Heritage Asset Management | Cash Trust Municipal Money Market Fund

Heritage Municipal Money Market Fund

The AAAm-rated Heritage Cash Trust — Municipal Money Market Fund invests in high-quality municipal securities, considered by many to be highly liquid and the most conservative investment after Treasuries (the safest). AllianceBernstein, the Fund’s subadviser, performs ongoing, in-depth due diligence on municipal borrowers and maintains a list of approved investments for the Fund that is based on its proprietary, internal ratings system, strict regulatory limits, and the limits of the Fund Prospectus and Statement of Additional Information. Currently, the Fund’s holdings are not subject to any Alternative Minimum Tax; however you should consult your tax advisor regarding your own particular tax situation.

Where applicable, the Fund buys and owns securities that are backed by bank letters of credit. Because letters of credit are considered guarantees under regulatory limits, (i.e. direct credit substitution), the criteria used are the credit ratings of the banks, both by the rating agencies and AllianceBernstein. AllianceBernstein monitors the banks’ credit strength regularly to ensure they remain eligible and appropriate for purchase into the Fund. With respect to the subprime situation, the majority of major financial institutions in the world have subprime exposure to some degree. However, AllianceBernstein’s analysts do not see the subprime situation as a material ratings event for the institutions providing credit support to the holdings in the Heritage Cash Trust – Municipal Money Market Fund.

Some of the securities held in the Municipal Money Market Fund are variable rate demand notes (VRDNs). The types of VRDNs in the Fund’s portfolio have periodic interest-rate resets that are based on a daily or weekly remarketing process reflects supply and demand as well as the rates for comparable securities with similar maturities and credit ratings.

Many VRDNs are tied to insurers. Some of the VRDNs held in the Fund are insured by FSA, a financial guaranty insurance company, which has a stable outlook and AAA rating. The liquidity features for these VRDNs are provided by highly rated banks and financial institutions. Any other insured holdings have been reviewed and it has been determined that the securities would still be Fund eligible even without insurance. The VRDN’s held in the Fund have rates that reset normally on a daily or weekly basis. Approximately 80 percent of the portfolio is invested in VRDNS.

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