<PAGE> 1
December 19, 1995
Dear Fellow Shareholders:
I am pleased to provide you with the annual report for Heritage Series
Trust-Value Equity Fund (the "Fund") for the period from the Fund's inception on
December 30, 1994 through October 31, 1995. For this period, Class A Shares of
your Fund had a total return of +25.96% (excluding the imposition of a front-end
sales load). For the same period, the Standard & Poor's 500 Composite Stock
Price Index and the Value Line Index had total returns of +29.29% and 14.38%,
respectively. As a further comparison, the universe of growth and income funds
tracked by Morningstar, Inc. had an average return of +24.22%. From April 3,
1995 when Class C shares of your Fund were introduced, through the end of the
fiscal year, Class C shares returned +17.35%.
Your Fund was introduced on the heels of the very difficult investment
market of 1994. As we approach the end of calendar 1995 we have enjoyed quite a
contrast with 1994. In the letter that follows, Chris Bertelsen discusses the
factors that materially affected the performance of your Fund in its initial
fiscal period. Chris is a Senior Vice President of Eagle Asset Management, your
Fund's subadviser, and has served as portfolio manager for your Fund since its
inception. From 1987 through 1993 when he joined Eagle, Chris served as
portfolio manager for the Colonial Fund which, like your Fund, took a
value-oriented approach to investment management. I hope your find Chris'
comments helpful in understanding how your Fund's investment portfolio is
managed.
On behalf of all of us at Heritage, thank you for your continuing
investment with us. We hope you had a happy and healthy holiday season and wish
you a wonderful 1996!
Sincerely,
/s/ Stephen G. Hill
-------------------
Stephen G. Hill
President
<PAGE> 2
December 19, 1995
Dear Fellow Shareholders:
I am honored to present to you the first annual report for the Heritage
Series Trust Value Equity Fund (the "Fund") for the fiscal period ended October
31, 1995. Class A Shares of the Fund provided a total return of 25.96% for this
ten-month period (excluding the imposition of a front-end sales load). During
the same time period the Standard & Poor's 500 Composite Stock Price Index had a
total return of 29.29%. From April 3, 1995, when Class C Shares of your Fund
were introduced, through the end of the Fund's fiscal year, Class C Shares
returned of 17.35%.
One of the major objectives in portfolio management is diversification of
fund assets. While the Fund is well represented by stocks in many different
industries, I have implemented several strategic themes in the form of industry
concentrations at various times during the fiscal year in an attempt to enhance
shareholder return.
The most notable and largest industry concentration of our investment
portfolio began in January 1995 when I raised our holdings in technology stocks
to over 20% of the Fund's total assets, well above the 10% average technology
weighting of the S&P 500 Index. This industry overweighting paid off handsomely
as technology stock prices soared to record highs during the year. During August
and September, however, many of these stocks became quite volatile, and had
risen, in my opinion, from being undervalued to more than fairly valued. Hence,
most positions were sold during this time period, many at substantial gains.
Noteworthy sales include the following: Microsoft Corp. was sold at a 43% gain,
National Semiconductor Corp. at a 48% gain, and Electro Scientific Industries at
a 60% gain. By October 31, 1995, the Fund's weighting in technology stocks stood
at 2%.
The second largest area of industry concentration has been in the oil and
gas industry. The Fund has maintained a fairly large and consistent weighting in
this area, within a range of 10% to 15% of the Fund's value, higher than the 9%
oil and gas weighting of the S&P 500 Index. Unlike the exceptional performance
that technology stocks enjoyed this year, oil and gas stocks have generally
lagged the market. Our position in these stocks was an inhibitor to performance
during the fiscal year. However, patience is showing its virtue, as recently
this industry has shown favorable performance comparisons with the market in
general.
Finally, the healthcare sector performed well during the year, and the Fund
is comfortably positioned with pharmaceutical companies such as Eli Lilly & Co.,
Bristol Meyers Squibb Co., American Home Products Corp. and Amgen, Inc. Indeed,
pharmaceutical stocks appreciated close to 50% through the ten month period
ended October 31, 1995. Midway through the year Health Maintenance Organizations
(HMOs), such as United Healthcare Corp., US Healthcare, Inc., and Foundation
Health Corp., were purchased for the Fund after research indicated that these
stocks were significantly undervalued. HMOs have also performed well during the
second half of the year.
