<PAGE> 1
December 19, 1995
Dear Fellow Shareholders:
I am pleased to provide you with the annual report for Heritage Series
Trust-Small Cap Stock Fund (the "Fund") for the fiscal year ended October 31,
1995. For this period, Class A Shares of your Fund had a total return of +23.97%
(excluding the imposition of a front end sales load). For the same period, the
Russell 2000 index (an index comprised of smaller capitalization companies), had
a return of +18.33%. From April 3, 1995, when Class C Shares of your Fund were
introduced, through the end of the Fund's fiscal year, Class C Shares returned
+19.91%.
Within the past year, we have experienced not only a pleasant change in the
climate for investors in small cap stocks, but also a significant change in the
management of your Fund's investment portfolio. In May 1995, your Fund's
Trustees approved solicitation of shareholder approval for retaining Eagle Asset
Management ("Eagle") as a subadviser for a portion of your Fund's portfolio,
replacing the Research Department of Raymond James & Associates. This change was
approved by shareholders at an August 7, 1995 special meeting.* Eagle is
continuing to invest the majority of their portion of your Fund in stocks rated
"Buy 1" by the Research Department of Raymond James & Associates, much like the
Research Department did previously. We appreciate the services that David
Henwood provided for your Fund on behalf of Research from the inception of your
Fund through August 1995. We are excited about the future for your Fund with the
current team of Bert Boksen at Eagle and Jim Awad at Awad & Associates. In the
letters that follow, your Fund's portfolio managers discuss the factors that
materially affected your Fund's performance last year. I hope you find their
comments helpful in understanding how your Fund's investment portfolio is
managed.
On behalf of all of us at Heritage, thank you for your continuing
investment with us. We hope you had a happy and healthy holiday season and wish
you a wonderful 1996!
Sincerely,
/s/ Stephen G. Hill
-------------------
Stephen G. Hill
President
- ---------------
* Proxy Voting Results:
On August 7, 1995 a special shareholders' meeting was held. The results of
that meeting on the following items were as follows:
<TABLE>
<CAPTION>
SHARES
-----------------------------------------
FOR AGAINST ABSTAINING
------------- ---------- ----------
<S> <C> <C> <C>
To approve the Investment Subadvisory
Agreement between Heritage Asset Management,
Inc. and Eagle Asset Management, Inc. with
respect to the Fund......................... 1,302,045.577 50,836.027 83,151.271
============ ========= =========
</TABLE>
<PAGE> 2
December 19, 1995
Dear Shareholders:
It is with great pleasure that we present you with the performance report
for the portion of your Fund managed by Awad & Associates.
In terms of specific situations, your Fund benefited from a position in
Wallace Computer Services, Inc. This company, having benefited from significant
investments in new technology, was offered to be taken over by Moore
Corporation, which resulted in significant appreciation. Another major winner
was National Data Corp., where excellent fundamentals became apparent to the
investment community. Peak Technologies made good money for your Fund, as its
premier position in the bar code distribution area created good growing profits.
In the medical area, your Fund benefited from the favorable outlooks at
some emerging and middle sized companies with excellent prospects. This universe
includes Angeion, Eckerd Corp., Circon and Thermo Cardiosystems.
In addition, your Fund benefited from the continuing restructuring of the
financial sector, with Summit Bancorp., RCSB Financial and First Financial
Caribbean. The Fund also benefited from owning companies which had restructured
and started to grow, yet which were underfollowed by the investment community.
Examples are Americredit in the auto finance area and National Education
Corporation.
In the technology area, Printronix, which makes high speed printers, and
Inter-Tel, which automates communications for small businesses, added to the
Fund's results. Finally, good money was made in Luxotica, which consolidated its
grip on the eyeglass manufacturing and retailing industry.
On the negative side, real estate investment trusts were disappointing as
were a variety of situations where the earnings turned out to be somewhat less
than expected. A position in Sports Club hurt the Fund, as the company was not
as successful as hoped for in consolidating the athletic club industry. An
investment in an emerging software company was unsuccessful, as the company used
up its finances and is in the process of being merged with another company. John
Alden hurt the Fund's results, as HMO costs grew faster than expected.
Our portion of your Fund is invested largely in companies with growing
earnings and good balance sheets yet which sell at low price earnings ratios and
below strategic acquisition value. We believe these should be sound investments
over time.
