<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
Semiannual Report
(Unaudited) and Investment Performance
Review for the Six-Month Period Ended
April 30, 1997
[HERITAGE LOGO]
--------
Series Trust (TM)
------------
<PAGE> 2
HERITAGE SERIES TRUST
SEMIANNUAL REPORT
TABLE OF CONTENTS
<TABLE>
<S> <C>
PRESIDENT'S LETTER.......................................... 1
PORTFOLIO COMMENTARY AND INVESTMENT PORTFOLIO:
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Investment Commentary............................. 2
Investment Portfolio.............................. 4
GROWTH EQUITY FUND
Portfolio Management Letter....................... 9
Investment Portfolio.............................. 10
SMALL CAP STOCK FUND
Portfolio Management Letters...................... 12
Investment Portfolio.............................. 14
VALUE EQUITY FUND
Investment Commentary............................. 20
Investment Portfolio.............................. 21
STATEMENT OF ASSETS AND LIABILITIES......................... 24
STATEMENT OF OPERATIONS..................................... 25
STATEMENT OF CHANGES IN NET ASSETS.......................... 26
FINANCIAL HIGHLIGHTS........................................ 28
NOTES TO FINANCIAL STATEMENTS............................... 32
</TABLE>
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<PAGE> 4
June 11, 1997
Dear Fellow Shareholders:
It is my pleasure to provide you with the semiannual report for Heritage
Series Trust for the period ended April 30, 1997. The four separate investment
portfolios available within Heritage Series Trust are the Eagle International
Equity Portfolio, the Growth Equity Fund, the Small Cap Stock Fund and the Value
Equity Fund. While historically we have provided these reports under separate
cover, we are now combining them continuing the process begun with our recently
combined prospectus updates. Because many of you have invested in more than one
of these funds, we are able to reduce the volume of mail you receive while still
providing important investment information on each of your investments. We hope
you will let us know how you like these changes. Please call us at 800-709-FUND
(3863) with any comments you would like to share.
During the period covered by this report, the stock markets, both
domestically and internationally, continued to be quite volatile. Each of the
funds in the Heritage Series Trust delivered positive returns during this period
and, as shown in the table below, were very competitive relative to their
respective indices and fund category averages.
<TABLE>
<CAPTION>
FUND "A" SHARES(1) "C" SHARES(1) INDEX(2) CATEGORY AVERAGE(3)
- ---- ------------- ------------- -------- -------------------
<S> <C> <C> <C> <C>
Eagle International Equity
Portfolio..................... +6.51% +6.00% +1.57% +6.93%
Growth Equity Fund.............. +12.06 +11.64 +14.72 +7.08
Small Cap Stock Fund............ +5.91 +5.49 +1.60 -3.01
Value Equity Fund............... +12.62 +12.29 +14.72 +10.24
</TABLE>
In the pages that follow, you will find portfolio commentaries for these
funds, each followed by the investment portfolio information for the respective
fund. Following this information is other important financial information for
all of the funds.
On behalf of all of us at Heritage, we appreciate the confidence you have
shown by your investments with us. We hope that you will discuss with your
financial advisors how other Heritage funds may fit in your investment plan. We
look forward to reporting to you again this fall after the end of the funds'
fiscal year.
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 Asia and Far East Index (EAFE) for the Eagle International Equity
Portfolio, the Standard & Poor's 500 Stock Composite Price Index 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-Foreign 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. June 11, 1997
Subadviser 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 or 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.
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.
2
<PAGE> 6
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
<PAGE> 7
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-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
-----------
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
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 8
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
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
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
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 9
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
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
-----------
SPAIN--3.0%
----------
6,345 Banco de Santander S.A...................................... 477,378
8,500 Cen. Commerciales 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
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 10
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
- --------------- ------
<C> <S> <C>
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>
<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.
7
<PAGE> 11
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET % OF NET
VALUE ASSETS
------ --------
<S> <C> <C>
INDUSTRY DIVERSIFICATION
- --------------------
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.
8
<PAGE> 12
June 11, 1997
Dear Fellow Shareholders:
The Heritage Series Trust-Growth Equity Fund (the "Fund") has continued to
perform well over the last six months. The Fund currently has 31 equity
investments that we consider to be premier, quality growth stocks. Each company
is expected 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 are
established and will maintain a competitive advantage in their industry.
A predominant theme in the Fund's portfolio continues to be the ownership
of outstanding U.S. multinational companies that derive significant revenues and
earnings from overseas sales. Examples include: Coca Cola, Gillette, Procter &
Gamble, Johnson & Johnson, Merck, American International Group, and Illinois
Tool Works. Our technology exposure has remained constant at approximately 15%
with core investments in Intel, Microsoft, Cisco, and Oracle. Cyclicals and
energy related issues remain underweighted in our portfolio as they typically do
not meet our investment criteria. Other stocks that have significantly
contributed to our performance results include: Omnicom, Kohl's and Home Depot.
We continue to invest new cash flows to keep the Fund fully invested with
cash levels under 10%. Annual portfolio turnover remains in the 25%-50% range.
The past six months has been characterized by tremendous volatility. As of
mid-February the Fund was up approximately 12% from January 1, 1997. However,
inflation fears and a Federal Reserve Board's (the "Fed") interest rate increase
quickly eroded our gains. Historically, rising interest rates have not been a
hospitable environment for growth investors as higher bond yields attract
capital and future earnings are discounted to be less valuable. However, since
the quarter end, recent economic data indicates that the economy is slowing
naturally. The market speculates that inflation may be under control and the Fed
may not need to raise rates further. This has been extremely positive for our
quality growth stocks and has provided a powerful rebound for the Fund.