I believe value investors will continue to be rewarded in the ensuing
years, and I will continue to work diligently to create wealth for the
shareholders of the Heritage Series Trust Value Equity Fund.
Sincerely,
/s/ Chris Bertelsen
-------------------
Chris Bertelsen
Senior Vice President
Eagle Asset Management, Inc.
2
<PAGE> 3
[CHART]
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HST-VALUE EQUITY FUND CLASS A SHARES
ON DECEMBER 30, 1994
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) HST-VALUE EQUITY S&P 500
<S> <C> <C>
12/30/94** 9525 10000
1/31/95 9645 10032
4/30/95 10591 11046
7/31/95 11671 12144
10/31/95 11998 12643
</TABLE>
- --------------------------------------------------------------------------------
* Average total return for HST-Value Equity Class A Shares are calculated in
conformance with Item 22 of Form N-1A, which assumes a sales load of 4.75%.
** From Fund inception on December 30, 1994.
- --------------------------------------------------------------------------------
[CHART]
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HST-VALUE EQUITY FUND CLASS C SHARES
ON APRIL 3, 1995
<TABLE>
<CAPTION>
MEASUREMENT PERIOD
(FISCAL YEAR COVERED) HST-VALUE EQUITY S&P 500
<S> <C> <C>
4/3/95**** 10000 10000
4/30/95 10413 10294
5/31/95 10825 10706
6/30/95 11035 10954
7/31/95 11434 11318
8/31/95 11526 11346
9/30/95 11847 11825
10/31/95 11735 11782
</TABLE>
- --------------------------------------------------------------------------------
*** Annual total return for HST-Value Equity Fund Class C Shares are calculated
in conformance with Item 22 of Form N-1A.
**** From inception of Class C Shares on April 3, 1995.
3
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C>
REPURCHASE AGREEMENT--13.8%(A)
Repurchase Agreement with State Street Bank and Trust Company, dated October 31, 1995 @ 5.82%, to be
repurchased at $2,225,364 on November 1, 1995, (collateralized by $2,075,000 United States Treasury
Notes, 7.25% due August 15, 2004 with a market value of $2,286,503, including interest) (cost
$2,225,000)........................................................................................... $ 2,225,000
-----------
COMMON STOCKS--93.2%(A)
</TABLE>
<TABLE>
<CAPTION>
SHARES
- ------------------
<C> <S> <C>
AEROSPACE--1.6%
--------------
3,000 Boeing Company..................................................................... 196,875
1,500 General Motors Corporation, Class "H".............................................. 63,000
-----------
259,875
-----------
AUTO PARTS/EQUIPMENT--2.6%
------------------------
12,000 Breed Technologies, Inc. .......................................................... 223,500
1,000 Dana Corporation................................................................... 25,625
2,300 Eaton Corporation.................................................................. 117,875
3,000 Federal-Mogul Corporation.......................................................... 53,625
-----------
420,625
-----------
AUTO/TRUCK MANUFACTURERS--2.5%
-----------------------------
2,800 Chrysler Corporation............................................................... 144,550
7,000 Ford Motor Company................................................................. 201,250
1,400 General Motors Corporation......................................................... 61,250
-----------
407,050
-----------
BANKING--7.9%
-------------
1,500 Banc One Corporation............................................................... 50,625
3,200 Bank Of New York Company, Inc. .................................................... 134,400
3,000 BankAmerica Corporation............................................................ 172,500
3,000 Bankers Trust New York Corporation................................................. 191,250
4,500 Dime Bancorp, Inc.*................................................................ 47,813
400 First Interstate Bancorp........................................................... 51,600
2,800 Fleet Financial Group, Inc. ....................................................... 108,500
2,800 Great Western Financial Corporation................................................ 63,350
1,000 Home Financial Corporation......................................................... 15,250
2,500 Klamath First Bancorp, Inc.*....................................................... 31,875
3,300 Mellon Bank Corporation............................................................ 165,412
1,000 J.P. Morgan & Company, Inc. ....................................................... 77,125
2,700 PNC Bank Corporation............................................................... 70,875
2,300 Wachovia Corporation............................................................... 101,488
-----------
1,282,063
-----------
BEVERAGES--0.6%
--------------
1,900 PepsiCo, Inc. ..................................................................... 100,225
-----------
BUILDING--1.0%
-------------
2,000 Black & Decker Corporation......................................................... 67,750
2,400 Foster Wheeler Corporation......................................................... 90,000
-----------
157,750
-----------
CHEMICALS--0.6%
--------------
1,000 ARCO Chemical Company.............................................................. 49,000
1,500 Lubrizol Corporation............................................................... 43,125
-----------
92,125
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
CONGLOMERATE/DIVERSIFIED--0.3%
---------------------------
2,400 Hanson PLC, ADR.................................................................... $ 37,200
800 U.S. Industries, Inc.*............................................................. 12,000
-----------
49,200
-----------
COSMETICS/TOILETRIES--1.0%
-----------------------
1,000 Jean Philippe Fragrances, Inc.*.................................................... 9,250
3,500 Tambrands, Inc. ................................................................... 156,625
-----------
165,875
-----------
DATA PROCESSING--2.9%
