<PAGE> 1
December 9, 1996
Dear Fellow Shareholders:
It is my pleasure to provide you with the first annual report for the
Heritage Series Trust-Growth Equity Fund (the "Fund"). For the period from your
Fund's inception on November 16, 1995 through October 31, 1996, the A and C
shares of your Fund returned 24.14% and 23.23%, respectively.(*) This compares
favorably with the 20.59% return of the Standard & Poor's 500 Composite Stock
Price Index and the 20.41% return of the S&P Barra Growth Index. The S&P Barra
Growth Index is comprised of "growth" stocks (as measured by price-to-book and
price-to-earnings ratios) as opposed to "value" stocks.
In the letter that follows, Ken Corba, portfolio manager for your Fund,
describes the "growth" stocks in which he invests as those with increasing and
predictable earnings, high profitability and strong positions within their
industries. Mr. Corba also elaborates further on the factors that contributed to
your Fund's performance for the recent fiscal period. Mr. Corba is Chief
Investment Officer of Eagle Asset Management, the investment subadviser for your
Fund. I hope you find his comments instructive on how your Fund's investment
portfolio is managed.
Your Fund's A Share performance for the fiscal period was comprised of a
gain of 9.45% from November 16, 1995 through April 30, 1996 and a gain of 13.43%
from April 30 through October 31, 1996. These returns, however, do not give the
full picture of the Fund's performance. From May 24 through July 24, the Fund
suffered a decline of nearly 6%. This was followed by a gain of over 14% from
July 24 through the end of October. Your Fund outperformed the S&P 500 for the
year primarily because the Fund declined by about 2% less than the S&P 500 in
the May 24-July 24 period, and advanced by about 1% more than the S&P 500 from
July 24 through the end of October.
On behalf of all of us at Heritage, thank you for your continuing
investment in Heritage Series Trust-Growth Equity Fund. If you ever have any
suggestions on how we could better serve you, please call us at 800-709-3863.
Sincerely,
/s/ STEPHEN G. HILL
--------------------------------------
Stephen G. Hill
President
- ---------------
(*) Calculated without the imposition of front-end or contingent deferred sales
charges.
<PAGE> 2
December 9, 1996
Dear Fellow Shareholders:
The Heritage Series Trust-Growth Equity Fund has continued to perform well
since its inception on November 16, 1995. Our investment performance for the
first fiscal period exceeded the Standard & Poor's 500 Composite Stock Price
Index and the majority of growth equity mutual funds.
As of December the Fund has investments in 35 companies that we consider to
be quality growth stocks. We believe that each company should grow its earnings
at a minimum of 12% per year for the next 3 years and maintain a 15% return on
equity. In addition, we focus on companies that we believe provide consistent,
predictable earnings, and businesses that have established and will maintain a
competitive advantage in their industry.
A predominant theme in the portfolio continues to be ownership of what we
believe are outstanding U.S. multinational companies that derive significant
revenues and earnings from overseas sales. Examples are: Coca-Cola, Gillette,
Procter & Gamble, Johnson & Johnson and American Express. Our technology
exposure has remained in the 12-15% range with core investments in Cisco
Systems, Oracle, Microsoft and First Data.
During the Funds' first fiscal period, the industries that contributed the
most to our performance were technology, consumer goods, and financial services.
Specific stocks within these industries that made a positive impact on
performance include Cisco Systems, Gillette, and Bank America.
Even with a good year, there have been a few investments that have under
performed. Specifically, investments in Electronic Data Systems, Pepsi, and
Thermo Electron have lagged the broader market due to short term earnings
disappointments.
During the year we continued to invest new cash flows to keep the Fund
fully invested with cash levels under 10%. As expected, given our long-term
investment horizon, annual turnover was approximately 25% last year.
Our performance was strong for the last year. If the post-election economy
begins to weaken and this is accompanied by lower interest rates, our
performance relative to the market could further improve. If investors start to
anticipate a recession, there likely will continue to be a "flight to quality"
that we believe, will lead them to our consistent growth companies.
Sincerely,
/s/ KENNETH W. CORBA
----------------------------------
Kenneth W. Corba
Executive Vice President
Chief Investment Officer
Eagle Asset Management, Inc.