Going forward, we continue to see robust earnings for our companies and a
relatively hospitable investment environment for quality growth companies.
Sincerely,
/s/ KENNETH W. CORBA
Kenneth W. Corba
Executive Vice President
Chief Investment Officer
Eagle Asset Management, Inc.
Portfolio Manager, Growth Equity
Fund
9
<PAGE> 13
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS--89.2%(A)
- ------------------------
ADVERTISING/COMMUNICATIONS--3.1%
---------------------------------
16,000 Omnicom Group, Inc. ........................................ $ 848,000
-----------
AUTO RENTAL/SERVICE--0.2%
--------------------------
2,000 Hertz Corporation, Class "A"................................ 58,000
-----------
BANKING--6.8%
----------------
8,000 BankAmerica Corporation..................................... 935,000
15,000 NationsBank Corporation..................................... 905,625
-----------
1,840,625
-----------
BEVERAGES--2.4%
-----------------
10,000 The Coca-Cola Company....................................... 636,250
-----------
BUILDING--3.4%
----------------
10,000 Illinois Tool Works, Inc. .................................. 913,750
-----------
COSMETICS/TOILETRIES--3.8%
--------------------------
12,000 Gillette Company............................................ 1,020,000
-----------
DATA PROCESSING--11.1%
------------------------
12,000 Cisco Systems, Inc.* ....................................... 621,000
5,500 Intel Corporation........................................... 842,187
7,500 Microsoft Corporation*...................................... 911,250
15,000 Oracle Corporation*......................................... 596,250
-----------
2,970,687
-----------
ELECTRONICS/ELECTRIC--6.0%
--------------------------
10,000 General Electric Company.................................... 1,108,750
8,000 Nokia Corporation, Sponsored ADR, Class "A"................. 517,000
-----------
1,625,750
-----------
FINANCE--11.3%
----------------
8,500 American Express Company.................................... 559,938
16,500 Charles Schwab Corporation.................................. 604,312
22,000 Fannie Mae.................................................. 904,750
30,000 Federal Home Loan Mortgage Corporation...................... 956,250
-----------
3,025,250
-----------
HOTELS/MOTELS/INNS--4.7%
--------------------------
12,000 HFS, Inc.* ................................................. 711,000
10,000 Marriott International, Inc. ............................... 552,500
-----------
1,263,500
-----------
HOUSEHOLD PRODUCTS--3.5%
--------------------------
7,500 Procter & Gamble Company.................................... 943,125
-----------
INSURANCE--8.0%
-----------------
8,000 American International Group, Inc. ......................... 1,028,000
20,000 Travelers Group, Inc........................................ 1,107,500
-----------
2,135,500
-----------
PHARMACEUTICAL--12.0%
-----------------------
10,000 Eli Lilly & Company......................................... 878,750
10,000 Johnson & Johnson........................................... 612,500
10,000 Merck & Company, Inc........................................ 905,000
8,500 Pfizer, Inc................................................. 816,000
-----------
3,212,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
10
<PAGE> 14
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
RETAIL STORES--8.4%
-------------------
15,000 Home Depot, Inc............................................. $ 870,000
16,500 Kohl's Corporation*......................................... 806,438
12,500 Walgreen Company............................................ 575,000
-----------
2,251,438
-----------
SERVICES--2.0%
---------------
25,000 CUC International, Inc.*.................................... 528,125
-----------
TELECOMMUNICATIONS--2.5%
--------------------------
20,000 Telefonaktiebolaget LM Ericsson, ADR........................ 672,500
-----------
Total common stocks (cost $18,971,466)...................... 23,944,750
-----------
</TABLE>
<TABLE>
<CAPTION>
MATURITY MARKET
PRINCIPAL DATE VALUE
AMOUNT -------- -----------
<C> <S> <C> <C>
U.S. TREASURIES--3.7%(A)
- ----------------------
$500,000 U.S. Treasury Notes, 6.5%................................... 10/15/06 491,407
500,000 U.S. Treasury Notes, 6.625%................................. 03/31/02 500,937
-----------
Total U.S. Treasuries (cost $984,766)....................... 992,344
-----------
Total investment portfolio excluding repurchase agreement (cost $19,956,232).... 24,937,094
REPURCHASE AGREEMENT--9.1%(A)
- --------------------
Repurchase Agreement with State Street Bank and Trust
Company, dated April 30, 1997, @ 5.3%, to be repurchased at
$2,450,358 on May 1, 1997, collateralized by $2,205,000
United States Treasury Bonds, 8.125%, due August 15, 2019,
(market value $2,501,895, including interest) (cost
$2,430,000)..................................................................... 2,430,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $22,386,232)(B),
102.0%(A)..................................................................... 27,367,094
OTHER ASSETS AND LIABILITIES (2.0%)(A).......................................... (526,210)
-----------
NET ASSETS, 100.0%.............................................................. $26,840,884
===========
</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
$4,980,862, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$5,095,210 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value of $114,348.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
11
<PAGE> 15
June 11, 1997
Dear Fellow Shareholders:
We look forward with enthusiasm to making additional progress in building
the value of the portfolio of the Heritage Small Cap Stock Fund (the "Fund").
The basic building blocks of the financial market remain good: growing
corporate profits, excellent competitiveness of U.S. companies, low inflation,
foreign interest in U.S. equities, movement toward balanced budgets, demand for
financial assets by aging baby boomers and reasonable valuations.
Over the past twelve months, the price appreciation of the largest issues
has far exceeded that of the Russell 2000 as a result of investor interest in
index funds. This has resulted in significant undervaluation of small cap stocks
relative to large cap stocks.
