER, YOUR gains and net gains from certain foreign currency transactions)
TAX and net capital gain (the excess of net long-term capital gain
OBLIGATIONS over net short-term capital loss) that is distributed to its
ARE DETERMINED shareholders. Dividends from the Fund's investment company
BY YOUR taxable income are taxable to its shareholders as ordinary
PARTICULAR TAX income, to the extent of the Fund's earnings and profits,
CIRCUMSTANCES. whether received in cash or in additional Fund shares.
Distributions of the Fund's net capital gain, when designated as
such, are taxable to its shareholders as long-term capital
gains, whether received in cash or in additional Fund shares and
regardless of the length of time the shares have been held. The
portion of the dividends (but not the capital gain
distributions) paid by the Fund that does not exceed the
aggregate dividends received by the Fund from U.S. corporations
will be eligible for the dividends-received deduction allowed to
corporations; however, dividends received by a corporate
shareholder and deducted by it pursuant to the
dividends-received deduction are subject indirectly to the
Federal alternative minimum tax.
WHEN YOU SELL Dividends and other distributions declared by the Fund in
OR EXCHANGE October, November or December of any year and payable to
SHARES, IT shareholders of record on a date in that month will be deemed to
GENERALLY IS have been paid by the Fund and received by its shareholders on
CONSIDERED A December 31 if they are paid by the Fund during the following
TAXABLE EVENT January.
TO YOU.
Shareholders receive Federal income tax information regarding
dividends and other distributions after the end of each year.
The information regarding capital gain distributions designates
the portions of those distributions that are subject to (1) the
20% maximum rate of tax (10% for investors in the 15% marginal
tax bracket) enacted by the Taxpayer Relief Act of 1997 ("Tax
Act"), which applies to non-corporate taxpayers' net capital
gain on securities and other capital assets held for more than
18 months, and (2) the 28% maximum tax rate, applicable to such
gain on capital assets held for more than one year and up to 18
months (which, prior to enactment of the Tax Act, applied to all
such gain on capital assets held for more than one year).
The Fund is required to withhold 31% of all dividends,
capital gain distributions and redemption proceeds payable to
individuals and certain other non-corporate shareholders who do
not provide the Fund with a correct taxpayer identification
number. Withholding at that rate also is required from dividends
and capital gain distributions payable to such shareholders who
otherwise are subject to backup withholding. When you sell or
exchange shares of the Fund, it generally is considered a
taxable event to you.
The foregoing is only a summary of some of the important
Federal income tax considerations generally affecting the Fund
and its shareholders. See the SAI for a further discussion.
There may be other Federal, state or local tax considerations
applicable to a particular investor. You are therefore urged to
consult your tax adviser.
ABOUT THE TRUST AND THE FUND
=============================================================
Heritage Series Trust (the "Trust") was established as a
Massachusetts business trust under a Declaration of Trust dated
October 28, 1992. The Trust currently offers its shares through
six separate investment portfolios. To obtain more information
Page 21
<PAGE>
about the Trust's other investment portfolios, which are not
offered in this Prospectus, call (800) 421-4184.
SHAREHOLDER INFORMATION
=============================================================
YOU MAY VOTE Each share of the Fund gives the shareholder one vote in
ON MATTERS matters submitted to shareholders for a vote. Class A shares,
SUBMITTED FOR Class B shares and Class C shares of the Fund have equal voting
YOUR APPROVAL. rights, except that in matters affecting only a particular class
EACH SHARE YOU or series, only shares of that class or series are entitled to
OWN ENTITLES vote. As a Massachusetts business trust, the Trust is not
YOU TO ONE required to hold annual shareholder meetings. Shareholder
VOTE. approval will be sought only for certain changes in the Trust's
or the Fund's operation and for the election of Trustees under
certain circumstances. Trustees may be removed by the other
Trustees or shareholders at a special meeting. A special meeting
of shareholders shall be called by the Trustees upon the written
request of shareholders owning at least 10% of each Trust's
outstanding shares.
The Manager has taken steps that it believes are reasonably
designed to address the potential failure of computer programs
used by the Manager, Eagle and the Fund's other service
providers to address the Year 2000 issue. There can be no
assurance that these will be steps will be sufficient to avoid
any adverse impact.
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 Fund or the Distributor. This Prospectus
does not constitute an offering in any state in which such
offering may not lawfully be made.
Page 22
<PAGE>
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION DATED __________ __, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Statement of Additional Information shall not constitute an
offer to sell or the solicitation of an offer to buy nor shall there be any sale
of these securities in any State in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the securities laws of
any such State.
STATEMENT OF ADDITIONAL INFORMATION
HERITAGE SERIES TRUST
AGGRESSIVE GROWTH FUND
This Statement of Additional Information ("SAI") dated ______ __, 1998,
should be read in conjunction with the Prospectus of the Heritage Series Trust -
Aggressive Growth Fund (the "Fund") dated ______ __, 1998. This SAI is not a
prospectus itself. To receive a copy of the Fund's Prospectus, write to Heritage
Asset Management, Inc. ("Heritage") at the address below or call (800) 421-4184.
HERITAGE ASSET MANAGEMENT, INC.
880 Carillon Parkway, St. Petersburg, Florida 33716
TABLE OF CONTENTS
PAGE
----
GENERAL INFORMATION..........................................................1
INVESTMENT INFORMATION.......................................................1
Investment Objective...................................................1
Investment Policies....................................................1
Industry Classifications...............................................4
INVESTMENT LIMITATIONS.......................................................4
NET ASSET VALUE..............................................................6
PERFORMANCE INFORMATION......................................................7
INVESTING IN THE FUND........................................................7
Systematic Investment Options..........................................8
Retirement Plans.......................................................8
Class A Combined Purchase Privilege (Right of Accumulation)............9
Class A Statement of Intention........................................10
REDEEMING SHARES............................................................10
Systematic Withdrawal Plan............................................10
Telephone Transactions................................................11
Redemptions in Kind...................................................11
Receiving Payment.....................................................11
EXCHANGE PRIVILEGE..........................................................12
CONVERSION OF CLASS B SHARES................................................12
TAXES ......................................................................13
FUND INFORMATION............................................................15
Management of the Fund................................................15
Investment Adviser and Administrator; Subadviser......................17
Brokerage Practices...................................................19
Distribution of Shares................................................20
Administration of the Fund............................................20
Potential Liability...................................................21
APPENDIX...................................................................A-1
<PAGE>
GENERAL INFORMATION
- -------------------
The Heritage Series Trust (the "Trust") was established as a Massachusetts
business trust under a Declaration of Trust dated October 28, 1992. The Trust is
registered as open-end diversified management investment company under the
Investment Company Act of 1940, as amended (the "1940 Act"). The Trust currently
offers its shares through six separate investment portfolios, including the
Fund. The Fund offers three classes of shares, Class A shares sold subject to a
4.75% maximum front-end sales load ("Class A shares"), Class B shares sold
subject to a 5% maximum contingent deferred sales load ("CDSL"), declining over
a six-year period ("Class B shares"), and Class C shares sold subject to a 1%
CDSL ("Class C shares"). To obtain more information about the Trust's other
investment portfolios, call (800) 421-4281.
INVESTMENT INFORMATION
- ----------------------
Investment Objective
--------------------
The Fund's investment objective is stated in the Prospectus.
Investment Policies
-------------------
The following information is in addition to and supplements the Fund's
investment policies set forth in the Prospectus.
AMERICAN DEPOSITORY RECEIPTS ("ADRS"), EUROPEAN DEPOSITORY RECEIPTS
("EDRS"), GLOBAL DEPOSITORY RECEIPTS ("GDRS") AND INTERNATIONAL DEPOSITORY
RECEIPTS ("IDRS"). The Fund may invest in sponsored and unsponsored ADRs. ADRs,
EDRs, GDRs and IDRs are receipts that represent interests in or are convertible
into, securities of foreign issuers. These receipts are not necessarily
denominated in the same currency as the underlying securities into which they
may be converted.
ADRs may be purchased through "sponsored" or "unsponsored" facilities. A
sponsored facility is established jointly by the issuer of the underlying
security and a depository, whereas a depository may establish an unsponsored
facility without participation by the issuer of the depository security. Holders
of unsponsored depository receipts generally bear all the costs of such
facilities and the depository of an unsponsored facility frequently is under no
obligation to distribute shareholder communications received from the issuer of
the deposited security or to pass through voting rights to the holders of such
receipts of the deposited securities. Generally, ADRs in registered form are
designed for use in the U.S. securities market and ADRs in bearer form are
designed for use outside the United States.
The Fund also may invest in sponsored or unsponsored EDRs, GDRs, IDRs or
other similar securities representing interests in or convertible into
securities of foreign issuers ("Depository Receipts"). 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. Depository Receipts may not necessarily be denominated in the same
currency as the underlying securities into which they may be converted. As with
ADRs, the issuers of the securities underlying unsponsored Depository 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 Depository Receipts. Depository Receipts also involve the risks of other
investments in foreign securities, as discussed below. For purposes of certain
investment limitations, the Fund considers EDRs, GDRs and IDRs to be foreign
securities.
<PAGE>
BANKERS' ACCEPTANCES. The Fund may invest in banker's acceptances. A
Banker's acceptance is a short-term credit instrument used to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
asset, or it may be sold in the secondary market at the going rate of interest
for a specified maturity. Although maturities for acceptances can be as long as
270 days, most acceptances have maturities of six months or less.
CERTIFICATES OF DEPOSIT. The Fund may invest in bank certificates of
deposit ("CDs") issued by domestic institutions with assets in excess of $1
billion. The Federal Deposit Insurance Corporation is an agency of the U.S.
Government that insures the deposits of certain banks and savings and loan
associations up to $100,000 per deposit. The interest on such deposits may not
be insured if this limit is exceeded. Current federal regulations also permit
such institutions to issue insured negotiable CDs in amounts of $100,000 or
more, without regard to the interest rate ceilings on other deposits. To remain
fully insured, these investments currently must be limited to $100,000 per
insured bank or savings and loan association.