2
<PAGE> 3
Growth of a $10,000 Investment
since inception of a Heritage Series Trust-Growth Equity Fund
on November 16, 1995
<TABLE>
<CAPTION>
% Return
Period A Shares C Shares S&P S&P Barra
Ending Growth Equity Growth Equity 500 Growth Index
------------- ------------- --- ------------
<S> <C> <C> <C> <C>
11/16/95 $ 9,525 $10,000 $10,000 $10,000
11/30/95 $ 9,765 $10,252 $10,144 $10,083
12/31/95 $ 9,765 $10,238 $10,340 $10,197
1/31/96 $10,252 $10,749 $10,691 $10,586
2/29/96 $10,265 $10,749 $10,791 $10,683
3/31/96 $10,325 $10,805 $10,894 $10,638
4/30/96 $10,425 $10,910 $11,054 $10,845
5/31/96 $10,805 $11,295 $11,340 $11,244
6/30/96 $11,111 $11,610 $11,383 $11,385
7/31/96 $10,605 $11,071 $10,880 $10,860
8/31/96 $10,865 $11,337 $11,109 $11,021
9/30/96 $11,578 $12,071 $11,735 $11,785
10/31/96 $11,825 $12,323 $12,059 $12,041
</TABLE>
(*) Total returns for Heritage Series Trust-Growth Equity Fund Class A Shares
and Class C Shares are calculated in conformance with item 22 of Form
N-1A, which assumes the reinvestment of dividends, a sales load of 4.75%
for Class A Shares and a contingent deferred sales load of (CDSL) of 1%
for Class C Shares on redemptions made within one year of purchase. Since
the period shown is less than one year the aggregate total return in lieu
of the annualized total return is used for Class A and C Shares.
(**) Calculated without the imposition of contingent deferred sales charges.
3
<PAGE> 4
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
COMMON STOCKS--92.8%(A)
ADVERTISING/COMMUNICATIONS--3.5%
12,000 Omnicom Group, Inc. ............................................................... $ 597,000
-----------
BANKING--6.7%
6,500 BankAmerica Corporation............................................................ 594,750
6,000 NationsBank Corporation............................................................ 565,500
-----------
1,160,250
-----------
BEVERAGES--4.4%
8,000 The Coca-Cola Company.............................................................. 404,000
12,000 PepsiCo, Inc. ..................................................................... 355,500
-----------
759,500
-----------
BUILDING--2.4%
6,000 Illinois Tool Works, Inc. ......................................................... 421,500
-----------
CHEMICALS--1.7%
7,500 Monsanto Company .................................................................. 297,187
-----------
COSMETICS/TOILETRIES--6.2%
7,500 Estee Lauder Companies, Class "A".................................................. 322,500
10,000 Gillette Company................................................................... 747,500
-----------
1,070,000
-----------
DATA PROCESSING--11.8%
7,500 Cisco Systems, Inc.* .............................................................. 464,063
7,500 Electronic Data Systems Corporation................................................ 337,500
5,000 First Data Corporation............................................................. 398,750
3,000 Microsoft Corporation*............................................................. 411,750
10,000 Oracle Corporation*................................................................ 423,125
-----------
2,035,188
-----------
ELECTRONICS/ELECTRIC--4.2%
7,500 General Electric Company........................................................... 725,625
-----------
FINANCE--12.2%
8,000 American Express Company........................................................... 376,000
10,000 Associates First Capital Corporation............................................... 433,750
5,000 Federal Home Loan Mortgage Corporation............................................. 505,000
20,000 Federal National Mortgage Association.............................................. 782,500
-----------
2,097,250
-----------
HOTELS/MOTELS/INNS--4.7%
6,000 HFS, Inc.* ........................................................................ 439,500
6,500 Marriott International, Inc. ...................................................... 369,687
-----------
809,187
-----------
HOUSEHOLD PRODUCTS--3.4%
6,000 Procter & Gamble Company........................................................... 594,000
-----------
INSURANCE--7.2%
5,500 American International Group, Inc. ................................................ 597,438
12,000 Travelers Group, Inc. ............................................................. 651,000
-----------
1,248,438
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1996
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- ------------------ -----------
<C> <S> <C>
MINING/DIVERSIFIED--1.1%
7,500 Barrick Gold Corporation........................................................... $ 195,938
-----------
PHARMACEUTICAL--6.8%
8,000 Johnson & Johnson.................................................................. 394,000
5,000 Merck & Company, Inc. ............................................................. 370,625
5,000 Pfizer, Inc. ...................................................................... 413,750
-----------
1,178,375
-----------
POLLUTION CONTROL--2.7%
12,500 Thermo Electron Corporation........................................................ 456,250
-----------
PUBLISHING--2.2%
5,000 Reuters Holdings PLC, ADR.......................................................... 371,875
-----------
RETAIL STORES--7.0%
8,500 Home Depot, Inc. .................................................................. 465,375
10,000 Kohl's Corporation*................................................................ 360,000
10,000 Walgreen Company................................................................... 377,500
-----------
1,202,875
-----------
SERVICES--2.3%
16,000 CUC International, Inc.*........................................................... 392,000