We believe this valuation dispersion is unsustainable and should be
accompanied by excellent performance in the small capitalization sectors. As we
go to press, this valuation dispersion has just begun to be corrected and
momentum appears to be moving toward small cap equities. We believe this should
lead to sound investment results for your Fund.
With respect to our part of your Fund's portfolio, our large exposure in
data processing and electronics industries recognizes efforts to improve
productivity by the corporate sector. Similarly, the significant exposure to
medical equipment reflects the need of our society to serve an aging population
in a cost efficient manner.
We hold a large position in the oil and gas industry as the long-term
supply/demand equation has become favorable and equity prices are attractively
valued.
Many small capitalization issues are so attractively priced that we are
seeing some of the issuers of our holdings being taken over by large companies.
This reflects the compelling valuations. These valuations give us confidence
about the future performance of the Fund.
We look forward to continuing to serve you as portfolio manager on our
portion of your Fund's assets.
Sincerely,
/s/ JAMES D. AWAD
James D. Awad
Chairman
Awad & Associates
Portfolio Manager, Small Cap Stock
Fund
12
<PAGE> 16
June 11, 1997
Dear Fellow Shareholders:
It is a pleasure to be able to report to you that, during a period of
extremely poor relative performance for small capitalization stocks (small
caps), The Heritage Small Cap Stock Fund continued to perform well, appreciating
by 5.9%* on the A shares for the six months ended April 30, 1997. During that
period the Russell 2000 was up only 1.6%.
For the 12 months ended April 30, 1997, small caps, as measured by the
Russell 2000 Index, underperformed the Standard & Poor's 500 Index by some 25%.
According to a study by Prudential Securities, similar relative underperformance
on the part of small caps last occurred in the period ended October 1990. The
study indicates in the six months following October 1990, small caps
outperformed large capitalization stocks by about 15%. Although I don't ascribe
to market timing, given the underperformance of small caps, their relatively
attractive recent valuations, when compared to large capitalization stocks,
coupled with favorable prospects for a capital gains tax cut, a case can be
built for strong small cap performance over the next twelve months. In fact,
small cap stocks have performed very well since the end of April.
In our portion of your Fund's portfolio, the following mergers contributed
to your Fund's strong performance during the six months ended April 30, 1997:
BHC Financial, Inc. with Fiserve, Inc. and National Education Corp. with
Harcourt General, Inc.
Strong performers also included, full service hotel operators CapStar Hotel
Company and Bristol Hotels; educational service providers, Strayer Education
Corporation and Houghton Mifflin Company; regional stockbrokers, Legg Mason,
Inc. and Southwest Securities Group, Inc. and retailers, Genesco Inc., Cole
National Corporation, and Claire's Stores, Inc.
On the downside, losses were relatively minor, but included Forensic
Technologies International Corporation, and Envirosource, Inc., while Ampex
Corporation and Sodak Gaming, Inc. retraced prior gains. A relatively light
weighting in the battered technology sector aided performance.
Recently, we have purchased several telecommunications and electronic
companies including SymmetriCom, Inc., Sawtek, Inc., and Triquint Semiconductor,
Inc. Other new purchases include oil service provider Seacor Smit, Inc. as well
as Chicago Miniature Lamp, Inc. Subsequent to April 30, 1997, we also augmented
our holdings of regional stock brokers, with purchases of Interra Financial,
Inc. and Advest Group, Inc.
Recent sales included Marine Drilling Companies, Inc., Bristol Hotel
Corporation, as well as relatively small positions in Aronex Pharmaceuticals,
Inc. and Kapson Senior Quarters Corporation. National Education Corporation was
sold upon learning that Nick Acquisition Corporation, a wholly-owned subsidiary
of Harcourt General Inc., offered to purchase all of its outstanding shares.
I am excited about the future and remain dedicated to do my best for fund
shareholders.
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.
