<PAGE> 1
June 19, 1996
Dear Fellow Shareholders:
It is my pleasure to provide you with the semiannual report for Heritage
Series Trust-Small Cap Stock Fund (the "Fund") for the six month period ended
April 30, 1996. For this period, the "A" shares and "C" shares of your Fund
returned +31.5%, and +31.1%, respectively.* This compares very favorably to the
Russell 2000 index of smaller capitalization companies which returned +18.4%.
While we obviously are excited about the very strong investment
performance, we are equally pleased that this performance was achieved with a
very diversified portfolio managed by two separate subadvisers. Unlike many of
the year's top performing small cap funds, your Fund has not achieved its
returns by concentrating in only a few industry groups or with significant
reliance on participation in initial public offerings. Since its inception in
May 1993, your Fund was designed to employ multiple independent subadvisers,
each with a focus on a different segment of the small cap market. In this way,
we believed we could reduce some of the volatility inherent in investments in
small cap stocks without sacrificing the potential long-term gains from these
investments.
In the letters that follow, Bert Boksen and Jim Awad share their thoughts
on the small cap market in general and on your Fund's portfolio in particular.
Bert is a Senior Vice president of Eagle Asset Management, Inc. ("Eagle") and
Jim is Chairman of Awad & Associates ("Awad"). Eagle and Awad are each
subadvisers with respect to approximately 50% of your Fund's assets. I hope you
find their comments helpful in understanding how your portfolio is managed.
Thank you for your continuing investment in Heritage Series Trust-Small Cap
Stock Fund. We look forward to serving your investment needs for years to come.
Sincerely,
/s/ Stephen G. Hill
Stephen G. Hill
President
* Calculated without the imposition of front-end or contingent deferred
sales charges.
<PAGE> 2
June 19, 1996
Dear Shareholders:
Your Fund has continued to provide excellent returns, both absolutely and
relative to stock market indices and small capitalization stock indices.
Looking forward, we are optimistic as to the Fund's prospects for several
reasons: U.S. corporations are in good shape to deliver growing profits, the
economy is providing a good backdrop of reasonable growth accompanied by low
inflation, valuation levels of equities are reasonable, and demographic demand
for financial assets continues to grow.
We believe the small capitalization sector is particularly attractive.
While these equities have outperformed stocks in general during the 1990's, they
have made up only one-half of the underperformance of the 1983-1990 period, when
investors focused on large cap stocks. We believe, small cap companies are the
types of companies that can show unit growth in a moderately growing economy,
growth regardless of short-term factors emanating from the political process,
and may be ineffectively priced due to the lack of research coverage by the
major investment firms.
The theme underlying your Fund's holdings is good earnings growth
accompanied by reasonable price/earnings ratios.
Our major position in data processing reflects the importance that we
believe this area has in contributing to the increased efforts to improve
productivity in American society. In addition, the significant position in
medical equipment and supplies speaks to the demographic aging of the American
population along with our society's efforts to reduce health care costs,
creating, in our opinion, excellent investment opportunities.
We look forward with enthusiasm to serving you over coming months.
Sincerely,
/s/ James D. Awad
James D. Awad
Chairman
Awad & Associates
2
<PAGE> 3
June 19, 1996
Dear Fellow Shareholders:
I am pleased to report that for the six months ended April 30, 1996,
Heritage Series Trust - Small Cap Fund appreciated 31.5%* for Class A Shares and
31.1%* for Class C Shares, substantially exceeding gains of 13.8% and 18.4% for
the Standard & Poor's 500 Composite Stock Price Index and the Russell 2000
indices, respectively.
Performance was good throughout the period, but was particularly enhanced by
the strong relative performance of small cap stocks that began in mid-February
1996. Although I am not a market-timer, it is somewhat comforting to note that
profit growth of the Russell 2000 and S&P 500 both approximated 16% in the
fourth quarter of 1995. However in the first quarter of 1996, earnings for the
Russell 2000 continued to grow over 15%, compared to about 7% for the S&P 500.
Thus, at least part of the recent excess returns achieved by small cap stocks
was fueled by earnings.