Going forward, we expect further strength in equity prices based on low
inflation, sustainable economic growth, increasing corporate profits, movement
toward a balanced budget, declining interest rates, favorable stock valuations
and the initiation of a capital gains tax cut.
2
<PAGE> 3
From a historical perspective, we believe small capitalization stocks are
still particularly attractive. While these stocks have provided high returns
over time, during much of the 1980's this universe of stocks appreciated less
than large capitalization stocks, and although they have outperformed in the
1990's, they have not yet recouped the underperformance of the 1980's. Thus, an
argument can be made that the stocks are attractive relative to the market as a
whole.
We are hopeful that this combination of factors should lead to record stock
prices over the next year.
Sincerely,
/s/ James D. Awad
-----------------
James D. Awad
President
Awad & Associates
3
<PAGE> 4
December 19, 1995
Dear Shareholders:
An expanding U.S. economy, growing moderately with low inflation provided a
favorable background for falling interest rates and corporate profitability
gains throughout 1995. Such an environment was healthy for both the bond and
equity markets as both experienced steady and impressive gains.
Strong markets throughout fiscal year 1995 propelled the Fund upward even
though the Russell 2000, a small stock index, lagged the Dow Jones Industrial
Averages and Standard & Poor's 500 Composite Stock Price Index. A lack of a
heavy weighting of technology stocks somewhat hurt relative performance of the
Research portion of the Heritage Small Cap Stock Fund. Still, major stock
appreciation gains were achieved in quality growth stocks led by 40%-plus
gainers including: Cordis Corp., DF&R Restaurants, Danka Business Systems, JLG
Industries, Metrocall, Inc., National Education Corp., Outback Steakhouse,
Scientific Gaming, and U.S. Filter. These stocks produced strong earnings gains
and all benefitted from rising Price/Earnings multiples over the past year.
Despite the strength in the overall market, any smaller stocks with
disappointing results were immediately penalized and usually severely.
Unfortunately, this was true of several 20%-plus decliners in the Research
position of your Fund, including: Aldila, Peoples Telephone, Pittencrieff
Communications, and Sun Healthcare.
The overall performance during my nine months managing a portion of your
Fund was aided by quality growth companies, and was hurt by non-performing
cyclicals and companies that failed to live up to analysts' expectations.
In 1995, business spending-driven stocks led and consumer spending
sensitive stocks usually lagged. These trends are continuing to be evident in
recent trading activity, but investors are becoming more sensitive to very high
P/Es and economic sensitivity issues as the economy continues to slow.
I enjoyed the opportunity of serving as a portfolio manager for a portion
of your Fund.
Sincerely,
/s/ David A. Henwood
--------------------
David A. Henwood
Senior Vice President, Director of
Research
Raymond James & Associates
4
<PAGE> 5
December 19, 1995
Dear Fellow Shareholders:
It is with great pleasure, enthusiasm and positive anticipation that I
report to shareholders for the first time as a portfolio manager of your Fund.
After sixteen years at Raymond James, as an analyst, institutional salesperson,
Chief Investment Officer and Chairman of the Focus Committee, in August of this
year, as a strong complement to my new position as Small Cap manager at Eagle
Asset Management, I assumed the portfolio management of the portion of your Fund
previously managed by the Raymond James Research Department.
My prior experience at Raymond James should enable me to perform well in
maintaining the character of the Fund (i.e. primarily Raymond James research
stocks), while augmenting that research with the talents brought to bear by
Eagle's research and trading capabilities.
My thanks to my predecessor Dave Henwood who did an outstanding job in
managing your Fund. He left me an excellent list of stocks, which included DF &
R restaurants, which was acquired by Apple South, and Cordis Corp., which
received an offer from Johnson & Johnson.
Upon assuming management of the Fund, I added to certain existing positions
such as Harsco, U.S. Filter, Calloway, Thermo Instruments and Southeast
Securities. New purchases include Thermedics, Ampex, CCH, Amtran and Interim
Services. Recently, your Fund benefited as CCH received a $55.50 a share cash
tender offer. Our cost was slightly over $23 a share.
Stocks sold included Living Centers, Fisher Scientific, Sequent Computer,
Cellstar and Royal Caribbean. The best sale of the period was Players
International, which was sold at $20 5/8. Players currently trades at
approximately $12 1/8. On the downside Amtran, a regional airline, has been a
negative performer despite robust earnings.
Recently, I began adding to the oil service sector, as strong activity in
the Gulf of Mexico and rising Natural Gas prices figure to help that sector.