--------------------
2,500 Apple Computer, Inc. .............................................................. 90,781
2,000 Autodesk, Inc. .................................................................... 68,000
2,000 Automatic Data Processing, Inc. ................................................... 143,000
1,200 Diamond Multimedia Systems, Inc.*.................................................. 35,400
2,500 MacNeal-Schwendler Corporation..................................................... 38,125
2,000 Seagate Technology, Inc.*.......................................................... 89,250
-----------
464,556
-----------
ELECTRONICS/ELECTRICAL--2.4%
------------------------
1,000 First Alert, Inc.*................................................................. 15,500
700 General Electric Company........................................................... 44,275
1,700 Honeywell, Inc. ................................................................... 71,400
600 Intel Corporation.................................................................. 41,925
300 Sony Corporation, ADR.............................................................. 13,725
1,100 Tech-Sym Corporation*.............................................................. 32,588
11,500 Westinghouse Electric Corporation.................................................. 162,438
300 Philips Electronics N.V., NY Shares, ADR........................................... 11,587
-----------
393,438
-----------
FINANCE--4.1%
------------
6,300 American Express Company........................................................... 255,937
1,300 Federal National Mortgage Association.............................................. 136,337
4,500 Student Loan Marketing Association................................................. 264,937
-----------
657,211
-----------
FOOD--2.7%
----------
2,000 Campbell Soup Company.............................................................. 104,750
7,100 Chiquita Brands International...................................................... 115,375
1,600 Dole Food Company.................................................................. 60,200
1,500 Grand Metropolitan, PLC, ADR....................................................... 41,250
1,900 Heinz (H.J.) Company............................................................... 88,350
950 Quaker Oats Company................................................................ 32,419
-----------
442,344
-----------
FOOD SERVING--1.1%
-----------------
2,200 McDonald's Corporation............................................................. 90,200
4,500 Wendy's International, Inc. ....................................................... 89,437
-----------
179,637
-----------
GRAPHIC ARTS--0.5%
-----------------
2,800 Deluxe Corporation................................................................. 75,250
-----------
HEALTH CARE CENTERS--7.2%
-----------------------
3,300 Columbia Healthcare Corporation.................................................... 162,112
4,500 Foundation Health Corporation*..................................................... 190,688
1,000 Healthsource, Inc.*................................................................ 53,000
2,000 Horizon/CMS Healthcare Corporation*................................................ 40,500
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
300 Physician Corporation Of America*.................................................. $ 4,612
9,500 Tenet Healthcare Corporation*...................................................... 169,812
7,500 U.S. Healthcare, Inc. ............................................................. 288,750
4,700 United Healthcare Corporation...................................................... 249,688
-----------
1,159,162
-----------
HOTELS/MOTELS/INNS--0.5%
-----------------------
1,000 HFS, Inc.*......................................................................... 61,250
2,500 Prime Hospitality Corporation*..................................................... 24,687
-----------
85,937
-----------
HOUSEWARES--0.2%
----------------
1,000 Rubbermaid, Inc. .................................................................. 26,125
-----------
INSURANCE--3.2%
--------------
3,022 Allstate Corporation............................................................... 111,059
1,600 Hartford Steam Boiler Inspection & Insurance Company............................... 74,600
7,000 Humana, Inc.*...................................................................... 147,875
1,200 Jefferson-Pilot Corporation........................................................ 79,200
2,700 Torchmark Corporation.............................................................. 112,050
-----------
524,784
-----------
LEISURE/AMUSEMENT--1.4%
-----------------------
1,600 Polaroid Corporation............................................................... 68,400
4,000 Royal Caribbean Cruises, Ltd. ..................................................... 92,000
1,100 The Walt Disney Company............................................................ 63,387
-----------
223,787
-----------
MACHINERY--1.4%
---------------
2,000 Caterpillar, Inc. ................................................................. 112,250
1,000 Harnischfeger Industries, Inc. .................................................... 31,500
1,200 Johnson Controls, Inc. ............................................................ 69,900
2,000 Western Power & Equipment Corporation*............................................. 8,000
-----------
221,650
-----------
MANUFACTURING/DISTRIBUTIONS--0.4%
-------------------------------
1,100 Minnesota Mining & Manufacturing Company........................................... 62,563
-----------
MEDICAL EQUIPMENT/SUPPLY--2.6%
-----------------------------
1,700 Bausch & Lomb, Inc. ............................................................... 58,863
3,000 Baxter International, Inc. ........................................................ 115,875