13
<PAGE> 17
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS--94.4%(A)
AEROSPACE--0.2%
-----------------
25,000 Kellstrom Industries, Inc.*................................. $ 343,750
-----------
BANKING--4.7%
---------------
100,000 Bank Plus Corporation*...................................... 987,500
100,000 BankUnited Financial Corporation, Class "A"*................ 900,000
45,000 Dime Bancorp, Inc.*......................................... 725,625
60,400 First Financial Caribbean Corporation....................... 1,645,900
29,000 FNB Rochester Corporation................................... 357,062
69,920 IBS Financial Corporation................................... 1,040,060
8,000 Independent Bankshares, Inc................................. 124,000
100,000 ITLA Capital Corporation*................................... 1,437,500
15,000 SIS Bancorp, Inc............................................ 390,000
25,000 Wayne Bancorp, Inc. ........................................ 415,625
-----------
8,023,272
-----------
BUILDING--1.3%
----------------
85,000 Lennar Corporation.......................................... 2,284,375
-----------
CHEMICALS--1.3%
-----------------
65,600 Lawter International, Inc. ................................. 697,000
70,000 Mississippi Chemical Corporation............................ 1,540,000
-----------
2,237,000
-----------
CONTAINERS--0.8%
------------------
70,000 ZERO Corporation............................................ 1,365,000
-----------
DATA PROCESSING--8.1%
----------------------
59,000 Active Voice Corporation*................................... 590,000
25,000 Cayenne Software, Inc.*..................................... 84,375
82,500 Comdisco, Inc. ............................................. 2,619,375
185,000 Dynamic Healthcare Technologies, Inc.*...................... 1,202,500
141,705 Greentree Software, Inc.*................................... 70,853
235,300 LanVision Systems, Inc.*.................................... 1,058,850
74,500 National Data Corporation................................... 2,793,750
68,475 New Horizons Worldwide, Inc.*............................... 607,716
61,800 Ovid Technologies, Inc.*.................................... 432,600
154,875 Printronix, Inc.*........................................... 1,955,296
55,000 Shared Medical Systems Corporation.......................... 2,316,875
-----------
13,732,190
-----------
EDUCATION--3.6%
-----------------
150,000 National Education Corporation*............................. 3,037,500
120,000 Strayer Education, Inc...................................... 3,090,000
-----------
6,127,500
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
14
<PAGE> 18
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
ELECTRONICS/ELECTRIC--7.5%
-------------------------
300,000 Ampex Corporation, Class "A"*............................... $ 1,687,500
50,000 Chicago Miniature Lamp, Inc.*............................... 1,168,750
145,000 Computer Products, Inc.*.................................... 2,483,125
100,000 Eltron International, Inc.*................................. 2,000,000
75,000 Pioneer-Standard Electronics, Inc. ......................... 918,750
20,000 Sawtek, Inc.*............................................... 592,500
7,000 ThermoQuest Corporation*.................................... 91,000
50,000 ThermoQuest Corporation(d)*................................. 633,750
50,000 Trident International, Inc.*................................ 1,000,000
75,000 Triquint Semiconductor, Inc.*............................... 2,231,250
-----------
12,806,625
-----------
FILMED ENTERTAINMENT--0.3%
---------------------------
55,000 Ascent Entertainment Group, Inc.* .......................... 536,250
-----------
FINANCE--1.3%
---------------
250,000 Cash America International, Inc............................. 2,218,750
-----------
FOOD--0.7%
-------------
48,300 International Multifoods Corporation........................ 1,201,462
-----------
FOOD SERVING--0.5%
--------------------
60,000 Apple South, Inc. .......................................... 780,000
-----------
HEALTH CARE CENTERS--2.5%
--------------------------
2,500 Arbor Health Care Company*.................................. 61,250
83,100 Alternative Living Services, Inc.*.......................... 1,371,150
27,500 Assisted Living Concepts, Inc.*............................. 605,000
19,300 Bergen Brunswig Corporation, Class "A"...................... 658,612
37,800 Horizon Mental Health Management, Inc.*..................... 618,975
43,300 Multicare Companies, Inc.*.................................. 806,463
-----------
4,121,450
-----------
HOME FURNISHINGS--3.2%
------------------------
50,000 Ethan Allen Interiors, Inc.................................. 2,212,500
46,000 Falcon Products, Inc........................................ 626,750
180,000 Furniture Brands International, Inc.*....................... 2,655,000
-----------
5,494,250
-----------
HOTELS/MOTELS/INNS--1.4%
-------------------------
85,000 CapStar Hotel Company*...................................... 2,411,875
-----------
INSURANCE--1.4%
-----------------
50,000 Danielson Holding Corporation*.............................. 337,500
137,600 Gryphon Holdings, Inc.*..................................... 1,978,000
