<PAGE> 1
THE EAGLE INTERNATIONAL EQUITY PORTFOLIO [LOGO]
SEMIANNUAL REPORT (unaudited)
April 30, 1997
EAGLE
ASSET MANAGEMENT INC.
880 Carillon Parkway P.O. Box 10520
St. Petersburg, FL 33733-0520
(813) 573-2453 (800) 237-3101
<PAGE> 2
June 16, 1997
Dear Fellow Shareholders:
It is our pleasure to provide you with the semiannual report for the Eagle
International Equity Portfolio (the "Fund") of Heritage Series Trust for the
period ended April 30, 1997. During this period your Fund's Eagle class shares
appreciated by 6.15%. For the same period, the Morgan Stanley Capital
International Europe Asia and Far East (EAFE) Index returned only 1.57%. The
average for mutual funds in the International-Foreign category as published by
Lipper Analytical Services, Inc. was 6.93% for the same period.
Your Fund's investment portfolio is managed by Martin Currie, Inc. of Edinburgh,
Scotland. Martin Currie was founded over a century ago and for decades has been
an active investor in the world's stock markets. In managing your Fund's
portfolio, Martin Currie generally invests a majority of the Fund's assets in
developed stock markets around the world. You will usually see relatively large
positions in Japan, the United Kingdom and other western European countries.
Martin Currie also invests a portion of your Fund's assets in developing
markets. Current positions include Latin American markets and India, for
example. In the commentary that follows, Martin Currie provides further details
on the markets in which your Fund invests as well as their outlook for
international markets going forward.
While returns from investments in U.S. stocks have recently outperformed many
foreign markets, we should remember that a majority of the total market
capitalization of the world's stock markets is outside the United States. We
believe that you will be rewarded for your confidence in committing a portion of
your portfolio to these markets through investments such as the Eagle
International Equity Portfolio.
On behalf of all of us at Heritage and Eagle, thank you for your investments
with us. We look forward to serving your investment needs for years to come.
Sincerely, Sincerely,
<TABLE>
<S> <C>
/s/ Stephen G. Hill /s/ Richard K. Riess
- ------------------------------------ ---------------------------
Stephen G. Hill Richard K. Riess
President President
Heritage Series Trust Eagle Asset Management, Inc.
Eagle International Equity Portfolio
</TABLE>
SEMIANNUAL REPORT
<PAGE> 3
MARKET COMMENTARY from MARTIN CURRIE, INC. June 11, 1997
Eagle International Equity Portfolio
The Eagle International Equity Portfolio is constructed with the goal of
outperforming 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. Securities of industrial issuers
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.
Over the six months to 30 April 1997, international markets continued to move
ahead, helped by a recovery in non-index markets, particularly Latin America.
The Japanese market remained an exception, by weakening further. The Fund rose
by over 6% during the period, compared to a return of less than 2% from the MSCI
EAFE Index.
CONTINENTAL EUROPEAN stock markets (34.2% of net assets as of April 30) were
robust during the period, helped by supportive bond markets and weak currencies.
Corporate restructuring provided additional impetus for markets to move ahead.
We added new holdings reflecting this restructuring theme over the period, such
as Rhone-Poulenc (France), Volkswagen (Germany), Philips Electronics
(Netherlands) and ABB (Sweden) reflect the restructuring themes.
In the UNITED KINGDOM (19.0% of net assets), the equity market moved strongly
ahead through April 30, supported by benign economic news and good liquidity.
Financial stocks were significant outperformers. We added holdings in Scottish
Power (with utilities fully discounting a change of government), Royal Bank of
Scotland and General Electric (with new management now in place). For Europe as
a whole, a changed government in the UK, and key elections in Europe may well
create further uncertainty over EMU convergence. Interest rates will remain
subdued and corporate activity will be sufficient to keep earnings moving ahead.
Valuations remain at attractive levels.
The JAPANESE stock market (17.3% of net assets) weakened further through April
30. We reduced our position and removed the currency protection against a weaker
yen. The real casualty of the recent fall in the Japanese Index has been the
financial sector, where we have remained very underweighted, preferring
manufacturing stocks, which are the beneficiaries of the yen's weakness and
corporate profit recovery. This strategy offset the worst of the index fall.
Monetary policy remains relaxed in the region and we are beginning to see some
signs of the yen firming and economic conditions improving. Such evidence points
to an increase in domestic and medium sized holdings within the portfolio.
International investors have returned to the market.
ASIAN markets (16.6% of net assets) generally performed poorly as a region.