In my letter of December 19, 1995, I noted that the Eagle Asset Management,
Inc. ("Eagle") portion of the fund was underweighted in technology. The
technology portion was augmented early in 1996 with the purchase of Computer
Products and Boca Research. However, technology now represents a still modest
12% of Eagle's portion of the fund. Other significant purchases during the
period include, Protein Design Laboratories, Trident International, Houghton
Mifflin Company, World Color Press, Claire's Stores, and Cash America
International.
Largest sales during the period were Thermo Instrument Systems, Calloway
Golf Company, Community Psychiatric Centers, and United States Filter.
Biggest positive contributors during the period were National Education,
Ampex, and Genesco. A move into energy stocks last fall proved timely as Marine
Drilling Companies, Camco International, and Seacor Holdings were strong
contributors to performance. It is very unusual, but during the six months ended
April 30, 1996, we had no significant losses.
Reflecting what we believe to be strong occupancy and pricing trends, most
recently we purchased several lodging stocks including Red Lion Hotels and
Suburban Lodges of America.
Going forward, I will continue to prudently increase the Fund's
participation in technology and health care industries. As always we will
attempt to balance growth prospects with value, and diversify our assets among
industry categories.
I continue to feel good about the prospects for small companies through the
balance of 1996. I thank you for your continued support and, as always will
endeavor to do my best on your behalf.
Sincerely,
/s/ Bert Boksen
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
*Calculated without the imposition of front-end or contingent deferred sales
charges.
3
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
COMMON STOCKS--92.5%(A)
AEROSPACE--0.2%
30,000 Kellstrom Industries, Inc.*........................................................ $ 210,000
-----------
BANKING--4.0%
30,000 BankUnited Financial Corporation, Class "A"*....................................... 232,500
62,500 Fidelity Federal Bank FSB, Class "A"............................................... 570,312
40,000 First Financial Caribbean Corporation.............................................. 860,000
40,000 FNB Rochester Corporation*......................................................... 390,000
20,000 Glendale Federal Bank FSB*......................................................... 350,000
17,000 Home Financial Corporation......................................................... 235,875
19,500 IBS Financial Corporation.......................................................... 268,125
25,000 Imperial Thrift & Loan Association*................................................ 359,375
5,000 MSB Bancorp, Inc................................................................... 86,250
15,000 Pamrapo Bancorp, Inc............................................................... 288,750
17,250 RCSB Financial, Inc................................................................ 405,375
-----------
4,046,562
-----------
BROADCASTING--0.9%
60,000 Premiere Radio Networks, Inc., Class "A"........................................... 885,000
-----------
BUILDING--1.3%
10,000 Advanced Lighting Technologies, Inc.*.............................................. 145,000
45,000 Lennar Corporation................................................................. 1,125,000
-----------
1,270,000
-----------
CHEMICALS--0.1%
10,000 Planet Polymer Technology, Inc.*................................................... 130,000
-----------
CONGLOMERATES/DIVERSIFIED--1.7%
25,000 Harsco Corporation................................................................. 1,721,875
-----------
DATA PROCESSING--12.1%
10,000 3D Systems Corporation............................................................. 201,250
45,876 BancTec, Inc.*..................................................................... 934,724
65,000 Boca Research, Inc.*............................................................... 1,397,500
50,000 Byron Preiss Multimedia Company, Inc.*............................................. 362,500
67,500 Comdisco, Inc...................................................................... 1,662,187
15,000 Excalibur Technologies Corporation*................................................ 386,250
141,705 Greentree Software, Inc.*.......................................................... 159,417
79,500 National Data Corporation.......................................................... 2,802,375
91,000 Norand Corporation*................................................................ 1,888,250
88,250 Printronix, Inc.*.................................................................. 1,809,125
15,000 Sykes Enterprises, Inc.*........................................................... 532,500
-----------
12,136,078
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
ELECTRONICS/ELECTRIC--5.8%
250,000 Ampex Corporation, Class "A"*...................................................... $ 2,093,750
80,000 Computer Products, Inc.*........................................................... 1,295,000
40,000 Eltron International, Inc.......................................................... 1,150,000
22,500 Reptron Electronics, Inc.*......................................................... 334,688
