HERITAGE SERIES TRUST, N-30D, 1997-12-29

HERITAGE SERIES TRUST
N-30D, 1997-12-29

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<PAGE> 1

HERITAGE
SERIES
TRUST

[Photos of people working and playing]

From Our Family to Yours: The Intelligent Creation of Wealth.

Eagle International Equity Portfolio
Growth Equity Fund
Small Cap Stock Fund
Value Equity Fund

Annual Report
and Investment Performance
Review for the Year Ended
October 31, 1997

[HERITAGE LOGO]
---------------
Series Trust (TM)
-----------------
<PAGE> 2

HERITAGE SERIES TRUST
ANNUAL REPORT
TABLE OF CONTENTS

<TABLE>
<S> <C>
PRESIDENT'S LETTER.......................................... 1
PORTFOLIO COMMENTARY AND GRAPHS:
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Investment Commentary............................. 2
Performance Graphs................................ 3
GROWTH EQUITY FUND
Portfolio Management Letter....................... 4
Performance Graphs................................ 5
SMALL CAP STOCK FUND
Portfolio Management Letters...................... 6
Performance Graphs................................ 8
VALUE EQUITY FUND
Portfolio Management Letter....................... 9
Performance Graphs................................ 10
INVESTMENT PORTFOLIOS....................................... 11
STATEMENT OF ASSETS AND LIABILITIES......................... 27
STATEMENT OF OPERATIONS..................................... 28
STATEMENT OF CHANGES IN NET ASSETS.......................... 29
FINANCIAL HIGHLIGHTS........................................ 31
NOTES TO FINANCIAL STATEMENTS............................... 35
</TABLE>
<PAGE> 3

(This page intentionally left blank)
<PAGE> 4

December 5, 1997

Dear Fellow Shareholders:

It is my pleasure to provide you with the annual report for Heritage Series
Trust for the fiscal year ended October 31, 1997. Continuing with the approach
we began earlier this year, the reports for each of the four separate investment
portfolios available within the Heritage Series Trust are provided to you in
this combined document. We have received positive comments from many of you
regarding this process. I hope it continues to provide you with the investment
information you need, while reducing the volume of mail for those of you who own
more than one of these funds. As always, please feel free to call us at
800/709-FUND (3863) with any comments you would like to share with us.

For the fiscal year covered by this report, each of the funds in Heritage
Series Trust generated positive returns for our investors and performed quite
well compared to their respective fund category averages and market indices.
These returns are given in the table below:

<TABLE>
<CAPTION>
FUND "EAGLE" SHARES "A" SHARES(1) "C" SHARES(1) INDEX(2) CATEGORY AVERAGE(3)
- ---- ---------------- --------------- --------------- -------- -------------------
<S> <C> <C> <C> <C> <C>
Eagle International Equity
Portfolio........................ +9.98% +10.71% + 9.79% + 4.63% +10.43%
Growth Equity Fund................. N/A +33.99 +32.99 +32.12 +27.37
Small Cap Stock Fund............... N/A +36.68 +35.63 +29.33 +26.57
Value Equity Fund.................. N/A +28.69 +27.79 +32.12 +28.40
</TABLE>

In the pages that follow, you will find portfolio commentaries and
performance graphs for each of these funds. (Because the assets of the Small Cap
Stock Fund are allocated to two subadvisers, you will find two letters relating
to this fund.) Following this information you will find portfolio holdings and
other important information for all of the funds. We hope that you will discuss
with your financial advisors how any of these funds that you do not currently
own may fit into your investment plans.

At their August 15, 1997 meeting, your Board of Trustees authorized us to
reallocate the assets of the Value Equity Fund to Eagle Asset Management, Inc.
from Dreman Value Advisors, Inc. This change was effective October 1, 1997.
Eagle had previously managed the Value Equity Fund's portfolio and had remained
as a subadviser to this fund, even though no assets were allocated to Eagle from
mid-1996 through September 1997. We and your Board of Trustees feel very
confident in the abilities of Michael Chren and the investment team at Eagle to
provide excellent investment leadership for this fund. One result of almost any
subadviser change is a repositioning of the portfolio to reflect the new
manager's investment strategy. The short-term effect of this can be to generate
additional portfolio turnover and the accompanying capital gains that must be
distributed to shareholders and reported on their Form 1099S. This repositioning
now is substantially complete. Thus, we should expect this fund to have lower
portfolio turnover in fiscal 1998 than in fiscal 1997.

During the portion of the fiscal year for which Dreman Value Advisors, Inc.
managed the Value Equity Fund portfolio, this fund added to its holdings in
basic industries, while reducing its holdings in banking and oil and gas in
order to provide additional industry diversification. Additionally, some profits
were taken in selected technology and health care companies as these stocks rose
to price/earnings ratios that triggered the manager's sell discipline. The
number of stocks in the portfolio declined by about one-third as the subadviser
chose to concentrate in fewer individual holdings. Generally, for the first
eleven months of the fiscal year, this fund benefited from its holdings in
consumer cyclical, financial and health care stocks and was hampered by sluggish
returns from utility stocks. In the commentary on page 9, Michael Chren
discusses how the portfolio is currently positioned.

Thank you for your continuing confidence in Heritage Series Trust. On behalf
of all of us at Heritage, we wish you a happy and healthy 1998.

Sincerely,

/s/ STEPHEN G. HILL
Stephen G. Hill
President
- ---------------

(1) Calculated without the imposition of front or back-end sales charges.
(2) Indices used for comparison are the Morgan Stanley Capital International
Europe Australia and Far East Index (EAFE) for the Eagle International
Equity Portfolio, the Standard & Poor's 500 Stock Composite Price Index
("S&P 500") for the Growth Equity and Value Equity Funds, and the Russell
2000 Index for the Small Cap Stock Fund.
(3) Fund category averages are the Lipper International Funds for the Eagle
International Equity Portfolio, Lipper Growth Funds for the Growth Equity
Fund, Lipper Small Company Growth Funds for the Small Cap Stock Fund and
Lipper Growth & Income Funds for the Value Equity Fund. Averages are
published by Lipper Analytical Services, Inc.
<PAGE> 5

MARKET COMMENTARY from MARTIN CURRIE, INC. December 5, 1997
Subadviser Eagle International Equity Portfolio

The Eagle International Equity Portfolio (the "Fund") invests a substantial
portion of its investment portfolio in securities traded in developed foreign
securities markets, such as those included in the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE Index"). The countries in
which it invests are selected for their ability to generate high real rates of
economic growth, consistent with reasonable political and currency stability.
Individual securities are selected following an intensive research process,
designed to screen out companies with either weak financial structures, market
positions or poor management. The ability to produce premium growth in earnings
is paramount.

In the twelve months to October 31, 1997, the Fund continued to outperform
the EAFE Index. While the UK and Continental European markets moved strongly
ahead, the collapse of many southeast Asian markets and weakness of the Japanese
market and currency have impacted on confidence in international markets in
general. A substantial exposure to the UK market, good stock selection against a
weak Japanese index and investments in Latin America have enabled the Fund to
place in the top half of the Lipper rankings for our category.

The UK market (22% of net assets) has benefited from the support of bonds,
good liquidity and corporate activity. We remain overweighted in this market
against the industry average and EAFE Index. The best performing stocks have
included financials, such as Lloyds TSB Group and Royal Bank of Scotland Group,
while consumer stocks such as Marks & Spencer have recovered. The Sterling's
strength has held back export stocks. The new Labour administration's public
support for Europe's Economic and Monetary Union (EMU) has raised the prospect
of yet lower bond yields in the UK.

Continental Europe (37% of net assets) has been pushed ahead by corporate
restructuring and significant efforts to improve returns for shareholders. We
added to the region over the period. Novartis, Rhone-Poulenc, and Philips
Electronics rose strongly as their restructuring plans bore fruit. Domestic
growth has begun to pick up while Maastricht targets look closer to being met. A
rights issue from Volkswagen upset markets in the third quarter but EMU
disciplines will ensure the restructuring theme will persist. Asian turmoil has
impacted on individual stocks, such as ABB with its Malaysian contracts or
Gucci, reliant on the Japanese consumer, rather than the region as a whole.

The Japanese market (17% of net assets) has continued to weaken and the yen
has fallen further against the dollar. We reduced our exposure over the period
and removed the final part of the currency hedge. Despite a relaxed monetary
policy, economic forecasts continue to be reduced. Great sector polarisation has
continued with export related "blue chips", where we are overweight, performing
relatively well. Financials, utilities, construction, and domestic plays have
suffered. The collapse of the southeast Asian financial markets and demand
(particularly Korean) have put back further the hope of economic recovery for
Japan. However, current bankruptcies among major financial conglomerates should
be regarded as an encouraging sign; the Japanese authorities are at last
tackling the underlying structural problems of uncompetitive practices and cross
share ownership which have beset both the stock market and economy for years.
Service sector confidence and a revival of the property market are prerequisites
to economic recovery. This is proceeding very slowly.

Returns for the rest of Asia (7% of net assets) have been dramatically
weak. A combination of rising interest rates to protect local currencies,
slowing growth and destocking in traditional export markets has resulted in
savage market collapses. Worst affected have been Thailand, Korea and Malaysia.
The Philippines, Singapore and ultimately Hong Kong were caught in the wake. We
substantially reduced our exposure to the region over the period, held nothing
in Thailand and Korea, and remained underweight to Singapore and Malaysia. The
sale of a large proportion of our Hong Kong assets in the summer, prior to the
market's collapse in October, helped relative returns. Australia, India and Hong
Kong now make up the bulk of our exposure to the region.

Latin America (6% of net assets) represents the majority of exposure to
non-index markets. We took profits in the region over the second quarter, with
the current portfolio concentrated on Mexico, Brazil, Venezuela, Chile and
Argentina. After a dramatic recovery in the earlier part of year, the Asian
crisis has seen a withdrawal of capital. The most vulnerable markets have been
Argentina (with its dollar link) and Brazil (with its current account deficit
and deteriorating trade deficit). We reduced both positions. Looking into 1998,
the region looks oversold and risk premiums should decline. The earnings outlook
is still robust.

On behalf of all of us at Martin Currie, Inc., we appreciate the confidence
you have in us. We look forward to reporting to you again in the Spring of 1998.

2
<PAGE> 6

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF THE HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY
PORTFOLIO-EAGLE SHARES ON MAY 1, 1995

[CHART]

The graph contained in the annual report compares the performance of the
Heritage Series Trust-Eagle International Equity Portfolio Eagle Shares with the
Morgan Stanley Capital International EAFE Index from inception of Eagle Shares
(May 1, 1995) through October 31, 1997.

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF THE HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY
PORTFOLIO-CLASS A & C SHARES ON DECEMBER 27, 1995

[CHART]

The graph contained in the annual report compares the performance of the
Heritage Series Trust- Eagle International Equity Portfolio Class A and C Shares
with the Morgan Stanley Capital International EAFE Index from inception of Class
A and C Shares (December 27, 1995) through October 31, 1997.

*Average annual total returns for Heritage Series Trust-Eagle International
Equity Portfolio are calculated in conformance with Item 22 of Form N-1A, which
assumes the reinvestment of dividends and a sales load of 4.75% for Class A
Shares. These returns are calculated based on the published net asset value.

3
<PAGE> 7

December 5, 1997
Dear Fellow Shareholders:

The Heritage Series Trust - Growth Equity Fund (the "Fund") continued to
perform well for the fiscal year ended October 31, 1997. For the period, the
Fund outperformed the Standard & Poor's 500 Composite Stock Price Index and the
Class A Shares ranked in the 17th percentile of all growth funds according to
Lipper Analytical Services, Inc.

The Fund currently has 35 equity investments that we consider to be
premier, quality growth stocks. We expect each company to grow its earnings at a
minimum of 12% per year for the next three years and maintain a 15% return on
equity. In addition, we focus on owning companies with consistent, predictable
earnings and businesses that have established a sustainable competitive
advantage in their industry.

A predominant theme in the Fund continues to be the ownership of
outstanding U.S. multinational companies that derive significant revenues and
earnings from overseas sales. Examples include: The Coca Cola Company, Gillette
Company, Warner-Lambert Company, Guidant Corporation, American International
Group Inc., and Illinois Tool Works, Inc. Our technology exposure has remained
constant at approximately 19% with core investments in Intel Corporation,
Microsoft Corporation, Cisco Systems Inc., Tellabs Inc., and PeopleSoft.
Cyclical investments remain underweighted in our Fund as they typically do not
meet our investment criteria. Other stocks that have significantly contributed
to our performance results include: Omnicom Group, Inc., Kohl's Corporation, and
Home Depot Inc.

Earnings growth within the Fund continues to be robust. During the latest
quarter, 26 out of 35 of our companies reported earnings higher than we expected
and only three companies reported disappointing results. In 1998, we expect the
average company in our portfolio to grow 19% versus 7% for the S&P 500.

We continue to invest new cash flows to keep the Fund substantially
invested with cash levels under 10%. Annual portfolio turnover remains in the
25%-50% range.

Going forward, we continue to see robust earnings for our companies and a
relatively hospitable investment environment for quality growth companies. With
declining interest rates and some slowdown in the economy, our investments
should continue to provide attractive results.