COMMERCIAL PAPER. The Fund may invest in commercial paper that is limited
to obligations rated Prime-1 or Prime-2 by Moody's Investors Service, Inc.
("Moody's") or A-1 or A-2 by Standard & Poor's ("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. See the Appendix for a description of commercial
paper ratings.
CONVERTIBLE SECURITIES. The Fund may invest in convertible securities.
While no securities investment is without some risk, investments in convertible
securities generally entail less risk than the issuer's common stock, although
the extent to which such risk is reduced depends in large measure upon the
degree to which the convertible security sells above its value as a fixed income
security. Convertible securities in which the Fund may invest include corporate
bonds, notes and preferred stock that can be converted into common stock.
Convertible securities combine the fixed-income characteristics of bonds and
preferred stock with the potential for capital appreciation. As with all debt
securities, 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.
FOREIGN SECURITIES. The Fund may invest in foreign securities. It is
anticipated that, in most cases, the best available market for foreign
securities will be on exchanges or in over-the-counter markets located outside
the United States. Foreign stock markets, while growing in volume and
sophistication, generally are not as developed as those in the United States,
and securities of some foreign issuers (particularly those located in developing
countries) may be less liquid and more volatile than securities of comparable
U.S. companies. In addition, foreign brokerage commissions generally are higher
than commissions on securities traded in the United States. In general, there is
less overall governmental supervision and regulation of securities exchanges,
brokers and listed companies than in the United States. Investments in foreign
securities also involve the risk of possible adverse changes in investment or
exchange control regulations, expropriation or confiscatory taxation, limitation
on or delays in the removal of funds or other assets of the Fund, political or
financial instability or diplomatic and other developments that could affect
such investments. Further, the economies of some countries may differ favorably
or unfavorably from the economy of the United States.
-2-
<PAGE>
It is the Fund's policy not to invest in foreign securities when there are
currency or trading restrictions in force or when, in the judgment of the Fund's
subadviser, Eagle Asset Management, Inc. ("Eagle" or "Subadviser"), such
restrictions are likely to be imposed. However, certain currencies may become
blocked (I.E., not freely available for transfer from a foreign country),
resulting in the possible inability of the Fund to convert proceeds realized
upon sale of portfolio securities of the affected foreign companies into U.S.
currency.
Because investments in foreign companies usually will involve currencies
of foreign countries and because the Fund may temporarily hold funds in bank
deposits in foreign currencies during the completion of investment programs, the
value of any of Fund assets as measured in U.S. dollars may be affected
favorably or unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the Fund may incur costs in connection with
conversions between various currencies. The Fund will conduct its foreign
currency exchange transactions on a spot (I.E., cash) basis at the spot rate
prevailing in the foreign currency exchange market. In addition, in order to
protect against uncertainty in the level of future exchange rates, as described
below in the discussion of futures, forwards, and hedging transactions, the Fund
may enter into contracts to purchase or sell foreign currencies at a future date
(I.E., a "forward currency contract" or "forward contract").
ILLIQUID SECURITIES. The Fund will not purchase or otherwise acquire any
illiquid security, including repurchase agreements maturing in more than seven
days, if, as a result, more than 15% 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.
INDEX SECURITIES. The Fund may invest in Standard and Poor's MidCap 400
Depositary Receipts ("Mid Cap SPDR's) and other index securities ("Index
Securities"). Index Securities represent interests in a fixed portfolio of
common stocks designed to track the price and dividend yield performance of a
broad-based securities index, such as the Standard & Poor's 500 Composite Stock
Price Index ("S&P 500 Index") or the Standard & Poor's MidCap 400 Index, but are
traded on an exchange like shares of common stock. The value of Index Securities
fluctuates in relation to changes in the value of the underlying portfolio of
securities. However, the market price of Index Securities may not be equivalent
to the pro rata value of the index it tracks. Index Securities are subject to
the risks of an investment in a broadly based portfolio of common stocks.
PREFERRED STOCK. The Fund may invest in preferred stock. 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 may be limited. 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. Although the dividend is set at a fixed annual
rate, in some circumstances it can be changed or omitted by the issuer.
REPURCHASE AGREEMENTS. The Fund may invest in repurchase agreements. The
period of these repurchase agreements usually will be short, from overnight to
one week, and at no time will the Fund invest in repurchase agreements of more
than one year. The securities that are subject to repurchase agreements,
however, may have maturity dates in excess of one year from the effective date
of the repurchase agreement. The Fund always will receive as collateral
securities whose market value, including accrued interest, will be at least
equal to 100% of the dollar amount invested by the Fund in each agreement, and
the Fund will make payment for such securities only upon physical delivery or
evidence of book entry transfer to the account of the Fund's custodian bank.
-3-
<PAGE>
U.S. GOVERNMENT SECURITIES. The Fund may invest in U.S. Government
securities, including a variety of securities that are issued or guaranteed by
the U.S. Government, its agencies or instrumentalities and repurchase agreements
secured thereby. These securities include securities issued and guaranteed by
the full faith and credit of the U.S. Government, such as Treasury bills,
Treasury notes, and Treasury bonds; obligations supported by the right of the
issuer to borrow from the U.S. Treasury, such as those of the Federal Home Loan
Banks; and obligations supported only by the credit of the issuer, such as those
of the Federal Intermediate Credit Banks.
WARRANTS. The Fund may purchase rights and warrants, which are instruments
that permit the Fund to acquire, by subscription, the capital stock of a
corporation at a set price, regardless of the market price for such stock. The
Fund currently does not intend to invest more than 5% of its net assets in
warrants. Warrants may be either perpetual or of limited duration. There is a
greater risk that warrants might drop in value at a faster rate than the
underlying stock.
Industry Classifications
------------------------
For purposes of determining industry classifications, the Fund relies upon
classifications established by Heritage that are based upon classifications
contained in the Directory of Companies Filing Annual Reports with the
Securities and Exchange Commission ("SEC") and in the Standard & Poor's
Corporation Industry Classifications.
INVESTMENT LIMITATIONS
- ----------------------
Fundamental Investment Policies
-------------------------------
In addition to the limits disclosed in "Investment Policies" above and the
investment limitations described in the Prospectus, the Fund is subject to the
following investment limitations that are fundamental policies and may not be
changed without the vote of a majority of the outstanding voting securities of
the Fund. Under the 1940 Act, a "vote of a majority of the outstanding voting
securities" of the Fund means the affirmative vote of the lesser of (1) more
than 50% of the outstanding shares of the Fund 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.
DIVERSIFICATION. With respect to 75% of its total assets, the Fund may not
invest more than 5% of its assets (valued at market value) in securities of any
one issuer other than the U.S. Government or its agencies and instrumentalities,
or purchase more than 10% of the voting securities of the voting securities of
any one issuer.
INDUSTRY CONCENTRATION. The Fund may not purchase securities if, as a
result of such purchase, more than 25% of the value of its total assets would be
invested in any one industry; however, this restriction does not apply to U.S.
Government securities.
BORROWING MONEY. The Fund may not borrow money except as a temporary
measure for extraordinary or emergency purposes. Except that the Fund may enter
into reverse repurchase agreements in an amount up to 33 1/3% of the value of
its total assets in order to meet redemption requests without immediately
selling portfolio securities. This latter practice is not for investment
leverage but solely to facilitate management of the investment portfolio by
enabling the Fund to meet redemption requests when the liquidation of portfolio
instruments would be inconvenient or disadvantageous. However, the Fund may not
purchase additional portfolio investments once borrowed funds exceed 5% of total
assets. Interest paid on borrowed funds will not be available for investment.
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The Fund will liquidate any such borrowings as soon as possible and may not
purchase any portfolio instruments while any borrowings are outstanding (except
as described above).
ISSUING SENIOR SECURITIES. The Fund may not issue senior securities,
except as permitted by the investment objective, policies, and investment
limitations of the Fund, except that the Fund may engage in transactions
involving forward currency contracts, or other financial instruments.
UNDERWRITING. Subject to the following exceptions, the Fund may underwrite
the securities of other issuers: (1) the Fund may underwrite securities to the
extent that, in connection with the disposition of portfolio securities, it may
be deemed to be an underwriter under federal securities laws, and (2) the Fund
may invest not more than 15% of its net assets (taken at cost immediately after
making such investment) in securities that are not readily marketable without
registration under the 1933 Act.
INVESTING IN COMMODITIES, MINERALS OR REAL ESTATE. With the following
exceptions, the Fund may not invest in commodities, commodity contracts or real
estate (including real estate limited partnerships): the Fund may purchase (1)
securities issued by companies that invest in or sponsor such interests, (2)
purchase and sell forward currency contracts and other financial instruments.
LOANS. The Fund may not make loans, except that it may make loans under
the following circumstances: (1) to the extent that the purchase of a portion of
an issue of publicly distributed notes, bonds, or other evidences of
indebtedness or deposits with banks and other financial institutions may be
considered loans and (2) where the Fund may enter into repurchase agreements as
permitted under its investment policies.
Non-fundamental Investment Policies
-----------------------------------
The Fund has adopted the following additional restrictions which, together
with certain limits described in the Prospectus, may be changed by the Board of
Trustees without shareholder approval in compliance with applicable law,
regulation or regulatory policy.
INVESTING IN ILLIQUID SECURITIES. The Fund may not invest more than 15% of
its net assets in repurchase agreements maturing in more than seven days or in
other illiquid securities, including securities that are illiquid by virtue of
the absence of a readily available market or legal or contractual restrictions
as to resale.
SELLING SHORT AND BUYING ON MARGIN. The Fund may not sell any securities
short or purchase any securities on margin but may obtain such short-term
credits as may be necessary for clearance of purchases and sales of securities;
and, in addition, the Fund may make margin deposits in connection with its use
of forward currency contracts and other financial instruments.
INVESTING IN INVESTMENT COMPANIES. The Fund may not invest in securities
issued by other investment companies except as permitted by the 1940 Act, except
in connection with the merger, consolidation or acquisition of all the
securities or assets of such an issuer.
