<PAGE> 1
June 19, 1996
Dear Fellow Shareholders:
It is my pleasure to provide you with the semiannual report for the
Heritage Series Trust - Value Equity Fund (the "Fund") for the six month period
ended April 30, 1996. For this period, the "A" shares and "C" shares of your
Fund had total returns of +13.3% and +12.8%, respectively.* For the same period,
the Standard & Poor's 500 Composite Stock Price Index had a gain of 13.8%.
Since our last report to you, we have added Dreman Value Advisors, Inc. as
a subadviser to your Fund. This action was approved by over 90% of shareholders
who cast their votes at a shareholders meeting held on May 24, 1996 and was
recommended by your Fund's Board of Trustees in order to retain the services of
Chris Bertelsen and the firm of Dreman Value Advisors (see notes to the
financial statements on page 12). Chris had managed your Fund since its
inception as a Senior Vice President of Eagle Asset Management, Inc., your
Fund's initial subadviser. Effective June 1, Chris began managing your Fund in
his new position as Chief Investment Officer of Dreman. Although Eagle remains
as an approved subadviser to your Fund, we currently have allocated all of the
Fund's assets to Chris and his team at Dreman.
In the letter that follows Chris Bertelsen discusses your Fund's
performance during the semiannual period, as well as his current views on
various market segments. I hope you find this information helpful in
understanding how your portfolio is managed.
Thank you for your continuing investment in Heritage Series Trust-Value
Equity Fund. We look forward to helping serve 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 Fellow Shareholders:
I am pleased to present to you the semiannual report for the Heritage
Series Trust - Value Equity Fund for the six month period ended April 30, 1996.
The Fund provided a total return of 13.3%* for Class A Shares and 12.8%* for
Class C Shares during this period, closely matching the 13.8% return of the
Standard & Poor's 500 Composite Stock Price Index.
The Fund had substantial growth in assets under management during the
period. Assets grew from approximately $16 million to nearly $24 million, a 50%
increase. This increase was due to both inflows of new cash and from
appreciation of assets.
During the semiannual period, Fund assets were allocated at various times
to take advantage of attractively priced companies in undervalued industries.
One of the biggest contributors to performance during the period was the Fund's
big position in healthcare and drug stocks, which constituted over 20% of assets
at October 31, 1995. This area experienced substantial appreciation, from which
the fund benefited handsomely. Later, many of these positions were sold in order
to preserve some sizable gains. By April 30, 1996, healthcare and drug stocks
comprised only 8.9% of Fund assets.
In early 1996 our research began to indicate that many companies within the
cyclical sector, namely aerospace, machinery and manufacturing concerns, were
undervalued and attractively priced. We soon began adding aerospace giants
Boeing and United Technologies to the Fund, along with machinery firms like
Deere & Company and Ingersoll-Rand Company, and manufacturers such as PPG
Industries.
The portfolio's long standing market weighting in the financial sector
decreased to 9.3% with the sale of American Express, Fannie Mae, Fleet Financial
Group, and The Bank of New York. All positions were sold for gains after meeting
their target sales prices.
Many technology names began to reappear in the portfolio in February.
Following the huge market sell-off in late 1995 of technology related stocks, a
number of these issues became oversold and in our eyes undervalued. Seagate
Technology, Inc., a maker of rigid magnetic disk drives for computer systems was
added to the portfolio along with Diamond Multimedia Systems, Inc., a designer
of high-performance multimedia solutions for personal computers. Technology
stocks made up 6.8% of the Fund's holdings at April 30, 1996, up from 2.9% of
holdings at October 31, 1995.
We believe that opportunities continue to exist for value investors to
achieve strong investment results and that the Fund is well positioned for the
remaining portion of the fiscal year.
Sincerely,
/s/ Chris Bertelsen
Chris Bertelsen
Chief Investment Officer
Dreman Value Advisors, Inc.
* Calculated without the imposition of front-end or contingent deferred sales
charges.