700 C.R. Bard, Inc. ................................................................... 19,775
2,300 Johnson & Johnson.................................................................. 187,450
2,200 Sterile Concepts Holdings, Inc. ................................................... 31,075
-----------
413,038
-----------
OFFICE EQUIPMENT--1.4%
--------------------
1,800 Danka Business Systems, Sponsored ADR.............................................. 60,300
4,000 Pitney-Bowes, Inc. ................................................................ 174,500
-----------
234,800
-----------
OIL & GAS--9.6%
--------------
1,900 Amoco Corporation.................................................................. 121,363
1,200 Anadarko Petroleum Corporation..................................................... 52,050
6,000 Apache Corporation................................................................. 153,000
1,500 Atlantic Richfield Company......................................................... 160,125
1,100 Burlington Resources, Inc. ........................................................ 39,600
1,400 Chevron Corporation................................................................ 65,450
800 Dresser Industries, Inc. .......................................................... 16,600
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
1,800 Exxon Corporation.................................................................. $ 137,475
1,000 Halliburton Company................................................................ 41,500
1,500 Mobil Corporation.................................................................. 151,125
5,500 Occidental Petroleum Corporation................................................... 118,250
1,700 Pennzoil Company................................................................... 64,175
900 Phillips Petroleum Company......................................................... 29,025
1,000 Royal Dutch Petroleum, NY Shares, ADR.............................................. 122,875
1,300 Schlumberger, Ltd. ................................................................ 80,925
1,500 Texaco, Inc. ...................................................................... 102,187
1,400 Ultramar Corporation............................................................... 34,125
2,200 Valero Energy Corporation.......................................................... 51,975
1,000 YPF Sociedad Anonima, Sponsored ADR................................................ 17,125
-----------
1,558,950
-----------
PHARMACEUTICAL--10.3%
--------------------
3,000 Abbott Laboratories................................................................ 119,250
2,600 American Home Products Corporation................................................. 230,425
4,000 Amgen, Inc.*....................................................................... 192,000
2,000 Beckman Instruments, Inc. ......................................................... 66,250
3,200 Bristol-Myers Squibb Company....................................................... 244,000
3,600 Lilly (Eli) & Company.............................................................. 347,850
1,200 Merck & Company, Inc. ............................................................. 69,000
1,600 Pfizer, Inc. ...................................................................... 91,800
2,000 R.P. Scherer Corporation*.......................................................... 89,000
1,700 Schering-Plough Corporation........................................................ 91,163
2,500 Upjohn Company..................................................................... 126,875
-----------
1,667,613
-----------
POLLUTION CONTROL--0.9%
---------------------
3,000 Browning-Ferris Industries......................................................... 87,375
2,100 WMX Technologies, Inc. ............................................................ 59,063
-----------
146,438
-----------
PUBLISHING--3.0%
---------------
3,500 Dun & Bradstreet Corporation....................................................... 209,125
1,700 Gannett Company.................................................................... 92,437
2,800 Tribune Company.................................................................... 176,750
-----------
478,312
-----------
REAL ESTATE INVESTMENT TRUST (REIT)--0.3%
--------------------------------------
1,500 Meditrust, SBI..................................................................... 50,625
-----------
RETAIL--3.8%
-----------
1,000 Ann Taylor Stores, Inc.*........................................................... 11,000
2,500 Barnes & Noble, Inc.*.............................................................. 91,250
3,000 Gap, Inc. ......................................................................... 118,125
1,900 J.C. Penney Company, Inc. ......................................................... 80,037
2,000 May Department Stores Company...................................................... 78,500
2,400 Nordstrom, Inc. ................................................................... 88,950
1,000 O'Reilly Automotive, Inc.*......................................................... 32,750
1,000 Sears Roebuck And Company.......................................................... 34,000
1,700 Toys "R" Us, Inc.*................................................................. 37,187
2,000 Wal-Mart Stores, Inc. ............................................................. 43,250
-----------
615,049
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
SECURITIES--1.5%
--------------
1,000 Edwards (A.G.), Inc. .............................................................. $ 25,500
1,100 Lehman Brothers Holding, Inc. ..................................................... 23,925
300 Morgan Stanley Group, Inc. ........................................................ 26,100
4,700 Salomon, Inc. ..................................................................... 169,787
-----------
245,312
-----------
SERVICES--0.5%
------------