Purchases made subsequent to fiscal year end include Marine Drilling and Seacor
Holdings.
Historically and currently, the Fund has been underweighted in technology,
probably a good place to be given current valuations of that sector. However,
sometime in the future when valuations are more realistic, I will be seeking to
increase the technology exposure.
I am not a market timer and intend to stay over 90% invested under normal
market conditions. Hopefully, industry diversification and strong research will
help the Fund weather inevitable difficult market environments. Although, I will
echo observations of most market observers that a cut in the capital gains tax
rate should benefit small cap stocks.
I feel good about the current make-up of the Fund and look forward to being
able to report continued positive results.
Respectfully yours,
/s/ Bert Boksen
- ---------------
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
5
<PAGE> 6
[CHART]
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HST-SMALL CAP STOCK FUND CLASS A SHARES
ON MAY 7, 1993
<TABLE>
<CAPTION>
MEASUREMENT PERIOD HST-SMALL CAP RUSSELL 2000
(FISCAL YEAR COVERED) STOCK FUND INDEX
<S> <C> <C>
5/7/93** 9525 10000
7/31/93 9512 10390
10/31/93 10378 11431
1/31/94 10938 11794
4/30/94 10631 11199
7/31/94 10145 10874
10/31/94 10798 11396
1/31/95 10817 11086
4/30/95 11427 12006
7/31/95 13116 13586
10/31/95 13386 13485
</TABLE>
- --------------------------------------------------------------------------------
* Average annual total returns for HST-Small Cap Stock Fund Class A Shares are
calculated in conformance with Item 22 of Form N-1A, which assumes the
reinvestment of dividends and a sales load of 4.75%.
** From Fund inception on May 7, 1993.
[CHART]
- --------------------------------------------------------------------------------
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HST-SMALL CAP STOCK FUND CLASS C SHARES
ON APRIL 3, 1995
<TABLE>
<CAPTION>
HST-SMALL CAP
MEASUREMENT PERIOD STOCK FUND RUSSELL 2000
(FISCAL YEAR COVERED) $11,991 INDEX
<S> <C> <C>
4/3/1995**** 10000 10000
4/30/95 10268 10222
5/31/95 10466 10398
6/30/95 10906 10938
7/31/95 11729 11568
8/31/95 12023 11807
9/30/95 12527 12018
10/31/95 11991 11481
</TABLE>
- --------------------------------------------------------------------------------
*** Annual total return for HST-Small Cap Stock Fund Class C Shares are
calculated in conformance with Item 22 of Form N-1A.
**** From inception of Class C Shares on April 3, 1995.
6
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
VALUE
-----------
<S> <C>
REPURCHASE AGREEMENT--8.6%(A)
- ----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October 31, 1995 @ 5.82%, to
be repurchased at $5,310,858 on November 1, 1995, (collateralized by $4,945,000 United States
Treasury Notes, 7.25%, due August 15, 2004 with a market value $5,449,041, including
interest)(cost $5,310,000)........................................................................ $ 5,310,000
-----------
COMMON STOCKS--89.9%(A)
- ---------------------
</TABLE>
<TABLE>
<CAPTION>
SHARES
----------------
<C> <S> <C>
AIR TRANSPORT--0.9%
-----------------
50,000 Amtran, Inc.*..................................................................... 550,000
-----------
BANKING--5.2%
-------------
2,500 Commerce Bancorp, Inc............................................................. 57,813
32,500 First Financial Caribbean Corporation............................................. 578,906
20,000 FNB Rochester Corporation*........................................................ 157,500
17,000 Home Financial Corporation........................................................ 259,250
25,000 Imperial Thrift & Loan Association*............................................... 287,500
10,000 ISB Financial Corporation......................................................... 160,000
5,000 Pennfed Financial Services, Inc.*................................................. 72,500
2,500 Progressive Bank, Inc............................................................. 68,125
5,000 Queens County Bancorp, Inc........................................................ 200,000
17,250 RCSB Financial, Inc............................................................... 383,812
20,298 Summit Bancorporation............................................................. 575,956
12,500 UJB Financial Corporation......................................................... 398,437
-----------
3,199,799
-----------
BROADCASTING--0.7%
-----------------
32,500 Spelling Entertainment Group, Inc.*............................................... 422,500
-----------
BUILDING--0.7%
-------------
20,000 Lennar Corporation................................................................ 457,500
-----------
CHEMICALS--0.1%
--------------
10,000 Planet Polymer Technology, Inc.*.................................................. 31,250
-----------
CONGLOMERATES/DIVERSIFIED--0.1%
----------------------------
1,754 Belding Heminway Company, Inc.*................................................... 6,577
10,000 Noel Group, Inc................................................................... 55,000
-----------
61,577
-----------
DATA PROCESSING--13.2%
---------------------
27,376 BancTec, Inc.*.................................................................... 513,300
15,000 Byron Preiss Multimedia Company, Inc.*............................................ 112,500
45,000 Comdisco, Inc..................................................................... 1,372,500
10,000 Cornerstone Imaging, Inc.*........................................................ 225,000
141,705 Greentree Software, Inc.*......................................................... 137,284
52,000 Inter-Tel, Inc.*.................................................................. 773,500
79,500 National Data Corporation......................................................... 2,106,750
40,000 Norand Corporation*............................................................... 680,000