Singapore, The Philippines, South Korea and Thailand were very weak. Hong Kong,
Taiwan and Australia stood out in contrast. We added to Hong Kong over the
period, with holdings such as China Overseas Land benefiting from a gradual
recovery in China's economy and increased confidence over the transfer of
sovereignty. We have no exposure to Thailand, South Korea and Taiwan.
Our response to SMALLER MARKETS has concentrated on LATIN AMERICA (7.4% of net
assets). Brazil and Peru were the top performing markets. We have had
overweighted positions in the key blue chip stocks such as Telebras, Petrobas
and Telefonica del Peru. We broadened both our market and stock exposure over
the period, through privatisations such as CTC (Chile) and CANTV (Venezuela).
Elsewhere, we invested in holdings from India, while decreasing our holdings in
Taiwan, because of improved political stability and market liquidity that saw
the market off its lows. We currently have no exposure to South Africa.
2 SEMIANNUAL REPORT
<PAGE> 4
In terms of our outlook, we believe the cycle of economic activity, corporate
profits and share prices in North America is now very extended. In contrast,
major international markets do not look expensive, particularly relative to
bonds.
In the UK, a change of government should not impact dramatically on the benign
environment for equities. However, some uncertainty will prevail in the short
term over tax changes. In Continental Europe, where economic activity is yet to
revive, our investment theme is the change in management culture that permits
companies to be run for the benefit of shareholders rather than for other
groups.
In Japan, we see an opportunity to take advantage of recovery in certain sectors
of the economy. In Asia, the dominant theme will be China. Some opportunities
again are appearing in the region as export growth recovers elsewhere. In the
smaller markets area, we believe Latin America offers the greatest potential.
We appreciate your confidence in investing with us. We look forward to providing
you a further update after the Fund's fiscal year.
3 SEMIANNUAL REPORT
<PAGE> 5
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
COMMON STOCKS--93.7%(A)
- ------------------------
ARGENTINA--0.9%
--------------
16,000 Compania Perez Companc SA................................... $ 129,773
5,000 Telefonica de Argentina, ADR................................ 166,250
-----------
296,023
-----------
AUSTRALIA--1.6%
--------------
6,000 Lend Lease Corporation...................................... 114,825
13,500 National Australia Bank, Ltd................................ 184,766
65,000 News Corporation, Ltd....................................... 247,875
-----------
547,466
-----------
AUSTRIA--1.0%
------------
2,200 V.A. Technologie AG......................................... 341,869
-----------
BRAZIL--2.7%
-----------
8,000 Centrais Electricas Brasileiras, ADR........................ 179,000
5,000 Compania Vale Do Rio Doce, ADR.............................. 127,500
10,000 Petrobras, ADR.............................................. 212,031
3,500 Telebras, ADR............................................... 401,625
-----------
920,156
-----------
CHILE--0.8%
----------
8,500 Compania de Telefonos de Chile SA, ADR...................... 275,188
-----------
DENMARK--1.0%
--------------
3,300 Novo Nordisk................................................ 326,460
-----------
FRANCE--8.1%
------------
8,100 AXA-UAP Groupe.............................................. 498,365
3,500 Elf Aquitaine (Ste Nationale)............................... 339,416
2,950 L'Air Liquide SA............................................ 444,282
7,900 Michelin.................................................... 441,393
12,400 Rhone-Poulenc SA............................................ 417,051
8,440 Schneider SA................................................ 475,758
4,600 Seita....................................................... 163,776
-----------
2,780,041
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4 SEMIANNUAL REPORT
<PAGE> 6
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
GERMANY--8.8%
--------------
9,600 Deutsche Bank AG............................................ $ 506,664
3,287 Deutsche Telekom............................................ 71,328
13,200 Hoechst AG.................................................. 518,305
1,300 Mannesmann AG............................................... 511,202
2,900 SGL Carbon AG............................................... 404,406
9,101 VEBA AG..................................................... 468,766
800 Volkswagen AG............................................... 508,604
-----------
2,989,275
-----------
HONG KONG--9.0%
----------------
229,000 Amoy Properties, Ltd........................................ 226,147
52,000 Cheung Kong Holdings, Ltd................................... 456,464
467,000 China Overseas Land & Investments........................... 263,748
37,000 China Light and Power Company, Ltd.......................... 166,695
35,000 Citic Pacific, Ltd.......................................... 189,311
138,000 First Pacific Bank.......................................... 164,784
159,800 Hong Kong Telecom Company, Ltd.............................. 274,361
15,896 HSBC Holdings............................................... 402,197
55,000 Hutchison Whampoa, Ltd...................................... 408,249
59,000 New World Development, Ltd.................................. 340,450
22,000 Swire Pacific, Ltd, Class "A"............................... 169,690
-----------
3,062,096
-----------
INDIA--1.8%
----------
8,032 Indian Opportunities Fund, Ltd.............................. 73,655
30,500 Schroder India Fund......................................... 323,056
12,000 Videsh Sanchar Nigam, Ltd................................... 233,760
-----------
630,471
-----------
INDONESIA--0.7%
--------------
160,000 PT Telkom................................................... 232,099
-----------
ITALY--0.9%
----------
63,472 ENI......................................................... 322,147
-----------
JAPAN--16.6%
------------
17,000 Canon, Incorporated......................................... 403,120
37 DDI Corporation............................................. 245,724
31,000 Hitachi, Ltd................................................ 280,852
8,000 Ito-Yokado Company, Ltd..................................... 383,818
34,000 Kamigumi Company, Ltd....................................... 168,212
2,000 Kyocera Corporation......................................... 119,746
2,000 Mabuchi Motor Company, Ltd.................................. 101,312
10,000 Marui Company, Ltd.......................................... 164,651
47,000 Mitsubishi Heavy Industries................................. 310,285
17,000 Mitsui Fudosan Company, Ltd................................. 194,194
</TABLE>
The accompanying notes are an integral part of the financial statements.