2,500 Medaphis Corporation*.............................................................. 79,375
-----------
STEEL--0.3%
----------
1,500 Carpenter Technology Corporation................................................... 56,813
-----------
TELECOMMUNICATIONS--5.4%
-----------------------
800 Alcatel Alsthom CGE, Sponsored ADR................................................. 13,500
1,000 Ameritech Corporation.............................................................. 54,000
2,700 BellSouth Corporation.............................................................. 206,550
8,000 Comsat Corporation................................................................. 159,000
1,000 GTE Corporation.................................................................... 41,250
1,600 Hong Kong Telecommunications, Ltd., Sponsored ADR.................................. 27,800
600 MCI Communications................................................................. 14,963
2,600 NYNEX Corporation.................................................................. 122,200
800 Pacific Telesis Group.............................................................. 24,300
2,700 SBC Communications, Inc. .......................................................... 150,863
1,300 Telephone & Data Systems, Inc. .................................................... 52,000
-----------
866,426
-----------
TEXTILES--0.3%
------------
1,500 Liz Claiborne, Inc. ............................................................... 42,563
400 Shaw Industries, Inc. ............................................................. 5,100
-----------
47,663
-----------
TOBACCO--2.2%
-------------
3,000 American Brands, Inc. ............................................................. 128,625
4,500 RJR Nabisco Holdings Corporation................................................... 138,375
3,000 UST, Inc. ......................................................................... 90,000
-----------
357,000
-----------
TRANSPORTATION--5.0%
------------------
6,000 Airborne Freight Corporation....................................................... 157,500
2,700 CSX Corporation.................................................................... 226,125
4,000 Federal Express Corporation*....................................................... 328,500
2,400 Illinois Central Corporation....................................................... 91,800
-----------
803,925
-----------
Total common stocks (cost $14,277,378)................................................................. 15,072,571
-----------
TOTAL INVESTMENT PORTFOLIO (cost $16,502,378)(b), 107.0%(a)............................................ 17,297,571
OTHER ASSETS AND LIABILITIES, NET, (7.0%)(a)........................................................... (1,126,765)
-----------
NET ASSETS, 100.0%..................................................................................... $16,170,806
==========
</TABLE>
- ------------------
* Not an income-producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
$16,511,338. Market value includes net unrealized appreciation of
$786,233, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
of $1,076,898 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$290,665.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
- -----
Investments, at market value (identified cost $14,277,378) (Note 1)...................... $15,072,571
Repurchase agreement (identified cost $2,225,000) (Note 1)............................... 2,225,000
Cash..................................................................................... 166
Receivables:
Investments sold....................................................................... 652,797
Fund shares sold....................................................................... 174,658
Dividends and interest................................................................. 20,601
Deferred organization expenses (Note 1).................................................. 44,175
Deferred state registration expenses (Note 1)............................................ 15,931
Prepaid insurance........................................................................ 1,283
-----------
Total assets..................................................................... 18,207,182
Liabilities
- --------
Payables (Note 4):
Investments purchased.................................................................. $1,919,273
Fund shares redeemed................................................................... 15,388
Due to Manager......................................................................... 27,128
Accrued distribution fee............................................................... 5,562
Other accrued expenses................................................................. 69,025
----------
Total liabilities................................................................ 2,036,376
-----------
Net assets, at market value.............................................................. $16,170,806
==========
Net Assets
- ---------
Net assets consist of:
Undistributed net investment income.................................................... $ 56,475
Net unrealized appreciation on investments............................................. 795,193
Accumulated net realized gain.......................................................... 536,111
Paid-in capital........................................................................ 14,783,027
-----------
Net assets, at market value.............................................................. $16,170,806
==========
Class A Shares
- -------------
Net asset value and redemption price per share ($11,918,015 divided by 661,961 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $18.00
-----
-----
Maximum offering price per share (100/95.25 of $18.00)................................... $18.90
-----
-----
Class C Shares
- ------------
Net asset value and offering price per share ($4,252,791 divided by 237,324 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $17.92
-----
-----
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