-----------
2,315,500
-----------
LEATHER/SHOES--1.2%
---------------------
100,000 Footstar, Inc.*............................................. 2,075,000
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
15
<PAGE> 19
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
LEISURE/AMUSEMENT--2.8%
--------------------------
60,000 International Speedway Corporation, Class "A"*.............. $ 1,102,500
43,000 K2, Inc..................................................... 1,123,375
110,000 Rio Hotel & Casino Inc.*.................................... 1,526,250
85,000 Sodak Gaming, Inc.*......................................... 998,750
-----------
4,750,875
-----------
MACHINERY--1.2%
------------------
40,000 Computational Systems, Inc.*................................ 780,000
50,000 Gradall Industries, Inc.*................................... 612,500
60,000 Middleby Corporation*....................................... 540,000
10,000 Thermo Fibertek, Inc.*...................................... 93,750
-----------
2,026,250
-----------
MANUFACTURING/DISTRIBUTIONS--2.1%
---------------------------------
50,000 Hughes Supply, Inc.......................................... 1,656,250
65,000 JLG Industries, Inc......................................... 812,500
77,000 Thermo Optek Corporation*................................... 895,125
25,000 ThermoSpectra Corporation*.................................. 300,000
-----------
3,663,875
-----------
MEDICAL EQUIPMENT/SUPPLY--6.8%
--------------------------------
475,000 Angeion Corporation*........................................ 1,900,000
123,456 Angiosonics, Inc., Series "K"(c)(d)*........................ 100,000
192,500 ATS Medical, Inc.*.......................................... 1,251,250
200,000 CardioDynamics International Corporation(d)*................ 562,500
40,000 Coherent, Inc.*............................................. 1,660,000
133,333 Cooper Companies, Inc.*..................................... 2,383,327
50,000 Cypress Bioscience, Inc.*................................... 70,313
45,000 Neoprobe Corporation*....................................... 568,125
30,000 Photoelectron Corporation*.................................. 131,250
113,000 Sano Corporation*........................................... 1,073,500
44,444 SurVivaLink Corporation(d)*................................. 200,000
41,000 Thermedics, Inc............................................. 686,750
35,000 Thermo Bioanalysis Corporation*............................. 468,125
20,000 Thermo Cardiosystems, Inc.*................................. 547,500
-----------
11,602,640
-----------
METAL--1.0%
-------------
119,500 Material Sciences Corporation*.............................. 1,777,563
-----------
MINING/DIVERSIFIED--0.4%
-------------------------
26,500 Petsec Energy Limited, ADR*................................. 569,750
30,000 Uranium Resources, Inc.*.................................... 142,500
-----------
712,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
16
<PAGE> 20
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
OIL/GAS--7.1%
---------------
25,000 Abraxas Petroleum Corporation*.............................. $ 290,625
15,000 Cabot Oil and Gas Corporation, Class "A".................... 251,250
35,000 Cairn Energy USA, Inc.*..................................... 389,375
400,000 Chaparral Resources, Inc.*.................................. 362,500
50,000 Chieftain International, Inc.*.............................. 1,000,000
18,000 COHO Energy, Inc.*.......................................... 135,000
170,000 Comstock Resources, Inc.*................................... 1,445,000
50,000 Gulf Island Fabrication, Inc.*.............................. 1,050,000
45,000 Midcoast Energy Resources, Inc.............................. 613,125
75,000 Panaco, Inc.*............................................... 304,687
20,000 Patina Oil & Gas Corporation*............................... 167,500
85,000 Precision Drilling Corporation*............................. 2,953,750
45,000 Seacor Holdings, Inc.*...................................... 1,935,000
40,000 Tom Brown, Inc.*............................................ 730,000
30,000 Transmontaigne Oil Company*................................. 442,500
-----------
12,070,312
-----------
PHARMACEUTICAL--2.3%
----------------------
20,000 Aronex Pharmaceuticals, Inc.*............................... 100,000
35,000 EntreMed, Inc.*............................................. 380,625
300,000 NABI, Inc.*................................................. 1,800,000
65,000 Protein Design Labs, Inc.*.................................. 1,633,125
-----------
3,913,750
-----------
POLLUTION CONTROL--4.7%
-----------------------
220,000 Envirosource Inc.*.......................................... 357,500
130,000 IMCO Recycling, Inc......................................... 1,950,000
215,000 Philip Environmental, Inc.*................................. 3,386,250
103,200 Superior Services, Inc.*.................................... 2,270,400
-----------
7,964,150
-----------
PUBLISHING--5.1%
-----------------
50,000 Houghton Mifflin Company.................................... 2,806,250
52,800 John Wiley & Sons, Inc., Class "A".......................... 1,590,600