5,000 ThermoQuest Corporation*........................................................... 82,500
50,000 Trident International, Inc.*....................................................... 875,000
-----------
5,830,938
-----------
FINANCE--0.4%
25,000 Amresco, Inc....................................................................... 428,125
-----------
FOOD--1.4%
25,000 Morningstar Group, Inc.*........................................................... 250,000
40,000 Smithfield Foods, Inc.*............................................................ 1,180,000
-----------
1,430,000
-----------
FOOD SERVING--1.2%
45,000 Apple South, Inc................................................................... 1,170,000
-----------
HEALTH CARE CENTERS--5.1%
61,000 Advocat, Inc.*..................................................................... 632,875
27,500 Assisted Living Concepts, Inc.*.................................................... 543,125
95,500 ATS Medical, Inc.*................................................................. 955,000
14,300 Bergen Brunswig Corporation, Class "A"............................................. 389,675
45,200 Horizon Mental Health Management, Inc.............................................. 949,200
12,000 Regency Health Services, Inc.*..................................................... 112,500
50,000 Sterling Healthcare Group*......................................................... 862,500
40,000 Sterling House Corporation*........................................................ 740,000
-----------
5,184,875
-----------
HOME FURNISHINGS--1.2%
20,000 Ethan Allen Interiors, Inc.*....................................................... 520,000
40,000 Falcon Products, Inc............................................................... 650,000
-----------
1,170,000
-----------
HOTELS/MOTELS/INNS--0.8%
35,000 Red Lion Hotels, Inc.*............................................................. 770,000
-----------
INSURANCE--1.8%
40,000 Delphi Financial Group, Inc.*...................................................... 1,100,000
17,200 Transport Holdings, Inc., Class "A"*............................................... 731,000
-----------
1,831,000
-----------
INVESTMENT--0.5%
45,000 Southwest Securities Group, Inc.................................................... 523,125
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
LEATHER/SHOES--1.5%
240,000 Genesco Inc.*...................................................................... $ 1,470,000
-----------
LEISURE/AMUSEMENT--3.1%
43,000 Anthony Industries, Inc............................................................ 1,225,500
10,000 Cedar Fair Limited Partnership..................................................... 357,500
25,000 Matthews Studio Equipment Group*................................................... 48,828
45,000 Scientific Games Holdings, Inc.*................................................... 1,473,750
-----------
3,105,578
-----------
MACHINERY--0.9%
40,000 Computational Systems, Inc.*....................................................... 935,000
-----------
MANUFACTURING/DISTRIBUTIONS--2.7%
10,000 J. Ray McDermott S.A.*............................................................. 243,750
54,800 Peak Technologies Group, Inc.*..................................................... 1,328,900
30,000 Thermo Sentron, Inc.*.............................................................. 472,500
16,800 Thermo TerraTech, Inc.*............................................................ 226,800
25,000 ThermoSpectra Corporation*......................................................... 431,250
-----------
2,703,200
-----------
MEDICAL EQUIPMENT/SUPPLY--9.5%
175,000 Angeion Corporation*............................................................... 1,859,375
20,000 Arterial Vascular Engineering, Inc.*............................................... 880,000
62,742 Circon Corporation*................................................................ 901,916
113,333 Cooper Companies, Inc.............................................................. 1,246,663
85,000 Sano Corporation*.................................................................. 1,434,375
60,000 Thermedics, Inc.*.................................................................. 1,815,000
20,000 Thermo Cardiosystems, Inc.......................................................... 1,420,000
-----------
9,557,329
-----------
METAL--0.7%
46,000 Material Sciences Corporation*..................................................... 736,000
-----------
OIL & GAS--6.2%
50,000 Camco International, Inc........................................................... 1,781,250
400,000 Chaparral Resources, Inc.*......................................................... 437,500
15,000 Forcenergy Gas Exploration, Inc.*.................................................. 210,000
150,000 Marine Drilling Company, Inc.*..................................................... 1,481,250
35,000 Seacor Holdings, Inc.*............................................................. 1,443,750
47,000 Stone Energy Corporation*.......................................................... 846,000
-----------
6,199,750
-----------
PHARMACEUTICALS--1.4%
35,000 Applied Bioscience International, Inc.*............................................ 312,813
40,000 Protein Design Labs, Inc.*......................................................... 1,060,000
-----------
1,372,813
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