2
<PAGE> 3
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------------- -----------
<C> <S> <C>
COMMON STOCKS--94.9%(A)
AEROSPACE--4.8%
8,000 Boeing Company..................................................................... $ 657,000
2,500 General Motors Corporation, Class "H".............................................. 152,812
3,300 McDonnell Douglas Corporation...................................................... 318,450
-----------
1,128,262
-----------
ALUMINUM--1.5%
5,800 Aluminum Company of America........................................................ 361,775
-----------
AUTO PARTS/EQUIPMENT--3.7%
12,000 Breed Technologies, Inc............................................................ 258,000
7,000 Dana Corporation................................................................... 232,750
5,300 Eaton Corporation.................................................................. 320,650
3,400 Federal-Mogul Corporation.......................................................... 64,600
-----------
876,000
-----------
AUTO/TRUCK MANUFACTURERS--2.2%
1,400 Chrysler Corporation............................................................... 87,850
12,000 Ford Motor Company................................................................. 430,500
-----------
518,350
-----------
BANKING--4.9%
2,000 BankAmerica Corporation............................................................ 151,500
4,500 Bankers Trust New York Corporation................................................. 312,187
9,000 Cal Fed Bancorp, Inc.*............................................................. 160,875
4,100 Chase Manhattan Corporation........................................................ 282,387
2,500 Dime Bancorp, Inc.*................................................................ 30,625
2,800 Great Western Financial Corporation................................................ 64,400
2,500 Klamath First Bancorp, Inc......................................................... 34,375
4,000 PNC Bank Corporation............................................................... 121,000
-----------
1,157,349
-----------
BUILDING--2.8%
7,000 Foster Wheeler Corporation......................................................... 323,750
5,000 Illinois Tool Works, Inc. ......................................................... 336,250
-----------
660,000
-----------
CHEMICALS--3.8%
2,000 ARCO Chemical Company.............................................................. 106,250
2,000 Dow Chemical Company............................................................... 177,750
6,000 Du Pont (E.I.) De Nemours & Company................................................ 482,250
3,000 Union Carbide Corporation Holding Company.......................................... 136,500
-----------
902,750
-----------
COATINGS, PAINT, VARNISHES--1.4%
6,500 PPG Industries, Inc. .............................................................. 329,063
-----------
CONGLOMERATES/DIVERSIFIED--3.4%
6,000 Allied Signal, Inc................................................................. 348,750
4,000 United Technologies Corporation.................................................... 442,000
-----------
790,750
-----------
COSMETICS/TOILETRIES--1.4%
7,000 Tambrands, Inc. ................................................................... 335,125
-----------
DATA PROCESSING--6.8%
7,000 Automatic Data Processing, Inc. ................................................... 272,125
2,500 Compaq Computer Corporation*....................................................... 116,562
12,000 Diamond Multimedia Systems, Inc.*.................................................. 258,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------------- -----------
<C> <S> <C>
6,000 Intel Corporation.................................................................. 406,500
3,000 MacNeal-Schwendler Corporation..................................................... 40,875
2,000 National Semiconductor Corporation*................................................ 31,500
4,000 Read-Rite Corporation*............................................................. 83,000
7,000 Seagate Technology, Inc.*.......................................................... 406,000
-----------
1,614,562
-----------
ELECTRONICS/ELECTRIC--5.7%
7,500 Honeywell, Inc. ................................................................... 394,687
3,000 S3, Inc.*.......................................................................... 42,375
4,300 Texas Instruments, Inc. ........................................................... 242,950
35,500 Westinghouse Electric Corporation.................................................. 670,063
-----------
1,350,075
-----------
FINANCE--1.6%
5,000 Student Loan Marketing Association................................................. 366,250
-----------
FOOD--0.3%
2,900 Castle & Cooke, Inc.*.............................................................. 47,125
1,000 Grand Metropolitan, PLC, ADR....................................................... 26,625
-----------
73,750
-----------
GRAPHIC ARTS--0.4%
3,000 Deluxe Corporation................................................................. 105,000
-----------
HEALTH CARE CENTERS--5.5%
3,000 Columbia/HCA Healthcare Corporation................................................ 159,375
2,000 Foundation Health Corporation...................................................... 78,250
8,000 Humana, Inc.*...................................................................... 197,000
13,000 Tenet Healthcare Corporation*...................................................... 266,500
5,000 U. S. Healthcare, Inc. ............................................................ 260,625