Sincerely,

/s/ KENNETH W. CORBA
Kenneth W. Corba
Executive Vice President
Chief Investment Officer
Eagle Asset Management, Inc.
Portfolio Manager, Growth Equity
Fund

4
<PAGE> 8

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-GROWTH EQUITY FUND
ON NOVEMBER 16, 1995

[CHART]

The graph contained in the annual report compares the performance of the
Heritage Series Trust- Growth Equity Class A and C Shares with the S&P 500 and
S&P Barra Growth Index from inception of Class A and C Shares (November 16,
1995) through October 31, 1997.

* Average annual total returns for Heritage Series Trust-Growth Equity Fund are
calculated in conformance with Item 22 of Form N-1A, which assumes the
reinvestment of dividends and a sales load of 4.75% for Class A Shares.

5
<PAGE> 9

December 5, 1997

Dear Fellow Shareholders:

The Heritage Small Cap Stock Fund had another excellent year, providing a
return on its A shares of +36.68%*. This is well in excess of the average for
small cap stock funds (according to Lipper Analytical Services) and the Russell
2000 (an index comprised of smaller capitalization companies).

During the fiscal year, we took gains on several long-term holdings that
contributed significantly to your Fund's positive performance. These positions
included Norand Corporation, National Education Corporation and Assisted Living
Concepts, Inc., 7.0% Convertible Bond. The Fund also benefited from significant
gains in Cooper Companies, Inc., Midcoast Energy Resources, Middleby Corporation
and Alternative Living Services, Inc. Additionally, the Fund enjoyed gains in
new share purchases of several oil service companies including Precision
Drilling Corporation and Comstock Resources, Inc. New purchases that contributed
to the Fund's performance include ITEQ, Inc. and Volt Information Sciences, Inc.
Reflecting the diversification of your Fund's portfolio, these companies
represent investments across a number of different industries.

Fortunately, the 1997 fiscal year was a very good one for the Fund. However,
not all stocks were winners for us. During the past fiscal year, we reduced or
eliminated our position in several companies whose stock price performance was
disappointing. These include Angeion Corporation, Peak Technologies Group, Inc.,
and Sterling House Corporation. Other companies whose stock prices declined
during the year but whose prospects we still believe are positive include
StarTek, Inc., Ascent Entertainment Group, Inc., Eltron International, Inc., and
LanVision Systems, Inc. Again, these companies did not reflect concentration in
any particular industry.

Looking forward, we expect our good fortune to continue. We believe the
requisite building blocks for long-term capital appreciation continue to exist
in the stock market and in the domestic economy.

We continue to see significant cash flows into the equity markets, despite
recent market volatility. Recent academic studies have suggested that
individuals between the ages of 50 and 65 save a higher percentage of their
income than any other age group. This demographic group is growing rapidly and
suggests continued demand for equity assets in the next twelve months. The
available supply of stocks has declined slightly over the period 1990 through
1997 as the result of stock buybacks, such as the one announced by IBM in early
November, and mergers, such as the recently announced acquisition of portfolio
company Sano Corporation. This supply/demand imbalance suggests the possibility
of higher equity valuations in the future.

The domestic economy continues to grow at a reasonable pace while the
Federal Reserve appears to be vigilantly monitoring inflation. This combination
of moderate economic growth with low inflation is leading to a lower budget
deficit and lower long-term interest rates. We expect this trend to continue
into 1998 suggesting, again, higher equity valuations.

While we continue to have a positive outlook for 1998, we remain ever
mindful of the possibility of negative performance. We continue to search for
high quality, growing companies with good balance sheets and high insider stock
ownership. These are characteristics that we believe will positively withstand
the test of time. We maintain a regular dialogue with our portfolio companies to
ensure we are fully aware of their progress.

We continue to have concentrations in health care, financial services,
publishing and real estate industries. Within the health care industry, we
believe assisted living facilities companies offer long-term promise as the
aging of our population continues. The financial services industry (encompassing
brokerage, banking, insurance and money management), and the publishing industry
continue to be consolidating industries. Our focus has been on local and
regional banks such as Doral Financial and IBS Financial and specialized
publishers such as John Wiley & Sons, Inc. and Waverly, Inc. Finally, we
continue to selectively add Real Estate Investment Trusts ("REITs") to our
portfolio. REITs continue to offer generous yields, low volatility and capital
appreciation potential.

We continue to be excited by the long-term prospects for our economy, stock
market and the Heritage Small Cap Stock Fund. We look forward to serving you for
years to come.

Sincerely,

/s/ JAMES D. AWAD
James D. Awad
Chairman
Awad & Associates
Portfolio Manager, Small Cap Stock
Fund

* Calculated without the imposition of front or back-end sales charges.

6
<PAGE> 10

December 5, 1997

Dear Fellow Shareholders:

I'm pleased to report fiscal 1997 was another outstanding year for the
Heritage Series Trust - Small Cap Stock Fund (the "Fund") with appreciation of
36.68%* for Class A Shares.

During the fiscal year, the Fund benefited from many diversified special
situations demonstrating the value of diversification and stock picking. The
largest contributors to performance were Strayer Education, Inc., an owner and
operator of private colleges, Ethan Allen Interiors, Inc., a furniture
manufacturer and retailer, Legg Mason, Inc., a securities broker, Lennar
Corporation, a homebuilder, Interim Services, Inc., a provider of temporary
help, and Gulf Island Fabrication, Inc., a fabricator of drilling rigs and
related equipment.

On the downside, Sodak Gaming, Inc., a distributor of gaming equipment,
NABI, a plasma and biotechnical company, Coherent Inc., a manufacturer of
lasers, Spectrian Corporation, a manufacturer of power amplifiers for wireless
communication, and Allen Telecom Inc., a diversified manufacturer and provider
of telecommunications equipment and services, performed poorly during the
period.

While your Fund has performed admirably in 1997, it appears that 1997 will
be the fourth consecutive year of underperformance by small capitalization
stocks in general. As of this writing, for 1997, the Russell 2000 was up a
healthy 22%. However, this pales in comparison to the 33% rise in the Standard &
Poor's 500 Index.

In my opinion, the sustained underperformance of smaller capitalization
stocks has made them all the more attractive. Eagle's portion of the Fund
currently has a 1998 projected earnings growth of approximately 30%, yet the
portfolio trades at just under 20 times earnings. This compares with a price
earnings ratio of 21 times 1998 projected earnings for the S&P 500; however,
those larger capitalization stocks are growing earnings at only about 10%
annually.

Currently many technology stocks are depressed reflecting, in part,
concerns over the Far East, further compounded by tax related selling. We
believe the weakness in this sector is overdone and will be looking to increase
our technology exposure as we enter 1998.

As always, I thank you for your support and will endeavor to do my best for
your Fund.

Wishing you and your families a happy and prosperous new year.

Sincerely,

/s/ BERT BOKSEN
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Small Cap Stock
Fund

* Calculated without the imposition of front or back-end sales charges.

7
<PAGE> 11

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-SMALL CAP STOCK FUND CLASS A SHARES
ON MAY 7, 1993

[CHART]

The graph contained in the annual report compares the performance of the
Heritage Series Trust- Small Cap Stock Fund Class A Shares with the Russell 2000
Index from inception of Class A Shares (May 7, 1993) through October 31, 1997.

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-SMALL CAP STOCK FUND CLASS C SHARES
ON APRIL 3, 1995

[CHART]

The graph contained in the annual report compares the performance of the
Heritage Series Trust- Small Cap Stock Fund Class C Shares with the Russell 2000
Index from inception of Class C Shares (April 3, 1995) through October 31, 1997.

* Average annual total returns for Heritage Series Trust-Small Stock Fund are
calculated in conformance with Item 22 of Form N-1A, which assumes the
reinvestment of dividends and a sales load of 4.75% for Class A Shares.

8
<PAGE> 12

December 5, 1997

Dear Fellow Shareholders:

It is both a privilege and a pleasure to address you for the first time as
portfolio manager of the Heritage Series Trust-Value Equity Fund. Our management
philosophy is driven by the straightforward notion that selecting the right
companies for purchase is only half of the investment equation; buying them at a
significant discount to their true worth is the other. As with most value
investors who are true to their roots, we are not looking for admiration when we
select stocks for the portfolio, but rather the most attractive risk/reward
scenarios we can uncover. In the short run, buying into the pessimism that
creates value is a difficult and lonely way to invest. However, over time, the
efficiency inherent in the market serves to unlock true value, eventually
leading, we believe, to above average returns for investors.

Our disciplined stock selection process consists of three distinct steps:
1) an initial "generic value" screen based upon selected absolute and relative
value criteria, 2) exhaustive industry and company-specific fundamental
research, and 3) a conservative estimation of underlying intrinsic value. Only
those stocks that we believe are trading at a significant discount to their
intrinsic value are considered for purchase in the Fund.

Since taking over the management of the Fund on October 1, 1997, we have
begun restructuring the portfolio and anticipate that this process will be
complete by the end of this year. Our investments fall into three general
categories: 1) "pure" value opportunities, such as Philips Electronics, 2)
"relative value" opportunities, such as Sunbeam Corporation, and 3)
"event-driven" value opportunities, such as Columbia Healthcare. Each of these
top holdings exhibit the fundamental characteristics that are consistent with
all of our holdings in the Fund; we focused on creating shareholder value, true
company worth that we believe is substantially higher than the current stock
price, and an extremely attractive long-term risk/reward profile.

As we enter 1998 with the stock market at record valuation levels from
nearly every perspective, we feel more strongly than ever that a disciplined,
focused, value-driven investment approach will offer our shareholders superior
returns over the long run.

Sincerely,

/s/ Michael J. Chren
Michael J. Chren
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Value Equity Fund

9
<PAGE> 13

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-VALUE EQUITY FUND CLASS A SHARES
ON DECEMBER 30, 1994

[GRAPH]

The graph contained in the annual report compares the performance of the
Heritage Series Trust-Value Equity Fund Class A Shares with the S&P 500 and S&P
Barra Value Index from inception of Class A Shares (December 30, 1994) through
October 31, 1997.

GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-VALUE EQUITY FUND CLASS C SHARES
ON APRIL 3, 1995

[GRAPH]

The graph contained in the annual report compares the performance of the
Heritage Series Trust-Value Equity Fund Class C Shares with the S&P 500 and S&P
Barra Value Index from inception of Class C Shares (April 3, 1995) through
October 31, 1997.

* Average annual total returns for Heritage Series Trust-Value Equity Fund 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.

10
<PAGE> 14

- --------------------------------------------------------------------------------
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------
<C> <S> <C>
COMMON STOCKS--87.8%(A)
- -----------------------
ARGENTINA--0.5%
---------------
17,843 Compania Perez Companc SA................................... $ 111,765
3,000 Telefonica de Argentina, ADR................................ 84,375
-----------
196,140
-----------
AUSTRALIA--1.5%
---------------
70,000 John Fairfax Holdings, Ltd.................................. 154,574
6,000 Lend Lease Corporation...................................... 122,872
33,000 Mayne Nickless, Ltd......................................... 150,847
43,000 News Corporation, Ltd....................................... 190,813
-----------
619,106
-----------
AUSTRIA--0.9%
-------------
2,200 V.A. Technologie AG......................................... 390,374
-----------
BELGIUM--1.3%
-------------
1,300 Generale de Banque.......................................... 531,752
-----------
BRAZIL--1.8%
-------------
15,500 Centrais Electricas Brasileiras, ADR........................ 341,000
10,000 Petroleo Brasileiro......................................... 190,000
2,200 Telecomunicacues Brasileiras, ADR........................... 223,300
-----------
754,300
-----------
CHILE--0.6%
------------
8,500 Compania de Telefonos de Chile SA, ADR...................... 235,875
-----------
DENMARK--1.5%
-------------
5,717 Novo Nordisk................................................ 619,327
-----------
FRANCE--6.9%
-------------
9,400 AXA-UAP Groupe.............................................. 643,696
4,859 Compagnie Generale.......................................... 566,915
2,950 L'Air Liquide SA............................................ 457,721
17,000 Rhone-Poulenc SA............................................ 741,213
8,940 Schneider SA................................................ 477,358
-----------
2,886,903
-----------
GERMANY--11.2%
--------------
700 Bayerische Motoren Werke AG................................. 506,381
11,700 Deutsche Bank AG............................................ 765,611
16,300 Hoechst AG.................................................. 620,304
1,600 Mannesmann AG............................................... 675,716
1,700 Preussag AG................................................. 440,828
2,900 SGL Carbon AG............................................... 407,124
15,001 VEBA AG..................................................... 836,290
700 Volkswagen AG............................................... 413,795
-----------
4,666,049
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

11
<PAGE> 15

- --------------------------------------------------------------------------------
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
HONG KONG--2.2%
---------------
6,500 Amoy Properties, Ltd........................................ $ 5,591
14,800 Cheung Kong Holdings, Ltd................................... 102,891
26,000 China Light and Power Company, Ltd.......................... 136,869
26,100 Citic Pacific, Ltd.......................................... 124,905
112,000 First Pacific Bank.......................................... 70,620
3,496 HSBC Holdings............................................... 79,131
19,500 Hutchison Whampoa, Ltd...................................... 134,935
48,400 New World Development, Ltd.................................. 170,275
18,000 Swire Pacific, Ltd, Class "A"............................... 96,152
-----------
921,369
-----------
INDIA--1.4%
-------------
8,032 Indian Opportunities Fund, Ltd.(c) ......................... 81,446
30,500 Schroder India Fund......................................... 320,189
12,000 Videsh Sanchar Nigam, Ltd................................... 165,600
-----------
567,235
-----------
INDONESIA--1.1%
---------------
750,000 Bank International Indonesia................................ 161,234
316,000 PT Telekumunikasi........................................... 293,648
-----------
454,882
-----------
ITALY--1.8%
-----------
80,472 ENI......................................................... 452,506
8,000 Gucci NV.................................................... 291,000
-----------
743,506
-----------
JAPAN--15.8%
-------------
20,000 Canon, Incorporated......................................... 485,251
41 DDI Corporation............................................. 136,951
48,000 Hitachi, Ltd. .............................................. 368,924
11,000 Honda Motor Corporation..................................... 370,170
8,000 Ito-Yokado Company, Ltd. ................................... 397,507
34,000 Kamigumi Company, Ltd. ..................................... 153,968
3,000 Mabuchi Motor Company, Ltd. ................................ 167,013
12,000 Marui Company, Ltd. ........................................ 202,410
54,000 Mitsubishi Heavy Industries................................. 265,177
17,000 Mitsui Fudosan Company, Ltd. ............................... 192,106
24,000 Nippon Express Company, Ltd. ............................... 129,223
2,000 Riso Kagaku Corporation..................................... 117,823
7,000 Rohm Company, Ltd. ......................................... 692,148
24,000,000 Sakura Finance.............................................. 187,952
</TABLE>

The accompanying notes are an integral part of the financial statements.