NET ASSET VALUE
- ---------------
The net asset value per share of Class A shares, Class B shares and Class
C shares is determined separately daily as of the close of regular trading on
the New York Stock Exchange (the "Exchange") each day the Exchange is open for
business.
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A security listed or traded on the Exchange, or other domestic or foreign
stock exchanges, is valued at its last sales price on the principal exchange on
which it is traded prior to the time when assets are valued. If no sale is
reported at that time or the security is traded in the OTC market the most
recent quoted bid price is used. Securities and other assets for which market
quotations are not readily available, or for which market quotes are not deemed
to be reliable, are valued at fair value as determined in good faith by the
Board of Trustees. Securities and other assets in foreign currency and foreign
currency contracts will be valued daily in U.S. dollars at the foreign currency
exchange rates prevailing at the time the Fund calculates the daily net asset
value of each class. 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.
All securities and other assets quoted in foreign currency and forward
currency contracts are valued daily in U.S. dollars on the basis of the foreign
currency exchange rate prevailing at the time such valuation is determined by
the Fund's custodian ("Custodian"). Foreign currency exchange rates generally
are determined prior to the close of the Exchange. Occasionally, events
affecting the value of foreign securities and such exchange rates occur between
the time at which they are determined and the close of the Exchange, which
events will not be reflected in a computation of the Fund's net asset value. If
events materially affecting the value of such securities or assets or currency
exchange rates occurred during such time period, the securities or assets would
be valued at their fair value as determined in good faith under procedures
established by and under the general supervision and responsibility of the Board
of Trustees. The foreign currency exchange transactions of the Fund conducted on
a spot basis are valued at the spot rate for purchasing or selling currency
prevailing on the foreign exchange market.
The Fund is open for business on days on which the Exchange is open (each
a "Business Day"). Trading in securities on European and Far Eastern securities
exchanges and OTC markets normally is completed well before the Fund's close of
business on each Business Day. In addition, European or Far Eastern securities
trading may not take place on all Business Days. Furthermore, trading takes
place in various foreign capital markets on days that are not Business Days and
on which the Fund's net asset value is not calculated. Calculation of net asset
value of Class A shares, Class B shares and Class C shares does not take place
contemporaneously with the determination of the prices of the majority of the
portfolio securities used in such calculation. The Fund calculates net asset
value per share and, therefore, effect sales and redemptions, as of the close of
regular trading on the Exchange each Business Day. If events materially
affecting the value of such securities or other assets occur between the time
when their prices are determined (including their value in U.S. dollars by
reference to foreign currency exchange rates) and the time when the Fund's net
asset value is calculated, such securities and other assets will be valued at
fair value by methods as determined in good faith by or under the direction of
the Board of Trustees.
The Board of Trustees may suspend the right of redemption or postpone
payment for more than seven days at times (1) during which the Exchange is
closed other than for the customary weekend and holiday closings, (2) during
which trading on the Exchange is restricted as determined by the SEC, (3) during
which an emergency exists as a result of which disposal by the Fund of its
securities is not reasonably practicable or it is not reasonably practical for
the Fund 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
Class A shares, Class B shares and Class C shares.
PERFORMANCE INFORMATION
- -----------------------
The Fund's performance data quoted in advertising and other promotional
materials represents past performance and is not intended to indicate future
performance. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or less
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than their original cost. Average annual total return quotes for each class used
in the Fund's advertising and promotional materials are calculated according to
the following formula:
P(1+T)[SUPERSCRIPT]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
In calculating the ending redeemable value for Class A shares, the Fund's
current maximum sales load of 4.75% is deducted from the initial $1,000 payment
and, for Class B shares and Class C shares, the applicable CDSL imposed on a
redemption of Class B shares or Class C shares held for the period is deducted.
All dividends and other distributions by the Fund are assumed to have been
reinvested at net asset value on the reinvestment dates during the period. Based
on this formula, the total return, or "T" in the formula above, is computed by
finding the average annual compounded rates of return over the period that would
equate the initial amount invested to the ending redeemable value.
In connection with communicating its total return to current or
prospective shareholders, the Fund also may compare these figures to the
performance of other mutual funds tracked by mutual fund rating services or to
other unmanaged indexes that may assume reinvestment of dividends but generally
do not reflect deductions for administrative and management costs. In addition,
the Fund may from time to time include in advertising and promotional materials
total return figures that are not calculated according to the formula set forth
above for each class of shares. For example, in comparing the Fund's aggregate
total return with data published by Lipper Analytical Services, Inc., CDA
Investment Technologies, Inc., or with such market indices as the Dow Jones
Industrial Average, and the S&P 500 Index, the Fund calculates its cumulative
total return for each class for the specified periods of time by assuming an
investment of $10,000 in that class of 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. The Fund does not, for these purposes, deduct from the initial value
invested any amount representing front-end sales loads charged on Class A shares
or CDSLs charged on Class B shares and Class C shares. By not annualizing the
performance and excluding the effect of the front-end sales load on Class A
shares and the CDSL on Class B shares and Class C shares, the total return
calculated in this manner simply will reflect the increase in net asset value
per share over a period of time, adjusted for dividends and other distributions.
Calculating total return without taking into account the sales load or CDSL
results in a higher rate of return than calculating total return net of the
front-end sales load.
INVESTING IN THE FUND
- ---------------------
Class A shares, Class B shares and Class C shares are sold at their next
determined net asset value on Business Days. The procedures for purchasing
shares of the Fund are explained in the Prospectus under "Purchase Procedures."
Systematic Investment Options
-----------------------------
The options below allow you to invest continually in the Fund at regular
intervals.
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1. Systematic Investing -- You may authorize Heritage to process a
monthly draft from your personal checking account for investment into the Fund.
The draft is returned by your bank the same way a canceled check is returned.
2. Payroll Direct Deposit -- If your employer participates in a direct
deposit program (also known as ACH Deposits) you may have all or a portion of
your payroll directed to the Fund. This will generate a purchase transaction
each time you are paid by your employer. Your employer will report to you the
amount sent from each paycheck.
3. Government Direct Deposit -- If you receive a qualifying periodic
payment from the U.S. Government or other agency that participates in Direct
Deposit, you may have all or a part of each check directed to purchase shares of
the Fund. The U.S. Government or agency will report to you all payments made.
4. Automatic Exchange -- If you own shares of another Heritage mutual
fund advised or administered by Heritage ("Heritage Mutual Fund"), you may elect
to have a preset amount redeemed from that fund and exchanged into the
corresponding class of shares of the Fund. You will receive a statement from the
other Heritage Mutual Fund confirming the redemption.
You may change or terminate any of the above options at any time.
Retirement Plans
----------------
HERITAGE IRA. Individuals who earn compensation and who have not reached
age 70 1/2 before the close of the year generally may establish a Heritage
Individual Retirement Account ("IRA"). An individual may make limited
contributions to a Heritage IRA through the purchase of shares of the Fund
and/or other Heritage Mutual Funds. The Internal Revenue Code of 1986, as
amended (the "Code"), limits the deductibility of IRA contributions to taxpayers
who are not active participants (and whose spouses are not active participants)
in employer-provided retirement plans or who have adjusted gross income below
certain levels. Nevertheless, the Code permits other individuals to make
nondeductible IRA contributions up to $2,000 per year (or $4,000, if such
contributions also are made for a nonworking spouse and a joint return is
filed). In addition, individuals whose earnings (together with their spouse's
earnings) do not exceed a certain level may establish an "education IRA" and/or
a "Roth IRA"; although contributions to these new types of IRAs (established by
the Taxpayer Relief Act of 1997 ("Tax Act")) are nondeductible, withdrawals from
them will not be taxable under certain circumstances. A Heritage IRA also may be
used for certain "rollovers" from qualified benefit plans and from Section
403(b) annuity plans. For more detailed information on the Heritage IRA, please
contact Heritage.
Fund shares also may be used as the investment medium for qualified plans
(defined benefit or defined contribution plans established by corporations,
partnerships or sole proprietorships). Contributions to qualified plans may be
made (within certain limits) on behalf of the employees, including
owner-employees, of the sponsoring entity.
OTHER RETIREMENT PLANS. Multiple participant payroll deduction retirement
plans also may purchase Class A shares of any Heritage Mutual Fund at a reduced
sales load on a monthly basis during the 13-month period following such a plan's
initial purchase. The sales load applicable to an initial purchase of Class A
shares will be that normally applicable under the schedule of sales loads set
forth in the Prospectus to an investment 13 times larger than the initial
purchase. The sales load applicable to each succeeding monthly purchase of Class
A shares will be that normally applicable, under the schedule, to an investment
equal to the sum of (1) the total purchase previously made during the 13-month
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period and (2) the current month's purchase multiplied by the number of months
(including the current month) remaining in the 13-month period. Sales loads
previously paid during such period will not be adjusted retroactively on the
basis of later purchases. Multiple participant payroll deduction retirement
plans may purchase Class C shares at any time.
Class A Combined Purchase Privilege (Right Of Accumulation)
-----------------------------------------------------------
Certain investors may qualify for the Class A sales load reductions
indicated in the sales load schedule in the Prospectus by combining purchases of
Class A shares into a single "purchase," if the resulting purchase totals at
least $25,000. The term "purchase" refers to a single purchase by an individual,
or to concurrent purchases that, in the aggregate, are at least equal to the
prescribed amounts, by an individual, his spouse and their children under the
age of 21 years purchasing Class A shares for his or their own account; a single
purchase by a trustee or other fiduciary purchasing Class A shares for a single
trust, estate or single fiduciary account although more than one beneficiary is
involved; or a single purchase for the employee benefit plans of a single
employer. The term "purchase" also includes purchases by a "company," as the
term is defined in the 1940 Act, but does not include purchases by any such
company that has not been in existence for at least six months or that has no
purpose other than the purchase of Class A shares or shares of other registered
investment companies at a discount; provided, however, that it shall not include
purchases by any group of individuals whose sole organizational nexus is that
the participants therein are credit card holders of a company, policy holders of
an insurance company, customers of either a bank or broker-dealer, or clients of
an investment adviser. A "purchase" also may include Class A shares purchased at
the same time through a single selected dealer of any other Heritage Mutual Fund
that distributes its shares subject to a sales load.