5,800 United Healthcare Corporation...................................................... 339,300
-----------
1,301,050
-----------
HOUSEWARES--0.8%
7,000 Rubbermaid, Inc. .................................................................. 197,750
-----------
INSURANCE--2.1%
3,200 Hartford Steam Boiler Inspection & Insurance Company............................... 154,400
700 Highlands Insurance Group*......................................................... 13,300
7,000 Torchmark Corporation.............................................................. 301,000
-----------
468,700
-----------
LEATHER/SHOES--0.4%
3,500 Reebok International, Ltd. ........................................................ 101,500
-----------
LEISURE/AMUSEMENT--1.0%
2,000 Eastman Kodak Company.............................................................. 153,000
2,800 Royal Caribbean Cruises, Ltd. ..................................................... 78,750
-----------
231,750
-----------
MACHINERY--6.5%
6,400 Caterpillar, Inc. ................................................................. 409,600
7,500 Deere & Company.................................................................... 291,563
2,500 Harnischfeger Industries, Inc. .................................................... 101,250
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------------- -----------
<C> <S> <C>
7,000 Ingersoll-Rand Company............................................................. 271,250
5,000 Johnson Controls, Inc.............................................................. 357,500
2,000 Tecumseh Products Company, Class "A"............................................... 113,000
-----------
1,544,163
-----------
MINING/DIVERSIFIED--0.9%
3,000 Phelps Dodge Corporation........................................................... 220,500
-----------
OFFICE EQUIPMENT--3.1%
11,000 Office Depot, Inc.*................................................................ 246,125
10,000 Pitney-Bowes Inc. ................................................................. 487,500
-----------
733,625
-----------
OIL & GAS--9.6%
2,000 Apache Corporation................................................................. 58,000
1,000 Atlantic Richfield Company......................................................... 117,750
3,000 British Petroleum Company, PLC, Sponsored ADR...................................... 327,750
2,000 Chevron Corporation................................................................ 116,000
5,000 Exxon Corporation.................................................................. 425,000
3,500 Halliburton Company................................................................ 200,813
3,000 McDermott International, Inc. ..................................................... 63,000
3,300 Mobil Corporation.................................................................. 379,500
1,400 Royal Dutch Petroleum Company, NY Shares, ADR...................................... 200,550
2,500 Schlumberger, Ltd. ................................................................ 220,625
2,000 Texaco, Inc. ...................................................................... 171,000
-----------
2,279,988
-----------
PAPER/PRODUCTS--0.6%
3,000 Champion International Corporation................................................. 144,750
-----------
PHARMACEUTICAL--3.4%
6,500 Amgen, Inc.*....................................................................... 373,750
5,000 Amlyin Pharmaceuticals, Inc.*...................................................... 47,500
3,000 Cocensys, Inc.*.................................................................... 22,875
3,000 Cortex Pharmaceuticals, Inc.*...................................................... 20,625
1,500 Cytogen Corporation*............................................................... 11,531
5,000 Ligand Pharmaceuticals, Class "B"*................................................. 73,125
4,200 Eli Lilly & Company................................................................ 247,800
-----------
797,206
-----------
POLLUTION CONTROL--0.5%
4,000 Browning-Ferris Industries, Inc.*.................................................. 129,000
-----------
PUBLISHING--0.5%
6,000 Dun & Bradstreet Corporation....................................................... 365,250
3,200 Tribune Company.................................................................... 223,200
-----------
588,450
-----------
RAILROADS--2.1%
1,000 Burlington Northern Santa Fe....................................................... 87,500
6,300 CSX Corporation.................................................................... 322,875
2,700 Illinois Central Corporation....................................................... 81,000
-----------
491,375
-----------
RETAIL STORES--1.0%
4,700 J.C. Penney Company, Inc. ......................................................... 232,650
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1996
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ----------------- -----------
<C> <S> <C>
SECURITIES--0.7%
4,000 Salomon, Inc. ..................................................................... 162,500
-----------
STEEL/IRON--1.0%
6,000 Carpenter Technology Corporation................................................... 225,750
-----------
TELECOMMUNICATIONS--3.4%
2,000 Ameritech Corporation.............................................................. 116,750
7,000 BellSouth Corporation.............................................................. 280,000
2,000 GTE Corporation.................................................................... 86,750
3,000 NYNEX Corporation.................................................................. 147,375
3,500 SBC Communications, Inc. .......................................................... 175,000