35,750 Printronix, Inc.*................................................................. 679,250
35,000 Shared Medical Systems Corporation................................................ 1,351,875
15,000 Tech Data Corporation*............................................................ 181,875
-----------
8,133,834
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------- -----------
<C> <S> <C>
ELECTRONICS/ELECTRICAL--1.1%
------------------------
200,000 Ampex Corporation*................................................................ $ 625,000
10,000 Cincinnati Microwave, Inc.*....................................................... 57,500
-----------
682,500
-----------
FILMED ENTERTAINMENT--3.2%
------------------------
35,000 Applied Bioscience International Inc.*............................................ 223,125
25,000 IMCO Recycling, Inc............................................................... 537,500
40,000 Republic Waste Industries*........................................................ 860,000
25,000 TETRA Technologies, Inc.*......................................................... 331,250
-----------
1,951,875
-----------
FINANCE--1.2%
------------
61,000 AmeriCredit Corporation*.......................................................... 747,250
-----------
FOOD--2.1%
----------
25,000 D F & R Restaurants, Inc.*........................................................ 762,500
25,000 Morningstar Group, Inc.*.......................................................... 193,750
10,000 Smithfield Foods, Inc.*........................................................... 252,500
5,694 Sylvan, Inc.*..................................................................... 60,499
-----------
1,269,249
-----------
HEALTH CARE CENTERS--6.1%
-----------------------
66,000 Advocat, Inc.*.................................................................... 709,500
27,500 Assisted Living Concepts, Inc.*................................................... 395,312
44,300 Bergen Brunswig Corporation, Class "A"............................................ 919,225
30,000 Community Psychiatric Centers..................................................... 326,250
45,000 Horizon Mental Health Management, Inc.*........................................... 697,500
7,500 Multicare Companies, Inc.*........................................................ 140,625
35,000 Sterling Healthcare Group......................................................... 481,250
10,000 Sterling House Corporation*....................................................... 123,750
-----------
3,793,412
-----------
HOME FURNISHINGS--0.5%
---------------------
20,000 Falcon Products, Inc.............................................................. 280,000
-----------
INSURANCE--0.7%
--------------
10,000 Delphi Financial Group, Inc.*..................................................... 201,250
11,000 John Alden Financial Corporation.................................................. 228,250
-----------
429,500
-----------
INVESTMENT--0.5%
---------------
30,000 Southwest Securities Group, Inc................................................... 292,500
-----------
LEATHER/SHOES--1.1%
------------------
170,000 Genesco, Inc.*.................................................................... 680,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------- -----------
<C> <S> <C>
LEISURE/AMUSEMENT--4.8%
-----------------------
43,000 Anthony Industries, Inc........................................................... $ 800,875
27,000 Bally Gaming International, Inc.*................................................. 283,500
40,000 Callaway Golf Company............................................................. 655,000
25,000 Matthews Studio Equipment Group*.................................................. 43,750
30,000 Scientific Games Holdings Corporation*............................................ 982,500
52,500 Sports Club Company, Inc.*........................................................ 223,125
-----------
2,988,750
-----------
MACHINERY--0.7%
---------------
30,000 Computational Systems, Inc.*...................................................... 446,250
-----------
MANUFACTURING/DISTRIBUTIONS--7.5%
-------------------------------
25,000 Harsco Corporation................................................................ 1,318,750
22,000 Luxottica Group S.P.A., ADR....................................................... 1,072,500
34,800 Peak Technologies Group, Inc.*.................................................... 878,700
10,000 Sweetwater, Inc.*................................................................. 37,500
25,000 Thermo Instrument Systems, Inc.*.................................................. 759,375
16,800 Thermo Process Systems, Inc.*..................................................... 182,700
25,000 ThermoSpectra Corporation(c)*..................................................... 406,250
-----------
4,655,775
-----------
MEDICAL EQUIPMENT/SUPPLY--9.6%
-----------------------------
125,000 Angeion Corporation*.............................................................. 953,125
37,742 Circon Corporated*................................................................ 858,631
63,333 Cooper Companies, Inc.*........................................................... 372,083
10,000 Cordis Corporation*............................................................... 1,105,000
15,000 Empi, Inc.*....................................................................... 333,750
20,000 Jones Medical, Inc................................................................ 390,000
40,000 Thermedics, Inc.*................................................................. 735,000
20,000 Thermo Cardiosystems, Inc.*....................................................... 970,000
68,000 Unilab Corporation*............................................................... 212,500
-----------
5,930,089
-----------
METAL--0.9%
-----------