The applicable Class A shares initial sales load will be based on the
total of:
(i) the investor's current purchase;
(ii) the net asset value (at the close of business on the previous
day) of (a) all Class A shares of the Fund held by the investor and (b) all
Class A shares of any other Heritage Mutual Fund held by the investor and
purchased at a time when Class A shares of such other fund were distributed
subject to a sales load (including Heritage Cash Trust shares acquired by
exchange); and
(iii) the net asset value of all Class A shares described in
paragraph (ii) owned by another shareholder eligible to combine his purchase
with that of the investor into a single "purchase."
Class A shares of Heritage Income Trust-Intermediate Government Fund
("Intermediate Government") purchased from February 1, 1992 through July 31,
1992, without payment of a sales load will be deemed to fall under the
provisions of paragraph (ii) as if they had been distributed without being
subject to a sales load, unless those shares were acquired through an exchange
of other shares that were subject to a sales load.
To qualify for the Combined Purchase Privilege on a purchase through a
selected dealer, the investor or selected dealer must provide the Fund's
distributor, Raymond James & Associates, Inc. ("Distributor"), with sufficient
information to verify that each purchase qualifies for the
privilege or discount.
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Class A Statement Of Intention
------------------------------
Investors also may obtain the reduced sales loads shown in the Prospectus
by means of a written Statement of Intention, which expresses the investor's
intention to invest not less than $25,000 within a period of 13 months in Class
A shares of the Fund or any other Heritage Mutual Fund. Each purchase of Class A
shares under a Statement of Intention will be made at the public offering price
or prices applicable at the time of such purchase to a single transaction of the
dollar amount indicated in the Statement. In addition, if you own Class A shares
of any other Heritage Mutual Fund subject to a sales load, you may include those
shares in computing the amount necessary to qualify for a sales load reduction.
The Statement of Intention is not a binding obligation upon the investor
to purchase the full amount indicated. The minimum initial investment under a
Statement of Intention is 5% of such amount. Class A shares purchased with the
first 5% of such amount will be held in escrow (while remaining registered in
the name of the investor) to secure payment of the higher sales load applicable
to the shares actually purchased if the full amount indicated is not purchased,
and such escrowed Class A shares will be redeemed involuntarily to pay the
additional sales load, if necessary. When the full amount indicated has been
purchased, the escrow will be released. To the extent an investor purchases more
than the dollar amount indicated on the Statement of Intention and qualifies for
a further reduced sales load, the sales load will be adjusted for the entire
amount purchased at the end of the 13-month period. The difference in sales load
will be used to purchase additional Class A shares of the Fund subject to the
rate of sales load applicable to the actual amount of the aggregate purchases.
An investor may amend his/her Statement of Intention to increase the indicated
dollar amount and begin a new 13-month period. In that case, all investments
subsequent to the amendment will be made at the sales load in effect for the
higher amount. The escrow procedures discussed above will apply.
REDEEMING SHARES
- ----------------
The methods of redemption are described in the section of the
Prospectus entitled "How to Redeem Shares."
Systematic Withdrawal Plan
--------------------------
Shareholders may elect to make systematic withdrawals from the Fund
account of a minimum of $50 on a periodic basis. The amounts paid each period
are obtained by redeeming sufficient shares from an account to provide the
withdrawal amount specified. The Systematic Withdrawal Plan currently is not
available for shares held in an individual retirement account, Section 403(b)
annuity plan, defined contribution plan, simplified employee pension plan, or
other retirement plans, unless the shareholder establishes to Heritage's
satisfaction that withdrawals from such an account may be made without
imposition of a penalty. Shareholders may change the amount to be paid without
charge not more than once a year by written notice to the Distributor or
Heritage.
Redemptions will be made at net asset value determined as of the close of
regular trading on the Exchange on a day of each month chosen by the
shareholders or a day of the last month of each period chosen by the
shareholders, whichever is applicable. Systematic withdrawals of Class C shares,
if made in less than one year of the date of purchase, will be charged a CDSL of
1%. If the Exchange is not open for business on that day, the shares will be
redeemed at net asset value determined as of the close of regular trading on the
Exchange on the preceding Business Day, minus any applicable CDSL for Class B
shares and Class C shares. If a shareholder elects to participate in the
Systematic Withdrawal Plan, dividends and other distributions on all shares in
the account must be reinvested automatically in Fund shares. A shareholder may
terminate the Systematic Withdrawal Plan at any time without charge or penalty
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by giving written notice to Heritage or the Distributor. The Fund, and the
transfer agent and Distributor also reserve the right to modify or terminate the
Systematic Withdrawal Plan at any time.
Withdrawal payments are treated as a sale of shares rather than as a
dividend or a capital gain distribution. These payments are taxable to the
extent that the total amount of the payments exceeds the tax basis of the shares
sold. If the periodic withdrawals exceed reinvested dividends and other
distributions, the amount of the original investment may be correspondingly
reduced.
Ordinarily, a shareholder should not purchase additional Class A shares of
the Fund if maintaining a Systematic Withdrawal Plan of Class A shares because
the shareholder may incur tax liabilities in connection with such purchases and
withdrawals. The Fund will not knowingly accept purchase orders from
shareholders for additional Class A shares if they maintain a Systematic
Withdrawal Plan unless the purchase is equal to at least one year's scheduled
withdrawals. In addition, a shareholder who maintains such a Plan may not make
periodic investments under the Fund's Automatic Investment Plan.
Telephone Transactions
----------------------
Shareholders may redeem shares by placing a telephone request to the Fund.
The Fund, Heritage, the Distributor and their Trustees, directors, officers and
employees are not liable for any loss arising out of telephone instructions they
reasonably believe are authentic. In acting upon telephone instructions, these
parties use procedures that are reasonably designed to ensure that such
instructions are genuine, such as (1) obtaining some or all of the following
information: account number, name(s) and social security number registered to
the account, and personal identification; (2) recording all telephone
transactions; and (3) sending written confirmation of each transaction to the
registered owner. If the Fund, Heritage, the Distributor and their Trustees,
directors, officers and employees do not follow reasonable procedures, some or
all of them may be liable for any such losses.
Redemptions In Kind
-------------------
The Fund is obligated to redeem shares for any shareholder for cash during
any 90-day period up to $250,000 or 1% of that Fund's net asset value, whichever
is less. Any redemption beyond this amount also will be in cash unless the Board
of Trustees determine that further cash payments will have a material adverse
effect on remaining shareholders. In such a case, the Fund will pay all or a
portion of the remainder of the redemption in portfolio instruments, valued in
the same way the Fund determines net asset value. The portfolio instruments will
be selected in a manner that the Board of Trustees deem fair and equitable. A
redemption in kind is not as liquid as a cash redemption. If a redemption is
made in kind, a shareholder receiving portfolio instruments could receive less
than the redemption value thereof and could incur certain transaction costs.
Receiving Payment
-----------------
If shares of the Fund are redeemed by a shareholder through the
Distributor or a participating dealer, the redemption is settled with the
shareholder as an ordinary transaction. If a request for redemption is received
before the close of regular trading on the Exchange, shares will be redeemed at
the net asset value per share determined on that day, minus any applicable CDSL
for Class B shares and Class C shares. Requests for redemption received after
the close of regular trading on the Exchange will be executed on the next
trading day. Payment for shares redeemed normally will be made by the Fund to
the Distributor or a participating dealer by the third business day after the
day the redemption request was made, provided that certificates for shares have
been delivered in proper form for transfer to the Fund, or if no certificates
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have been issued, a written request signed by the shareholder has been provided
to the Distributor or a participating dealer prior to settlement date.
Other supporting legal documents may be required from corporations or
other organizations, fiduciaries or persons other than the shareholder of record
making the request for redemption. Questions concerning the redemption of Fund
shares can be directed to registered representatives of the Distributor or a
participating dealer, or to Heritage.
EXCHANGE PRIVILEGE
- ------------------
An exchange is effected through the redemption of the shares tendered for
exchange and the purchase of shares being acquired at their respective net asset
values as next determined following receipt by the Heritage Mutual Fund whose
shares are being exchanged of (1) proper instructions and all necessary
supporting documents as described in such fund's Prospectus, or (2) a telephone
request for such exchange in accordance with the procedures set forth in the
Prospectus and below. Telephone or telegram requests for an exchange received by
the Fund before the close of regular trading on the Exchange will be effected at
the close of regular trading on that day. Requests for an exchange received
after the close of regular trading will be effected on the Exchange's next
trading day.
Class A shares of Intermediate Government purchased from February 1, 1992
through July 31, 1992, without payment of an initial sales load may be exchanged
into Class A shares of the Fund without payment of any sales load. Class A
shares of Intermediate Government purchased after July 31, 1992 without an
initial sales load will be subject to a sales load when exchanged into Class A
shares of the Fund, unless those shares were acquired through an exchange of
other Class A shares that were subject to an initial sales load.
CONVERSION OF CLASS B SHARES
- ----------------------------
Class B shares of the Fund automatically will convert to Class A shares,
based on the relative net asset values per share of the two classes, eight years
after the end of the calendar month in which the shareholder's order to purchase
was accepted. For the purpose of calculating the holding period required for
conversion of Class B shares, the date of initial issuance shall mean (i) the
date on which such Class B shares were issued or (ii) for Class B shares
obtained through an exchange, or a series of exchanges, the date on which the
original Class B shares were issued. For purposes of conversion to Class A
shares, Class B shares purchased through the reinvestment of dividends and other
distributions paid in respect of Class B shares will be held in a separate
sub-account. Each time any Class B shares in the shareholder's regular account
(other than those in the sub-account) convert to Class A shares, a pro rata
portion of the Class B shares in the sub-account will also convert to Class A
shares. The portion will be determined by the ratio that the shareholder's Class
B shares converting to Class A shares bears to the shareholder's total Class B
shares not acquired through dividends and other distributions.