-----------
805,875
-----------
TOBACCO--2.1%
4,100 American Brands, Inc. ............................................................. 170,663
4,200 RJR Nabisco Holdings Corporation................................................... 125,475
6,000 UST, Inc. ......................................................................... 192,000
-----------
488,138
-----------
TRANSPORTATION--2.7%
2,800 Airborne Freight Corporation....................................................... 73,850
2,000 Comair Holdings, Inc. ............................................................. 74,000
5,900 Federal Express Corporation*....................................................... 476,425
-----------
624,275
-----------
UTILITIES-ELECTRIC--0.3%
800 Duke Power Company................................................................. 37,600
1,000 Minnesota Power & Light Company.................................................... 26,750
-----------
64,350
-----------
Total common stocks (cost $20,734,660)................................................................. 22,402,406
-----------
REPURCHASE AGREEMENT--3.6%(A)
Repurchase Agreement with State Street Bank and Trust Company, dated April 30, 1996, @ 5.22%, to be
repurchased at $840,122 on May 1, 1996, collateralized by $843,680 United States Treasury Notes,
5.625%, due June 30, 1997, (market value $859,610 including interest) (cost $840,000).................. 840,000
-----------
TOTAL INVESTMENT PORTFOLIO (cost $21,574,660)(b), 98.5%(a)............................................. 23,242,406
OTHER ASSETS AND LIABILITIES, NET, 1.5%(a)............................................................. 352,640
-----------
NET ASSETS, 100.0%..................................................................................... $23,595,046
===========
</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
$21,580,990. Market value includes net unrealized appreciation of
$1,661,416, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
of $1,814,706 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$153,290.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
- -----
Investments, at market value (identified cost $21,574,660) (Note 1)...................... $23,242,406
Cash..................................................................................... 572
Receivables:
Investments sold....................................................................... 410,395
Fund shares sold....................................................................... 107,000
Dividends and interest................................................................. 26,116
Deferred organization expenses (Note 1).................................................. 38,874
Deferred state registration expenses (Note 1)............................................ 16,011
-----------
Total assets..................................................................... 23,841,374
Liabilities
- --------
Payables (Note 4):
Investments purchased.................................................................. $ 114,838
Fund shares redeemed................................................................... 25,771
Due to Manager......................................................................... 40,178
Accrued distribution fee............................................................... 9,161
Other accrued expenses................................................................. 56,380
----------
Total liabilities................................................................ 246,328
-----------
Net assets, at market value.............................................................. $23,595,046
==========
Net Assets
- ---------
Net assets consist of:
Paid-in capital (Note 1)............................................................... $20,461,234
Undistributed net investment income (Note 1)........................................... 17,424
Accumulated net realized gain (Note 1)................................................. 1,448,642
Net unrealized appreciation on investments............................................. 1,667,746
-----------
Net assets, at market value.............................................................. $23,595,046
==========
Class A Shares
- -------------
Net asset value and redemption price per share ($15,505,163 divided by 787,251 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $19.70
=====
Maximum offering price per share (100/95.25 of $19.70)................................... $20.68
=====
Class C Shares
- ------------
Net asset value and offering price per share ($8,089,883 divided by 413,317 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $19.57
=====
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD
ENDED APRIL 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
- ----------------
Income:
Dividends................................................................................. $ 222,707
Interest.................................................................................. 26,427
----------
Total income........................................................................ 249,134
Expenses (Notes 1 and 4):
Management fee............................................................................ $ 76,761
Custodian/Fund accounting fees............................................................ 34,056
Professional fees......................................................................... 20,254
Distribution fee (Class A Shares)......................................................... 17,665
Distribution fee (Class C Shares)......................................................... 31,687
Amortization of state registration expenses............................................... 16,009