12
<PAGE> 16

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
4,000 Secom Company, Ltd.......................................... $ 258,579
7,000 Shimachu Company, Ltd....................................... 148,899
10,000 Shin-Etsu Chemical Company, Ltd............................. 244,287
7,000 Sony Corporation............................................ 581,055
17,000 Sumitomo Electric Industries, Ltd........................... 224,595
15,000 Taisho Pharmaceutical Company............................... 383,880
24,000 Toppan Printing Company, Ltd................................ 301,122
9,000 Toyota Motor Corporation.................................... 250,519
13,000 Yamanouchi Pharmaceuticals.................................. 319,734
-----------
6,579,293
-----------
MEXICO--2.0%
-------------
16,118 Cifra SA DE CV.............................................. 32,063
30,000 Corporation Industrial ALFA................................. 218,963
4,000 Empresas ICA Sociedad Contro................................ 53,250
130,000 Grupo Financiero Banamex.................................... 257,364
5,800 Telefonos De Mexico......................................... 250,850
-----------
812,490
-----------
NETHERLANDS--3.0%
-----------------
13,100 ING Groep NV................................................ 549,910
9,000 Philips Electronics NV...................................... 704,610
-----------
1,254,520
-----------
PHILIPPINES--0.3%
-----------------
1,920,000 Belle Corporation........................................... 144,487
-----------
SINGAPORE--0.5%
---------------
24,000 Development Bank of Singapore............................... 224,000
-----------
SPAIN--2.7%
------------
19,035 Banco de Santander SA....................................... 533,221
22,500 Telefonica de Espana SA..................................... 614,044
-----------
1,147,265
-----------
SWEDEN--1.3%
-------------
6,100 Incentive AB................................................ 534,266
-----------
SWITZERLAND--6.3%
-----------------
6,120 Credit Suisse Group......................................... 862,110
617 Novartis AG................................................. 966,315
90 Roche Holdings AG Genusscheine.............................. 790,894
-----------
2,619,319
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

13
<PAGE> 17

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------
<C> <S> <C>
UK--22.3%
------------
67,000 Cable & Wireless, PLC....................................... $ 535,068
57,000 General Electric Company, PLC............................... 364,118
23,000 GKN, PLC.................................................... 515,925
26,500 Glaxo Wellcome, PLC......................................... 568,204
33,200 Granada Group, PLC.......................................... 457,865
102,000 Ladbroke Group, PLC......................................... 456,919
84,000 LASMO, PLC.................................................. 387,560
51,000 Lloyds TSB Group, PLC....................................... 637,461
56,000 Marks & Spencer, PLC........................................ 568,422
24,000 McKechnie, PLC.............................................. 202,538
33,000 National Westminister Bank, PLC............................. 474,485
111,000 NFC, PLC.................................................... 251,411
32,950 Reckitt & Colman, PLC....................................... 505,553
43,100 Royal Bank of Scotland Group, PLC........................... 457,006
58,558 Safeway, PLC................................................ 381,439
69,000 Scottish Power, PLC......................................... 516,311
81,000 Shell Transport & Trading Company, PLC...................... 574,508
28,731 Smiths Industries, PLC...................................... 416,960
64,000 Unilever, PLC............................................... 476,750
44,357 Wassall, PLC................................................ 250,795
34,000 Wolseley, PLC............................................... 283,364
-----------
9,282,662
-----------
VENEZUELA--0.9%
---------------
8,200 Compania Anonima Nacional Telefonos......................... 358,750
-----------
Total Common Stocks (cost $34,543,491)...................... 36,543,870
-----------
</TABLE>

<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
--------- -------- -----------
<C> <S> <C> <C>
BONDS--1.5%(A)
- --------------
JAPAN--1.5%
-------------
$311,000 MBL International Finance (Bermuda), 3.0%(d)................ 11/30/02 $ 317,026
10,000,000 Namco, 4.7%(d)(e)........................................... 09/30/98 108,018
23,000,000 Nitto Denko Corporation, 2.2%(d)(e)......................... 03/31/99 217,100
-----------
Total Bonds (cost $697,855)................................. 642,144
-----------
Total investment portfolio excluding repurchase agreement (cost
$35,241,346).................................................................. 37,186,014
REPURCHASE AGREEMENT--7.0%(A)
- ----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October
31, 1997, @ 5.58% to be repurchased at $2,899,329 on November 3, 1997,
collateralized by $2,580,000 United States Treasury Notes, 7.875% due November
15, 2004, (market value of $2,968,034 including interest) (cost $2,898,000)... 2,898,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $38,139,346)(B) 96.3%(A)..................... 40,084,014
OTHER ASSETS AND LIABILITIES, NET, 3.7%(A).................................... 1,530,909
-----------
NET ASSETS, 100%.............................................................. $41,614,923
===========
</TABLE>

(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
$1,944,668 which consists of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost of
$4,708,721 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value of $2,764,053.
(c) Martin Currie Investment Management Limited is the manager of the Indian
Opportunities Fund, Ltd.
(d) Convertible bond.
(e) Principal amount is stated in Japanese yen.
ADR -- American Depository Receipt.

The accompanying notes are an integral part of the financial statements.

14
<PAGE> 18

<TABLE>
<CAPTION>
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
- ------------------------ ----------- --------
<S> <C> <C>
Common Stocks
Banking................................................... $ 3,934,520 9.4%
Basic Industries.......................................... 2,858,725 6.9%
Building Materials and Merchandise........................ 283,364 0.7%
Capital Goods............................................. 4,989,508 12.0%
Consumer Goods and Services............................... 5,593,249 13.4%
Diversified Industrials................................... 825,749 2.0%
Electronic and Electrical Equipment....................... 1,068,728 2.6%
Energy.................................................... 1,217,451 2.9%
Engineering............................................... 1,135,423 2.7%
Finance................................................... 3,103,324 7.5%
Foods..................................................... 476,750 1.2%
Household Goods........................................... 505,553 1.2%
Insurance................................................. 643,696 1.6%
Leisure and Hotels........................................ 914,784 2.2%
Oil, Exploration and Production........................... 387,560 0.9%
Oil, Integrated........................................... 764,508 1.8%
Pharmaceuticals........................................... 1,271,818 3.1%
Retail Trade.............................................. 1,543,596 3.7%
Telecommunications........................................ 2,595,910 6.2%
Transportation and Storage................................ 685,449 1.6%
Utilities................................................. 1,744,205 4.2%
Bonds....................................................... 642,144 1.5%
Repurchase Agreement........................................ 2,898,000 7.0%
----------- ---
Total Investments........................................... $40,084,014 96.3%
=========== ===
</TABLE>

The accompanying notes are an integral part of the financial statements.

15
<PAGE> 19

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCK--95.8%(A)
- ----------------------
ADVERTISING/COMMUNICATIONS--4.3%
--------------------------------
26,000 Omnicom Group, Inc. ........................................ $ 1,836,250
-----------
BANKING--5.6%
-------------
16,500 BankAmerica Corporation..................................... 1,179,750
20,000 NationsBank Corporation..................................... 1,197,500
-----------
2,377,250
-----------
BEVERAGES--1.3%
---------------
10,000 The Coca-Cola Company....................................... 565,000
-----------
BUILDING--2.3%
--------------
20,000 Illinois Tool Works, Inc. .................................. 983,750
-----------
CONGLOMERATES/DIVERSIFIED--2.2%
-------------------------------
25,000 Thermo Electron Corporation*................................ 932,813
-----------
COSMETICS/TOILETRIES--2.5%
--------------------------
12,000 Gillette Company............................................ 1,068,750
-----------
DATA PROCESSING--14.6%
----------------------
15,000 Cisco Systems, Inc.* ....................................... 1,230,468
12,000 Dell Computer Corporation* ................................. 961,500
25,000 HBO & Company............................................... 1,087,500
12,000 Intel Corporation........................................... 924,000
8,000 Microsoft Corporation*...................................... 1,040,000
16,000 PeopleSoft, Inc.*........................................... 1,006,000
-----------
6,249,468
-----------
ELECTRONICS/ELECTRIC--5.1%
--------------------------
20,000 General Electric Company.................................... 1,291,250
10,000 Nokia Corporation, Sponsored ADR, Class "A"................. 882,500
-----------
2,173,750
-----------
FINANCE--10.0%
---------------
12,000 American Express Company.................................... 936,000
30,000 Charles Schwab Corporation.................................. 1,023,750
25,000 Fannie Mae.................................................. 1,210,938
30,000 Freddie Mac................................................. 1,136,250
-----------
4,306,938
-----------
HOTELS/MOTELS/INNS--2.0%
------------------------
12,500 Marriott International, Inc. ............................... 871,875
-----------
INSURANCE--10.0%
----------------
12,000 Allstate Corporation........................................ 995,250
15,000 American International Group, Inc. ......................... 1,530,937
25,000 Travelers Group, Inc........................................ 1,750,000
-----------
4,276,187
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

16
<PAGE> 20

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
MEDICAL EQUIPMENT/SUPPLY--3.4%
------------------------------
25,000 Guidant Corporation......................................... $ 1,437,500
-----------
OIL & GAS--5.7%
---------------
18,000 Diamond Offshore Drilling, Inc.............................. 1,120,500
15,000 Schlumberger, Ltd........................................... 1,312,500
-----------
2,433,000
-----------
PHARMACEUTICAL--12.2%
---------------------
25,000 Eli Lilly & Company......................................... 1,671,875
25,000 Pfizer, Inc................................................. 1,768,750
12,500 Warner-Lambert Company...................................... 1,789,844
-----------
5,230,469
-----------
REAL ESTATE/LAND DEVELOPMENT--2.2%
----------------------------------
30,000 Security Capital Group, Inc., Class "B"*.................... 960,000
-----------

RETAIL STORES--8.4%
-------------------
25,000 Home Depot, Inc............................................. 1,390,625
20,000 Kohl's Corporation*......................................... 1,342,500
30,000 Walgreen Company............................................ 843,750
-----------
3,576,875
-----------

TELECOMMUNICATIONS--4.0%
------------------------
20,000 Telefonakliebolaget LM Ericsson, ADR........................ 885,000
15,000 Tellabs, Inc.*.............................................. 810,000
-----------
1,695,000
-----------
Total investment portfolio excluding repurchase agreement (cost
$30,969,425)................................................................. 40,974,875

REPURCHASE AGREEMENT--4.4%(A)
- -----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October 31,
1997 @ 5.58% to be repurchased at $1,890,879 on November 3, 1997, collateralized
by $1,685,000 United States Treasury Notes, 7.875% due November 15, 2004,
(market value $1,938,425 including interest) (cost $1,890,000).................. 1,890,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $32,859,425)(B), 100.2%(A)..................... 42,864,875
OTHER ASSETS AND LIABILITIES, NET, (0.2%)(A).................................... (72,273)
-----------
NET ASSETS, 100.0%.............................................................. $42,792,602
===========
</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
$10,005,450, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$10,100,917 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $95,467.
ADR -- American Depository Receipt.

The accompanying notes are an integral part of the financial statements.