-----------
TELECOMMUNICATIONS--2.3%
14,000 Telefonaktiebolaget LM Ericsson, ADR............................................... 386,750
-----------
Total common stocks (cost $13,550,586).............................................................. 15,999,188
-----------
REPURCHASE AGREEMENT--7.4%(A)
Repurchase Agreement with State Street Bank and Trust Company, dated October 31, 1996, @ 5.45%,
to be repurchased at $1,275,193 on November 1, 1996, (collateralized by $1,286,508 United States
Treasury Notes, 8.5%, due February 15, 2020, with a market value of $1,305,785, including interest)
(cost $1,275,000).................................................................................. $1,275,000
-----------
TOTAL INVESTMENT PORTFOLIO (cost $14,825,586)(b), 100.2%(a)........................................ 17,274,188
OTHER ASSETS AND LIABILITIES, (0.2%)(a)............................................................ (27,723)
-----------
NET ASSETS, 100.0%................................................................................. $17,246,465
==========
</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
substantially the same. Market value includes net unrealized appreciation
of $2,448,602, which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $2,532,265 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$83,663.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Assets
- -----
Investments, at market value (identified cost $14,825,586) (Note 1)...................... $17,274,188
Cash..................................................................................... 875
Receivables:
Fund shares sold....................................................................... 368,968
Dividends and interest................................................................. 12,621
Deferred organization expenses (Note 1).................................................. 22,664
Deferred state registration expenses (Note 1)............................................ 10,628
Prepaid insurance........................................................................ 1,164
-----------
Total assets..................................................................... 17,691,108
Liabilities
- --------
Payables (Note 4):
Investments purchased.................................................................. $ 329,330
Fund shares redeemed................................................................... 1,339
Due to Manager......................................................................... 37,303
Accrued distribution fee............................................................... 6,398
Other accrued expenses................................................................. 70,273
----------
Total liabilities................................................................ 444,643
-----------
Net assets, at market value.............................................................. $17,246,465
==========
Net Assets
- ---------
Net assets consist of:
Paid-in capital........................................................................ $14,852,184
Accumulated net realized loss (Note 1)................................................. (54,321)
Net unrealized appreciation on investments............................................. 2,448,602
-----------
Net assets, at market value.............................................................. $17,246,465
==========
Class A Shares
- -------------
Net asset value and redemption price per share ($12,142,571 divided by 684,441 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $17.74
-----
-----
Maximum offering price per share (100/95.25 of $17.74)................................... $18.62
-----
-----
Class C Shares
- ------------
Net asset value and offering price per share ($5,103,894 divided by 289,802 shares of
beneficial interest outstanding, no par value) (Notes 1 and 2)......................... $17.61
-----
-----
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
FOR THE PERIOD NOVEMBER 16, 1995
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
Investment Income
- ----------------
Income:
Dividends................................................................................. $ 116,274
Interest.................................................................................. 33,225
----------
Total income........................................................................ 149,499
Expenses (Notes 1 and 4):
Management fee............................................................................ $ 77,137
Distribution fee (Class A Shares)......................................................... 19,287
Distribution fee (Class C Shares)......................................................... 25,704
Custodian/Fund accounting fees............................................................ 38,308
Professional fees......................................................................... 34,333
Amortization of state registration expenses............................................... 32,974
Reports to shareholders................................................................... 10,773
Trustees' fees and expenses............................................................... 8,027
Shareholder servicing fee................................................................. 7,074
Amortization of organization expenses..................................................... 5,667
Federal registration fee.................................................................. 4,513
Insurance................................................................................. 1,396
--------
Total expenses before waiver........................................................ 265,193