32,500 Material Sciences Corporation*.................................................... 540,313
-----------
MINING/DIVERSIFIED--1.0%
----------------------
15,000 Minerals Technologies, Inc........................................................ 598,125
-----------
OFFICE EQUIPMENT--0.4%
--------------------
12,000 American Business Products, Inc................................................... 262,500
-----------
OIL & GAS--2.1%
--------------
45,000 Camco International, Inc.......................................................... 1,029,375
10,000 Global Industries Ltd.*........................................................... 262,500
-----------
1,291,875
-----------
POLLUTION CONTROL--3.7%
---------------------
38,475 Handex Corporation*............................................................... 240,469
63,000 Insituform Technologies, Class "A"................................................ 787,500
22,500 Thermo Remediation, Inc........................................................... 320,625
40,000 U.S. Filter Corporation*.......................................................... 930,000
-----------
2,278,594
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
9
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
---------------- -----------
<C> <S> <C>
PUBLISHING--3.9%
---------------
40,000 CCH Inc., Class "A"............................................................... $ 930,000
10,000 CCH Inc., Class "B"............................................................... 230,000
20,000 Claire's Stores, Inc.............................................................. 392,500
12,000 International Imaging Materials, Inc.*............................................ 303,000
6,000 John Wiley & Sons, Inc. Class "A"................................................. 178,500
9,000 Waverly, Inc...................................................................... 357,750
-----------
2,391,750
-----------
REAL ESTATE INVESTMENT TRUSTS (REIT)--5.4%
--------------------------------------
19,000 Alexander Haagen Properties, Inc.................................................. 209,000
25,000 Apartment Investors & Management Company.......................................... 503,125
77,000 LTC Properties, Inc............................................................... 1,116,500
22,000 Malan Realty Investors, Inc....................................................... 308,000
10,000 Mid-America Apartment Communities, Inc............................................ 230,000
6,000 Mid-America Realty Investments.................................................... 47,250
13,000 Mid-Atlantic Realty Trust......................................................... 107,250
25,000 Storage Equities, Inc............................................................. 459,375
20,000 Walden Residential Properties, Inc................................................ 367,500
-----------
3,348,000
-----------
RETAIL--4.9%
-----------
40,000 Cole National Corporation, Class "A"*............................................. 490,000
15,000 Damark International, Inc.*....................................................... 90,000
40,000 Eckerd Corporation*............................................................... 1,585,000
13,000 Fingerhut Companies, Inc.......................................................... 177,125
42,500 Forschner Group, Inc.*............................................................ 494,063
25,000 The Sirena Apparel Group, Inc.*................................................... 181,250
-----------
3,017,438
-----------
SERVICES--5.4%
------------
40,000 Interim Services, Inc.*........................................................... 1,190,000
200,000 National Education Corporation*................................................... 1,625,000
19,000 Protection One, Inc.*............................................................. 149,625
11,500 Stewart Enterprises, Inc.......................................................... 388,125
-----------
3,352,750
-----------
TELECOMMUNICATIONS--2.4%
-----------------------
60,000 A+ Network, Inc.*................................................................. 840,000
25,000 Metrocall, Inc.*.................................................................. 625,000
-----------
1,465,000
-----------
Total common stocks (cost $46,649,408)............................................................... 55,549,955
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1995
(CONTINUED)
- --------------------------------------------------------------------------------
CONVERTIBLE BONDS--2.4%(A)
- ---------------------
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
- ---------------- ---------- -----------
<C> <S> <C> <C>
HEALTH CARE CENTERS--1.3%
-----------------------
$750,000 Assisted Living Concepts, Inc., 7.00%..................................... 08/15/05 $ 822,503
-----------
LEISURE/AMUSEMENT--0.3%
-----------------------
200,000 All American Communications Inc., 6.50%................................... 10/01/03 193,182
-----------
MEDICAL EQUIPMENT/SUPPLY--0.8%
-----------------------------
500,000 Cabot Medical Corporation, 7.50%.......................................... 03/01/99 490,000
-----------
Total convertible bonds (cost $1,415,000)................................................................ 1,505,685
-----------
TOTAL INVESTMENT PORTFOLIO (cost $53,374,408)(b), 100.9%(a).............................................. 62,365,639
OTHER ASSETS AND LIABILITIES, (0.9%)(a).................................................................. (539,586)
-----------
NET ASSETS, 100.0%....................................................................................... $61,826,053
==========
</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
$53,447,719. Market value includes net unrealized appreciation of
$8,917,920, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$10,845,037 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $1,927,117.