17
<PAGE> 21

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
COMMON STOCK--92.7%(A)
- ----------------------
AEROSPACE--0.3%
-----------------
40,000 Kellstrom Industries, Inc.*................................. $ 842,500
------------
AUTO PARTS/EQUIPMENT--0.1%
--------------------------
50,000 Miller Industries, Inc.*.................................... 506,250
------------
AUTO RENTAL/SERVICE--0.1%
-------------------------
33,000 Earl Scheib, Inc.*.......................................... 297,000
------------
BANKING--3.6%
-------------
100,000 Bank Plus Corporation*...................................... 1,200,000
100,000 BankUnited Financial Corporation, Class "A"*................ 1,312,500
60,000 Commercial Federal Corporation*............................. 2,910,000
77,000 Doral Financial Corporation................................. 1,703,625
69,920 IBS Financial Corporation................................... 1,075,020
10,000 Independent Bankshares, Inc................................. 166,875
100,000 ITLA Capital Corporation*................................... 2,000,000
15,000 SIS Bancorp, Inc............................................ 511,875
25,000 Wayne Bancorp, Inc. ........................................ 550,000
------------
11,429,895
------------
BUILDING--2.1%
--------------
160,000 Lennar Corporation.......................................... 6,510,000
------------
CHEMICALS--0.7%
---------------
68,600 Lawter International, Inc. ................................. 767,462
75,000 Mississippi Chemical Corporation............................ 1,378,125
------------
2,145,587
------------
CONTAINERS--0.8%
----------------
100,000 ZERO Corporation............................................ 2,687,500
------------
COSMETICS/TOILETRIES--0.2%
--------------------------
50,000 Enamelon, Inc.*............................................. 775,000
------------
DATA PROCESSING--9.8%
---------------------
55,000 3D Systems Corporation*..................................... 522,500
25,000 Cayenne Software, Inc.*..................................... 75,000
123,750 Comdisco, Inc. ............................................. 3,905,859
5,000 DIDAX, Inc.*................................................ 19,844
190,000 Dynamic Healthcare Technologies, Inc.*...................... 979,688
39,350 Fiserv, Inc.*............................................... 1,760,912
23,617 Greentree Software, Inc.*................................... 27,307
25,000 Health Management Systems, Inc.*............................ 162,500
38,700 Information Resources, Inc.*................................ 638,550
240,300 LanVision Systems, Inc.*.................................... 1,449,309
40,000 Logic Works, Inc.*.......................................... 375,000
60,000 Medic Computer Systems, Inc.*............................... 2,092,500
70,000 National Data Corporation................................... 2,585,625
78,475 New Horizons Worldwide, Inc.*............................... 1,137,887
133,800 Ovid Technologies, Inc.*.................................... 1,204,200
25,000 Policy Management Systems Corporation*...................... 1,531,250
154,875 Printronix, Inc.*........................................... 2,826,468
60,000 ScanSource, Inc.*........................................... 1,192,500
</TABLE>

The accompanying notes are an integral part of the financial statements.

18
<PAGE> 22

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
20,000 Shared Medical Systems Corporation.......................... $ 1,095,000
160,000 Sykes Enterprises, Inc.*.................................... 3,980,000
105,000 The Pathways Group, Inc.*................................... 2,060,625
92,500 TransAct Technologics, Inc.*................................ 1,156,250
------------
30,778,774
------------
EDUCATION--1.7%
---------------
110,000 Strayer Education, Inc...................................... 5,252,500
------------
ELECTRONICS/ELECTRIC--5.9%
-------------------------
50,000 Chicago Miniature Lamp, Inc.*............................... 1,600,000
155,000 Computer Products, Inc.*.................................... 4,223,750
150,000 EA Industries, Inc.*........................................ 937,500
110,000 Eltron International, Inc.*................................. 3,203,750
100,000 Fluke Corporation........................................... 2,406,250
10,000 Holmes Protection Group, Inc.*.............................. 155,000
25,000 OPTEK Technology, Inc.*..................................... 453,125
75,000 Pioneer-Standard Electronics, Inc........................... 1,228,125
30,000 Polaroid Corporation........................................ 1,348,125
100,000 ThermoQuest Corporation*.................................... 1,787,500
65,000 Trident International, Inc.*................................ 991,250
------------
18,334,375
------------
FILMED ENTERTAINMENT--0.5%
--------------------------
110,000 Ascent Entertainment Group, Inc.*........................... 1,086,250
9,000 Cinar Films, Inc.*.......................................... 349,875
20,000 Todd-AO Corporation......................................... 212,500
------------
1,648,625
------------
FINANCE--1.8%
--------------
250,000 Cash America International, Inc............................. 2,953,125
50,000 Interra Financial, Inc...................................... 2,756,250
------------
5,709,375
------------
FOOD--1.2%
------------
75,000 J.M. Smucker Company, Class "B"*............................ 1,893,750
60,000 Smithfield Foods, Inc.*..................................... 1,792,500
------------
3,686,250
------------
HEALTH CARE CENTERS--2.5%
-------------------------
55,100 Alternative Living Services, Inc.*.......................... 1,349,950
50,000 American Retirement Corporation*............................ 971,875
52,000 ARV Assisted Living, Inc.*.................................. 780,000
55,000 Assisted Living Concepts, Inc.*............................. 1,127,500
37,800 Horizon Health Corporation*................................. 883,575
130,000 Sun Healthcare Group, Inc.*................................. 2,583,750
------------
7,696,650
------------
HOME FURNISHINGS--2.5%
----------------------
100,000 Ethan Allen Interiors, Inc.................................. 3,543,750
66,600 Falcon Products, Inc........................................ 1,028,138
195,000 Furniture Brands International, Inc.*....................... 3,266,250
------------
7,838,138
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

19
<PAGE> 23

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
HOTELS/MOTELS/INNS--2.1%
------------------------
85,000 CapStar Hotel Company*...................................... $ 3,012,187
225,000 Servico, Inc.*.............................................. 3,585,938
------------
6,598,125
------------
INSURANCE--1.4%
---------------
50,000 Danielson Holding Corporation*.............................. 393,750
137,600 Gryphon Holdings, Inc.*..................................... 2,218,800
100,000 INSpire Insurance Solutions, Inc.*.......................... 1,850,000
------------
4,462,550
------------
LEATHER/SHOES--1.8%
-------------------
100,000 Footstar, Inc.*............................................. 2,718,750
240,000 Genesco Inc.*............................................... 3,045,000
------------
5,763,750
------------
LEISURE/AMUSEMENT--2.0%
-----------------------
74,500 International Speedway Corporation, Class "A"............... 1,564,500
53,000 K2, Inc..................................................... 1,341,563
110,000 Rio Hotel & Casino Inc.*.................................... 2,413,125
85,000 Sodak Gaming, Inc.*......................................... 913,750
------------
6,232,938
------------
MACHINERY--2.2%
---------------
25,000 Blount International, Inc., Class "A"....................... 1,314,063
50,000 Gradall Industries, Inc.*................................... 781,250
206,500 ITEQ, Inc.*................................................. 2,581,250
160,000 Middleby Corporation*....................................... 1,620,000
40,000 WPI Group, Inc.*............................................ 445,000
------------
6,741,563
------------
MANUFACTURING/DISTRIBUTIONS--4.3%
---------------------------------
175,000 Amor Holdings, Inc.*........................................ 1,925,000
125,000 Gentex Corporation*......................................... 3,062,500
20,000 Gibson Greetings, Inc.*..................................... 492,500
115,300 Hughes Supply, Inc.......................................... 4,021,087
90,000 JLG Industries, Inc......................................... 1,141,875
69,100 Metrika Systems Corporation*................................ 1,131,513
92,000 Thermo Optek Corporation*................................... 1,558,250
------------
13,332,725
------------
MEDICAL EQUIPMENT/SUPPLY--6.4%
------------------------------
565,000 Angeion Corporation*........................................ 2,224,687
123,456 Angiosonics, Inc.*(c)....................................... 370,368
232,500 ATS Medical, Inc.*.......................................... 1,453,125
55,000 Aviron*..................................................... 1,203,125
200,000 CardioDynamics International Corporation*................... 575,000
92,500 Coherent, Inc.*............................................. 3,607,500
133,333 Cooper Companies, Inc.*..................................... 4,774,988
50,000 Cypress Bioscience, Inc.*................................... 81,250
30,000 Photoelectron Corporation*.................................. 330,000
113,000 Sano Corporation*........................................... 2,344,750
92,500 Somanetics Corporation*..................................... 659,063
44,444 SurVivaLink Corporation*(c)................................. 200,000
41,000 Thermedics, Inc.*........................................... 697,000
35,000 Thermo Bioanalysis Corporation*............................. 603,750
43,200 Thermo Cardiosystems, Inc.*................................. 934,200
------------
20,058,806
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

20
<PAGE> 24

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
METAL--0.6%
-----------
124,500 Material Sciences Corporation*.............................. $ 1,851,938
------------
MINING/DIVERSIFIED--0.1%
------------------------
1,500 Petsec Energy Limited, ADR*................................. 33,750
30,000 Uranium Resources, Inc.*.................................... 168,750
------------
202,500
------------
OIL & GAS--7.8%
---------------
25,000 Abraxas Petroleum Corporation*.............................. 465,625
120,000 CE Franklin Limited*........................................ 1,620,000
400,000 Chaparral Resources, Inc.*.................................. 750,000
80,000 Chieftain International, Inc.*.............................. 1,960,000
200,000 Comstock Resources, Inc.*................................... 3,350,000
50,000 Dailey International, Inc.*................................. 637,500
100,000 Gulf Island Fabrication, Inc.*.............................. 3,250,000
45,300 Midcoast Energy Resources, Inc.............................. 1,090,031
75,000 Panaco, Inc.*............................................... 365,625
20,000 Patina Oil & Gas Corporation*............................... 195,000
236,000 Precision Drilling Corporation*............................. 7,257,000
50,000 Pride International, Inc.*.................................. 1,650,000
50,000 Snyder Oil Corporation*..................................... 1,106,250
30,000 Transmontaigne Oil Company*................................. 517,500
------------
24,214,531
------------
PHARMACEUTICAL--1.8%
--------------------
200,000 Capstone Pharmacy Services, Inc.*........................... 2,125,000
35,000 EntreMed, Inc.*............................................. 264,688
65,000 Protein Design Labs, Inc.*.................................. 3,241,875
------------
5,631,563
------------
POLLUTION CONTROL--3.2%
-----------------------
220,000 Envirosource, Inc.*......................................... 605,000
170,000 IMCO Recycling, Inc......................................... 3,091,875
210,000 Phillip Services Corporation*............................... 3,675,000
103,200 Superior Services, Inc.*.................................... 2,760,600
------------
10,132,475
------------
PUBLISHING--4.1%
----------------
100,000 Houghton Mifflin Company.................................... 3,550,000
54,800 John Wiley & Sons, Inc., Class "A".......................... 2,404,350
96,000 Waverly, Inc................................................ 2,496,000
170,000 World Color Press, Inc.*.................................... 4,303,125
------------
12,753,475
------------
RAILROADS--1.2%
---------------
130,000 Genesee & Wyoming, Inc.*.................................... 3,640,000
------------
REAL ESTATE INVESTMENT TRUST--5.2%
----------------------------------
123,000 Alexander Haagen Properties, Inc............................ 2,060,250
27,000 Arden Realty Group, Inc..................................... 823,500
25,000 Excel Realty Trust, Inc..................................... 753,125
175,000 Innkeepers USA Trust........................................ 2,920,312
164,900 LTC Properties, Inc......................................... 3,339,225
100,000 Meridian Industrial Trust, Inc.............................. 2,306,250
</TABLE>

The accompanying notes are an integral part of the financial statements.