Fees waived by the Manager (Note 4)................................................. (76,210)
--------
188,983
----------
Net investment loss......................................................................... (39,484)
----------
Realized and Unrealized Gain (Loss) on Investments
- ---------------------------------------------
Net realized loss from investment transactions.............................................. (54,321)
Net increase in unrealized appreciation of investments during the period.................... 2,448,602
----------
Net gain on investments............................................................. 2,394,281
----------
Net increase in net assets resulting from operations........................................ $2,354,797
=========
</TABLE>
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 16, 1995
(COMMENCEMENT OF OPERATIONS)
TO OCTOBER 31, 1996
-----------------------------
<S> <C>
Increase in net assets:
Operations:
Net investment loss..................................................................... $ (39,484)
Net realized loss from investment transactions.......................................... (54,321)
Net increase in unrealized appreciation of investments during the period................ 2,448,602
------------
Net increase in net assets resulting from operations.................................... 2,354,797
Increase in net assets from Fund share transactions (Note 2).............................. 14,889,668
------------
Increase in net assets.................................................................... 17,244,465
Net assets, beginning of period (original capital as of November 16, 1995)................ 2,000
------------
Net assets, end of period................................................................. $ 17,246,465
=============================
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
-------------- --------------
1996+* 1996+*
-------------- --------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF THE PERIOD....................................... $14.29 $14.29
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment loss(a)....................................................... (.03) (.15)
Net realized and unrealized gain on investments.............................. 3.48 3.47
------ ------
Total from investment operations............................................... 3.45 3.32
------ ------
NET ASSET VALUE, END OF THE PERIOD............................................. $17.74 $17.61
============= =============
TOTAL RETURN (%)(C)(D)......................................................... 24.14 23.23
RATIOS (%)/AND SUPPLEMENTAL DATA:
Ratio of operating expenses, net to average daily net assets(a)(b)........... 1.65 2.40
Ratio of net investment income to average daily net assets(b)................ (.19) (.96)
Portfolio turnover rate(c)................................................... 23 23
Average commission rate on portfolio transactions............................ $.0599 $.0599
Net assets, end of period ($ millions)....................................... 12 5
</TABLE>
- ---------------
+ For the period November 16, 1995 (commencement of operations) to October 31,
1996.
* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the period
since use of the undistributed income method does not correspond with
results of operations.
(a) Excludes management fees waived and expenses reimbursed by the Manager of
$.11 per share for Class A and Class C Shares, for the period ended October
31, 1996. The operating expense ratios including such items would have been
2.39% (annualized) and 3.14% (annualized) for the period ended October 31,
1996.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales charge.
The accompanying notes are an integral part of the financial statements.
8
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company and presently offers shares in four
series, the Growth Equity Fund (the "Fund"), the Small Cap Stock Fund,
the Value Equity Fund and the Eagle International Equity Portfolio. The
Fund primarily seeks growth through long-term capital appreciation. The
Fund currently offers 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 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, Value 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.
Note 2: FUND SHARES. At October 31, 1996, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Class A and Class C Shares of the Fund during the period
November 16, 1995 (commencement of operations) to October 31, 1996 were
as follows:
<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
FOR THE PERIOD NOVEMBER 16, 1995 FOR THE PERIOD NOVEMBER 16, 1995
(COMMENCEMENT OF OPERATIONS) TO (COMMENCEMENT OF OPERATIONS) TO
OCTOBER 31, 1996 OCTOBER 31, 1996
-------------------------------- --------------------------------
SHARES AMOUNT SHARES AMOUNT
---------- ----------- --------- ----------
<S> <C> <C> <C> <C>
Shares sold............................ 764,029 $11,657,911 319,149 $4,976,551
Shares redeemed........................ (79,658) (1,284,160) (29,417) (460,634)
---------- ----------- --------- ----------
Net increase........................... 684,371 $10,373,751 289,732 $4,515,917
========== =========
Shares outstanding:
Beginning of period.................. 70 70
---------- ---------
End of period........................ 684,441 289,802
========= ========
</TABLE>
9
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 3: PURCHASES AND SALES OF SECURITIES. For the period ended October 31,
1996, purchases and sales of investment securities (excluding repurchase
agreements and short term obligations) aggregated $16,014,686 and
$2,409,779, respectively.