5 SEMIANNUAL REPORT
<PAGE> 7
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
JAPAN--(CONTINUED)
----------------
22,000 Nippon Express Company, Ltd................................. $ 151,652
12,000 Nitto Denko Corporation..................................... 173,947
11,000 Nomura Securities Company, Ltd.............................. 123,055
1,000 Riso Kagaku Corporation..................................... 59,085
6,000 Rohm Company, Ltd........................................... 465,120
3,000 Secom Company, Ltd.......................................... 178,438
4,000 Shimachu Company, Ltd....................................... 96,112
18,000 Shin-Etsu Chemical Company, Ltd............................. 363,020
5,000 Sony Corporation............................................ 363,966
25,000 Sumitomo Electric Industries, Ltd........................... 338,756
15,000 Taisho Pharmaceutical Company............................... 371,056
17,000 Tokio Marine & Fire Insurance............................... 166,069
15,000 Toyota Motor Corporation.................................... 434,868
-----------
5,657,058
-----------
MALAYSIA--1.8%
-------------
36,000 AMMB Holdings, Ltd.......................................... 239,446
19,000 Edaran Otomobile Nasional................................... 179,345
30,000 United Engineers Malaysia................................... 212,681
-----------
631,472
-----------
MEXICO--2.1%
------------
47,300 Cemex....................................................... 173,213
144,000 Cifra SA DE CV.............................................. 221,078
13,000 Corporation Industrial ALFA................................. 71,981
4,000 Empresas ICA Sociedad Contro................................ 59,500
90,000 Grupo Financiero Banamex.................................... 192,764
-----------
718,536
-----------
NETHERLANDS--4.3%
-----------------
28,500 Elsevier NV................................................. 456,398
14,500 ING Groep NV................................................ 569,343
8,200 Philips Electronics NV...................................... 428,035
-----------
1,453,776
-----------
PERU--0.2%
----------
2,400 Telefonica Del Peru......................................... 57,600
-----------
PHILIPPINES--0.7%
----------------
4,150 Philippine Long Distance Telephone.......................... 231,363
-----------
SINGAPORE--1.0%
--------------
28,000 Development Bank of Singapore............................... 332,712
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6 SEMIANNUAL REPORT
<PAGE> 8
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
SPAIN--3.0%
-----------
6,345 Banco de Santander S.A...................................... $ 477,378
8,500 Cen. Comerciales Continente................................. 143,600
15,500 Telefonica de Espana SA..................................... 397,028
-----------
1,018,006
-----------
SWEDEN--1.8%
-------------
37,400 ABB AB...................................................... 455,301
5,200 LM Ericsson................................................. 164,391
-----------
619,692
-----------
SWITZERLAND--5.2%
----------------
487 Novartis AG................................................. 641,581
80 Roche Holdings AG Genusscheine.............................. 675,667
1,420 Zurich Versicher............................................ 466,237
-----------
1,783,485
-----------
UNITED KINGDOM--19.0%
---------------------
42,000 British Telecommunications, PLC............................. 307,682
37,000 Cable & Wireless, PLC....................................... 284,921
31,000 General Electric Company, PLC............................... 184,051
20,000 GKN, PLC.................................................... 308,590
18,500 Glaxo Wellcome, PLC......................................... 363,703
21,200 Granada Group, PLC.......................................... 306,146
86,000 Ladbroke Group, PLC......................................... 320,583
65,000 LASMO, PLC.................................................. 234,927
48,000 Lloyds TSB Group, PLC....................................... 437,990
46,000 Marks & Spencer, PLC........................................ 364,570
21,000 McKechnie, PLC.............................................. 168,136
97,000 NFC, PLC.................................................... 222,455
27,950 Reckitt & Colman, PLC....................................... 380,519
39,100 Royal Bank of Scotland Group, PLC........................... 368,820
45,558 Safeway, PLC................................................ 252,526
59,000 Scottish Power, PLC......................................... 357,634
22,000 Shell Transport & Trading Company........................... 389,011
23,731 Smiths Industries, PLC...................................... 290,003
13,000 Unilever, PLC............................................... 341,540
45,000 Wassall, PLC................................................ 256,726
40,000 Wolseley, PLC............................................... 320,259
-----------
6,460,792
-----------
VENEZUELA--0.7%
---------------
8,200 Compania Anonima Nacional Telefonos......................... 246,000
-----------
Total Common Stocks (cost $29,686,984)...................... 31,933,783
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