POLLUTION CONTROL--6.4%
240,000 Envirosource Inc.*................................................................. $ 840,000
68,475 Handex Corporation*................................................................ 462,206
65,000 IMCO Recycling, Inc................................................................ 1,413,750
175,000 Philip Environmental, Inc.*........................................................ 1,421,875
40,000 Superior Services, Inc.*........................................................... 560,000
70,000 Tetra Technologies, Inc.*.......................................................... 1,382,500
22,500 Thermo Remediation, Inc............................................................ 306,563
-----------
6,386,894
-----------
PUBLISHING--4.8%
15,000 Houghton Mifflin Company........................................................... 695,625
50,000 International Imaging Materials, Inc.*............................................. 950,000
34,200 John Wiley & Sons, Inc. Class "A".................................................. 1,179,900
19,000 Waverly, Inc....................................................................... 874,000
10,000 Western Publishing Group, Inc.*.................................................... 131,250
40,000 World Color Press, Inc.*........................................................... 960,000
-----------
4,790,775
-----------
REAL ESTATE INVESTMENT TRUST--4.6%
76,500 Alexander Haagen Properties, Inc................................................... 879,750
25,000 Apartment Investors & Management Company, Class "A"................................ 525,000
77,000 LTC Properties, Inc................................................................ 1,183,875
50,000 Meridian Industrial Trust, Inc..................................................... 806,250
20,000 Mid-America Apartment Communities, Inc............................................. 527,500
25,000 Public Storage, Inc................................................................ 512,500
15,000 Winston Hotels, Inc................................................................ 176,250
-----------
4,611,125
-----------
RETAIL STORES--4.3%
55,000 Cash America International, Inc.................................................... 316,250
30,000 Claire's Stores Inc................................................................ 652,500
45,000 Cole National Corporation, Class "A"*.............................................. 736,875
40,000 Eckerd Corporation................................................................. 1,910,000
42,500 The Forschner Group Inc.*.......................................................... 547,188
25,000 The Sirena Apparel Group, Inc.*.................................................... 121,875
-----------
4,284,688
-----------
SERVICES--6.5%
40,000 Interim Services, Inc.*............................................................ 1,735,000
250,000 National Education Corporation*.................................................... 3,718,750
10,000 PHH Corporation.................................................................... 568,750
11,500 Stewart Enterprises, Inc., Class "A"............................................... 526,125
-----------
6,548,625
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
TELECOMMUNICATIONS--1.4%
20,000 C-Tec Corporation*................................................................. $ 595,000
127,000 Syntellect, Inc.*.................................................................. 746,125
-----------
1,341,125
-----------
Total common stocks (cost $68,544,125)................................................................. 92,780,480
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT DATE
- ------------------ --------
<C> <S> <C> <C>
CONVERTIBLE BONDS--1.3%(A)
HEALTH CARE CENTERS--1.1%
$750,000 Assisted Living Concepts, 7.0%........................................... 08/15/05 1,050,000
------------
LEISURE/AMUSEMENT--0.2%
200,000 All American Communications, Inc., 6.5%.................................. 10/01/03 193,652
------------
Total convertible bonds (cost $950,000)................................................................ 1,243,652
------------
REPURCHASE AGREEMENT--8.3%(A)
- ----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated April 30, 1996, @ 5.22%,
to be repurchased at $8,281,201 on May 1, 1996, collateralized by $8,292,023 United States
Treasury Notes, 5.625%, due June 30, 1997 (market value $8,448,598 including interest) (cost
$8,280,000)......................................................................................... 8,280,000
-----------
TOTAL INVESTMENT PORTFOLIO (cost $77,774,125)(b), 102.1%(a)............................................ 102,304,132
OTHER ASSETS AND LIABILITIES, NET (2.1%)(a)............................................................ (2,058,619)
------------
NET ASSETS, 100.0%..................................................................................... $100,245,513
===========
</TABLE>
- ------------------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is 77,866,185.
Market value includes net unrealized appreciation of $24,437,947, which
consists of aggregate gross unrealized appreciation for all securities in
which there is an excess of market value over tax cost of $25,010,973 and
aggregate gross unrealized depreciation for all securities in which there is
an excess of tax cost over market value of $573,026.