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administration
Agreement with Heritage Asset Management, Inc. (the "Manager"), the Fund
agrees to pay to the Manager a fee equal to an annualized rate of .75%
of the Fund's average daily net assets, computed daily and payable
monthly. The agreement also provides for a reduction in such fees in any
year to the extent that operating expenses of the Fund exceed applicable
state expense limitations. Currently, the Manager has voluntarily agreed
to waive its fee and, if necessary reimburse the Fund to the extent that
Fund operating expenses exceed 1.65% for Class A Shares and 2.40% for
Class C Shares on an annual basis of the Fund's average daily net assets
attributable to each class of shares. Management fees waived totaled
$76,210 during the period ended October 31, 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.
The Manager is also the Dividend Paying and Shareholder Servicing Agent
for the Portfolio. The amount payable to the Manager for such expenses
as of October 31, 1996 was $2,400. In addition, the Manager performs
Fund Accounting services and charged $24,797 during the current period
of which $9,077 was payable as of October 31, 1996.
The Manager has entered into an agreement with Eagle Asset Management,
Inc. (the "Subadviser") for the Subadviser to provide to the Fund
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to 50% of the fees payable by the Fund to
the Manager without regard to any reduction due to the imposition of
expense limitations.
Raymond James & Associates, Inc. (the "Distributor") has advised the
Fund that it received $206,699 in front end sales charges and $1,828 in
contingent deferred sales charges during the period November 16, 1995 to
October 31, 1996. From these fees, the Distributor paid commissions to
salespersons and incurred other distribution costs.
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 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 $19,287 and $25,704 were paid for
distribution fees for Class A Shares and Class C Shares, respectively.
The Manager, the Subadviser 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 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 funds attended and $1,000 for each special
Trustees meeting attended. Trustees' fees and expenses are paid equally
by each of the Heritage funds.
Note 5: FEDERAL INCOME TAXES. For the year ended October 31, 1996, to reflect
reclassifications arising from permanent book/tax differences primarily
attributable to a net operating loss, the Fund credited accumulated net
realized loss on investments and debited paid-in capital $39,484.
10
<PAGE> 11
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
- --------------------------------------------------------------------------------
To the Shareholders and Board of Trustees of
Heritage Series Trust-Growth Equity Fund
In our opinion, the accompanying statement of assets and liabilities, including
the investment portfolio, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Heritage Series Trust-Growth Equity
Fund (the "Fund") at October 31, 1996, and the results of its operations, the
changes in its net assets and the financial highlights for the period November
16, 1995 (commencement of operations) through October 31, 1996, in conformity
with generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at October 31, 1996 by
correspondence with the custodian and brokers, provides a reasonable basis for
the opinion expressed above.
/s/ PRICE WATERHOUSE LLP
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PRICE WATERHOUSE LLP
Tampa, Florida
December 16, 1996
11
<PAGE> 12
Heritage Series Trust-Growth Equity Fund
P.O. Box 33022
St. Petersburg, FL 33733
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Address Change Requested
[LOGO]
HERITAGE
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SERIES TRUST(TM)
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Growth Equity Fund
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A mutual fund
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seeking long-term
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capital appreciation
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ANNUAL REPORT
and Investment
Performance Review for the Period From November 16, 1995
(Commencement of Operations) to
OCTOBER 31, 1996
A member of the Heritage Family of Mutual Funds(TM)
This report is for the information of shareholders of
Heritage Series Trust-Growth Equity Fund. It may also be used as sales
literature when preceded or accompanied by a prospectus.
5M 12/96 (RECYCLE LOGO) Printed on recycled paper.