7 SEMIANNUAL REPORT
<PAGE> 9
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
--------- -------- -----------
<C> <S> <C> <C>
BONDS--0.7%(A)
- -------------
JAPAN--0.7%
-------------
$236,000 MBL International Finance (Bermuda)......................... 11/30/02 $ 237,917
-----------
Total Bonds (cost $26,942).................................. 237,917
-----------
Total investment portfolio excluding repurchase agreement (cost
$29,713,926).................................................................. 32,171,700
-----------
REPURCHASE AGREEMENT--4.4%(A)
- -----------------------------
Repurchase agreement with State Street Bank and Trust Company, dated April 30,
1997, @ 5.3%, to be repurchased at $1,486,219 on May 1, 1997, (collateralized
by $1,350,000 United States Treasury Bonds, 8.125%, due August 15, 2019 with a
market value of $1,541,024 including interest) (cost $1,486,000).............. 1,486,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $31,199,926) 98.8%(A)........................ 33,657,700
OTHER ASSETS AND LIABILITIES, 1.2%(A)......................................... 410,857
-----------
NET ASSETS, 100%.............................................................. $34,068,557
===========
</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
$2,457,774 which consists of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost of
$3,558,161 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value of $1,100,387.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
8 SEMIANNUAL REPORT
<PAGE> 10
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
------------------------ ------ --------
<S> <C> <C>
Common Stocks
Banking................................................... $ 3,114,756 9.1%
Basic Industries.......................................... 2,315,551 6.8%
Building Materials and Merchandise........................ 320,259 0.9%
Capital Goods............................................. 5,491,842 16.1%
Consumer Goods and Services............................... 4,822,271 14.2%
Diversified Industrials................................... 926,268 2.7%
Electronic and Electrical Equipment....................... 612,085 1.8%
Energy.................................................... 1,315,664 3.9%
Engineering............................................... 766,729 2.3%
Finance................................................... 1,515,632 4.4%
Foods..................................................... 341,540 1.0%
Household Goods........................................... 380,519 1.1%
Insurance................................................. 1,130,672 3.3%
Leisure and Hotels........................................ 626,729 1.8%
Oil, Exploration and Production........................... 234,927 0.7%
Oil, Integrated........................................... 601,043 1.8%
Pharmaceuticals........................................... 734,759 2.2%
Real Estate............................................... 1,765,518 5.2%
Retail Trade.............................................. 617,096 1.8%
Telecommunications........................................ 3,109,837 9.1%
Transportation and Storage................................ 542,320 1.6%
Utilities................................................. 647,766 1.9%
Bonds....................................................... 237,917 0.7%
Repurchase Agreement........................................ 1,486,000 4.4%
----------- -------
Total Investments........................................... $33,657,700 98.8%
=========== =======
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 SEMIANNUAL REPORT
<PAGE> 11
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C> <C>
Assets
Investments, at market value (identified cost $31,199,926)
(Note 1).................................................. $33,657,700
Cash........................................................ 541
Foreign currency (cost $16,059)............................. 16,059
Receivables:
Investments sold.......................................... 227,092
Fund shares sold.......................................... 278,786
Dividends and interest.................................... 107,124
Foreign taxes recoverable................................. 20,163
Deferred organizational expenses (Note 1)................... 31,200
Deferred state registration expenses (Note 1)............... 18,515
-----------
Total assets........................................ 34,357,180
Liabilities
Payables (Note 4):
Investments purchased..................................... $ 57,252
Due to manager............................................ 129,722
Other accrued expenses.................................... 65,228
Accrued distribution fee.................................. 23,908
Fund shares redeemed...................................... 1,000
Tax withholding payable................................... 11,513
--------
Total liabilities................................... 288,623
-----------
Net assets, at market value................................. $34,068,557
===========
Net Assets
Net assets consist of:
Paid-in capital........................................... 31,848,746
Accumulated net investment loss (Note 1).................. (273,657)
Accumulated net realized gain (Notes 1 and 5)............. 36,733
Net unrealized appreciation on investments and other