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at market value (identified cost $77,774,125) (Note 1)..................... $102,304,132
Cash.................................................................................... 3,830
Receivables:
Investments sold...................................................................... 615,772
Fund shares sold...................................................................... 1,245,293
Dividends and interest................................................................ 53,687
Deferred organization expenses (Note 1)................................................. 20,000
Deferred state registration expenses (Note 1)........................................... 19,728
------------
Total assets.................................................................... 104,262,442
Liabilities
Payables (Note 4):
Investments purchased................................................................. $3,768,052
Fund shares redeemed.................................................................. 55,724
Accrued management fee................................................................ 66,386
Accrued distribution fee.............................................................. 26,744
Other accrued expenses................................................................ 100,023
----------
Total liabilities............................................................... 4,016,929
------------
Net assets, at market value............................................................. $100,245,513
===========
Net Assets
Net assets consist of:
Paid-in capital....................................................................... $ 69,592,840
Accumulated net investment loss (Note 1).............................................. (123,090)
Accumulated net realized gain (Note 1)................................................ 6,245,756
Net unrealized appreciation on investments............................................ 24,530,007
------------
Net assets, at market value............................................................. $100,245,513
===========
Class A Shares
Net asset value and redemption price per share ($85,148,706 divided by 3,580,266 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2)..................... $23.78
======
Maximum offering price per share (100/95.25 of $23.78).................................. $24.97
======
Class C Shares
Net asset value and offering price per share ($15,096,807 divided by 638,653 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)........................ $23.64
======
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends................................................................................ $ 288,336
Interest................................................................................. 191,701
-----------
Total income....................................................................... 480,037
Expenses (Notes 1 and 4):
Management fee........................................................................... $349,476
Distribution fee (Class A Shares)........................................................ 84,096
Distribution fee (Class C Shares)........................................................ 44,878
Custodian/Fund accounting fees........................................................... 30,996
Professional fees........................................................................ 28,652
Shareholder servicing fees............................................................... 22,528
Amortization of state registration expenses.............................................. 10,461
Reports to shareholders.................................................................. 10,216
Federal registration fees................................................................ 6,550
Amortization of organization expenses.................................................... 5,000
Trustees' fees and expenses.............................................................. 3,667
Insurance................................................................................ 2,382
Other.................................................................................... 199
--------
Total expenses..................................................................... 599,101
-----------
Net investment loss........................................................................ (119,064)
-----------
Realized and Unrealized Gain on Investments
Net realized gain from investment transactions............................................. 6,374,615
Net increase in unrealized appreciation of investments during the period................... 15,538,777
-----------
Net gain on investments............................................................ 21,913,392
-----------
Net increase in net assets resulting from operations....................................... $21,794,328
==========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
APRIL 30, 1996 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995
----------------- ------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income (loss)........................................... $ (119,064) $ 64,614
Net realized gain from investment transactions......................... 6,374,615 2,899,946
Net increase in unrealized appreciation of investments during the
period............................................................... 15,538,777 6,857,583
----------------- ------------------
Net increase in net assets resulting from operations................... 21,794,328 9,822,143
Distributions to shareholders from:
Net investment income Class A Shares ($.01 and $.01 per share,
respectively)........................................................ (35,023) (33,618)
Net realized gains Class A Shares ($.84 and $.97 per share,
respectively)........................................................ (2,610,455) (2,501,284)
Net realized gains Class C Shares ($.83 per share)..................... (286,911) --
Increase in net assets from Fund share transactions (Note 2)............. 19,557,521 13,014,458
----------------- ------------------
Increase in net assets................................................... 38,419,460 20,301,699
Net assets, beginning of period.......................................... 61,826,053 41,524,354
----------------- ------------------
Net assets, end of period (including accumulated net investment loss of
$123,090 and undistributed net investment income of $30,996,
respectively.)......................................................... $ 100,245,513 $ 61,826,053
================= =================
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
-------------------------------------------- ---------------------------
FOR THE SIX MONTH FOR THE YEARS ENDED FOR THE SIX MONTH