The availability of the conversion feature is subject to the continuing
availability of an opinion of counsel to the effect that the dividends and other
distributions paid on Class A shares and Class B shares will not result in
"preferential dividends" under the Code and the conversion of shares does not
constitute a taxable event. If the conversion feature ceased to be available,
the Class B shares would not be converted and would continue to be subject to
the higher ongoing expenses of the Class B shares beyond eight years from the
date of purchase. Heritage has no reason to believe that this condition for the
availability of the conversion feature will not be met.
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TAXES
- -----
GENERAL. The Fund is treated as a separate corporation for Federal income
tax purposes. In order to qualify for the favorable tax treatment as a regulated
investment company ("RIC") under the Code, the Fund must distribute annually to
its shareholders at least 90% of its investment company taxable income
(generally consisting of net investment income, net short-term capital gain and
net gains from certain foreign currency transactions) ("Distribution
Requirement") and must meet several additional requirements. These requirements
include the following: (1) the Fund 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 forward currency contracts)
derived with respect to its business of investing in securities or those
currencies ("Income Requirement"); (2) at the close of each quarter of the
Fund'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
Fund's total assets and that does not represent more than 10% of the issuer's
outstanding voting securities; and (3) at the close of each quarter of the
Fund'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.
The Fund will be subject to a nondeductible 4% excise tax ("Excise Tax")
to the extent it fails to distribute by the end of any calendar year
substantially all of its ordinary income for that year and its capital gain net
income for the one-year period ending on October 31 of that year, plus certain
other amounts.
A redemption of Fund shares will result in a taxable gain or loss to the
redeeming shareholder, depending on whether the redemption proceeds are more or
less than the shareholder's adjusted basis for the redeemed shares (which
normally includes any sales load paid on Class A shares). An exchange of Fund
shares for shares of another Heritage Mutual Fund generally will have similar
tax consequences. However, special rules apply when a shareholder disposes of
Class A shares of the Fund through a redemption or exchange within 90 days after
purchase thereof and subsequently reacquires Class A shares of the Fund or
acquires Class A shares of another Heritage Mutual Fund without paying a sales
load due to the 90-day reinstatement or exchange privilege. In these cases, any
gain on the disposition of the original Class A shares will be increased, or
loss decreased, by the amount of the sales load paid when those shares were
acquired, and that amount will increase the adjusted basis of the shares
subsequently acquired. In addition, if Fund shares are purchased (whether
pursuant to the reinstatement privilege or otherwise) within 30 days before or
after redeeming other shares of the Fund (regardless of class) at a loss, all or
a portion of that loss will not be deductible and will increase the basis of the
newly purchased shares.
If shares of the Fund are sold at a loss after being held for six months
or less, the loss will be treated as long-term, instead of short-term, capital
loss to the extent of any capital gain distributions received on those shares.
Investors also should be aware that if shares are purchased shortly before the
record date for a dividend or other distribution, the shareholder will pay full
price for the shares and receive some portion of the price back as a taxable
distribution.
-13-
<PAGE>
INCOME FROM FOREIGN SECURITIES. Dividends and interest received by the
Fund may be subject to income, withholding or other taxes imposed by foreign
countries and U.S. possessions ("foreign taxes") that would reduce the yield on
its securities. Tax conventions between certain countries and the United States
may reduce or eliminate these foreign taxes, however, and many foreign countries
do not impose taxes on capital gains in respect of investments by foreign
investors.
The Fund may invest in the stock of "passive foreign investment companies"
("PFICs"). A PFIC is a foreign corporation - other than a "controlled foreign
corporation" (I.E., a foreign corporation in which, on any day during its
taxable year, more than 50% of the total voting power of all voting stock
therein or the total value of all stock therein is owned, directly, indirectly,
or constructively, by "U.S. shareholders," defined as U.S. persons that
individually own, directly, indirectly, or constructively, at least 10% of that
voting power) as to which the Fund is a U.S. shareholder -- 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 Fund 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 Fund distributes the PFIC
income as a taxable dividend to its shareholders. The balance of the PFIC income
will be included in the Fund'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 Fund invests in a PFIC and elects to treat the PFIC as a "qualified
electing fund" ("QEF"), then in lieu of the foregoing tax and interest
obligation, the Fund will be required to include in income each year its pro
rata share of the QEF'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 by the Fund to satisfy the Distribution
Requirement and avoid imposition of the Excise Tax -- even if those earnings and
gain were not distributed to the Fund by the QEF. In most instances it will be
very difficult, if not impossible, to make this election because of certain
requirements thereof.
The Fund may elect to "mark-to-market" its stock in any PFIC.
"Marking-to-market," in this context, means including in ordinary income each
taxable year the excess, if any, of the fair market value of a PFIC's stock over
the Fund's adjusted basis therein as of the end of that year. Pursuant to the
election, the Fund also would be allowed to deduct (as an ordinary, not capital,
loss) the excess, if any, of its adjusted basis in PFIC stock over the fair
market value thereof as of the taxable year-end, but only to the extent of any
net mark-to-market gains with respect to that stock included by the Fund for
prior taxable years. The Fund's adjusted basis in each PFIC's stock with respect
to which it makes this election will be adjusted to reflect the amounts of
income included and deductions taken under the election. Regulations proposed in
1992 would provide a similar election with respect to the stock of certain
PFICs.
Gains or losses (1) from the disposition of foreign currencies, and (2)
that are attributable to fluctuations in exchange rates that occur between the
time the Fund accrues dividends, interest or other receivables or accrues
expenses or other liabilities denominated in a foreign currency and the time the
Fund 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 Fund's investment company taxable income to be distributed to its
shareholders.
Investors are advised to consult their own tax advisers regarding the
status of an investment in the Fund under state and local tax laws.
-14-
<PAGE>
FUND INFORMATION
- ----------------
Management of the Fund
----------------------
TRUSTEES AND OFFICERS. The Trust's Trustees and Officers are listed below
with their addresses, principal occupations and present positions, including any
affiliation with Raymond James Financial, Inc. ("RJF"), RJA, Heritage and Eagle.
<TABLE>
<CAPTION>
Position with Principal Occupation
Name Each Trust During Past Five Years
---- ---------- ----------------------
<S> <C> <C>
Thomas A. James* (55) Trustee Chairman of the Board since 1986
880 Carillon Parkway and Chief Executive Officer since
St. Petersburg, FL 33716 1969 of RJF; Chairman of the Board
of RJA since 1986; Chairman of the
Board of Eagle since 1984 and
Chief Executive Officer of Eagle,
1994 to 1996.
Richard K. Riess* (48) Trustee Chief Executive Officer of Eagle
880 Carillon Parkway since 1996, President, 1995 to
St. Petersburg, FL 33716 present, Chief Operating Officer,
1988 to 1996, Executive Vice
President, 1988 to 1993.
Donald W. Burton (53) Trustee President of South Atlantic
614 W. Bay Street Capital Corporation (venture
Suite 200 capital) since 1981.
Tampa, FL 33606
C. Andrew Graham (57) Trustee Vice President of Financial
Financial Designs, Ltd. Designs Ltd. since 1992; Executive
1775 Sherman Street Vice President of the Madison
Suite 1900 Group, Inc., 1991 to 1992;
Denver, CO 80203 Principal of First Denver
Financial Corporation (investment
banking) since 1987.
David M. Phillips (58) Trustee Chairman and Chief Executive
World Trade Center Officer of CCC Information
Chicago Services, Inc. since 1994 and of
444 Merchandise Mart InfoVest Corporation (information
Chicago, IL 60654 services to the insurance and auto
industries and consumer
households) since 1982.
Eric Stattin (64) Trustee Litigation Consultant/Expert
1975 Evening Star Drive Witness and private investor since
Park City, UT 84060 1988.
James L. Pappas (54) Trustee Lykes Professor of Banking and
University of South Florida Finance since 1986 at University
College of Business of South Florida; Dean of College
Administration of Business Administration 1987 to
Tampa, FL 33620 1996.
-15-
<PAGE>
Stephen G. Hill (38) President Chief Executive Officer and
880 Carillon Parkway President of Heritage since 1989
St. Petersburg, FL 33716 and Director since 1994; Director
of Eagle since 1995.
Donald H. Glassman (40) Treasurer Treasurer of Heritage since 1989;
880 Carillon Parkway Treasurer of Heritage Mutual Funds
St. Petersburg, FL 33716 since 1989.
Clifford J. Alexander (54) Secretary Partner, Kirkpatrick & Lockhart
1800 Massachusetts Ave., NW LLP (law firm).
Washington, DC 20036
Patricia Schneider (56) Assistant Compliance Administrator of
880 Carillon Parkway Secretary Heritage.
St. Petersburg, FL 33716
Robert J. Zutz (45) Assistant Partner, Kirkpatrick & Lockhart
1800 Massachusetts Ave., NW Secretary LLP (law firm).
Washington, DC 20036
</TABLE>
* These Trustees are "interested persons" as defined in section
2(a)(19) of the 1940 Act.
The Trustees and officers of the Trust, as a group, own less than 1% of
each class of the Fund's shares outstanding. The Trust's Declaration of Trust
provides that the Trustees will not be liable for errors of judgment or mistakes
of fact or law. However, they are not protected against any liability to which
they would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
their office.
The Trust currently pays Trustees who are not "interested persons" of the
Trust $3,333 annually and $1,250 per meeting of the Board of Trustees. The
Trustees also are reimbursed for any expenses incurred in attending meetings.
Because Heritage performs substantially all of the services necessary for the
Fund;s operation, the Fund requires no employees. No officer, director or
employee of Heritage receives any compensation from the Fund for acting as a
director or officer. The following table shows the compensation earned by each
Trustee for the Trust's prior fiscal year ended.