assets and liabilities denominated in foreign
currencies.............................................. 2,456,735
-----------
Net assets, at market value................................. $34,068,557
===========
Eagle Class Shares
Net asset value, redemption and offering price per share
($26,322,807 divided by 1,144,174 shares of beneficial
interest outstanding, no par value) (Notes 1 and 2)....... $23.01
Class A Shares
Net asset value and redemption price per share ($5,180,569
divided by 224,563 shares of beneficial interest
outstanding, no par value) (Notes 1 and 2)................ $23.07
Maximum offering price per share (100/95.25 of $23.07)...... $24.22
Class C Shares
Net asset value and offering price per share ($2,565,181
divided by 111,895 shares of beneficial interest
outstanding, no par value) (Notes 1 and 2)................ $22.92
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 SEMIANNUAL REPORT
<PAGE> 12
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 1997
(UNAUDITED)
<TABLE>
<S> <C> <C>
Investment Income
Income:
Dividends................................................. $ 212,420
Interest.................................................. 56,369
----------
Total income........................................ 268,789
Expenses (Notes 1 and 4):
Management fee............................................ $147,787
Distribution fee (Eagle Shares)........................... 119,861
Distribution fee (Class A Shares)......................... 4,907
Distribution fee (Class C Shares)......................... 8,339
Shareholder servicing fees (Eagle Shares)................. 3,586
Shareholder servicing fees (Class A Shares)............... 2,944
Shareholder servicing fees (Class C Shares)............... 1,251
Custodian/Fund accounting fees............................ 74,007
Registration fees......................................... 20,571
Professional fees......................................... 35,671
Reports to shareholders................................... 16,223
Amortization of organization expenses..................... 5,200
Trustees' fees and expenses............................... 4,179
Insurance................................................. 1,628
--------
Total expenses before fee waiver.................... 446,154
Fees waived by Manager.............................. (73,252) 372,902
-------- ----------
Net investment income....................................... (104,113)
----------
Realized and Unrealized Gain (Loss) on Investments
Net realized loss from investment transactions.............. (143,228)
Net realized gain from foreign currency transactions........ 218,842
Net increase in unrealized appreciation of investments
during the period......................................... 1,890,022
Net decrease in unrealized appreciation from foreign
currency during the period................................ (127,547)
----------
Net gain on investments............................. 1,838,089
----------
Net increase in net assets resulting from operations........ $1,733,976
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 SEMIANNUAL REPORT
<PAGE> 13
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
APRIL 30, 1997 FOR THE PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1996
------------------ --------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income (loss).............................. $ (104,113) $ 1,400
Net realized gain (loss) on investment transactions....... (143,228) 176,463
Net realized gain from foreign currency transactions...... 218,842 236,722
Net increase in unrealized appreciation of investments
during the period....................................... 1,890,022 589,606
Net increase (decease) in unrealized appreciation from
foreign currency during the period...................... (127,547) 142,373
----------- -----------
Net increase in net assets resulting from operations...... 1,733,976 1,146,564
----------- -----------
Distributions to shareholders from:
Net investment income Eagle Shares, ($0.31 and $0.01 per
share, respectively).................................... (318,525) (7,915)
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 realized gains Eagle Shares, ($0.17 and $0.47 per
share, respectively).................................... (172,431) (254,085)
Net realized gains Class A Shares, ($0.17 per share)...... (23,850) --
Net realized gains Class C Shares, ($0.17 per share)...... (9,263) --
Increase in net assets from Fund share transactions (Note
2)........................................................ 7,025,590 15,059,163
----------- -----------
Increase in net assets...................................... 8,154,271 15,943,727
Net assets, beginning of period............................. 25,914,286 9,970,559
----------- -----------
Net assets, end of period (including accumulated net
investment loss of $273,657 and undistributed net
investment income of $230,207, respectively).............. $34,068,557 $25,914,286
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 SEMIANNUAL REPORT
<PAGE> 14
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>
EAGLE SHARES* CLASS A SHARES* CLASS C SHARES*
--------------------------------- ----------------------------- -----------------------------
FOR THE SIX FOR THE FOR THE SIX FOR THE FOR THE SIX FOR THE