21
<PAGE> 25

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ ------------
<C> <S> <C>
152,700 Mid-Atlantic Realty Trust................................... $ 2,061,450
35,000 Prentiss Properties Trust................................... 995,313
55,000 Sunstone Hotel Investors, Inc............................... 965,937
------------
16,225,362
------------
REAL ESTATE/LAND DEVELOPMENT--0.1%
----------------------------------
50,000 Cadiz Land Company, Inc.*................................... 325,000
------------
RETAIL STORES--2.8%
-------------------
160,000 Claire's Stores Inc......................................... 3,540,000
80,000 Cole National Corporation, Class "A"*....................... 3,390,000
80,000 Heilig-Meyers Company....................................... 1,070,000
20,000 The Maxim Group, Inc.*...................................... 282,500
50,000 Shoe Carnival, Inc.*........................................ 393,750
------------
8,676,250
------------
SECURITIES--2.6%
----------------
50,000 Advest Group, Inc........................................... 1,143,750
106,667 Legg Mason, Inc. ........................................... 5,233,333
77,000 Southwest Securities Group, Inc............................. 1,713,250
------------
8,090,333
------------
SERVICES--5.3%
--------------
80,000 CDI Corporation*............................................ 3,140,000
59,500 Forensic Technologies International Corporation*............ 706,563
170,000 Interim Services, Inc.*..................................... 4,451,875
50,000 Mac-Gray Corporation*....................................... 737,500
125,000 RCM Technologies, Inc.*..................................... 1,812,500
40,000 Right Management Consultants*............................... 375,000
160,000 StarTek, Inc.*.............................................. 2,000,000
40,000 Stewart Enterprises, Inc., Class "A"........................ 1,660,000
22,500 Volt Information Sciences, Inc.*............................ 1,552,500
------------
16,435,938
------------
TELECOMMUNICATIONS--2.8%
------------------------
15,000 Aerial Communications, Inc.*................................ 127,500
80,000 Allen Telecom, Inc.*........................................ 1,515,000
85,800 Network Long Distance, Inc.*................................ 772,200
50,000 Nextlink Communications, Inc.*.............................. 1,131,250
35,000 Periphonics Corporation*.................................... 336,875
60,700 Spectrian Corporation*...................................... 1,426,450
181,000 SymmetriCom, Inc.*.......................................... 2,771,563
107,000 Syntellect, Inc.*........................................... 254,125
100,000 Trex Communications, Inc.*(c)............................... 400,000
5,000 USCI, Inc.*................................................. 38,125
------------
8,773,088
------------
TEXTILES--0.7%
--------------
60,000 Kellwood Company............................................ 2,073,750
------------
TRANSPORTATION--0.4%
--------------------
50,000 C.H. Robinson Worldwide, Inc.*.............................. 1,100,000
------------
Total Common Stock (cost $225,916,876)...................... 289,455,079
------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

22
<PAGE> 26

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MATURITY MARKET
AMOUNT DATE VALUE
------ -------- -----------
<C> <S> <C> <C>
CONVERTIBLE BONDS--1.7%(A)
- --------------------------
DATA PROCESSING--0.1%
---------------------
$100,000 Proscape Technologies, Inc., 6.5%, Series "B" Subordinated
Convertible Debentures(c)................................... 11/18/01 $ 100,000
------------
HEALTH CARE CENTERS--1.0%
--------------------------
1,000,000 Alternative Living Services, Inc., 7.0%..................... 06/01/04 1,320,000
1,000,000 Assisted Living Concepts, Inc., 6.0%........................ 11/01/02 1,080,000
750,000 Sterling House Corporation, 6.75%........................... 06/30/06 1,005,000
------------
3,405,000
------------
REAL ESTATE INVESTMENT TRUST--0.6%
----------------------------------
2,000,000 American Retirement Corporation, 5.75%...................... 10/01/02 1,995,000
155,000 LTC Properties, Inc., 8.25%................................. 07/01/01 181,956
------------
2,176,956
------------
Total Convertible Bonds (cost $4,870,000)................... 5,681,956
------------
</TABLE>

<TABLE>
<CAPTION>
SHARES
------
<C> <S> <C>
WARRANTS--0.1%(A)
- -----------------
MEDICAL EQUIPMENT/SUPPLY--0.1%
------------------------------
25,000 Cypress Bioscience, Inc. Warrants*.......................... 12,500
------------
Total Warrants (cost $781).................................. 12,500
------------
Total investment portfolio excluding repurchase agreement (cost $230,787,657)... 295,149,535
============

REPURCHASE AGREEMENT--6.0%(A)
- -----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October 31, 1997
@ 5.58% to be repurchased at $18,328,519 on November 3, 1997, collateralized by
$16,300,000 United States Treasury Notes, 7.875% due November 15, 2004,
(market value $18,751,533 including interest) (cost $18,320,000)......................... 18,320,000
------------
TOTAL INVESTMENT PORTFOLIO (COST $249,107,657)(B), 100.5%(A)............................ 313,469,535
OTHER ASSETS AND LIABILITIES, NET, (0.5%)(A)............................................. (1,119,888)
------------
NET ASSETS, 100.0%....................................................................... $312,349,647
============
</TABLE>

- ---------------

* Non-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
$64,361,878, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$73,220,749 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $8,858,871.
(c) Private placement securities are fair valued by the Board of Trustees.
ADR -- American Depository Receipt.

The accompanying notes are an integral part of the financial statements.

23
<PAGE> 27

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS--91.1%(A)
- -----------------------
AEROSPACE--2.4%
---------------
16,000 Raytheon Company............................................ $ 868,000
-----------
AUTO PARTS/EQUIPMENT--1.4%
--------------------------
20,000 Superior Industries International, Inc...................... 533,750
-----------
AUTO/TRUCK MANUFACTURERS--1.2%
------------------------------
10,000 Ford Motor Company.......................................... 436,875
-----------
BANKING--6.4%
-------------
1,500 Bankers Trust New York Corporation.......................... 177,000
4,500 Chase Manhattan Corporation................................. 519,187
5,500 Citicorp.................................................... 687,844
6,000 H.F. Ahmanson & Company..................................... 354,000
5,500 J.P. Morgan & Company....................................... 603,625
-----------
2,341,656
-----------
BEVERAGES--0.3%
---------------
2,500 PepsiCo, Inc. .............................................. 92,031
-----------
BUILDING--2.9%
--------------
19,000 American Standard Companies, Inc.*.......................... 679,250
7,000 Black & Decker Corporation.................................. 266,437
2,500 Illinois Tool Works, Inc. .................................. 122,969
-----------
1,068,656
-----------
CHEMICALS--3.1%
---------------
7,000 E.I. du Pont de Nemours & Company........................... 398,125
12,500 Imperial Chemical Industries, PLC, ADR...................... 748,438
-----------
1,146,563
-----------
CONGLOMERATES/DIVERSIFIED--3.2%
-------------------------------
23,000 Allegheny Teledyne, Inc..................................... 605,188
12,000 Fortune Brands, Inc......................................... 396,750
2,000 Pioneer Hi-Bred International, Inc.......................... 183,250
-----------
1,185,188
-----------
CONTAINERS--2.2%
----------------
18,000 Crown Cork & Seal Company, Inc.............................. 811,125
-----------
DATA PROCESSING--1.7%
---------------------
20,000 Lexmark International Group, Inc., Class "A"*............... 611,250
-----------
ELECTRONICS/ELECTRIC--5.8%
--------------------------
7,000 AMP, Inc.(c) ............................................... 315,000
7,000 Honeywell, Inc. ............................................ 476,438
17,000 Philips Electronics N.V., NY Shares, ADR.................... 1,332,375
-----------
2,123,813
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

24
<PAGE> 28

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
FINANCE--5.0%
---------------
14,000 Fannie Mae.................................................. $ 678,125
10,000 Freddie Mac................................................. 378,750
5,500 SLM Holding Corporation..................................... 772,063
-----------
1,828,938
-----------
HEALTH CARE CENTERS--2.6%
-------------------------
8,000 Bergen Brunswig Corporation, Class "A"...................... 320,500
22,000 Columbia/HCA Healthcare Corporation......................... 621,500
-----------
942,000
-----------
HOUSEHOLD PRODUCTS--5.3%
------------------------
29,500 Sunbeam Corporation......................................... 1,336,719
24,000 Tupperware Corporation...................................... 601,500
-----------
1,938,219
-----------
INSURANCE--3.8%
---------------
5,000 Allstate Corporation........................................ 414,687
5,250 American International Group, Inc........................... 535,828
12,000 Travelers Property Casualty Corporation, Class "A".......... 433,500
-----------
1,384,015
-----------
MANUFACTURING/DISTRIBUTIONS--1.7%
---------------------------------
19,000 Essex International, Inc.*.................................. 629,375
-----------
MEDICAL EQUIPMENT/SUPPLY--1.9%
------------------------------
17,500 Bausch & Lomb, Inc.......................................... 686,875
-----------
OFFICE EQUIPMENT--3.1%
----------------------
10,000 Hewlett-Packard Company..................................... 616,875
6,500 Xerox Corporation........................................... 515,531
-----------
1,132,406
-----------
OIL & GAS--13.0%
----------------
22,000 Ashland, Inc................................................ 1,049,125
9,000 British Petroleum Company, PLC, Sponsored ADR............... 789,750
12,000 Exxon Corporation........................................... 737,250
12,000 Mobil Corporation........................................... 873,750
18,000 Royal Dutch Petroleum Company, NY Shares, ADR............... 947,250
11,000 YPF Sociedad Anonima, Sponsored ADR......................... 352,000
-----------
4,749,125
-----------
PHARMACEUTICAL--1.3%
--------------------
3,000 Bristol-Myers Squibb Company................................ 263,250
5,000 Glaxo Wellcome, PLC, Sponsored ADR.......................... 214,062
-----------
477,312
-----------
REAL ESTATE INVESTMENT TRUST--2.1%
----------------------------------
15,000 BRE Properties, Inc., Class "A" Shares...................... 411,563
8,000 Meditrust Corporation....................................... 342,000
-----------
753,563
-----------
REAL ESTATE/LAND DEVELOPMENT--1.8%
----------------------------------
21,000 Security Capital Group, Inc., Class "B"..................... 672,000
-----------
RETAIL STORES--1.3%
-------------------
11,000 Federated Department Stores, Inc.*.......................... 484,000
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

25
<PAGE> 29

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
SECURITIES--8.2%
----------------
32,500 Standard and Poor's Depository Receipts..................... $ 2,977,812
-----------
STEEL/IRON--0.6%
----------------
4,000 Nucor Corporation........................................... 209,000
-----------
TELECOMMUNICATIONS--0.3%
------------------------
1,000 Telecomunicacoes Brasileiras S/A -- Telebras, ADR(c)........ 101,500
-----------
TOBACCO--6.4%
---------------
25,000 Philip Morris Companies, Inc................................ 990,625
25,000 RJR Nabisco Holdings Corporation............................ 792,188
18,000 UST, Inc.................................................... 538,875
-----------
2,321,688
-----------
UTILITIES-ELECTRIC--1.1%
------------------------
17,500 Southern Company............................................ 401,406
-----------
UTILITIES-GAS--1.0%
-------------------
7,500 Burlington Resources, Inc. ................................. 367,031
-----------
Total Common Stock (cost $31,252,104)....................... 33,275,172
-----------
COVERED CALL OPTIONS WRITTEN--(0.1)%(A)
- ---------------------------------------
7,000 AMP, Inc., November 1997 @ 45............................... (12,250)
Telecommunicacoes Brasileiras S/A--Telebras, ADR, November
1,000 1997 @ 105.................................................. (8,875)
-----------
Total Covered Call Options Written (premiums received
$20,429).................................................... (21,125)
-----------
Total investment portfolio excluding repurchase agreement (cost $31,231,675)..... 33,254,047
REPURCHASE AGREEMENT--10.1%(A)
- ------------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October 31,
1997 @ 5.58% to be repurchased at $3,681,711 on November 3, 1997, collateralized
by $3,275,000 United States Treasury Notes, 7.875% due November 15, 2004,
(market value $3,767,563 including interest) (cost $3,680,000)................... $ 3,680,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $34,911,675)(B), 101.1%(A)...................... 36,934,047
OTHER ASSETS AND LIABILITIES, NET, (1.1%)(A)..................................... (409,640)
-----------
NET ASSETS, 100.0%............................................................... $36,524,407
===========
</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 $2,022,372, which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $2,919,746 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$897,374.
(c) A portion of these shares were held by the custodian in connection with
covered can options written.

ADR -- American Depository Receipt.

The accompanying notes are an integral part of the financial statements.

26
<PAGE> 30

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EAGLE
INTERNATIONAL GROWTH SMALL CAP VALUE
EQUITY PORTFOLIO EQUITY FUND STOCK FUND EQUITY FUND
---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Assets
- -----
Investments, at market value (identified cost $35,241,346,
$30,969,425, $230,787,657, and $31,252,104, respectively)
(Note 1)................................................. $37,186,014 $40,974,875 $295,149,535 $33,275,172
Repurchase agreement (identified cost $2,898,000,
$1,890,000, $18,320,000, and $3,680,000, respectively)
(Note 1)................................................. 2,898,000 1,890,000 18,320,000 3,680,000
Cash....................................................... 969 1,342 499 3,864
Foreign currency (cost $192,758)........................... 192,612 -- -- --
Receivables:
Investments sold......................................... 2,155,873 -- 2,914,408 --
Fund shares sold......................................... 149,363 479,621 3,088,046 189,728
Dividends and interest................................... 62,864 16,193 128,045 52,671
Foreign taxes recoverable................................ 52,320 -- -- --
Deferred organization expenses (Note 1).................... 26,000 16,998 5,000 22,971
Deferred state/federal registration expenses (Note 1)...... 6,621 13,437 12,877 10,560
Prepaid insurance.......................................... 2,488 947 3,086 1,543
----------- ----------- ------------ -----------
Total Assets....................................... $42,733,124 $43,393,413 $319,621,496 $37,236,509
----------- ----------- ------------ -----------
Liabilities
- -----------
Payables (Note 4):
Investments purchased.................................... $ 853,462 $ 426,057 $ 6,422,769 $ 496,209
Fund shares redeemed..................................... 111,442 57,540 426,547 79,364
Accrued management fee................................... 51,036 47,020 168,028 50,500
Accrued distribution fee................................. 33,284 20,691 125,212 18,421
Other accrued expenses................................... 68,977 49,503 129,293 46,483
Covered call options written, at market value (premiums
received $20,429)........................................ -- -- -- 21,125
----------- ----------- ------------ -----------
Total Liabilities.................................. $ 1,118,201 $ 600,811 $ 7,271,849 $ 712,102
----------- ----------- ------------ -----------
Net assets, at market value................................ $41,614,923 $42,792,602 $312,349,647 $36,524,407
=========== =========== ============ ===========
Net Assets
- ----------
Net assets consist of:
Paid-in capital.......................................... $38,658,990 $32,199,284 $230,116,255 $27,051,766
Undistributed net investment income (Note 1)............. -- -- -- 182,541
Accumulated net realized gain (Notes 1 and 5)............ 1,049,917 587,868 17,871,514 7,267,728
Distribution in excess of net investment income.......... (40,256) -- -- --
Net unrealized appreciation on investments, covered call
options written and other assets and liabilities
denominated in foreign currencies...................... 1,946,272 10,005,450 64,361,878 2,022,372
----------- ----------- ------------ -----------
Net assets, at market value................................ $41,614,923 $42,792,602 $312,349,647 $36,524,407
=========== =========== ============ ===========
Net assets, at market value
Class A Shares........................................... 6,131,182 24,452,071 222,311,506 20,791,526
Class C Shares........................................... 3,758,914 18,340,531 90,038,141 15,732,881
Eagle Shares............................................. 31,724,827 -- -- --
----------- ----------- ------------ -----------
Total.............................................. $41,614,923 $42,792,602 $312,349,647 $36,524,407
=========== =========== ============ ===========
Shares of beneficial interest outstanding
Class A Shares........................................... 255,762 1,028,794 7,315,919 856,534
Class C Shares........................................... 158,392 783,120 3,018,510 656,055
Eagle Shares............................................. 1,331,303 -- -- --
----------- ----------- ------------ -----------
Total.............................................. 1,745,457 1,811,914 10,334,429 1,512,589
=========== =========== ============ ===========
Net Asset Value -- offering and redemption price per share
(Notes 1 and 2)
Class A Shares........................................... $ 23.97 $ 23.77 $ 30.39 $ 24.27
=========== =========== ============ ===========
Maximum offering price per share (100/95.25 of $23.97,
$23.77, $30.39 and $24.27, respectively)............. $ 25.17 $ 24.96 $ 31.91 $ 25.48
=========== =========== ============ ===========
Class C Shares........................................... $ 23.73 $ 23.42 $ 29.83 $ 23.98
=========== =========== ============ ===========
Eagle Shares............................................. $ 23.83
===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