Trustees' fees and expenses............................................................... 10,919
Shareholder servicing fee................................................................. 9,250
Reports to shareholders................................................................... 6,500
Amortization of organization expenses..................................................... 5,301
Federal registration fee.................................................................. 1,958
Insurance................................................................................. 1,800
Other..................................................................................... 536
--------
Total expenses before waiver........................................................ 232,696
Fees waived by the Manager (Note 4)................................................. (39,994)
--------
192,702
----------
Net investment income....................................................................... 56,432
----------
Realized and Unrealized Gain on Investments
- ---------------------------------------
Net realized gain from investment transactions.............................................. 1,457,661
Net increase in unrealized appreciation of investments during the period.................... 872,553
----------
Net gain on investments............................................................. 2,330,214
----------
Net increase in net assets resulting from operations........................................ $2,386,646
=========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH FOR THE PERIOD
PERIOD ENDED DECEMBER 30, 1994
APRIL 30, 1996 (COMMENCEMENT OF OPERATIONS)
(UNAUDITED) TO OCTOBER 31, 1995
------------------ -----------------------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income.......................................... $ 56,432 $ 56,475
Net realized gain from investment transactions................. 1,457,661 536,111
Net increase in unrealized appreciation of investments during
the period................................................... 872,553 795,193
------------------ ------------
Net increase in net assets resulting from operations........... 2,386,646 1,387,779
Distribution to shareholders from:
Net investment income Class A Shares, ($.11 per share)......... (76,650) --
Net investment income Class C Shares, ($.07 per share)......... (18,833) --
Net realized gains Class A Shares, ($.55 per share)............ (387,181) --
Net realized gains Class C Shares, ($.55 per share)............ (157,949) --
Increase in net assets from Fund share transactions (Note 2)..... 5,678,207 14,482,027
------------------ ------------
Increase in net assets........................................... 7,424,240 15,869,806
Net assets, beginning of period.................................. 16,170,806 301,000
------------------ ------------
Net assets, end of period (including undistributed net investment
income of $17,424 and $56,475, respectively)................... $ 23,595,046 $16,170,806
================== =============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY 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 SIX MONTH
PERIOD ENDED PERIOD ENDED
APRIL 30, 1996 APRIL 30, 1996
(UNAUDITED)* 1995+ (UNAUDITED)* 1995++
----------------- -------- ----------------- ---------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.......... $ 18.00 $14.29 $ 17.92 $ 15.27
------ -------- ------ ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a)........................ .08 .08 .00 .01
Net realized and unrealized gain on
investments................................... 2.28 3.63 2.27 2.64
------ -------- ------ ---------
Total from investment operations.................. 2.36 3.71 2.27 2.65
------ -------- ------ ---------
LESS DISTRIBUTIONS:
Dividends from net investment income............ (.11) -- (.07) --
Distributions from net realized gains........... (.55) -- (.55) --
------ -------- ------ ---------
Total Distributions............................... (.66) -- (.62) --
------ -------- ------ ---------
NET ASSET VALUE, END OF THE PERIOD................ $ 19.70 $18.00 $ 19.57 $ 17.92
================= ======== ================= ==========
TOTAL RETURN (%)(C)(D)............................ 13.31 25.96 12.83 17.35
RATIOS (%)/AND SUPPLEMENTAL DATA:
Ratio of operating expenses, net to average
daily net assets(a)(b)........................ 1.65 1.65 2.40 2.40
Ratio of net investment income to average daily
net assets(b)................................. .80 1.05 .00 .28
Portfolio turnover rate(c)...................... 57 82 57 82
Average commission rate on portfolio
transactions.................................. $ .0535 -- $ .0535 --
Net assets, end of period ($ millions).......... 16 12 8 4
</TABLE>
- ---------------
* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the year since
the use of the undistributed income method does not correspond with results
of operations.
+ 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 in
the amount of $.04 and $.26 per Class A Share, respectively. The operating
expense ratios including such items would be 2.04% and 3.49% for Class A
Shares, respectively. Excludes management fees waived and expenses
reimbursed by the Manager in the amount of $.04 and $.16 per Class C Share,
respectively. The operating expense ratio including such items would be
2.79% and 4.24% (annualized) for Class C Shares.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of front-end or contingent deferred sales
charges.
9
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY 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 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, 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.
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.