MONTH PERIOD PERIOD ENDED MONTH PERIOD PERIOD ENDED MONTH PERIOD PERIOD ENDED
ENDED OCTOBER 31, ENDED OCTOBER 31, ENDED OCTOBER 31,
APRIL 30, 1997 ---------------- APRIL 30, 1997 ------------ APRIL 30, 1997 ------------
(UNAUDITED) 1996 1995+ (UNAUDITED) 1996++ (UNAUDITED) 1996++
-------------- ------- ------ -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD...................... $ 22.14 $ 20.79 $20.00 $ 22.25 $ 21.11 $ 22.12 $ 21.11
------- ------- ------ ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net Investment income
(loss)(a)................. (0.09) (0.01) (0.03) (0.01) 0.10 (0.09) (0.07)
Net realized and unrealized
gain on investments....... 1.44 1.84 0.82 1.44 1.04 1.40 1.08
------- ------- ------ ------- ------- ------- -------
Total from Investment
Operations.................. 1.35 1.83 0.79 1.43 1.14 1.31 1.01
------- ------- ------ ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net
investment income......... (0.31) (0.01) -- (0.44) -- (0.34) --
Distributions from net
realized gains............ (0.17) (0.47) -- (0.17) -- (0.17) --
------- ------- ------ ------- ------- ------- -------
Total Distributions........... (0.48) (0.48) -- (0.61) -- (0.51) --
------- ------- ------ ------- ------- ------- -------
NET ASSET VALUE, END OF
PERIOD...................... $ 23.01 $ 22.14 $20.79 $ 23.07 $ 22.25 $ 22.92 $ 22.12
======= ======= ====== ======= ======= ======= =======
TOTAL RETURN (%)(C)(D)........ 6.15 8.93 3.95 6.51 5.40 6.00 4.78
RATIOS(%)/SUPPLEMENTAL DATA:
Operating expenses, net, to
average daily net
assets(a)................. 2.60(b) 2.60 2.60(b) 1.97(b) 1.97(b) 2.72(b) 2.72 (b)
Net investment income (loss)
to average daily net
assets.................... (0.80)(b) (0.02) (0.33)(b) (0.10)(b) 0.44(b) (0.77)(b) (0.32)(b)
Portfolio turnover rate..... 23(c) 59 61 23 (c) 59 23 (c) 59
Average commission rate on
portfolio transactions.... $0.0224 $0.0289 -- $0.0224 $0.0289 $0.0224 $0.0289
Net assets, end of period ($
millions)................... 26 22 10 5 3 3 1
</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 Manager in the amount of $.06 and
$.16 per Class A Share, respectively. The operating expense ratio including
such items would have been 2.47% (annualized) and 2.69% (annualized) for
Class A Shares, respectively. Excludes management fees waived by the Manager
in the amount of $.06 and $.16 per Class C Share, respectively. The
operating expense ratio including such items would have been 3.22%
(annualized) and 3.44% (annualized) for Class C Shares, respectively.
Excludes management fees waived and expenses reimbursed by the Manager in
the amount of $.06, $.16 and $.17 per Eagle Share, respectively. The
operating expense ratios including such items would have been 3.10%
(annualized), 3.31% and 5.09% (annualized) for Eagle Shares, respectively.
(b) Annualized.
(c) Not annualized.
(d) Calculated without the imposition of front-end or contingent deferred sales
charges.
The accompanying notes are an integral part of the financial statements.
13 SEMIANNUAL REPORT
<PAGE> 15
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company consisting of four separate investment
Portfolios, the Eagle International Equity Portfolio (the "Fund"), the
Small Cap Stock Fund, the Value Equity Fund and the Growth Equity Fund.
The Fund primarily seeks capital appreciation principally through
investment in an international portfolio of equity securities.
The Fund currently issues Eagle Class, Class A and Class C Shares. The
Eagle Class of shares are subject to certain minimum investment
requirements and are sold without any sales charge. Class A Shares are
sold subject to a maximum sales charge of 4.75% of the amount invested
payable at the time of purchase. Class C Shares are sold subject to a
contingent deferred sales charge of 1% of the lower of net asset value
or purchase price payable upon any redemptions within one year after
purchase. The financial statements for the Small Cap Fund, Growth Equity
Fund and Value Equity Fund are presented separately. The preparation of
financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ
from those estimates. The following is a summary of significant
accounting policies:
Security Valuation: The Fund values investment securities at market value
based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, the last bid price is used and in the absence of a market
quote, securities are valued using such methods as the Board of Trustees
believes would reflect fair market value. 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 Fund calculates its
daily net asset value per share. Although the Fund 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 Fund 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
Fund does not isolate that portion of gains and losses on investments
which is due to change 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 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 Fund 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 Fund 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: The Fund enters into repurchase agreements whereby
the Fund, through its custodian, receives delivery of the underlying
securities, the market value of which at the time of purchase is
required to be in an amount equal to at least 100% of the resale price.