27
<PAGE> 31

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1997
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
EAGLE
INTERNATIONAL GROWTH SMALL CAP VALUE
EQUITY PORTFOLIO EQUITY FUND STOCK FUND EQUITY FUND
---------------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Investment Income
- ----------------
Income:
Dividends................................................. $ 621,961(a) $ 261,178 $ 1,408,365 $ 688,321
Interest.................................................. 132,268(b) 105,451 887,092 124,437
---------- ---------- ----------- ----------
Total income........................................ 754,229 366,629 2,295,457 812,758
Expenses (notes 1 and 4):
Management fee............................................ 351,913 240,084 1,609,998 263,164
Distribution fee (Class A Shares)......................... 12,772 47,584 369,980 46,759
Distribution fee (Class C Shares)......................... 25,783 103,726 500,078 130,243
Distribution fee (Eagle Shares)........................... 275,084 -- -- --
Shareholder servicing fees................................ -- 20,515 118,187 23,230
Shareholder servicing fees (Class A Shares)............... 7,663 -- -- --
Shareholder servicing fees (Class C Shares)............... 3,867 -- -- --
Shareholder servicing fees (Eagle Shares)................. 8,242 -- -- --
Professional fees......................................... 59,490 43,840 31,363 41,743
Custodian/Fund accounting fees............................ 146,869 44,463 83,198 49,562
State/Federal registration expenses....................... 37,140 26,948 81,911 21,469
Organization expenses..................................... 10,400 5,666 10,000 10,602
Reports to shareholders................................... 27,053 6,748 33,423 8,455
Trustees' fees and expenses............................... 7,641 7,741 7,777 7,741
Insurance expense......................................... 3,312 4,390 7,693 3,982
Other..................................................... 106 112 1,992 563
---------- ---------- ----------- ----------
Total expenses before waiver........................ 977,335 551,817 2,855,600 607,513
Fees waived by Eagle (Note 4)....................... (91,433) -- -- --
---------- ---------- ----------- ----------
Total expenses after waiver......................... 885,902 551,817 2,855,600 607,513
---------- ---------- ----------- ----------
Net investment income (loss)................................ (131,673) (185,188) (560,143) 205,245
---------- ---------- ----------- ----------
Realized and Unrealized Gain (Loss) on Investments
- ---------------------------------------------
Net realized gain from investment transactions.............. 1,149,279 818,812 18,888,445 7,282,605
Net realized gain from foreign currency transactions........ 200,478 -- -- --
Net increase (decrease) in unrealized appreciation of
investments during the year............................... 1,394,725 7,556,848 42,301,556 (39,290)
Net increase in unrealized appreciation of covered call
options written during the year........................... -- -- -- (695)
Net decrease in unrealized appreciation from foreign
currency during the year.................................. (142,713) -- -- --
---------- ---------- ----------- ----------
Net gain on investments............................. 2,601,769 8,375,660 61,190,001 7,242,620
---------- ---------- ----------- ----------
Net increase in net assets resulting from operations........ $2,470,096 $8,190,472 $60,629,858 $7,447,865
========== ========== =========== ==========
</TABLE>

- ---------------

(a) Net of $77,808 foreign withholding taxes
(b) Net of $207 foreign withholding taxes

The accompanying notes are an integral part of the financial statements.

28
<PAGE> 32

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Eagle International Equity Portfolio
------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income (loss).............................. $ (131,673) $ 1,400
Net realized gain on investment transactions.............. 1,149,279 176,463
Net realized gain from foreign currency transactions...... 200,478 236,722
Net increase in unrealized appreciation of investments
during the year......................................... 1,394,725 589,606
Net increase (decrease) in unrealized appreciation from
foreign currency during the year........................ (142,713) 142,373
----------- -----------
Net increase in net assets resulting from operations...... 2,470,096 1,146,564
----------- -----------
Distribution to shareholders from:
Net investment income Class A Shares, ($0.44 per share)... (62,318) --
Net investment income Class C Shares, ($0.34 per share)... (18,908) --
Net investment income Eagle Shares, ($0.31 and $0.01 per
share, respectively).................................... (318,525) (7,915)
Net realized gains Class A Shares, ($0.17 per share)...... (23,850) --
Net realized gains Class C Shares, ($0.17 per share)...... (9,263) --
Net realized gains Eagle Shares, ($0.17 and $0.47 per
share, respectively).................................... (172,431) (254,085)
Increase in net assets from Fund share transactions (Note
2)........................................................ 13,835,836 15,059,163
----------- -----------
Increase in net assets...................................... 15,700,637 15,943,727
Net assets, beginning of year............................... 25,914,286 9,970,559
----------- -----------
Net assets, end of year (including distribution in excess of
net investment income of $40,256 and undistributed net
investment income of $230,207, respectively).............. $41,614,923 $25,914,286
=========== ===========
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Growth Equity Fund
-----------------
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (185,188) $ (39,484)
Net realized gain (loss) on investment transactions....... 818,812 (54,321)
Net increase in unrealized appreciation of investments
during the year......................................... 7,556,848 2,448,602
----------- -----------
Net increase in net assets resulting from operations...... 8,190,472 2,354,797
Increase in net assets from Fund share transactions (Note
2)........................................................ 17,355,665 14,889,668
----------- -----------
Increase in net assets...................................... 25,546,137 17,244,465
Net assets beginning of year................................ 17,246,465 2,000
----------- -----------
Net assets, end of year..................................... $42,792,602 $17,246,465
=========== ===========
</TABLE>

The accompanying notes are an integral part of the financial statements.

29
<PAGE> 33

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Small Cap Stock Fund
--------------------
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (560,143) $ (299,620)
Net realized gain on investment transactions.............. 18,888,445 10,012,029
Net increase in unrealized appreciation of investments
during the year......................................... 42,301,556 13,069,090
------------ ------------
Net increase in net assets resulting from operations...... 60,629,858 22,781,499
Distribution to shareholders from:
Net investment income Class A Shares, ($0.01 per share)... -- (35,074)
Net realized gains Class A Shares, ($1.88 and $0.84 per
share, respectively).................................... (7,806,517) (2,610,402)
Net realized gains Class C Shares, ($1.88 and $0.84 per
share, respectively).................................... (2,105,065) (286,911)
Increase in net assets from Fund share transactions (Note
2)........................................................ 140,852,503 39,103,703
------------ ------------
Increase in net assets...................................... 191,570,779 58,952,815
Net assets, beginning of year............................... 120,778,868 61,826,053
------------ ------------
Net assets, end of year..................................... $312,349,647 $120,778,868
============ ============
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------
OCTOBER 31, 1997 OCTOBER 31, 1996
---------------- ----------------
<S> <C> <C>
Value Equity Fund
-----------------
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 205,245 $ 141,189
Net realized gain on investment transactions.............. 7,282,605 1,660,050
Net increase (decrease) in unrealized appreciation of
investments during the year............................. (39,985) 1,267,164
------------ ------------
Net increase in net assets resulting from operations...... 7,447,865 3,068,403
Distributions to shareholders from:
Net investment income Class A Shares, ($0.15 and $0.11 per
share, respectively).................................... (117,148) (76,650)
Net investment income Class C Shares, ($0.03 and $0.07 per
share, respectively).................................... (17,648) (18,841)
Net realized gains Class A Shares, ($1.30 and $0.55 per
share, respectively).................................... (990,566) (387,181)
Net realized gains Class A Shares, ($1.30 and $0.55 per
share, respectively).................................... (665,431) (157,941)
Increase in net assets from Fund share transactions (Note
2)........................................................ 5,193,588 7,075,151
------------ ------------
Increase in net assets...................................... 10,850,660 9,502,941
Net assets, beginning of year............................... 25,673,747 16,170,806
------------ ------------
Net assets, end of year (including undistributed net
investment income of $182,541 and $102,173,
respectively)............................................. $ 36,524,407 $ 25,673,747
============ ============
</TABLE>

The accompanying notes are an integral part of the financial statements.

30
<PAGE> 34

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
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 C SHARES*
CLASS A SHARES* FOR THE YEARS EAGLE SHARES*
FOR THE YEARS ENDED ENDED FOR THE YEARS ENDED
------------------- --------------- --------------------------
1997 1996++ 1997 1996++ 1997 1996 1995+
------- ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................ $22.25 $21.11 $22.12 $21.11 $22.14 $20.79 $20.00
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a)................. 0.05 .10 (0.13) (.07) (0.11) (.01) (.03)
Net realized and unrealized gain on
investments................................... 2.28 1.04 2.25 1.08 2.28 1.84 .82
------ ------ ------ ------ ------ ------ ------
Total from investment operations.................. 2.33 1.14 2.12 1.01 2.17 1.83 .79
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............ (0.44) -- (0.34) -- (0.31) (.01) --
Distributions from net realized gains........... (0.17) -- (0.17) -- (0.17) (.47) --
------ ------ ------ ------ ------ ------ ------
Total Distributions............................... (0.61) -- (0.51) -- (0.48) (.48) --
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR...................... $23.97 $22.25 $23.73 $22.12 $23.83 $22.14 $20.79
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(D)............................... 10.71(e) 5.40(c) 9.79(e) 4.78(c) 9.98(e) 8.93 3.95(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net
assets(a)..................................... 1.97 1.97(b) 2.72 2.72(b) 2.60 2.60 2.60(b)
Net investment income (loss) to average daily
net assets.................................... .22 .44(b) (.52) (.32)(b) (.47) (.02) (.33)(b)
Portfolio turnover rate(c)...................... 50 59 50 59 50 59 61
Average commission rate on portfolio
transactions.................................. $.0164 $.0289 $.0164 $.0289 $.0164 $.0289 --
Net assets, end of year ($ millions)............ 6 3 4 1 32 22 10
</TABLE>

- ---------------

*Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the year since
use of the undistributed income method does not correspond with results of
operations.
+For the period May 1, 1995 (commencement of operations) to October 31, 1995.
++For the period December 27, 1995 (commencement of Class A and Class C Shares)
to October 31, 1996.
(a)Excludes management fees waived by the Eagle in the amount of $.06 and $.16
per Class A Share, respectively. The operating expense ratio including such
items would have been 2.23% and 2.69% (annualized) for Class A Shares,
respectively. Excludes management fees waived by the Eagle in the amount of
$.06 and $.16 per Class C Share, respectively. The operating expense ratio
including such items would have been 2.98% and 3.44% (annualized) for Class C
Shares, respectively. Excludes management fees waived and expenses reimbursed
by the Eagle in the amount of $.06, $.16 and $.17 per Eagle Share,
respectively. The operating expense ratios including such items would have
been 2.86%, 3.31% and 5.09% (annualized) for Eagle Shares, respectively.
(b)Annualized.
(c)Not annualized.
(d)Calculated without the imposition of a sales load.
(e)These returns are calculated based on the published net asset value.

The accompanying notes are an integral part of the financial statements.

31
<PAGE> 35

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.