- ----------------
Income:
Dividends................................................................................. $ 133,861
Interest.................................................................................. 34,714
----------
Total income........................................................................ 168,575
Expenses (Notes 1 and 4):
Management fee............................................................................ $ 47,250
Custodian/Fund accounting fees............................................................ 54,127
Amortization of state registration expenses............................................... 30,714
Professional fees......................................................................... 26,809
Distribution fee.......................................................................... 23,888
Reports to shareholders................................................................... 12,512
Shareholder servicing fee................................................................. 10,346
Amortization of organization expenses..................................................... 8,835
Trustees' fees and expenses............................................................... 6,413
Federal registration fee.................................................................. 4,994
Insurance................................................................................. 2,186
--------
Total expenses before waiver and reimbursement...................................... 228,074
Fees waived by the Manager (Note 4)................................................. (47,250)
Reimbursement from Manager (Note 4)................................................. (68,724) 112,100
-------- ----------
Net investment income....................................................................... 56,475
----------
Realized and Unrealized Gain on Investments
- ---------------------------------------
Net realized gain from investment transactions.............................................. 536,111
Net increase in unrealized appreciation of investments during the period.................... 795,193
----------
Net gain on investments............................................................. 1,331,304
----------
Net increase in net assets resulting from operations........................................ $1,387,779
=========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
DECEMBER 30, 1994
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1995
-----------------------------
<S> <C>
Increase in net assets:
Operations:
Net investment income................................................................... $ 56,475
Net realized gain from investment transactions.......................................... 536,111
Net increase in unrealized appreciation of investments during the period................ 795,193
------------
Net increase in net assets resulting from operations.................................... 1,387,779
Increase in net assets from Fund share transactions (Note 2).............................. 14,482,027
------------
Increase in net assets.................................................................... 15,869,806
Net assets, beginning of period (original capital as of December 30, 1994)................ 301,000
------------
Net assets, end of period (including undistributed net investment income of $56,475)...... $ 16,170,806
=============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A+ CLASS C++
---------- ----------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD........................................... $ 14.29 $ 15.27
---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income............................................................ .08 .01
Net realized and unrealized gain on investments.................................. 3.63 2.64
---------- ----------
Total from investment operations................................................... 3.71 2.65
---------- ----------
NET ASSET VALUE, END OF THE PERIOD................................................. $ 18.00 $ 17.92
=========== ===========
TOTAL RETURN (%)(C)(D)............................................................. 25.96 17.35
RATIOS (%)/AND SUPPLEMENTAL DATA:
Ratio of operating expenses, net to average daily net assets(a)(b)............... 1.65 2.40
Ratio of net investment income to average daily net assets(b).................... 1.05 .28
Portfolio turnover rate(b)....................................................... 82 82
Net assets, end of period ($ millions)........................................... 12 4
</TABLE>
- ---------------
+ For the period December 30, 1994 (commencement of operations) to October 31,
1995.
++ For the period April 3, 1995 (commencement of Class C Shares) to October 31,
1995.
(a) Excludes management fees waived and expenses reimbursed by the Manager of
$.13 per share for Class A and Class C Shares, respectively. The operating
expense ratios including such items would be 3.49% and 4.24%, (annualized),
respectively.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales charge.
11
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company and presently offers shares in four
series, the Value Equity Fund (the "Fund"), the Small Cap Stock Fund,
the Growth Equity Fund and the Eagle International Equity Portfolio. The
Fund currently issues Class A and Class C Shares. Class A Shares are
sold subject to a maximum sales charge of 4.75% of the amount invested
payable at the time of purchase. Class C Shares, which were offered to
shareholders beginning April 3, 1995, are sold subject to a contingent
deferred sales charge of 1% of the lower of net asset value or purchase
price payable upon any redemptions within one year after purchase. The
financial statements for the Small Cap Fund and Eagle International
Equity Portfolio are presented separately. The policies described below
are followed by the Fund in the preparation of its financial statements
in conformity with generally accepted accounting principles.