Federal Income Taxes: The Fund's policy is to comply with the requirements
of the Internal Revenue Code of 1986, as amended, which are applicable
to regulated investment companies and to distribute substantially all of
its taxable income to its shareholders. Accordingly, no provision has
been made for federal income and excise taxes.
Distribution of Net Realized Gains: Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to the
Fund, will be distributed to shareholders in the following fiscal year.
The Fund uses the identified cost method for determining realized gain
or loss on investments for both financial and federal income tax
reporting purposes.
State Registration Expenses: State registration fees are amortized based
either on the time period covered by the registration or as related
shares are sold, whichever is appropriate for each state.
Organization Expenses: Expenses incurred in connection with the formation
of the Fund were deferred and are being amortized on a straight-line
basis over 60 months from the date of commencement of operations.
14 SEMIANNUAL REPORT
<PAGE> 16
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
Capital Accounts: The Fund reports the undistributed net investment income
(accumulated net investment loss) and accumulated net realized gain
(loss) accounts on a basis approximating amounts available for future
tax distributions (or to offset future taxable realized gains when a
capital loss carryforward is available). Accordingly, the Fund may
periodically make reclassifications among certain capital accounts
without impacting the net asset value of the Fund.
Other: Investment security transactions are accounted for on a trade date
plus one basis. Dividend income and distributions to shareholders are
recorded on the ex-dividend date. Interest income is recorded on the
accrual basis. Expenses of the Fund are allocated to each class of
shares based upon their relative percentage of current net assets of
dividend eligible shares. All expenses that are directly attributable to
a specific class of shares, such as distribution and shareholder
servicing fees, are allocated to that class.
Note 2: FUND SHARES. At April 30, 1997, there was an unlimited number of shares
of beneficial interest of no par value authorized.
Transactions in Eagle Shares of the Eagle International Equity Portfolio
during the six month period ended April 30, 1997 and for the year ended
October 31, 1996 were as follows:
<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
--------------------------------------------------
FOR THE SIX MONTH PERIOD FOR THE YEAR ENDED
ENDED APRIL 30, 1997 OCTOBER 31, 1996
------------------------ ----------------------
EAGLE SHARES SHARES AMOUNT SHARES AMOUNT
------------ --------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................... 219,991 $ 4,982,027 534,815 $11,648,653
Shares issued on reinvestment of distributions............ 21,188 475,249 11,917 251,561
Shares redeemed........................................... (73,149) (1,660,727) (50,151) (1,114,981)
--------- ----------- ------- -----------
Net increase.............................................. 168,030 $ 3,796,549 496,581 $10,785,233
=========== ===========
Shares outstanding:
Beginning of period..................................... 976,144 479,563
--------- -------
End of period........................................... 1,144,174 976,144
========= =======
</TABLE>
Transactions in Class A Shares of the Eagle International Equity
Portfolio during the six month period ended April 30, 1997 and for the
period ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
-------------------------------------------------
FOR THE SIX MONTH PERIOD FOR THE PERIOD ENDED
ENDED APRIL 30, 1997 OCTOBER 31, 1996
------------------------ ---------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold................................................ 89,381 $ 2,024,132 159,739 $3,524,406
Shares issued on reinvestment of distributions............. 3,346 75,081 -- --
Shares redeemed............................................ (8,007) (181,280) (19,896) (444,547)
--------- ----------- ------- ----------
Net increase............................................... 84,720 $ 1,917,933 139,843 $3,079,859
=========== ==========
Shares outstanding:
Beginning of period...................................... 139,843 --
--------- -------
End of period............................................ 224,563 139,843
========= =======
</TABLE>
15 SEMIANNUAL REPORT
<PAGE> 17
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
Transactions in Class C Shares of the Eagle International Equity
Portfolio during the six month period ended April 30, 1997 and for the
period ended October 31, 1996 were as follows:
<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
---------------------------------------------------
FOR THE SIX MONTH PERIOD FOR THE PERIOD ENDED
ENDED APRIL 30, 1997 OCTOBER 31, 1996
------------------------- ---------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- ------ ----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 65,722 $ 1,488,624 56,036 $1,238,468
Shares issued on reinvestment of distributions........... 1,158 25,899 -- --
Shares redeemed.......................................... (9,009) (203,415) (2,012) (44,397)
--------- ----------- ------ ----------
Net increase............................................. 57,871 $ 1,311,108 54,024 $1,194,071
=========== ==========
Shares outstanding:
Beginning of period.................................... 54,024 --
--------- ------
End of period.......................................... 111,895 54,024
========= ======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the six month period ended April
30, 1997, purchases and sales of investment securities (excluding
repurchase agreements and short term obligations) aggregated $12,542,576
and $6,389,355, respectively.