10
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY 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 from December 30, 1994 to October 31, 1995 were
as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD
FOR THE SIX MONTH DECEMBER 30, 1994
PERIOD ENDED (COMMENCEMENT OF
APRIL 30, 1996 OPERATIONS) TO
(UNAUDITED) OCTOBER 31, 1995
----------------------- -----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------------- ------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................... 182,563 $ 3,466,211 692,734 $11,278,811
Shares issued on reinvestment of distributions............ 23,052 430,843 -- --
Shares redeemed........................................... (80,325) (1,542,740) (51,837) (885,977)
------- ----------- ------- -----------
Net increase.............................................. 125,290 $ 2,354,314 640,897 $10,392,834
========== ==========
Shares outstanding:
Beginning of period..................................... 661,961 21,064
------- -------
End of period........................................... 787,251 661,961
======= =======
</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............................................... 186,767 $ 3,534,099 238,487 $ 4,109,350
Shares issued on reinvestment of distributions............ 9,456 176,072 -- --
Shares redeemed........................................... (20,230) (386,278) (1,163) (20,157)
------- ----------- ------- -----------
Net increase.............................................. 175,993 $ 3,323,893 237,324 $ 4,089,193
========== ==========
Shares outstanding:
Beginning of period..................................... 237,324 --
------- -------
End of period........................................... 413,317 237,324
======= =======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the six month period ended April
30, 1996, purchases and sales of investment securities (excluding
repurchase agreements and short term obligations) aggregated $16,166,843
and $11,155,347, respectively.
11
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
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. Under
this agreement, management fees of $39,994 were waived for the period
ended April 30, 1996. If total Fund expenses fall below the expense
limitation agreed to by the Manager before the end of the year ending
October 31, 1998, the Fund may be required to pay the Manager a portion
or all of the waived management fee. In addition, the Fund may be
required to pay the Manager a portion or all of the management fees
waived of $115,974 for the year ended October 31, 1995, if total Fund
expenses fall below the annual expense limitations before the end of the
year ending October 31, 1997.
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 April 30, 1996 was $5,200. In addition, the Manager performs Fund
Accounting services and charged $15,908 during the current period of
which $9,523 was payable as of April 30, 1996.
The Manager has entered into an agreement with Eagle Asset Management,
Inc. ("Eagle") 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.
As of May 24, 1996, pursuant to a shareholders vote, the Manager entered
into an agreement with Dreman Value Advisors, Inc., ("Dreman") as an
additional 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 .35% of the Fund's average daily net assets. If,
however, Heritage's fee is reduced due to the imposition of asset level
breakpoints, Dreman's fee will be reduced proportionately, provided that
in no event will such fee be reduced below .35% on the first $50 million
of the Fund's average daily net assets. As of June 1, 1996, all the
assets of the Fund were allocated to Dreman.
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 may pay 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 $17,665 and $31,687 were paid for distribution fees for Class A
Shares and Class C Shares, respectively. The Manager, Eagle, 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 which are also advised by the Manager (collectively
referred to as the Heritage 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 funds.
12
<PAGE> 13
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Note 5: SHAREHOLDERS MEETING: On May 24, 1996, a Special Meeting of
Shareholders was held. The results of that meeting on the following item
was as follows:
<TABLE>
<CAPTION>
SHARES
-------------------------------------
WITHHELD
FOR AGAINST AUTHORITY
----------- ---------- ----------
<S> <C> <C> <C>
Approval of the Subadvisory Agreement between Heritage Asset Management,
Inc. and Dreman Value Advisors, Inc.................................... 588,124.098 19,989.757 40,043.613
</TABLE>
13
<PAGE> 14
(This page intentionally left blank)
<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
HIGH YIELD BOND FUND
INTERMEDIATE GOVERNMENT FUND
- HERITAGE SERIES TRUST
EAGLE INTERNATIONAL EQUITY PORTFOLIO
GROWTH EQUITY FUND
SMALL CAP STOCK 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 Series Trust-Value Equity Fund
P.O. Box 33022
St. Petersburg, FL 33733
- ------------------------------------------
Address Change Requested
Semiannual Report
INVESTMENT ADVISOR/
<PAGE> 17
[LOGO]
HERITAGE
- --------------------------
SERIES TRUST(TM)
- --------------------------
VALUE EQUITY 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-Eagle International Equity Portfolio
P.O. Box 33022
St. Petersburg, FL 33733
- -----------------------------------------
Address Change Requested
Semiannual Report
INVESTMENT ADVISOR/FUND ASSOCIATED
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) 573-3300
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
This report is for the information of shareholders of Heritage Series
Trust-Value Equity Fund. It may also be used as sales literature when
preceeded or accompanied by a prospectus.