PERIOD ENDED OCTOBER 31 PERIOD ENDED
APRIL 30, 1996 ------------------------ APRIL 30, 1996
(UNAUDITED) 1995 1994 1993+ (UNAUDITED) 1995++
----------------- ------ ------ ------ ----------------- -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD... $ 18.86 $16.20 $15.57 $14.29 $ 18.79 $15.67
------ ------ ------ ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a).......... (.02) .02 (.01) (.01) (.10) (.02)
Net realized and unrealized gain on
investments............................ 5.79 3.62 .64 1.29 5.78 3.14
------ ------ ------ ------ ------ -------
Total from investment operations........... 5.77 3.64 .63 1.28 5.68 3.12
------ ------ ------ ------ ------ -------
LESS DISTRIBUTIONS:
Dividends from net investment income..... (.01) (.01) -- -- -- --
Distributions from net realized gains.... (.84) (.97) -- -- (.83) --
------ ------ ------ ------ ------ -------
Total Distributions...................... (.85) (.98) -- -- (.83) --
------ ------ ------ ------ ------ -------
NET ASSET VALUE, END OF THE PERIOD......... $ 23.78 $18.86 $16.20 $15.57 $ 23.64 $18.79
================= ====== ====== ====== ================= =======
TOTAL RETURN (%)(C)........................ 31.52 23.97 4.05 8.96 31.11 19.91
RATIOS (%)/SUPPLEMENTAL DATA:
Ratio of operating expenses, net, to
average daily net assets(a)............ 1.48 1.88 1.91 2.00(b) 2.23 2.36 (b)
Ratio of net investment income (loss) to
average daily net assets............... (.22) .15 (0.07) (0.15)(b) (.99) (.46)(b)
Portfolio turnover rate.................. 47 89 95 97(b) 47 89
Average commission rate on portfolio
transactions........................... $ .0656 -- -- -- $ .0656 --
Net assets, end of period ($ millions)... 85 57 42 40 15 4
</TABLE>
- ---------------
+ For the period May 7, 1993 (commencement of operations) to October 31, 1993.
++ For the period April 3, 1995 (commencement of Class C Shares) to October 31,
1995.
(a) Excludes management fees waived by the Manager in fiscal 1993 of less than
$.01 per share. The operating expense ratio including such items would be
2.09% (annualized). The year 1994 includes previously waived management fees
paid to the Manager of less than $.01 per share.
(b) Annualized.
(c) Does not include sales load. Not annualized for fiscal 1993 for Class A
Shares and fiscal 1995 for Class C Shares.
11
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
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 Small Cap Stock Fund (the "Fund"), the Value Equity 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
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 Value Equity Fund, Growth Equity Fund and
Eagle International Equity Portfolio are presented separately. The
preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual
results could differ from those estimates. The following is a summary of
significant accounting policies.
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.
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 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.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Organization Expenses: Expenses incurred in connection with the
formation of the Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.
Capital Accounts: The Fund reports the undistributed net investment
income 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 reclasses 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-SMALL CAP STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Note 2: FUND SHARES. At April 30, 1996, there was an unlimited number of shares
of beneficial interest of no par value authorized.
Transactions in Class A Shares of the Fund during the six month period
ended April 30, 1996 and for the year ended October 31, 1995, were as
follows:
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
APRIL 30, 1996 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 1995
-------------------------- ---------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold......................................... 671,102 $ 14,089,155 984,286 $ 17,529,467
Shares issued on reinvestment of distributions...... 121,496 2,404,406 160,682 2,431,113
Shares redeemed..................................... (256,835) (5,282,611) (664,339) (11,260,584)
--------- ------------ ---------- ------------
Net increase........................................ 535,763 $ 11,210,950 480,629 $ 8,699,996
=========== ===========
Shares outstanding:
Beginning of period............................... 3,044,503 2,563,874
--------- ----------
End of period..................................... 3,580,266 3,044,503
======== =========
</TABLE>
Transactions in Class C Shares of the Fund during the six month period
ended April 30, 1996 and from April 3, 1995 (commencement of Class C
Shares) to October 31, 1995 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MONTH APRIL 3, 1995
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1996 CLASS C SHARES) TO
(UNAUDITED) OCTOBER 31, 1995
-------------------------- ---------------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold......................................... 448,496 $ 9,316,444 234,197 $ 4,319,728
Shares issued on reinvestment of distributions...... 14,285 281,141 -- --
Shares redeemed..................................... (58,049) (1,251,014) (276) (5,266)
--------- ------------ ---------- ------------
Net increase........................................ 404,732 $ 8,346,571 233,921 $ 4,314,462
=========== ===========
Shares outstanding:
Beginning of period............................... 233,921 --
--------- ----------
End of period..................................... 638,653 233,921
======== =========
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For six month period ended April 30,
1996, purchases and sales of investment securities (excluding repurchase
agreements and short term obligations) aggregated $49,284,597 and
$34,229,496, 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
1.00% of the first $50,000,000 of the Fund's average daily net assets
and .75% of any excess over $50,000,000 of such 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. The Manager has voluntarily
agreed to waive its fee and if necessary, reimburse the Fund to the
extent that Fund operating expenses exceed 2.00% for Class A Shares
(2.75% for Class C Shares effective April 3, 1995) on an annual basis of
the Fund's average daily net assets. Effective March 1, 1996, the
Manager has voluntarily agreed to waive its fee and if necessary
reimburse the Fund to the extent that Fund operating expenses exceed
1.80% for Class A Shares and 2.55% for Class C Shares on an annual basis
of the Fund's average daily net assets. This agreement is more
restrictive than any state expense limitation. Fees voluntarily waived
are recoverable by the Manager for a period of up to two years.