<TABLE>
<CAPTION>
CLASS A SHARES* CLASS C SHARES*
FOR THE YEARS ENDED FOR THE YEARS ENDED
OCTOBER 31, OCTOBER 31,
------------------- -------------------
1997 1996+ 1997 1996+
------- ------ ------- ------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR.......................... $ 17.74 $14.29 $ 17.61 $14.29
------- ------ ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a).................................. (0.07) (.03) (0.24) (.15)
Net realized and unrealized gain on investments........... 6.10 3.48 6.05 3.47
------- ------ ------- ------
Total from investment operations............................ 6.03 3.45 5.81 3.32
------- ------ ------- ------
NET ASSET VALUE, END OF YEAR................................ $ 23.77 $17.74 $ 23.42 $17.61
======= ====== ======= ======
TOTAL RETURN (%)(D)......................................... 33.99 24.14(c) 32.99 23.23(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net assets(a)... 1.61 1.65(b) 2.36 2.40(b)
Net investment income to average daily net assets......... (0.35) (0.19)(b) (1.14) (.96)(b)
Portfolio turnover rate(c)................................ 50 23 50 23
Average commission rate on portfolio transactions......... $ .0600 $.0599 $ .0600 $.0599
Net assets, end of year ($ millions)...................... 24 12 18 5
</TABLE>

- ---------------

* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the year since
use of the undistributed income method does not correspond with results of
operations.
+ For the period November 16, 1995 (commencement of operations) to October 31,
1996.
(a) Excludes management fees waived and expenses reimbursed by the Manager in
the amount of $.11 per share, for the period ended October 31, 1996. The
operating expense ratios including such items would have been 2.39%
(annualized) for Class A Shares and 3.14% (annualized) for Class C Shares,
respectively. The year ended October 31, 1997 includes recovery of
previously waived management fees paid to the manager of $.01 per share. The
operating expense ratios excluding such items would have been 1.54% for
Class A Shares and 2.29% for Class C Shares.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales load.

The accompanying notes are an integral part of the financial statements.

32
<PAGE> 36

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.

<TABLE>
<CAPTION>
CLASS A SHARES CLASS C SHARES
FOR THE YEARS ENDED FOR THE YEARS ENDED
OCTOBER 31, OCTOBER 31,
------------------------------------------ -------------------------
1997* 1996* 1995 1994 1993+ 1997* 1996* 1995++
------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................. $24.08 $18.86 $16.20 $15.57 $14.29 $23.84 $18.79 $15.67
------ ------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss)(a).................. (0.02) (.05) .02 (.01) (.01) (0.23) (.22) (.02)
Net realized and unrealized gain on
investments.................................... 8.21 6.12 3.62 .64 1.29 8.10 6.11 3.14
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations................... 8.19 6.07 3.64 .63 1.28 7.87 5.89 3.12
------ ------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............. -- (.01) (.01) -- -- -- -- --
Distributions from net realized gains............ (1.88) (.84) (.97) -- -- (1.88) (.84) --
------ ------ ------ ------ ------ ------ ------ ------
Total Distributions.............................. (1.88) (.85) (.98) -- -- (1.88) (.84) --
------ ------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR....................... $30.39 $24.08 $18.86 $16.20 $15.57 $29.83 $23.84 $18.79
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(D)................................ 36.68 33.18 23.97 4.05 8.96(c) 35.63 32.22 19.91(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net
assets(a)...................................... 1.25 1.41 1.88 1.91 2.00(b) 2.00 2.13 2.36(b)
Net investment income to average daily net
assets......................................... (0.09) (.21) .15 (.07) (.15)(b) (0.85) (.94) (.46)(b)
Portfolio turnover rate(c)....................... 54 80 89 95 97 54 80 89
Average commission rate on portfolio
transactions................................... $.0633 $.0637 -- -- -- $.0633 $.0637 --
Net assets, end of year ($ millions)............. 222 96 57 42 40 90 25 4
</TABLE>

- ---------------
* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the year since
use of the undistributed income method does not correspond with results of
operations.
+ 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 of less than $.01 per share
for the period ended October 31, 1993. The operating expense ratio including
such items would have been 2.09% (annualized). The year ended October 31,
1994 includes recovery of previously waived management fees paid to the
manager of less than $.01 per share.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales load.

The accompanying notes are an integral part of the financial statements.

33
<PAGE> 37

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------

The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.

<TABLE>
<CAPTION>
CLASS A SHARES* CLASS C SHARES*
FOR THE YEARS ENDED FOR THE YEARS ENDED
OCTOBER 31, OCTOBER 31,
---------------------------- -----------------------------
1997 1996 1995+ 1997 1996 1995++
------ ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR................... $20.27 $18.00 $14.29 $20.06 $17.92 $15.27
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a)........................... 0.22 .17 .08 0.05 .02 .01
Net realized and unrealized gain on investments.... 5.23 2.76 3.63 5.20 2.74 2.64
------ ------ ------ ------ ------ ------
Total from investment operations..................... 5.45 2.93 3.71 5.25 2.76 2.65
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income............... (0.15) (.11) -- (0.03) (.07) --
Distributions from net realized gains.............. (1.30) (.55) -- (1.30) (.55) --
------ ------ ------ ------ ------ ------
Total Distributions.................................. (1.45) (.66) -- (1.33) (.62) --
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF YEAR......................... $24.27 $20.27 $18.00 $23.98 $20.06 $17.92
====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(D).................................. 28.69 16.59 25.96(c) 27.79 15.65 17.35(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net
assets(a)........................................ 1.61 1.65 1.65(b) 2.36 2.40 2.40(b)
Net investment income to average daily net
assets........................................... 0.96 .89 1.05(b) 0.21 .13 .28(b)
Portfolio turnover rate(c)......................... 155 129 82 155 129 82
Average commission rate on portfolio
transactions..................................... $.0580 $.0550 -- $.0580 $.0550 --
Net assets, end of year ($ millions)............... 19 15 12 13 10 4
</TABLE>

- ---------------
* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the period
since the use of the undistributed income method does not correspond with
results of operations.
+ For the period December 30, 1994 (commencement of operations) to October 31,
1995.
++ For the period April 3, 1995 (commencement of Class C Shares) to October 31,
1995.
(a) Excludes management fees waived and expenses reimbursed by the Manager in
the amount of $.07 and $.13 per Class A Share, for the two years ended
October 31, 1996. The operating expense ratios including such items would
have been 1.99% and 3.49% (annualized) for Class A Shares, for the two years
ended October 31, 1996. Excludes management fees waived and expenses
reimbursed by the Manager in the amount of $.07 and $.13 per Class C Share,
for the two years ended October 31, 1996. The operating expense ratio
including such items would have been 2.74% and 4.24% (annualized) for Class
C Shares for the two years ended October 31, 1996. The year ended October
31, 1997 includes recovery of previously waived management fees paid to the
manager of $.02 per Class A and C Shares. The operating expense ratio
excluding such items would have been 1.53% and 2.28% for Class A and C
Shares, respectively. Effective October 1, 1997, all of the assets of the
Fund were allocated to Eagle Asset Management, Inc. from Dreman Value
Advisors, Inc.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales load.

The accompanying notes are an integral part of the financial statements.

34
<PAGE> 38

HERITAGE SERIES TRUST
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 Eagle International Equity Portfolio, the Growth Equity
Fund, the Small Cap Stock Fund, and the Value Equity Fund (each, a
"Fund" and collectively, the "Funds"). The Eagle International Equity
Portfolio primarily seeks capital appreciation principally through
investment in an international portfolio of equity securities. The
Growth Equity Fund primarily seeks growth through long-term capital
appreciation. The Small Cap Stock Fund seeks long-term capital
appreciation by investing principally in the equity securities of
companies with small market capitalization. The Value Equity Fund
primarily seeks long-term capital appreciation and, secondarily, seeks
current income. The Funds currently offer 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 less than
one year after purchase. The Eagle International Equity Portfolio also
issues Eagle Class Shares, which are subject to certain minimum
investment requirements and are sold without any sales charge. 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: Each 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. Securities that are quoted in
a foreign currency will be valued daily in U.S. dollars at the foreign
currency exchange rates prevailing at the time the Eagle International
Equity Portfolio calculates its daily net asset value per share.
Although the Eagle International Equity Portfolio values its assets in
U.S. dollars on a daily basis, it does not intend to convert holdings of
foreign currencies into U.S. dollars on a daily basis. 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.

Foreign Currency Transactions: The books and records of the Eagle
International Equity Portfolio are maintained in U.S. dollars. Foreign
currency transactions are translated into U.S. dollars on the following
basis: (i) market value of investment securities, other assets and other
liabilities at the daily rates of exchange, and (ii) purchases and sales
of investment securities, dividend and interest income and certain
expenses at the rates of exchange prevailing on the respective dates of
such transactions. The Eagle International Equity Portfolio does not
isolate that portion of gains and losses on investments which is due to
changes in foreign exchange rates from that which is due to changes in
market prices of the investments. Such fluctuations are included with
the net realized and unrealized gains and losses from investments. Net
realized gain (loss) and unrealized appreciation (depreciation) from
foreign currency transactions include gains and losses between trade and
settlement date on securities transactions, gains and losses arising
from the sales of foreign currency and gains and losses between the ex
and payment dates on dividends, interest, and foreign withholding taxes.

Forward Foreign Currency Contracts: The Eagle International Equity
Portfolio may enter into forward foreign currency contracts which are
valued daily at the appropriate exchange rates. The resultant unrealized
exchange gains and losses are included in the Statement of Operations as
unrealized foreign currencies gain or loss. The Eagle International
Equity Portfolio records realized gains or losses on delivery of the
currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery.

Repurchase Agreements: Each Fund enters into repurchase agreements
whereby a 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: Each Fund is treated as a single corporate
taxpayer and provided for in the Tax Reform Act of 1986, as amended. A
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 each
Fund, will be distributed to shareholders in the following fiscal year.
Each 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.

Option Accounting Principles: When the Fund writes a covered call
option, an amount equal to the premium received by the Fund is included
in the Fund's Statement of Assets and Liabilities as an asset and as an
equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option
written. The current market value of a written option is the last
offering price on the principal exchange on which such option is traded.
The Fund receives a premium on the sale of an option, but gives up the
opportunity to profit form any increase in stock value above the
exercise price of the option. If an option that the Fund has written
either expires on its stipulated expiration date, or the Fund enters
into a closing purchase transaction, the Fund realizes a gain (or loss
if the cost of a closing purchase transaction exceeds the premium
received when the option was sold) without regard to any unrealized gain
or loss on the underlying security, and the liability related to such
option is extinguished. If a call option that the Fund has written is
exercised, the Fund realizes a capital gain or loss from the sale of the
underlying security, and the proceeds from such sale are increased by
the premium originally received.

Expenses: Each Fund is charged for those expenses that 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 Trust. Expenses of each 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 and shareholder service fees with respect to Eagle
International Equity Portfolio, are charged directly to that class.

Organization Expenses: Expenses incurred in connection with the
formation of each Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.

Capital Accounts: Each 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

35
<PAGE> 39

- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------

capital loss carryforward is available). Accordingly, each Fund may
periodically make reclassifications among certain capital accounts
without impacting the net asset value of the Fund.

Other: For purposes of these financial statements, investment security
transactions are accounted for on a trade date basis (date the order to
buy or sell is executed). 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, 1997, there was an unlimited number of
shares of beneficial interest of no par value authorized.

Transactions in Class A Shares, C Shares and Eagle Shares of the Eagle
International Equity Portfolio during the year ended October 31, 1997
and 1996 were as follows:

<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
----------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------ ----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 145,840 $ 3,468,293 159,739 $ 3,524,406
Shares issued on reinvestment of distributions........... 3,346 75,081 -- --
Shares redeemed.......................................... (33,267) (815,865) (19,896) (444,547)
--------- ----------- ------- -----------
Net increase............................................. 115,919 $ 2,727,509 139,843 $ 3,079,859
=========== ===========
Shares outstanding:
Beginning of year...................................... 139,843 --
--------- -------
End of year............................................ 255,762 139,843
========= =======
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------ ----------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 121,689 $ 2,915,342 56,036 $ 1,238,468
Shares issued on reinvestment of distributions........... 1,158 25,899 -- --
Shares redeemed.......................................... (18,479) (439,911) (2,012) (44,397)
--------- ----------- ------- -----------
Net increase............................................. 104,368 $ 2,501,330 54,024 $ 1,194,071
=========== ===========
Shares outstanding:
Beginning of year...................................... 54,024 --
--------- -------
End of year............................................ 158,392 54,024
========= =======
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------ ----------------------
EAGLE SHARES SHARES AMOUNT SHARES AMOUNT
------------ --------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 459,654 $11,104,451 534,815 $11,648,653
Shares issued on reinvestment of distributions........... 21,188 475,249 11,917 251,561
Shares redeemed.......................................... (125,683) (2,972,703) (50,151) (1,114,981)
--------- ----------- ------- -----------
Net increase............................................. 355,159 $ 8,606,997 496,581 $10,785,233
=========== ===========
Shares outstanding:
Beginning of year...................................... 976,144 479,563
--------- -------
End of year............................................ 1,331,303 976,144
========= =======
</TABLE>

Transactions in Class A Shares and C Shares of the Growth Equity Fund
during the year ended October 31, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
GROWTH EQUITY FUND
-----------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------ -----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................. 553,303 $11,132,958 764,029 $11,657,911
Shares redeemed......................................... (208,950) (4,286,048) (79,658) (1,284,160)
--------- ----------- ------- -----------
Net increase............................................ 344,353 $ 6,846,910 684,371 $10,373,751
=========== ===========
Shares outstanding:
Beginning of year..................................... 684,441 70
--------- -------
End of year........................................... 1,028,794 684,441
========= =======
</TABLE>