92,500 Waverly, Inc................................................ 1,896,250
100,000 World Color Press, Inc.*.................................... 2,400,000
-----------
8,693,100
-----------
REAL ESTATE INVESTMENT TRUST--6.1%
----------------------------------
123,000 Alexander Haagen Properties, Inc............................ 1,660,500
24,500 Arden Realty Group, Inc..................................... 609,438
20,000 Beacon Properties Corporation............................... 617,500
25,000 Innkeepers USA Trust........................................ 350,000
144,900 LTC Properties, Inc......................................... 2,427,075
125,000 Meridian Industrial Trust, Inc. ............................ 2,562,500
40,000 Nationwide Health Properties, Inc........................... 800,000
30,000 Prentiss Properties Trust................................... 708,750
55,000 Sunstone Hotel Investors, Inc............................... 735,625
-----------
10,471,388
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
17
<PAGE> 21
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
RETAIL STORES--4.8%
-------------------
12,000 Duty Free International, Inc................................ $ 169,500
160,000 Claire's Stores Inc......................................... 3,060,000
50,000 Cole National Corporation, Class "A"*....................... 1,650,000
240,000 Genesco Inc.*............................................... 2,790,000
35,000 Heilig-Meyers Company....................................... 525,000
-----------
8,194,500
-----------
SECURITIES--3.6%
-----------------
45,000 BHC Financial, Inc.......................................... 1,479,375
75,000 Legg Mason, Inc. ........................................... 3,562,500
70,000 Southwest Securities Group, Inc............................. 1,102,500
-----------
6,144,375
-----------
SERVICES--4.3%
---------------
45,000 CDI Corporation*............................................ 1,704,375
59,500 Forensic Technologies International Corporation*............ 461,125
70,000 Interim Services, Inc.*..................................... 2,712,500
40,000 Right Management Consultants*............................... 405,000
40,000 Stewart Enterprises, Inc., Class "A"........................ 1,320,000
15,000 Volt Information Sciences, Inc.*............................ 780,000
-----------
7,383,000
-----------
TELECOMMUNICATIONS--1.3%
--------------------------
35,200 RMH Teleservices, Inc.*..................................... 202,400
120,000 SymmetriCom, Inc.*.......................................... 1,620,000
127,000 Syntellect, Inc.*........................................... 396,875
-----------
2,219,275
-----------
TEXTILES--0.8%
---------------
10,000 Culp, Inc................................................... 177,500
50,000 Kellwood Company............................................ 1,187,500
-----------
1,365,000
-----------
Total common stocks (cost $143,987,325)..................... 161,026,552
-----------
WARRANTS--0.1%(A)
- -----------------
MEDICAL EQUIPMENT/SUPPLY--0.1%
--------------------------------
25,000 Cypress Bioscience, Inc.*................................... 12,500
-----------
Total warrants (cost $781).................................. 12,500
-----------
CONVERTIBLE BONDS--1.7%(A)
- ------------------------
AEROSPACE--0.6%
-----------------
$1,000,000 Simula, Inc., 8.0%.......................................... 1,000,000
-----------
DATA PROCESSING--0.1%
----------------------
100,000 Proscape Technologies, Inc., 6.5%, Series "B"(d)............ 100,000
-----------
HEALTH CARE CENTERS--0.9%
--------------------------
750,000 Assisted Living Concepts, Inc., 7.0%........................ 1,137,487
750,000 Sterling House Corporation, 6.75%........................... 533,438
-----------
1,670,925
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
18
<PAGE> 22
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
REAL ESTATE INVESTMENT TRUST--0.1%
----------------------------------
$155,000 LTC Properties, 8.25%....................................... $ 154,769
-----------
Total convertible bonds (cost $2,620,000)................... 2,925,694
-----------
Total investment portfolio excluding repurchase agreement (cost $146,608,106)... 163,964,746
REPURCHASE AGREEMENT--4.7%(A)
- ----------------------------
Repurchase Agreement with State Street Bank and Trust
Company, dated April 30, 1997, @ 5.3%, to be repurchased at
$8,031,182 on May 1, 1997, collateralized by $7,285,000
United States Treasury Bonds, 8.125%, due August 15, 2019,
(market value $8,315,821 including interest) (cost
$8,030,000)..................................................................... 8,030,000
------------
TOTAL INVESTMENT PORTFOLIO (COST $154,638,106)(B)
100.9%(A)..................................................................... 171,994,746
OTHER ASSETS AND LIABILITIES (0.9%)(A).......................................... (1,457,609)
------------
NET ASSETS, 100.0%.............................................................. $170,537,137
============
</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
$17,356,640, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$27,132,252 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $9,775,612.