The Manager has entered into agreements with Awad & Associates, Inc., a
division of Raymond James & Associates, Inc., and Eagle Asset
Management, Inc. (the "Subadvisers") for the Subadvisers to provide to
the Fund investment advice, portfolio
13
<PAGE> 14
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
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.
The Manager is also the Dividend Paying and Shareholder Servicing Agent
for the Fund. The amount payable to the Manager for such expenses as of
April 30, 1996 was $14,800 . In addition, the Manager performs Fund
Accounting services and charged $17,535 during the current period of
which $10,800 was payable as of April 30, 1996.
Pursuant to the Class A Distribution 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 of up to 0.35% of average daily net assets for
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 for Class A
Shares. Such fee is accrued daily and payable monthly. Under the Class C
Distribution Plan the Fund may pay the Distributer a fee equal to 1.00%
of the average daily net assets. 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. Such fees are accrued
daily and payable monthly. During the period $84,096 and $44,878 were
paid for distribution fees for Class A Shares and Class C Shares,
respectively. The Manager, the Subadvisers, and the Distributor 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 that are also advised by the Manager (collectively
referred to as the Heritage mutual funds). Each Trustee of the Heritage
mutual funds that is not an interested person of the Manager receives an
annual fee of $8,000, an additional fee of $2,000 for each combined
quarterly meeting of the Heritage mutual funds attended and $1,000 for
each special Trustees meeting attended. Trustees' fees and expenses are
paid equally by each of the Heritage mutual funds.
Note 5: DISTRIBUTION OF NET REALIZED GAINS. The Fund uses the identified cost
method for determining realized gain or loss on investments for both
financial and federal income tax purposes. Of the $2,526,517 net
realized gains for the year ended October 31, 1994, the Fund has
designated $403,325 as net long-term capital gains on a tax basis paid
in 1995.
14
<PAGE> 15
HERITAGE SERIES TRUST-SMALL CAP STOCK 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
HIGH YIELD BOND FUND
INTERMEDIATE GOVERNMENT FUND
- HERITAGE SERIES TRUST
EAGLE INTERNATIONAL EQUITY PORTFOLIO
GROWTH EQUITY FUND
VALUE EQUITY FUND
- 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 mutual funds, please contact your
account executive. Read the Prospectus carefully before you invest in any of the
funds.
<PAGE> 16
[HERITAGE LOGO]
SMALL CAP STOCK FUND
- -----------------------------------------------------
A MUTUAL FUND
- -----------------------------------------------------
SEEKING LONG-TERM
- -----------------------------------------------------
CAPITAL APPRECIATION
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
SEMIANNUAL REPORT
(Unaudited) and Investment
Performance Review for the
Six Month Period Ended
APRIL 30, 1996
A member of the
Heritage Family of Mutual Funds(TM)
Heritage Series Trust-Small Cap Stock Fund
P.O. Box 33022
St. Petersburg, FL 33733
- ---------------------------------------
Address Change Requested
Semiannual 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
This report is for the information of shareholders of Heritage
Series Trust-Small Cap Stock Fund. It may also be used as sales
literature when preceded or accompanied by a prospectus.
12M 6/96