(c) Restricted security -- security that has not been registered with the
Securities and Exchange Commission under the Securities Act of
1933 -- purchased on October 11, 1994 at $10.00 per share. This security
represented 0.7% of the net assets of the Fund.
ADR--American Depository Receipt
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 12
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
Investments, at market value (identified cost $48,064,408) (Note 1)...................... $57,055,639
Repurchase agreement (identified cost $5,310,000) (Note 1)............................... 5,310,000
Cash..................................................................................... 170
Receivables:
Investments sold....................................................................... 1,699,527
Fund shares sold....................................................................... 376,339
Dividends and interest................................................................. 44,790
Deferred organization expenses (Note 1).................................................. 25,000
Deferred state registration expenses (Note 1)............................................ 13,281
Prepaid insurance........................................................................ 1,866
-----------
Total assets..................................................................... 64,526,612
Liabilities
Payables (Note 4):
Investments purchased.................................................................. $2,506,063
Fund shares redeemed................................................................... 41,541
Accrued management fee................................................................. 48,899
Accrued distribution fee............................................................... 15,835
Other accrued expenses................................................................. 88,221
----------
Total liabilities................................................................ 2,700,559
-----------
Net assets, at market value.............................................................. $61,826,053
==========
Net Assets
Net assets consist of:
Undistributed net investment income.................................................... $ 30,996
Net unrealized appreciation on investments............................................. 8,991,231
Accumulated net realized gain.......................................................... 2,768,507
Paid-in capital........................................................................ 50,035,319
-----------
Net assets, at market value.............................................................. $61,826,053
==========
Class A Shares
Net asset value and redemption price per share ($57,430,000 divided by 3,044,503 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2)...................... $18.86
==========
Maximum offering price per share (100/95.25 of $18.86)................................... $19.80
==========
Class C Shares
Net asset value and offering price per share ($4,396,053 divided by 233,921 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $18.79
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12
<PAGE> 13
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends............................................................................. $ 547,047
Interest.............................................................................. 406,626
------------
Total income.................................................................... 953,673
Expenses (Notes 1 and 4):
Management fee........................................................................ $ 465,132
Distribution fee...................................................................... 124,649
Shareholder servicing fees............................................................ 62,042
Professional fees..................................................................... 60,346
Custodian/Fund accounting fees........................................................ 53,835
Amortization of state registration expenses........................................... 50,309
Reports to shareholders............................................................... 39,799
Trustees' fees and expenses........................................................... 12,405
Amortization of organization expenses................................................. 10,000
Insurance............................................................................. 4,720
Federal registration fees............................................................. 4,488
Other................................................................................. 1,334
----------
Total expenses.................................................................. 889,059
------------
Net investment income................................................................... 64,614
------------
Realized and Unrealized Gain on Investments
Net realized gain from investment transactions.......................................... 2,899,946
Net increase in unrealized appreciation of investments during the year.................. 6,857,583
------------
Net gain on investments......................................................... 9,757,529
------------
Net increase in net assets resulting from operations.................................... $ 9,822,143
===========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-------------------------------------
OCTOBER 31, 1995 OCTOBER 31, 1994
---------------- ----------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment income (loss)............................................... $ 64,614 $ (27,981)
Net realized gain from investment transactions............................. 2,899,946 2,526,517
Net increase (decrease) in unrealized appreciation of investments during
the year................................................................. 6,857,583 (1,054,728)
---------------- ----------------
Net increase in net assets resulting from operations....................... 9,822,143 1,443,808
Distributions to shareholders from:
Net investment income Class A ($.01 per share)............................. (33,618) --
Net realized gains Class A ($.97 per share)................................ (2,501,284) --
Increase (decrease) in net assets from Fund share transactions (Note 2)...... 13,014,458 (307,114)
---------------- ----------------
Increase in net assets....................................................... 20,301,699 1,136,694
Net assets, beginning of year................................................ 41,524,354 40,387,660
---------------- ----------------
Net assets, end of year (including undistributed net investment income of
$30,996 as of October 31, 1995)............................................ $ 61,826,053 $ 41,524,354
=============== ===============
</TABLE>
The accompanying notes are an integral part of the financial statements.