(c) Convertible preferred security.
(d) 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.
19
<PAGE> 23
June 23, 1997
MARKET COMMENTARY from DREMAN VALUE ADVISORS, INC.
Subadviser - Value Equity Fund
We are pleased to present to you the semiannual report for the Heritage
Series Trust - Value Equity Fund for the six month period ended April 30, 1997.
The Fund provided a total return of 12.62%* for Class A Shares and 12.29%* for
Class C Shares during the period.
In this period, fund managers in general trailed the Standard & Poor's ("S
& P") 500 Index as evidenced by the 10.2% return of the Lipper Growth and Income
category of mutual funds. This phenomenon is the result of the relatively narrow
advance in the market and the so-called "nifty 50" effect. In this period, the
50 stocks which comprise the Morgan Stanley Nifty 50 Index gained a remarkable
22.1%. These stocks inflated the returns of the S & P 500 Index. This market
incongruity has appeared briefly in various market cycles over the last three
decades only to revert to a more normal distribution of returns among equity
securities.
Despite the recent rise to new all time highs in the major market averages
in recent months, the market has been quite volatile as investor perceptions and
expectations regarding the economy, inflation, interest rates and profits have
been more mercurial than the underlying fundamentals.
Your Fund's holdings are well-diversified among seasoned quality leaders
within their industries. The top ten holdings, which comprised approximately 24%
of assets as of April 30, are Mobil Corporation, Student Loan Marketing
Association, PepsiCo, Inc., Illinois Tool Works, Inc., Exxon Corporation, Philip
Morris Companies, Inc., RJR Nabisco Holdings Corporation, Federal Express
Corporation, Raytheon Corporation and Fannie Mae.
Recent additions to our basic industry holdings, which comprise
approximately 12% of the portfolio holdings, are diversified within the paper,
chemical and steel industries and have begun to respond favorably in the market
place.
Although the major market averages have made new highs, the majority of
stocks have not performed as well as these indicators suggest. This factor
leaves opportunities for disciplined value investors to uncover the leaders of
tomorrow. We believe your portfolio, which has a price-earnings ratio below the
market, a higher dividend yield than the market as historic and projected
earnings growth which is above the market, is well positioned for the future.
We look forward to continuing to serve you as subadviser to the Heritage
Value Equity Fund.
- ---------------
* Calculated without the imposition of front-end or contingent deferred sales
charges.
20
<PAGE> 24
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
COMMON STOCKS--92.1%(A)
- ------------------------
AEROSPACE--2.3%
-----------------
1,000 Boeing Company.............................................. $ 98,625
13,400 Raytheon Company............................................ 584,575
-----------
683,200
-----------
ALUMINUM--1.4%
------------------
6,000 Aluminum Company of America................................. 419,250
-----------
AUTO/TRUCK MANUFACTURERS--1.5%
--------------------------------
3,000 Chrysler Corporation........................................ 90,000
10,000 Ford Motor Company.......................................... 347,500
-----------
437,500
-----------
BANKING--9.0%
---------------
5,500 Bankers Trust New York Corporation.......................... 447,563
3,500 Chase Manhattan Corporation................................. 324,187
3,000 Citicorp.................................................... 337,875
4,000 First Union Corporation..................................... 336,000
3,000 Fleet Financial Group, Inc. ................................ 183,000
6,000 H.F. Ahmanson & Company*.................................... 228,750
4,500 J.P. Morgan & Company....................................... 458,438
3,000 NationsBank Corporation..................................... 181,125
5,000 PNC Bank Corporation........................................ 205,625
-----------
2,702,563
-----------
BEVERAGES--2.3%
-----------------
20,000 PepsiCo, Inc. .............................................. 697,500
-----------
BROADCASTING--1.7%
-------------------
22,000 General Instrument Corporation*............................. 514,250
-----------
BUILDING--2.3%
----------------
7,500 Illinois Tool Works, Inc. .................................. 685,312
-----------
CHEMICALS--3.2%
-----------------
6,000 Dow Chemical Company........................................ 509,250
9,000 Eastman Chemical Company.................................... 459,000
-----------
968,250
-----------
CONTAINERS--1.1%
------------------
12,000 Sonoco Products Company..................................... 322,500
-----------
DATA PROCESSING--0.5%
----------------------
6,000 Read-Rite Corporation*...................................... 155,250
-----------
ELECTRONICS/ELECTRIC--6.3%
-------------------------
9,000 AMP, Inc. .................................................. 322,875
7,000 Honeywell, Inc. ............................................ 494,375
1,000 Motorola, Inc............................................... 57,250
5,000 Nokia Corporation, Sponsored ADR, Class "A"................. 323,125
8,000 Philips Electronics N.V., NY Shares, ADR.................... 428,000
15,000 Westinghouse Electric Corporation........................... 255,000
-----------
1,880,625
-----------
FINANCE--5.4%
---------------
14,000 Fannie Mae.................................................. 575,750
9,000 Federal Home Loan Mortgage Corporation...................... 286,875
6,500 Student Loan Marketing Association.......................... 768,625
-----------
1,631,250
-----------
FOOD--1.0%
-------------
5,000 Nestle SA, Sponsored ADR*................................... 301,250
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
21
<PAGE> 25
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
FOOD SERVING--1.3%
--------------------
7,000 McDonald's Corporation...................................... $ 375,375
-----------
INSURANCE--2.6%
-----------------
2,000 American International Group, Inc........................... 257,000
700 General Re Corporation...................................... 117,075
12,000 Travelers Property Casualty Corporation, Class "A".......... 405,000
-----------
779,075
-----------
LEATHER/SHOES--0.6%
---------------------
3,000 Nike, Inc., Class "B"....................................... 168,750
-----------
MACHINERY--2.4%
------------------
4,000 Caterpillar, Inc............................................ 356,000
8,000 Deere & Company............................................. 368,000
-----------
724,000
-----------
MEDICAL EQUIPMENT/SUPPLY--1.4%
--------------------------------
13,000 C.R. Bard, Inc.............................................. 412,750
-----------
METAL--1.6%
--------------
7,000 Reynolds Metals Company..................................... 475,125
-----------
MINING/DIVERSIFIED--0.3%
-------------------------
1,000 Phelps Dodge Corporation.................................... 76,750
-----------
OFFICE EQUIPMENT--3.8%
-----------------------
9,000 Pitney-Bowes, Inc........................................... 576,000
9,000 Xerox Corporation........................................... 553,500
-----------
1,129,500
-----------
OIL & GAS--13.4%
-----------------
5,000 Amoco Corporation........................................... 418,125
2,000 Apache Corporation.......................................... 68,000
1,500 Atlantic Richfield Company.................................. 204,187
3,000 British Petroleum Company, PLC, Sponsored ADR............... 412,875
7,000 Chevron Corporation......................................... 479,500
11,600 Exxon Corporation........................................... 656,850
6,000 Mobil Corporation........................................... 780,000
2,000 Royal Dutch Petroleum Company, NY Shares, ADR............... 360,500
3,000 Shell Transport & Trading Company, ADR...................... 319,125
11,000 YPF Sociedad Anonima, Sponsored ADR......................... 303,875
-----------
4,003,037
-----------
PAPER/PRODUCTS--3.7%
----------------------
7,000 Champion International Corporation.......................... 325,500
4,500 Georgia-Pacific Corporation................................. 351,000
9,000 Union Camp Corporation...................................... 437,625
-----------
1,114,125
-----------
PHARMACEUTICAL--2.3%
--------------------
14,000 Glaxo Wellcome, PLC, Sponsored ADR.......................... 551,250
5,100 Pharmacia & Upjohn, Inc..................................... 151,087
-----------
702,337
-----------
REAL ESTATE/LAND DEVELOPMENT--1.0%
------------------------------------
8,000 Meditrust Corporation....................................... 292,000
-----------
RETAIL STORES--1.6%
--------------------
7,000 J.C. Penney Company, Inc.................................... 334,250
3,000 Sears, Roebuck and Company.................................. 144,000
-----------
478,250
-----------
SECURITIES--3.8%
-----------------
7,000 Salomon, Inc. .............................................. 350,000
10,000 Standard and Poor's Depository Receipts..................... 800,937
-----------
1,150,937
-----------
STEEL/IRON--1.1%
-----------------
6,500 Nucor Corporation........................................... 323,375
-----------
</TABLE>
The accompanying notes are an integral part of the financial statements.