36
<PAGE> 40

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 534,451 $ 11,343,816 319,149 $ 4,976,551
Shares redeemed...................................... (41,133) (835,061) (29,417) (460,634)
--------- ------------ --------- ------------
Net increase......................................... 493,318 $ 10,508,755 289,732 $ 4,515,917
============ ============
Shares outstanding:
Beginning of year.................................. 289,802 70
--------- ---------
End of year........................................ 783,120 289,802
========= =========
</TABLE>

Transactions in Class A Shares and C Shares of the Small Cap Stock Fund
during the year ended October 31, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
SMALL CAP STOCK FUND
--------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 3,806,977 $102,346,776 1,691,124 $ 38,648,805
Shares issued on reinvestment of distributions....... 335,280 7,590,750 121,498 2,404,449
Shares redeemed...................................... (805,333) (21,288,297) (878,130) (20,167,883)
--------- ------------ --------- ------------
Net increase......................................... 3,336,924 $ 88,649,229 934,492 $ 20,885,371
============ ============
Shares outstanding:
Beginning of year.................................. 3,978,995 3,044,503
--------- ---------
End of year........................................ 7,315,919 3,978,995
========= =========
</TABLE>

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 2,145,616 $ 56,993,115 960,949 $ 21,587,317
Shares issued on reinvestment of distributions....... 93,252 2,086,050 14,285 281,141
Shares redeemed...................................... (267,904) (6,875,891) (161,609) (3,650,126)
--------- ------------ --------- ------------
Net increase......................................... 1,970,964 $ 52,203,274 813,625 $ 18,218,332
============ ============
Shares outstanding:
Beginning of year.................................. 1,047,546 233,921
--------- ---------
End of year........................................ 3,018,510 1,047,546
========= =========
</TABLE>

Transactions in Class A Shares and C Shares of the Value Equity Fund
during the year ended October 31, 1997 and 1996 were as follows:

<TABLE>
<CAPTION>
VALUE EQUITY FUND
--------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
------------------------- -------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ------------ --------- ------------
<S> <C> <C> <C> <C>
Shares sold.......................................... 189,849 $ 4,264,982 267,317 $ 5,100,504
Shares issued on reinvestment of distributions....... 54,761 1,062,355 23,052 430,843
Shares redeemed...................................... (148,365) (3,309,390) (192,041) (3,697,351)
--------- ------------ --------- ------------
Net increase......................................... 96,245 $ 2,017,947 98,328 $ 1,833,996
============ ============
Shares outstanding:
Beginning of year.................................. 760,289 661,961
--------- ---------
End of year........................................ 856,534 760,289
========= =========
</TABLE>

37
<PAGE> 41

<TABLE>
<CAPTION>
FOR THE YEARS ENDED
OCTOBER 31, 1997 OCTOBER 31, 1996
----------------------- -----------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- -------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................. 196,401 $ 4,418,250 307,936 $ 5,887,055
Shares issued on reinvestment of distributions.......... 34,665 668,696 9,456 176,072
Shares redeemed......................................... (86,706) (1,911,305) (43,021) (821,972)
-------- ----------- -------- -----------
Net increase............................................ 144,360 $ 3,175,641 274,371 $ 5,241,155
=========== ===========
Shares outstanding:
Beginning of year..................................... 511,695 237,324
-------- --------
End of year........................................... 656,055 511,695
======== ========
</TABLE>

Note 3: PURCHASES AND SALES OF SECURITIES. For the year ended October 31, 1997,
purchases and sales of investment securities (excluding repurchase
agreements and short term obligations) were as follows:

<TABLE>
<CAPTION>
INVESTMENT SECURITIES
----------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Eagle International Equity Portfolio........................ $ 27,640,397 $ 16,594,704
Growth Equity Fund.......................................... $ 30,460,069 $ 13,860,042
Small Cap Stock Fund........................................ $218,931,300 $100,463,030
Value Equity Fund........................................... $ 47,142,265 $ 45,111,217
</TABLE>

Agency brokerage commissions for the Eagle International Equity Portfolio,
the Growth Equity Fund, the Small Cap Stock Fund, and the Value Equity Fund
for the year ended October 31, 1997 aggregated $111,523, $36,721, $490,512
and $100,688, of which $0, $1,560, $114,416 and $0, was paid to Raymond James
& Associates, Inc., respectively.

<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
--------- --------
<S> <C> <C>
Outstanding October 31, 1996................................ $-- $ --
Written................................................... $80 $20,429
--- -------
Outstanding October 31, 1997................................ $80 $20,429
=== =======
</TABLE>

Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administrative
Agreements with Heritage Asset Management, Inc. (the "Manager"), the
Growth Equity and Value Equity Funds agree to pay to the Manager a fee
equal to an annual rate of 0.75% of the Fund's average daily net assets,
computed daily and payable monthly. For the Small Cap Stock Fund the
management fee is 1.0% on the first $50 million and 0.75% of any excess
over $50 million of net assets. Under the Fund's Investment Advisory and
Administrative Agreement with Eagle Asset Management, Inc. ("Eagle"),
the Eagle International Equity Portfolio management fee is 1.0% on the
first $100 million of net assets and 0.80% of any excess over $100
million of net assets. Effective March 1, 1997, the Manager agreed to
waive its fees and if necessary reimburse the Funds to the extent that
the Fund operating expenses exceed 1.60% for Class A Shares of the Value
Equity, Growth Equity and Small Cap Stock Fund (2.35% for Class C
Shares) on an annual basis and since inception, Eagle has capped
expenses at 1.97% for Class A Shares of the Eagle International Equity
Portfolio (2.72% for Class C Shares). Under these agreements, management
fees of $91,433 were waived for the Eagle International Equity Portfolio
and management fees of $26,319 and $19,538 were recovered by the Value
Equity Fund and the Growth Equity Fund, respectively for the year ended
October 31, 1997. If total Fund expenses fall below the expense
limitation agreed to by Eagle before the end of the year ended October
31, 1999, Eagle International Equity Portfolio may be required to pay
Eagle a portion or all of the waived management fees. In addition the
Eagle International Equity Portfolio may be required to pay Eagle, a
portion or all of the management fees waived in fiscal 1996 if total
Fund expenses fall below the annual expense limitations before the end
of the year ending October 31, 1998.

Eagle has entered into an agreement with Martin Currie, Inc., a New York
Corporation to provide to the Eagle International Equity Portfolio
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for a fee
payable by Eagle equal to .50% of the average daily net assets on the
first $100 million of net assets and .40% thereafter without regard to
any reduction due to the imposition of expense limitations. For the year
ended October 31, 1997 the Subadviser earned $175,957 for Subadviser
fees, which was paid by Eagle.

The Manager has entered into agreements with Eagle, (with respect to the
Value Equity Fund and the Growth Equity Fund) and with Eagle and Awad &
Associates, Inc., a division of Raymond James & Associates, Inc., (with
respect to the Small Cap Stock Fund) to provide 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. For the year ended October 31, 1997 the total fees the
Subadvisers earned were $110,273, $804,999 and $111,334 for the Growth
Equity Fund, Small Cap Stock Fund and Value Equity Fund, respectively.

Effective October 1, 1997, all of the assets of the Value Equity Fund
were allocated to Eagle. Prior to October 1, 1997, the assets of the
Fund were managed by Dreman Value Advisors, Inc. ("Dreman"), an
additional subadviser to the Fund. Dreman provided to the Fund
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to .35% of the Fund's average daily net
assets. For the year ended October 31, 1997 Dreman earned $99,243 for
subadviser fees. During November, 1997, the subadviser agreement between
Dreman and the Manager expired.

38
<PAGE> 42

HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)

Raymond James & Associates, Inc. (the "Distributor") has advised the
Trust that it received $90,013, $196,326, $1,433,660 and $78,318 in
front end sales charges for Class A Shares and $1,902, $2,793, $17,098
and $1,772 in contingent deferred sales charges for Class C Shares for
the Eagle International Equity Portfolio, Growth Equity Fund, Small Cap
Stock Fund and the Value Equity Fund, respectively, for the year ended
October 31, 1997. The Distributor paid sales commission to salespersons
and from these fees, incurred other distribution costs.

Pursuant to a plan in accordance with Rule 12b-1 of the Investment
Company Act of 1940, as amended, the Trust is authorized to pay the
Distributor a fee pursuant to the Class A Distribution Plan of up to
.35% of the 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 Trust may pay the Distributor a fee equal to 1.00% of the
average daily net assets. Such fees are accrued daily and payable
monthly. The Manager, Eagle and the Distributor are all wholly
subsidiaries of Raymond James Financial, Inc.

The Manager also is the Dividend Paying and Shareholder Servicing Agent
for the Eagle International Equity Portfolio, the Growth Equity Fund,
the Small Cap Stock Fund, and the Value Equity Fund. The amount payable
to the Manager for such expenses as of October 31, 1997 was $15,776,
$7,200, $42,000 and $7,200, respectively. In addition, the Manager
performs Fund Accounting services for the Growth Equity Fund, the Small
Cap Stock Fund and the Value Equity Fund and charged $29,782, $38,822
and $29,795, during the current period of which $10,000, $12,000 and
$10,000, was payable as of October 31, 1997, respectively.

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 also are 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 received 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.

EAGLE INTERNATIONAL EQUITY PORTFOLIO

For the year ended October 31, 1997, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to
foreign currency gains, the Fund credited undistributed net investment
income and debited accumulated net realized gain $260,960.

GROWTH EQUITY FUND:

For the year ended October 31, 1997, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss, the Fund debited accumulated net realized gain on
investments $176,623, paid-in capital $8,565 and credited accumulated
net investment loss $185,188. The Fund utililized $54,321 of net tax
basis capital losses during the current year against net realized gains
from investment transactions.

SMALL CAP STOCK FUND:

For the year ended October 31, 1997, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss and REIT distributions, the Fund debited accumulated
net realized gain on investments $703,835 and credited paid-in capital
$143,692 and accumulated net investment loss $560,143.

VALUE EQUITY FUND:

For the year ended October 31, 1997, to reflect reclassifications
arising from permanent book/tax differences attributable to a dividend
reclass, the Fund debited accumulated net realized gain on investments
and credited undistributed net investment income $9,919.

Note 6: FINANCIAL INVESTMENTS WITH OFF-BALANCE SHEET RISK.

EAGLE INTERNATIONAL EQUITY PORTFOLIO:

The Fund may enter into forward foreign currency contracts ("forward
contracts") to facilitate settlement of foreign currency denominated
portfolio transactions or to manage its foreign currency exposure or to
sell for a fixed amount of U.S. dollars or other currency, the amount of
foreign currency approximating the value of some or all of its holdings
denominated in such foreign currency or an amount of foreign currency
other than the currency in which the securities to be hedged are
denominated approximating the value of some or all of its holdings to be
hedged. Additionally, when the Subadviser anticipates purchasing
securities at some time in the future, the Fund may enter into a forward
contract to purchase an amount of currency equal to some or all of the
value of the anticipated purchase for a fixed amount of U.S. dollars or
other currency.

At October 31, 1997, the Fund had no outstanding forward foreign
currency exchange contracts ("forward contracts"). The Fund may enter
into forward contracts to hedge against changes in future foreign
exchange rates and enhance return. Forward contracts involve elements of
market risk in excess of the amount reflected in the Statement of Assets
and Liabilities. The Fund bears the risk of an unfavorable change in the
foreign exchange rate underlying the forward contract. Risks may also
arise upon entering into these contracts from the potential inability of
these parties to meet the terms of their contracts.

39
<PAGE> 43

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Shareholders and Board of Trustees of
Heritage Series Trust

In our opinion, the accompanying statements of assets and liabilities,
including the investment portfolios, 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 the Heritage Series Trust-Eagle
International Equity Portfolio, Heritage Series Trust-Growth Equity Fund,
Heritage Series Trust-Small Cap Stock Fund and Heritage Series Trust-Value
Equity Fund (constituting The Heritage Series Trust, hereafter referred to as
the "Trust") at October 31, 1997, the results of each of their operations for
the year then ended, and the changes in each of their net assets and the
financial highlights for each of the two years in the period then ended, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Trust's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits 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 audits, which included confirmation of securities at October
31, 1997 by correspondence with the custodian and brokers and the application of
alternative auditing procedures where confirmations from brokers were not
received, provide a reasonable basis for the opinion expressed above. The
financial highlights for each of the three years in the period ended October 31,
1995 were audited by other independent accountants whose reports dated November
29, 1995 for the Heritage Series Trust-Eagle International Equity Portfolio and
December 22, 1995 for the Heritage Series Trust-Small Cap Stock Fund and
Heritage Series Trust-Value Equity Fund expressed an unqualified opinion on
those financial highlights.

Price Waterhouse LLP
Tampa, Florida

December 17, 1997

1997 FEDERAL INCOME TAX NOTICE
(unaudited)

During the year ended October 31, 1997, the Small Cap Stock Fund and Value
Equity Fund paid to shareholders $4,875,777 and $482,606 or $0.90 and $0.38 per
share, from long-term capital gains, respectively.