-16-
<PAGE>
COMPENSATION TABLE
Total Compensation
From the Trust and
Aggregate Compensation the Heritage Family
Name of Person, From the of Fund Paid
Position Series Trust(1) To Trustees(2)
--------------- ---------------------- -------------------
Donald W. Burton, Trustee $5,820 $16,000
C. Andrew Graham, Trustee $5,820 $16,000
David M. Phillips, Trustee $4,364 $12,000
Eric Stattin, $5,820 $16,000
Trustee
James L. Pappas, $5,092 $14,000
Trustee
Richard K. Riess, $0 $0
Trustee
Thomas A. James, $0 $0
Trustee
-------------------------
(1) For the fiscal year ended October 31, 1997.
(2) The Heritage Mutual Funds consist of six separate registered investment
companies, including the Trust.
No Trustee will receive any benefits upon retirement. Thus, no pension or
retirement benefits have accrued as part of any of any Trust's expenses.
Investment Adviser and Administrator; Subadviser
------------------------------------------------
The investment adviser and administrator for the Fund is Heritage Asset
Management, Inc. Heritage was organized as a Florida corporation in 1985. All
the capital stock of Heritage is owned by Raymond James Financial, Inc. ("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.
Heritage is responsible for overseeing the Fund's investment and
noninvestment affairs, subject to the control and direction of the Board of
Trustees. The Trust, on behalf of the Fund, entered into an Investment Advisory
and Administration Agreement with Heritage dated March 29, 1993 and last
supplemented on August __, 1998. The Investment Advisory and Administration
Agreement requires that Heritage review and establish investment policies for
the Fund and administer the Fund's noninvestment affairs.
Under an Subadvisory Agreement, Eagle, subject to the direction and
control of the Board of Trustees, provide investment advice and portfolio
management services to the Fund for a fee payable by Heritage.
Heritage also is obligated to furnish the Fund with office space,
administrative, and certain other services as well as executive and other
personnel necessary for the operation of the Fund. Heritage and its affiliates
-17-
<PAGE>
also pay all the compensation of Trustees of the Trust who are employees of
Heritage and its affiliates. The Fund pays all its other expenses that are not
assumed by Heritage. The Fund also is liable for such nonrecurring expenses as
may arise, including litigation to which the Fund may be a party. The Fund also
may have an obligation to indemnify its Trustees and officers with respect to
any such litigation.
The Advisory Agreement and the Subadvisory Agreement each were approved by
the Board of Trustees (including all of the Trustees who are not "interested
persons" of Heritage or Eagle, as defined under the 1940 Act) and by Fund
shareholders in compliance with the 1940 Act. Each Agreement provides that it
will be in force for an initial two-year period and it must be approved each
year thereafter 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
Heritage, Eagle, 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
Fund. The Advisory and Subadvisory Agreements each automatically terminates on
assignment, and each is terminable on not more than 60 days' written notice by
the Trust to either party. In addition, the Advisory Agreement may be terminated
on not less than 60 days' written notice by Heritage to the Fund and the
Subadvisory Agreement may be terminated on not less than 60 days' written notice
by Heritage, or 90 days' written notice by Eagle. Under the terms of the
Advisory Agreement, Heritage automatically become responsible for the
obligations of Eagle upon termination of the Subadvisory Agreement. In the event
Heritage ceases to be the Fund's investment adviser or the Distributor ceases to
be the Fund's principal distributor, the right of the Fund to use the
identifying name of "Heritage" may be withdrawn.
Heritage and Eagle shall not be liable to the Fund 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 Fund or for any losses that may
be sustained in the purchase, holding or sale of any security.
All of the officers of the Trust except for Messrs. Alexander and Zutz
are officers or directors of Heritage or its affiliates. These relationships
are described under "Management of the Fund."
ADVISORY AND ADMINISTRATION FEE. The annual investment advisory fee paid
monthly by the Fund to Heritage is based on the Fund's average daily net assets
as listed in the Prospectus. Heritage has voluntarily agreed to waive its
management fees to the extent that annual operating expenses attributable to
Class A shares exceed 1.65% of the average daily net assets or to the extent
that annual operating expenses attributable to Class B shares and Class C shares
exceed 2.40% of average daily net assets attributable to that class during this
fiscal year.
Heritage has entered into an agreement with Eagle to provide investment
advice and portfolio management services to the Fund for a fee paid by Heritage
to Eagle with respect to the amount of Fund assets under management equal to 50%
of the fees payable to Heritage by the Fund, without regard to any reduction in
fees actually paid to Heritage as a result of expense limitations.
CLASS-SPECIFIC EXPENSES. The Fund may determine to allocate certain of its
expenses (in addition to distribution fees) to the specific classes of the
Fund's shares to which those expenses are attributable.
Brokerage Practices
-------------------
While the Fund generally purchases securities for long-term capital gains,
the Fund may engage in short-term transactions under various market conditions
to a greater extent than certain other mutual funds with similar investment
objectives. Thus, the turnover rate may vary greatly from year to year or during
periods within a year. The Fund's portfolio turnover rate is computed by
dividing the lesser of purchases or sales of securities for the period by the
-18-
<PAGE>
average value of portfolio securities for that period. The Fund's turnover rate
is expected to be 100%.
Eagle is responsible for the execution of the Fund's portfolio
transactions and must seek the most favorable price and execution for such
transactions. Best execution, however, does not mean that the Fund necessarily
will be paying the lowest commission or spread available. Rather, the Fund also
will take into account such factors as size of the order, difficulty of
execution, efficiency of the executing broker's facilities, and any risk assumed
by the executing broker.
It is a common practice in the investment advisory business for advisers
of investment companies and other institutional investors to receive research,
statistical and quotation services from broker-dealers who execute portfolio
transactions for the clients of such advisers. Consistent with the policy of
most favorable price and execution, Eagle may give consideration to research,
statistical and other services furnished by brokers or dealers. In addition,
Eagle 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 Eagle determines in good faith that such commission is
reasonable in relation to the value of brokerage and research services provided.
Such research and analysis may be useful to Eagle in connection with services to
clients other than the Fund.
The Fund may use the Distributor, its affiliates or certain affiliates of
Heritage as a broker for agency transactions in listed and OTC securities at
commission rates and under circumstances consistent with the policy of best
execution. Commissions paid to the Distributor, its affiliates or certain
affiliates of Heritage 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 also may select other brokers to execute portfolio transactions. In
the OTC market, the Fund generally deals with primary market makers unless a
more favorable execution can otherwise be obtained.
The Fund may not buy securities from, or sell securities to, the
Distributor as principal. However, the Board of Trustees has adopted procedures
in conformity with Rule 10f-3 under the 1940 Act whereby the Fund may purchase
securities that are offered in underwritings in which the Distributor is a
participant. The Board of Trustees will consider the possibilities of seeking to
recapture for the benefit of expenses to the Fund of certain portfolio
transactions, such as underwriting commissions and tender offer solicitation
fees, by conducting such portfolio transactions through affiliated entities,
including the Distributor, but only to the extent such recapture would be
permissible under applicable regulations, including the rules of the National
Association of Securities Dealers, Inc.
and other self-regulatory organizations.
Pursuant to Section 11(a) of the Securities Exchange Act of 1934, as
amended, the Fund has expressly consented to the Distributor executing
transactions on an exchange on its behalf.
Distribution of Shares
----------------------
The Distributor and Financial Advisors with whom the Distributor has
entered into dealer agreements offer shares of the Fund as agents on a best
efforts basis and are not obligated to sell any specific amount of shares. In
this connection, the Distributor makes distribution and servicing payments to
participating dealers in connection with the sale of shares of the Fund.
-19-
<PAGE>
Pursuant to the Distribution Agreements with respect to Class A shares, Class B
shares and Class C shares, the Distributor bears the cost of making information
about the Fund available through advertising, sales literature and other means,
the cost of printing and mailing prospectuses to persons other than
shareholders, and salaries and other expenses relating to selling efforts. The
Distributor also pays service fees to dealers for providing personal services to
Class A, B and C shareholders and for maintaining shareholder accounts. The Fund
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.
The Fund has adopted a Distribution Plan for each class of shares (each a
"Plan" and collectively the "Plans"). These Plans permit the Fund to pay the
Distributor the monthly distribution and service fee out of the Fund's net
assets to finance activity that is intended to result in the sale and retention
of Class A shares, Class B shares and Class C shares. The Fund intends to use
all Class A, Class B and Class C 12b-1 fees to pay the Distributor. The
Distributor, on Class C shares, may retain the first 12 months distribution fee
for reimbursement of amounts paid to the broker-dealer at the time of purchase.
Each Plan was approved by the Board of Trustees, including a majority of the
Trustees who are not interested persons of the Trust (as defined in the 1940
Act) and who have no direct or indirect financial interest in the operation of
the Plan or the Distribution Agreement (the "Independent Trustees"). In
approving such Plans, the Board determined that there is a reasonable likelihood
that the Fund and its shareholders will benefit from each Plan.
Each Plan each may be terminated by vote of a majority of the Independent
Trustees, or by vote of a majority of the outstanding voting securities of a
class of the Fund. The Board of Trustees reviews quarterly a written report of
Plan costs and the purposes for which such costs have been incurred. A Plan may
be amended by vote of the Board, including a majority of the Independent
Trustees, cast in person at a meeting called for such purpose. Any change in a
Plan that would increase materially the distribution cost to a class requires
shareholder approval of that class.
The Distribution Agreements may be terminated at any time on 60 days'
written notice without payment of any penalty by either party. The Fund may
effect such termination by vote of a majority of the outstanding voting
securities of the Fund or by vote of a majority of the Independent Trustees. For
so long as any Plan is in effect, selection and nomination of the Independent
Trustees shall be committed to the discretion of such disinterested persons.
The Distribution Agreements and each 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 Fund
- --------------------------
ADMINISTRATIVE, FUND ACCOUNTING AND TRANSFER AGENT SERVICES. Heritage,
subject to the control of the Board of Trustees, will manage, supervise and
conduct the administrative and business affairs of the Fund; furnish office
space and equipment; oversee the activities of the subadviser and the Custodian;
and pay all salaries, fees and expenses of officers and Trustees of the Trust
who are affiliated with Heritage. In addition, Heritage provides certain
shareholder servicing activities for Fund customers.