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES. Under the Fund's Investment Advisory and Administration
Agreement with Eagle Asset Management, Inc. ( the "Manager"), the Fund
agrees to pay to the Manager a fee equal to an annualized rate of 1.00%
of the Fund's average daily net assets, computed daily and payable
monthly. Currently, the Manager has voluntarily agreed to waive its fee
to the extent that Fund operating expenses exceed 2.60%, 1.97% and 2.72%
on an annual basis of the Fund's average daily net assets for Eagle
Class Shares, Class A and Class C Shares, respectively. Management fees
of $73,252 were waived for the six month period ended April 30, 1997. If
total Fund expenses fall below the expense limitation agreed to by the
Manager before the end of the year ending October 31, 1999, the Fund may
be required to pay the Manager a portion or all of the waived management
fee. In addition, the Fund may be required to pay the Manager a portion
or all of the management fees waived of $32,303 and $134,735 for the
years ended October 31, 1995, and October 31, 1996, respectively, if
total Fund expenses fall below the annual expense limitations before the
end of the years ending October 31, 1997 and October 31, 1998,
respectively.
The Manager has entered into an agreement with Martin Currie, Inc., a New
York Corporation, (the "Subadviser") to provide to the Fund investment
advice, portfolio management services including the placement of
brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to .50% of average daily net assets on the
first $100 million of assets and .40% thereafter without regard to any
reduction due to the imposition of expense limitations.
Heritage Asset Management, Inc. ("Heritage"), an affiliate of Eagle, is the
Dividend Paying and Shareholder Servicing Agent for the Fund. Heritage
also may provide certain administrative services for the Fund and may
receive a fee from Eagle for performing these administrative services.
Raymond James & Associates, Inc. (the "Distributor") has advised the Fund
that it received $57,047 in front-end sales charges and $884 in
contingent deferred sales charges for the six months ended April 30,
1997. The Distributor paid commissions to salespersons and from these
fees incurred other distribution costs.
Pursuant to the Class A Distribution Plan adopted in accordance with Rule
12b-1 of the Investment Company Act of 1940, at amended, the Fund is
authorized to pay the Distributor a fee, equal to .25% of the average
daily net assets for Class A Shares. Under the Eagle Class and Class C
Distribution Plans, the Fund may pay the Distributor a fee equal to
1.00% of the average daily net assets for each Class. Such fees are
accrued daily and payable monthly. The Manager, Heritage and Distributor
are all wholly owned subsidiaries of Raymond James Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust,
Heritage Income Trust and Heritage U.S. Government Income Fund,
investment companies that are advised by Heritage (collectively referred
to as the Heritage funds). Each Trustee of the Heritage funds that is
not an interested person of Heritage receives an annual fee of $8,000,
an additional fee of $2,000 for each combined quarterly meeting of the
Heritage funds attended and $1,000 for each special Trustees meeting
attended. Trustees' fees and expenses are paid equally by each of the
Heritage funds.
16 SEMIANNUAL REPORT
<PAGE> 18
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
Note 5: FEDERAL INCOME TAXES. For the year ended October 31, 1996, 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
$236,722.
Note 6: FINANCIAL INVESTMENTS WITH OFF-BALANCE SHEET RISK. 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 April 30, 1997, the Fund had no outstanding forward foreign currency
exchange contracts ("forward contracts") in order 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.
17 SEMIANNUAL REPORT
<PAGE> 19
EAGLE INTERNATIONAL EQUITY PORTFOLIO
P.O. Box 10520
St. Petersburg, FL 33733
INVESTMENT ADVISER
Eagle Asset Management, Inc.
P.O. Box 10520
St. Petersburg, FL 33733
(800) 237-3101
INVESTMENT SUBADVISER
Martin Currie Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland EH1 2ES
DISTRIBUTOR
Raymond James & Associates, Inc.
P.O. Box 12749
St. Petersburg, FL 33733
(813) 573-3800
TRANSFER AGENT/
DIVIDEND DISBURSING AGENT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02105
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
EAGLE INTERNATIONAL EQUITY
PORTFOLIO
SEMIANNUAL REPORT
(UNAUDITED)
April 30, 1997