13
<PAGE> 14
- --------------------------------------------------------------------------------
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
FOR THE YEARS ENDED CLASS C
OCTOBER 31 SHARES
---------------------------- -------
1995 1994 1993+ 1995++
------ ------ ------ -------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD.................................. $16.20 $15.57 $14.29 $15.67
------ ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a)......................................... .02 (.01) (.01) (.02)
Net realized and unrealized gain on investments......................... 3.62 .64 1.29 3.14
------ ------ ------ -------
Total from investment operations.......................................... 3.64 .63 1.28 3.12
------ ------ ------ -------
LESS DISTRIBUTIONS:
Dividends from net investment income.................................... (.01) -- -- --
Distributions from net realized gains................................... (.97) -- -- --
------ ------ ------ -------
Total Distributions..................................................... (.98) -- -- --
------ ------ ------ -------
NET ASSET VALUE, END OF THE PERIOD........................................ $18.86 $16.20 $15.57 $18.79
====== ====== ====== =======
TOTAL RETURN (%)(C)....................................................... 23.97 4.05 8.96 19.91
RATIOS (%)/SUPPLEMENTAL DATA:
Ratio of operating expenses, net, to average daily net assets(a)........ 1.88 1.91 2.00 (b) 2.36 (b)
Ratio of net investment income (loss) to average daily net assets....... .15 (0.07) (0.15)(b) (.46)(b)
Portfolio turnover rate................................................. 89 95 97 (b) 89
Net assets, end of period ($ millions).................................. 57 42 40 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.
14
<PAGE> 15
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company and presently offers shares in four
series, the 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 and Eagle International
Equity Portfolio are presented separately. The policies described below
are followed consistently by the Fund in the preparation of its
financial statements in conformity with generally accepted accounting
principles.
Security Valuation: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, the last bid price is used and in the absence of a market
quote, securities are valued using such methods as the Board of Trustees
believes would reflect fair market value. Short term investments having
a maturity of 60 days or less are valued at cost which, when combined
with accrued interest included in interest receivable or discount
earned, approximates market.
Repurchase Agreements: The Fund enters into repurchase agreements
whereby the Fund, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of purchase
is required to be in an amount equal to at least 100% of the resale
price.
Federal Income Taxes: The Fund's policy is to comply with the
requirements of the Internal Revenue Code of 1986, as amended, which are
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no provision has been made for federal income and excise
taxes.
Distribution of Net Realized Gains. Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to the
Fund, will be distributed to shareholders in the following fiscal year.
The Fund uses the identified cost method for determining realized gain
or loss on investments for both financial and federal income tax
reporting purposes. 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.
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
Portfolios. 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.