Security Valuation: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, the last bid price is used and in the absence of a market
quote, securities are valued using such methods as the Board of Trustees
believes would reflect fair market value. Short term investments having
a maturity of 60 days or less are valued at cost which, when combined
with accrued interest included in interest receivable or discount
earned, approximates market.
Repurchase Agreements: The Fund enters into repurchase agreements
whereby the Fund, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of purchase
is required to be in an amount equal to at least 100% of the resale
price.
Federal Income Taxes: The Fund's policy is to comply with the
requirements of the Internal Revenue Code of 1986, as amended, which are
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no provision has been made for federal income and excise
taxes.
Distribution of Net Realized Gains. Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to the
Fund, will be distributed to shareholders in the following fiscal year.
The Fund uses the identified cost method for determining realized gain
or loss on investments for both financial and federal income tax
reporting purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Expenses: The Fund is charged for those expenses which are directly
attributable to it, such as management fee, custodian/fund accounting
fees, distribution fee, etc., while other expenses such as professional
fees, insurance expense, etc., are all allocated proportionately among
the Funds. Expenses of the Fund are allocated to each class of shares
based upon their relative percentage of current net assets. All expenses
that are directly attributable to a specific class of shares, such as
distribution fees, are allocated to that class.
Organization Expenses: Expenses incurred in connection with the
formation of the Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.
Capital Accounts: The Fund reports the undistributed net investment
income and accumulated net realized gain (loss) accounts on a basis
approximating amounts available for future tax distributions (or to
offset future taxable realized gains when a capital loss carryforward is
available). Accordingly, the Fund may periodically make
reclassifications among certain capital accounts without impacting the
net asset value of the Fund.
Other: Investment security transactions are accounted for on a trade
date plus one basis. Dividend income and distributions to shareholders
are recorded on the ex-dividend date. Interest income is recorded on the
accrual basis.
12
<PAGE> 13
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 2: FUND SHARES. At October 31, 1995, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Class A and Class C Shares of the Fund during the period
December 30, 1994 to October 31, 1995 were as follows:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
FOR THE PERIOD FOR THE PERIOD
DECEMBER 30, 1994 APRIL 3, 1995
(COMMENCEMENT OF (COMMENCEMENT OF
OPERATIONS) TO CLASS C SHARES) TO
OCTOBER 31, 1995 OCTOBER 31, 1995
-------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................................ 692,734 $11,278,811 238,487 $4,109,350
Shares redeemed........................................ (51,837) (885,977) (1,163) (20,157)
---------- ----------- --------- ----------
Net increase........................................... 640,897 $10,392,834 237,324 $4,089,193
========== =========
Shares outstanding:
Beginning of period (seed shares).................... 21,064 --
---------- ---------
End of period........................................ 661,961 237,324
========= ========
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the period ended October 31,
1995, purchases and sales of investment securities (excluding repurchase
agreements and short term obligations) aggregated $18,855,843 and
$5,114,517, respectively.
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administration
Agreement with Heritage Asset Management, Inc. ( the "Manager"), the
Fund agrees to pay to the Manager a fee equal to an annualized rate of
.75% of the Fund's average daily net assets, computed daily and payable
monthly. The agreement also provides for a reduction in such fees in any
year to the extent that operating expenses of the Fund exceed applicable
state expense limitations. Currently, the Manager has voluntarily agreed
to waive its fee and, if necessary reimburse the Fund to the extent that
Fund operating expenses exceed 1.65% for Class A Shares (2.40% for Class
C Shares effective April 3, 1995) on an annual basis of the Fund's
average daily net assets attributable to each class of shares. This
agreement is more restrictive than any state expense limitation at the
current level of net assets. Under the Agreement, management fees waived
and expenses reimbursed totaled $115,974 ($.13 per share for each class)
during the period ended October 31, 1995. If total Fund expenses fall
below the expense limitation agreed to by the Manager before the end of
the year ending October 31, 1997, the Fund may be required to pay the
Manager a portion or all of the waived management fee.
The Manager is also the Dividend Paying and Shareholder Servicing Agent
for the Portfolio. The amount payable to the Manager for such expenses
as of October 31, 1995 was $4,800. In addition, the Manager performs
Fund Accounting services and charged $20,509 during the current period
of which $8,200 was payable as of October 31, 1995.