Heritage also is the transfer and dividend reimbursing agent for the Fund
and serves as fund accountant for the Fund. The Fund pays Heritage its cost plus
10% for its services as fund accountant and transfer and dividend disbursing
agent.
-20-
<PAGE>
CUSTODIAN. State Street Bank and Trust Company, P.O. Box 1912, Boston,
Massachusetts 02105, serves as custodian of the Fund's assets. The Custodian
also provides portfolio accounting and certain other services for the Fund.
LEGAL COUNSEL. Kirkpatrick & Lockhart LLP, 1800 Massachusetts Avenue,
NW, 2nd Floor, Washington, D.C. 20036, serves as counsel to the Trust.
INDEPENDENT ACCOUNTANTS. Price Waterhouse LLP, 400 North Ashley
Street, Suite 2800, Tampa, Florida 33602, is the independent accountant for
the Trust.
POTENTIAL LIABILITY
Under certain circumstances, shareholders may be held personally liable as
partners under Massachusetts law for obligations of the Trust. To protect its
shareholders, the Fund has filed legal documents with Massachusetts that
expressly disclaim the liability of its shareholders for acts or obligations of
the Fund. These documents require notice of this disclaimer to be given in each
agreement, obligation or instrument the Fund or the Trustees enter into or sign.
In the unlikely event a shareholder is held personally liable for the Fund's
obligations, that Fund is required to use its property to protect or compensate
the shareholder. On request, the Fund will defend any claim made and pay any
judgment against a shareholder for any act or obligation of the Fund. Therefore,
financial loss resulting from liability as a shareholder will occur only if the
Fund itself cannot meet its obligations to indemnify shareholders and pay
judgments against them.
-21-
<PAGE>
APPENDIX
COMMERCIAL PAPER RATINGS
The rating services' descriptions of commercial paper ratings in which the Fund
may invest are:
Description of Moody's Investors Service, Inc. Commercial Paper Debt 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.
PRIME-2. Issuers (or supporting institutions) rated PRIME-2 (P-2) have a strong
ability for repayment of senior short-term debt obligations. This will normally
be evidenced by many of the characteristics cited above, but to a lesser degree.
Earnings trends and coverage ratios, while sound, may be more subject to
variation. Capitalization characteristics, while still appropriate, may be more
affected by external conditions. Ample alternate liquidity is maintained.
Description of Standard & Poor's Commercial Paper Ratings
- ---------------------------------------------------------
A-1. This designation indicates that the degree of safety regarding timely
payment is very strong. Those issues determined to possess extremely strong
characteristics are denoted with a plus sign (+) designation.
A-2. Capacity for timely payment of issues with this designation is
satisfactory. However, the relative degree of safety is not as high as for
issues designated "A-1".
CORPORATE DEBT RATINGS
The rating services' descriptions of corporate debt ratings in which the Fund
may invest are:
Description of Moody's Investors Service, Inc. Corporate Debt Ratings
- ---------------------------------------------------------------------
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edged." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are likely
to change, such changes as can be visualized are most unlikely to impair the
fundamentally strong position of such issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all 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 or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risks appear somewhat larger than the Aaa securities.
A - Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment sometime in the future.
A-1
<PAGE>
Baa - Bonds that are rated Baa are considered medium grade obligations, I.E.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa - Bonds that 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 that are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that 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.
Description of Standard & Poor's Corporate Debt Ratings
- -------------------------------------------------------
AAA - Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA - Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated 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 for debt in higher rated categories.
BB, B, CCC, CC, C - Debt rated "BB," "B," "CCC," "CC," and "C" 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"
A-2
<PAGE>
indicates the lowest degree of speculation and "C" the highest 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 that 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 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 implied "CCC" rating.
C - The rating "C" is typically applied to debt subordinated to senior debt that
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.
A-3
<PAGE>
HERITAGE SERIES TRUST
PART C. OTHER INFORMATION
-------------------------
Item 24. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements:
Included in Part A of the Registration Statement: None
Included in Part B of the Registration Statement: None
(b) Exhibits:
(1) Declaration of Trust*
(2) Bylaws*
(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**
(e)(i) Specimen security Mid Cap Growth Fund Class
A**
(e)(ii) Specimen security Mid Cap Growth Fund Class
C**
(f)(i) Specimen security for Aggressive Growth Fund
Class A**
(f)(ii) Specimen security for Aggressive Growth Fund
Class C**
(5) (a)(i) Investment Advisory and Administration
Agreement*
<PAGE>
(a)(ii) Amended Schedule A relating to the addition
of the Value Equity Fund*
(a)(iii) Amended Schedule A relating to the addition
of the Growth Equity Fund*
(a)(iv) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund****
(a)(v) Amended Schedule A relating to the
addition of the Aggressive Growth Fund**
(b) Investment Advisory and Administration
Agreement between Eagle Asset Management, Inc.
and Eagle International Equity Portfolio*
(c)(i) Subadvisory Agreement between Heritage Asset
Management, Inc. and Eagle Asset Management,
Inc. relating to Small Cap Stock Fund*
(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*
(d)(i) Subadvisory Agreement between Heritage Asset
Management, Inc. and Eagle Asset Management,
Inc. relating to Value Equity Fund*
(d)(ii) Amended Schedule A relating to the addition
of the Small Cap Stock Fund*
(d)(iii) Amended Schedule A relating to the addition of
the Growth Equity Fund*
(d)(iv) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund****
(d)(v) Amended Schedule A relating to the addition of
the Aggressive Growth Fund**
(e) Subadvisory Agreement between Eagle Asset
Management, Inc. and Martin Currie Inc. relating
to Eagle International Equity Portfolio*
(6) Distribution Agreement*
(7) Bonus, profit sharing or pension plans - none
(8) Form of Custodian Agreement*
(9) (a) Form of Transfer Agency and Service Agreement*
(b)(i) Form of Fund Accounting and Pricing Service
Agreement*
C-2
<PAGE>
(b)(ii) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund****
(b)(iii) Amended Schedule A relating to the addition of
the Aggressive Growth Fund**
(10) Opinion and consent of counsel (filed herewith)
(11) Accountants' consent (not applicable)
(12) Financial statements omitted from prospectus - none
(13) Letter of investment intent*
(14) Prototype retirement plan***
(15) (a)(i) Class A Plan pursuant to Rule 12b-1*
(a)(ii) Amended Schedule A relating to the addition of
the Value Equity Fund*
(a)(iii) Amended Schedule A relating to the addition of
the Growth Equity Fund*
(a)(iv) Amended Schedule A relating to the
addition of the Eagle International Equity
Portfolio*
(a)(v) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund**
(a)(vi) Amended Schedule A relating to the addition
of the Aggressive Growth Fund**
(b)(i) Class C Plan pursuant to Rule 12b-1*
(b)(ii) Amended Schedule A relating to the addition of
the Growth Equity Fund*
(b)(iii) Amended Schedule A relating to the
addition of the Eagle International Equity
Portfolio*
(b)(iv) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund**
(b)(v) Amended Schedule A relating to the addition of
the Aggressive Growth Fund**
(c) Eagle Class Plan pursuant to Rule 12b-1*
(d)(i) Class B Plan pursuant to Rule 12b-1****
(d)(ii) Amended Schedule A relating to the addition
of the Aggressive Growth Fund**
(16) Performance Computation Schedule:
(a) Small Cap Stock Fund*
C-3
<PAGE>
(b) Value Equity Fund**
(c) Eagle International Equity Portfolio**
(d) Growth Equity Fund**
(e) Mid Cap Growth Fund**
(f) Aggressive Growth Fund**
(17) Financial Data Schedules for Electronic Filers (not
applicable)
(18) (a) Plan pursuant to Rule 18f-3*
(b) Amended Plan pursuant to Rule 18f-3***
(c) Amended Plan pursuant to Rule 18f-3*****
- ---------------------------
* Incorporated by reference from the Post-Effective Amendment
No. 10 to the Registration Statement of the Trust, SEC File
No. 33-57986, filed previously via EDGAR on December 1, 1995.
** To be filed by subsequent amendment.
*** Incorporated by reference from the Trust's Post-Effective
Amendment No. 13 to the Trust's Registration Statement on
Form N-1A, File No. 33-57986, filed previously via EDGAR on
February 28, 1997.
**** Incorporated by reference from the Trust's Post-Effective
Amendment No. 15 to the Trust's Registration Statement on
Form N-1A, File No. 33-57986, filed previously via EDGAR on
October 31, 1997.
***** Incorporated by reference from the Trust's Post-Effective
Amendment No. 16 to the Trust's Registration Statement on
Form N-1A, File No. 33-57986 filed previously via Edgar on
December 29, 1997.
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 April 30, 1998
- -------------- -------------------------
Small Cap Stock Fund
Class A Shares 16,095
Class B Shares 750
Class C Shares 9,762
C-4
<PAGE>
Mid Cap Growth Fund
Class A Shares 1,642
Class B Shares 189
Class C Shares 833
Value Equity Fund
Class A Shares 1,764
Class B Shares 86
Class C Shares 1,495
Growth Equity Fund
Class A Shares 2,364
Class B Shares 193
Class C Shares 2,332
Aggressive Growth Fund
Class A Shares 0
Class B Shares 0
Class C Shares 0
Eagle International
Equity Portfolio
Class A Shares 743
Class B Shares 31
Class C Shares 652
Eagle Shares 421
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:
(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,
C-5
<PAGE>
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 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.
C-6
<PAGE>
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 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 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 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
C-7
<PAGE>
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 Securities and Exchange Commission ("SEC") and is
incorporated by reference herein.