15
<PAGE> 16
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 2: FUND SHARES. At October 31, 1995, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Class A Shares of the Fund during the years ended
October 31, 1995 and 1994, were as follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------------------------------
OCTOBER 31, 1995 OCTOBER 31, 1994
-------------------------- ---------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
---------------------------------------------------- --------- ------------ ---------- ------------
<S> <C> <C> <C> <C>
Shares sold......................................... 984,286 $ 17,529,467 2,257,306 $ 36,019,552
Shares issued on reinvestment of distributions...... 160,682 2,431,113 -- --
Shares redeemed..................................... (664,339) (11,260,584) (2,287,410) (36,326,666)
--------- ------------ ---------- ------------
Net increase (decrease)............................. 480,629 $ 8,699,996 (30,104) $ (307,114)
=========== ===========
Shares outstanding:
Beginning of year................................. 2,563,874 2,593,978
--------- ----------
End of year....................................... 3,044,503 2,563,874
======== =========
</TABLE>
Transactions in Class C Shares of the Fund from April 3, 1995
(commencement of Class C Shares) to October 31, 1995 were as follows:
<TABLE>
<CAPTION>
CLASS C SHARES SHARES AMOUNT
---------------------------------------------------- --------- ------------
<S> <C> <C>
Shares sold......................................... 234,197 $ 4,319,728
Shares redeemed..................................... (276) (5,266)
--------- ------------
Net increase........................................ 233,921 $ 4,314,462
===========
Shares outstanding:
Beginning of period............................... --
---------
End of period..................................... 233,921
========
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For year ended October 31, 1995,
purchases and sales of investment securities (excluding repurchase
agreements and short term obligations) aggregated $49,450,409 and
$38,183,445, 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 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 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. This agreement
is more restrictive than any state expense limitation at the current
level of net assets attributable to each class of Shares. Fees
voluntarily waived are recoverable by the Manager for a period of up to
two years. In the prior year, the Fund's operating expenses fell below
2% of average daily net assets. Accordingly, during fiscal 1994 the Fund
paid the Manager all of the fees waived in 1993 amounting to $14,764
($.01 per share).
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 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
October 31, 1995 was $19,600. In addition, the Manager performs Fund
Accounting services and charged $29,311 during the current year of which
$10,400 was payable as of October 31, 1995.
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
16
<PAGE> 17
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
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 paid
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 $115,551 and $9,098 were paid for
distribution fees for Class A Shares and Class C Shares, respectively.
The Manager, the Subadvisers, the Distributor and the Shareholder
Servicing Agent are all wholly-owned subsidiaries of Raymond James
Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust,
Heritage Income Trust and Heritage U.S. Government Income Fund,
investment companies that are also advised by the Manager (collectively
referred to as the Heritage mutual funds). Each Trustee of the Heritage
mutual funds who is not an interested person of the Manager received an
annual fee of $8,000 and an additional fee of $2,000 for each combined
quarterly meeting of the Heritage mutual funds attended. Trustees' fees
and expenses are paid equally by each of the Heritage mutual funds.
17
<PAGE> 18
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Series Trust-Small Cap Stock Fund:
We have audited the accompanying statement of assets and liabilities of
Heritage Series Trust-Small Cap Stock Fund, including the investment portfolio,
as of October 31, 1995, and the related statement of operations for the year
then ended, the statements of changes in net assets for each of the two years in
the period then ended, and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
Heritage Series Trust-Small Cap Stock Fund, as of October 31, 1995, the results
of its operations for the year then ended, the changes in its net assets for
each of the two years in the period then ended, and the financial highlights for
each of the periods indicated therein, in conformity with generally accepted
accounting principles.
Boston, Massachusetts Coopers & Lybrand LLP
December 22, 1995
18
<PAGE> 19
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
DIVERSIFIED PORTFOLIO
LIMITED MATURITY GOVERNMENT PORTFOLIO
HERITAGE SERIES TRUST
GROWTH EQUITY FUND
EAGLE INTERNATIONAL EQUITY PORTFOLIO
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 funds, please contact your account
executive. Read the Prospectus carefully before you invest in any of the funds.
19
<PAGE> 20
Heritage Series Trust
P.O. Box 33022
St. Petersburg, FL 33733
--------------------------------------------
Address Change Requested
Annual Report
INVESTMENT ADVISOR/
SHAREHOLDER SERVICING AGENT/
FUND ACCOUNTANT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
(800) 421-4184
DISTRIBUTOR
Raymond James & Associates, Inc.
P.O. Box 12749
St. Petersburg, FL 33733
(813) 573-3800
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
This report is for the information of shareholders of
Heritage Series Trust. It may also be used as sales
literature when preceded or accompanied by a prospectus.
[HERITAGE SERIES TRUST (TM) LOGO]
SMALL CAP STOCK FUND
- -----------------------------------------------------
A MUTUAL FUND
- -----------------------------------------------------
SEEKING LONG-TERM
- -----------------------------------------------------
CAPITAL APPRECIATION
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
- -----------------------------------------------------
ANNUAL REPORT
and Investment Performance
Review for the Year Ended
OCTOBER 31, 1995
A member of the
Heritage Family of Mutual Funds(])