The Manager has entered into an agreement with Eagle Asset Management,
Inc. (the "Subadviser") for the Subadviser to provide to the Fund
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to 50% of the fees payable by the Fund to
the Manager without regard to any reduction due to the imposition of
expense limitations.
Pursuant to a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund is authorized to
pay Raymond James & Associates, Inc. (the "Distributor") a fee pursuant
to the Class A Distribution Plan of up to 0.35% of average daily net
assets for the services it provides in connection with the promotion and
distribution of Fund shares. However, at the present time the Board of
Trustees has authorized payments of only .25% of average daily net
assets. Under the Class C Distribution Plan the Fund paid the
Distributor a fee equal to 1.00% of the average daily net assets. The
Distributor may retain the first 12 months distribution fee for
reimbursement of amounts paid to the broker/dealer at the time of
purchase. Such fees are accrued daily and payable monthly. During the
period $13,040 and $10,848 were paid for distribution fees for Class A
Shares and Class C Shares, respectively. The Manager, the Subadviser,
the Distributor and the Shareholder Servicing Agent are all wholly-owned
subsidiaries of Raymond James Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust,
Heritage Income Trust and Heritage U.S. Government Income Fund,
investment companies which are also advised by the Manager (collectively
referred to as the Heritage funds). Each Trustee of the Heritage funds
who is not an interested person of the Manager received an annual fee of
$8,000 and an additional fee of $2,000 for each combined quarterly
meeting of the Heritage funds attended. Trustees' fees and expenses are
paid equally by each of the Heritage funds.
13
<PAGE> 14
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Series Trust-Value Equity Fund:
We have audited the accompanying statement of assets and liabilities of
Heritage Series Trust-Value Equity Fund, including the investment portfolio, as
of October 31, 1995, and the related statements of operations and changes in net
assets for the period December 30, 1994 (commencement of operations) to October
31, 1995, and the financial highlights for the periods indicated therein. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Heritage Series Trust-Value Equity Fund as of October 31, 1995, the results of
its operations, and the changes in its net assets for the period December 30,
1994 (commencement of operations) to October 31, 1995, and the financial
highlights for the periods indicated therein, in conformity with generally
accepted accounting principles.
Boston, Massachusetts Coopers & Lybrand LLP
December 22, 1995
14
<PAGE> 15
HERITAGE SERIES TRUST-VALUE EQUITY FUND is a member of the Heritage family of
mutual funds. Other investment alternatives available to you from Heritage
include:
HERITAGE CASH TRUST
MONEY MARKET FUND
MUNICIPAL MONEY MARKET FUND
HERITAGE CAPITAL APPRECIATION TRUST
HERITAGE INCOME-GROWTH TRUST
HERITAGE INCOME TRUST
DIVERSIFIED PORTFOLIO
LIMITED MATURITY GOVERNMENT PORTFOLIO
HERITAGE SERIES TRUST
GROWTH EQUITY FUND
SMALL CAP STOCK FUND
EAGLE INTERNATIONAL EQUITY PORTFOLIO
HERITAGE U.S. GOVERNMENT INCOME FUND
(A CLOSED-END FUND THAT TRADES ON THE
NEW YORK STOCK EXCHANGE)
We are pleased that many of you are also investors in these funds. For
information and a prospectus for any of these funds, please contact your account
executive. Read the Prospectus carefully before you invest in any of the funds.
15
<PAGE> 16
Heritage Series Trust
P.O. Box 33022
St. Petersburg, FL 33733
--------------------------------------------
Address Change Requested
Annual Report
INVESTMENT ADVISOR/
SHAREHOLDER SERVICING AGENT/
FUND ACCOUNTANT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
(800) 421-4184
DISTRIBUTOR
Raymond James & Associates, Inc.
P.O. Box 12749
St. Petersburg, FL 33733
(813) 573-3800
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
This report is for the information of shareholders of
Heritage Series Trust. It may also be used as sales
literature when preceded or accompanied by a prospectus.
[HERITAGE SERIES TRUST(TM) LOGO]
VALUE EQUITY FUND
A MUTUAL FUND
SEEKING LONG-TERM
CAPITAL APPRECIATION
- -----------------------------------------------------------
- -----------------------------------------------------------
- -----------------------------------------------------------
ANNUAL REPORT
and Investment Performance
Review for the
Period From December 30, 1994
(Commencement of Operations) to
OCTOBER 31, 1995
A member of the
Heritage Family of Mutual Funds(TM)