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, Growth Equity and Mid Cap Growth 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 SEC 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. Awad & Associates is a division of RJA. Information as to the officers
C-8
<PAGE>
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:
Positions & Offices Position
Name with Underwriter with Registrant
- ---- ----------------- ---------------
Thomas A. James Chief Executive Officer, Director Trustee
Robert F. Shuck Executive VP, Director None
Thomas S. Franke President, Chief Operating None
Officer, Director
Lynn Pippenger Secretary/Treasurer, Chief None
Financial Officer, Director
Dennis Zank Executive VP of Operations None
and Administration, Director
Item 30. Location of Accounts and Records
--------------------------------
For the Small Cap Stock Fund, the Mid Cap Growth Fund, the Value Equity
Fund, the Growth Equity Fund, and the Aggressive Growth Fund, the books and
other documents required by Rule 31a-1 under the Investment Company Act of 1940,
as amended ("1940 Act"), are maintained by Heritage Asset Management, Inc. For
the Eagle International Equity Portfolio, the books and other documents required
by Rule 31a-1 under the 1940 Act are maintained by the Portfolio's custodian,
State Street Bank & Trust Company. Prior to March 1, 1994 the Trust's Custodian
maintained the required records for the Small Cap Stock Fund, except that
Heritage maintained 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.
C-9
<PAGE>
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.
C-10
<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 has duly caused this Post-Effective Amendment No. 18 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 June
5, 1998.
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. 18 to the Registration Statement has been
signed below by the following persons in the capacities and on the dates
indicated.
Signature Title Date
- --------- ----- ----
/s/ Stephen Hill President June 5, 1998
- ---------------------------
Stephen G. Hill
/s/ Thomas A. James* Trustee June 5, 1998
- ---------------------------
Thomas A. James
/s/ Richard K. Riess* Trustee June 5, 1998
- ---------------------------
Richard K. Riess
/s/ C. Andrew Graham* Trustee June 5, 1998
- ---------------------------
C. Andrew Graham
/s/ David M. Phillips* Trustee June 5, 1998
- ---------------------------
David M. Phillips
/s/ James L. Pappas* Trustee June 5, 1998
- ---------------------------
James L. Pappas
/s/ Donald W. Burton* Trustee June 5, 1998
- ---------------------------
Donald W. Burton
<PAGE>
/s/ Eric Stattin* Trustee June 5, 1998
- ---------------------------
Eric Stattin
/s/ Donald H. Glassman Treasurer June 5, 1998
- --------------------------
Donald H. Glassman
*By: /s/ Donald H. Glassman
-----------------------
Donald H. Glassman,
Attorney-In-Fact
2
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Description Page
- ------ ----------- ----
(1) Declaration of Trust*
(2) Bylaws*
(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**
(e)(i) Specimen security Mid Cap Growth Fund Class A**
(e)(ii) Specimen security Mid Cap Growth Fund Class C**
(f)(i) Specimen security for Aggressive Growth Fund
Class A**
(f)(ii) Specimen security for Aggressive Growth Fund
Class C**
(5) (a)(i) Investment Advisory and Administration
Agreement*
(a)(ii) Amended Schedule A relating to the addition of
the Value Equity Fund*
(a)(iii) Amended Schedule A relating to the addition of
the Growth Equity Fund*
(a)(iv) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund****
(a)(v) Amended Schedule A relating to the
addition of the Aggressive Growth Fund**
<PAGE>
(b) Investment Advisory and Administration Agreement
between Eagle Asset Management, Inc. and Eagle
International Equity Portfolio*
(c)(i) Subadvisory Agreement between Heritage Asset
Management, Inc. and Eagle Asset Management,
Inc. relating to Small Cap Stock Fund*
(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*
(d)(i) Subadvisory Agreement between Heritage Asset
Management, Inc. and Eagle Asset Management,
Inc. relating to Value Equity Fund*
(d)(ii) Amended Schedule A relating to the addition
of the Small Cap Stock Fund*
(d)(iii) Amended Schedule A relating to the addition of
the Growth Equity Fund*
(d)(iv) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund****
(d)(v) Amended Schedule A relating to the addition of
the Aggressive Growth Fund**
(e) Subadvisory Agreement between Eagle Asset
Management, Inc. and Martin Currie Inc.
relating to Eagle International Equity
Portfolio*
(6) Distribution Agreement*
(7) Bonus, profit sharing or pension plans - none
(8) Form of Custodian Agreement*
(9) (a) Form of Transfer Agency and Service Agreement*
(b)(i) Form of Fund Accounting and Pricing Service
Agreement*
(b)(ii) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund****
(b)(iii) Amended Schedule A relating to the addition
of the Aggressive Growth Fund**
(10) Opinion and consent of counsel (filed herewith)
(11) Accountants' consent (not applicable)
(12) Financial statements omitted from prospectus - none
(13) Letter of investment intent*
2
<PAGE>
(14) Prototype retirement plan***
(15) (a)(i) Class A Plan pursuant to Rule 12b-1*
(a)(ii) Amended Schedule A relating to the addition
of the Value Equity Fund*
(a)(iii) Amended Schedule A relating to the addition
of the Growth Equity Fund*
(a)(iv) Amended Schedule A relating to the addition
of the Eagle International Equity
Portfolio*
(a)(v) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund**
(a)(vi) Amended Schedule A relating to the addition
of the Aggressive Growth Fund**
(b)(i) Class C Plan pursuant to Rule 12b-1*
(b)(ii) Amended Schedule A relating to the addition
of the Growth Equity Fund*
(b)(iii) Amended Schedule A relating to the addition
of the Eagle International Equity Portfolio*
(b)(iv) Amended Schedule A relating to the addition
of the Mid Cap Growth Fund**
(b)(v) Amended Schedule A relating to the addition
of the Aggressive Growth Fund**
(c) Eagle Class Plan pursuant to Rule 12b-1*
(d)(i) Class B Plan pursuant to Rule 12b-1****
(d)(ii) Amended Schedule A relating to the addition
of the Aggressive Growth Fund**
(16) Performance Computation Schedule:
(a) Small Cap Stock Fund*
(b) Value Equity Fund**
(c) Eagle International Equity Portfolio**
(d) Growth Equity Fund**
(e) Mid Cap Growth Fund**
(f) Aggressive Growth Fund**
(17) Financial Data Schedules for Electronic Filers (not
applicable)
(18) (a) Plan pursuant to Rule 18f-3*
(b) Amended Plan pursuant to Rule 18f-3***
3
<PAGE>
(c) Amended Plan pursuant to Rule 18f-3*****
- ---------------------------
* Incorporated by reference from the Post-Effective Amendment No.
10 to the Registration Statement of the Trust, SEC File No.
33-57986, filed previously via EDGAR on December 1, 1995.
** To be filed by subsequent amendment.
*** Incorporated by reference from the Trust's Post-Effective
Amendment No. 13 to the Trust's Registration Statement on Form
N-1A, File No. 33-57986, filed previously via EDGAR on February
28, 1997.
**** Incorporated by reference from the Trust's Post-Effective
Amendment No. 15 to the Trust's Registration Statement on Form
N-1A, File No. 33-57986, filed previously via EDGAR on October
31, 1997.
*****Incorporated by reference from the Trust's Post-Effective
Amendment No. 16 to the Trust's Registration Statement on Form
N-1A, File No. 33-57986 filed previously via Edgar on December
29, 1997.
4
Kirkpatrick & Lockhart LLP
1800 Massachusetts Avenue, N.W.
Washington, D. C. 20036-1800
Telephone 202-778-9000
June 5, 1998
Heritage Series Trust
880 Carillon Parkway
St. Petersburg, FL 33716
Ladies and Gentlemen:
You have requested our opinion, as counsel to Heritage Series Trust
("Trust"), as to certain matters regarding the issuance of Shares of the Trust.
As used in this letter, the term "Shares" means the Class A, Class B, and Class
C shares of beneficial interest of the Heritage Series Trust - Aggressive Growth
Fund, a series of the Trust, during the time that Post-Effective Amendment No.
18 to the Trust's Registration Statement on Form N-1A ("PEA") is effective and
has not been superseded by another post-effective amendment.
As such counsel, we have examined certified or other copies, believed
by us to be genuine, of the Trust's Declaration of Trust and by-laws and such
resolutions and minutes of meetings of the Trust's Board of Trustees as we have
deemed relevant to our opinion, as set forth herein. Our opinion is limited to
the laws and facts in existence on the date hereof, and it is further limited to
the laws (other than the conflict of law rules) in the Commonwealth of
Massachusetts that in our experience are normally applicable to the issuance of
shares by unincorporated voluntary associations and to the Securities Act of
1933 ("1933 Act"), the Investment Company Act of 1940 ("1940 Act") and the
regulations of the Securities and Exchange Commission ("SEC") thereunder.
Based on the foregoing, we are of the opinion that the issuance of the
Shares has been duly authorized by the Trust and that, when sold in accordance
with the terms contemplated by the PEA, including receipt by the Trust of full
payment for the Shares and compliance with the 1933 Act and the 1940 Act, the
Shares will have been validly issued, fully paid and non-assessable.
We note, however, that the Trust is an entity of the type commonly
known as a "Massachusetts business trust." Under Massachusetts law, shareholders
could, under certain circumstances, be held personally liable for the
obligations of the Trust. The Declaration of Trust states that creditors of,
contractors with and claimants against the Trust or any series shall look only
to the assets of the Trust or the appropriate series for payment. It also
requires that notice of such disclaimer be given in each note, bond, contract,
certificate undertaking or instrument made or issued by the officers or the
trustees of the Trust on behalf of the Trust. The Declaration of Trust further
provides: (1) for indemnification from the assets of the Trust or the
appropriate series for all loss and expense of any shareholder held personally
liable for the obligations of the Trust or any series by virtue of ownership of
shares of the Trust or such series; and (2) for the Trust or appropriate series
<PAGE>
Heritage Series Trust
June 5, 1998
Page 2
to assume the defense of any claim against the shareholder for any act or
obligation of the Trust or series. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability is limited to circumstances
in which the Trust or series would be unable to meet its obligations.
We hereby consent to this opinion accompanying the PEA when it is filed
with the SEC and to the reference to our firm in the statement of additional
information that is being filed as part of the PEA.
Very truly yours,
KIRKPATRICK & LOCKHART LLP
/s/ Robert J. Zutz
-------------------------------
Robert J. Zutz