22
<PAGE> 26
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 1997
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARKET
SHARES VALUE
------ -----------
<C> <S> <C>
TELECOMMUNICATIONS--2.1%
--------------------------
7,000 BellSouth Corporation....................................... $ 311,500
7,000 GTE Corporation............................................. 321,125
-----------
632,625
-----------
TEXTILES--1.1%
---------------
4,400 VF Corporation.............................................. 317,350
-----------
TOBACCO--5.2%
----------------
6,000 American Brands, Inc........................................ 322,500
16,500 Philip Morris Companies, Inc................................ 649,688
20,000 RJR Nabisco Holdings Corporation............................ 595,000
-----------
1,567,188
-----------
TRANSPORTATION--2.0%
---------------------
11,000 Federal Express Corporation................................. 592,625
-----------
UTILITIES-ELECTRIC--1.6%
-----------------------
4,000 Florida Progress Corporation................................ 123,000
17,500 Southern Company............................................ 356,563
-----------
479,563
-----------
UTILITIES-GAS--1.2%
--------------------
8,500 Burlington Resources, Inc. ................................. 360,188
-----------
Total common stocks (cost $24,810,596)...................... 27,553,625
-----------
REPURCHASE AGREEMENT--9.6%(A)
- ----------------------------
Repurchase agreement with State Street Bank and Trust
Company, dated April 30, 1997, @ 5.3%, to be repurchased at
$2,865,422 on May 1, 1997, collateralized by $2,600,000
United States Treasury Bonds, 8.125%, due August 15, 2019,
(market value of $2,950,080 including interest) (cost
$2,865,000)...................................................................... 2,865,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $27,675,596)(B),
101.7%(A)...................................................................... 30,418,625
OTHER ASSETS AND LIABILITIES, (1.7%)(A).......................................... (492,631)
-----------
NET ASSETS, 100.0%............................................................... $29,925,994
===========
</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 $2,743,029, which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $3,130,500 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$387,471.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
23
<PAGE> 27
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<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 $29,713,926,
$19,956,232, $146,608,106, and $24,810,596, respectively)
(Note 1)................................................. $32,171,700 $24,937,094 $163,964,746 $27,553,625
Repurchase agreement (identified cost $1,486,000,
$2,430,000, $8,030,000, and $2,865,000, respectively)
(Note 1)................................................. 1,486,000 2,430,000 8,030,000 2,865,000
Cash....................................................... 541 4,720 901 77
Foreign currency (cost $16,059)............................ 16,059 -- -- --
Receivables:
Investments sold......................................... 227,092 -- 2,554,670 --
Fund shares sold......................................... 278,786 138,412 1,070,054 46,958
Dividends and interest................................... 107,124 22,222 95,859 46,835
Foreign taxes recoverable................................ 20,163 -- -- --
Deferred organization expenses (Note 1).................... 31,200 19,831 10,000 28,272
Deferred state registration expenses (Note 1).............. 18,515 12,075 25,098 10,870
----------- ----------- ------------ -----------
Total Assets....................................... $34,357,180 $27,564,354 $175,751,328 $30,551,637
----------- ----------- ------------ -----------
Liabilities
- --------
Payables (Note 4):
Investments purchased.................................... $ 57,252 $ 586,455 $ 4,843,824 $ 450,271
Fund shares redeemed..................................... 1,000 25,301 96,146 34,371
Accrued management fee................................... 129,722 47,575 111,618 64,861
Accrued distribution fee................................. 23,908 10,072 58,186 13,168
Other accrued expenses................................... 65,228 54,067 104,417 62,972
Tax withholding payable.................................. 11,513 -- -- --
----------- ----------- ------------ -----------
Total Liabilities.................................. 288,623 723,470 5,214,191 625,643
----------- ----------- ------------ -----------
Net assets, at market value................................ $34,068,557 $26,840,884 $170,537,137 $29,925,994
=========== =========== ============ ===========
Net Assets
- ---------
Net assets consist of:
Paid-in capital.......................................... $31,848,746 $21,948,854 $141,999,565 $24,675,485
Undistributed/Accumulated net investment income (loss)
(Note 1)............................................... (273,657) (45,334) (156,610) 58,536
Accumulated net realized gain (loss) (Notes 1 and 5)..... 36,733 (43,498) 11,337,542 2,448,944
Net unrealized appreciation on investments and other
assets and liabilities denominated in foreign
currencies............................................. 2,456,735 4,980,862 17,356,640 2,743,029
----------- ----------- ------------ -----------
Net assets, at market value................................ $34,068,557 $26,840,884 $170,537,137 $29,925,994
=========== =========== ============ ===========
Net assets, at market value
Class A Shares........................................... $ 5,180,569 $17,911,152 $129,428,528 $17,618,260
Class C Shares........................................... 2,565,181 8,929,732 41,108,609 12,307,734
Eagle Shares............................................. 26,322,807 -- -- --
----------- ----------- ------------ -----------
Total.............................................. $34,068,557 $26,840,884 $170,537,137 $29,925,994
=========== =========== ============ ===========
Shares of beneficial interest outstanding
Class A Shares........................................... 224,563 901,101 5,496,571 829,318
Class C Shares........................................... 111,895 454,210 1,771,807 584,225
Eagle Shares............................................. 1,144,174 -- -- --
----------- ----------- ------------ -----------
Total.............................................. 1,480,632 1,355,311 7,268,378 1,413,543
=========== =========== ============ ===========
Net Asset Value -- offering and redemption price per share
(Notes 1 and 2)
Class A Shares........................................... $ 23.07 $ 19.88 $ 23.55 $ 21.24
=========== =========== ============ ===========
Maximum offering price per share (100/95.25 of $23.07,
$19.88, $23.55 and $21.24, respectively)............. $ 24.22 $ 20.87 $ 24.72 $ 22.30
=========== =========== ============ ===========
Class C Shares........................................... $ 22.92 $ 19.66 $ 23.20 $ 21.07
=========== =========== ============ ===========
Eagle Shares............................................. $ 23.01
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
24
<PAGE> 28
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 1997
(UNAUDITED)
- --------------------------------------------------------------------------------
<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................................................. $ 212,420 $ 119,129 $ 572,252 $ 317,148
Interest.................................................. 56,369 44,359 352,562 44,975
---------- ---------- ---------- ----------
Total income........................................ 268,789 163,488 924,814 362,123
Expenses (notes 1 and 4):
Management fee............................................ 147,787 84,133 615,671 104,970
Distribution fee (Class A Shares)......................... 4,907 19,440 143,241 21,206
Distribution fee (Class C Shares)......................... 8,339 34,418 165,282 56,624
Distribution fee (Eagle Shares)........................... 119,861 -- -- --
Shareholder servicing fees................................ -- 8,114 45,485 11,701
Shareholder servicing fees (Class A Shares)............... 2,944 -- -- --
Shareholder servicing fees (Class C Shares)............... 1,251 -- -- --
Shareholder servicing fees (Eagle Shares)................. 3,586 -- -- --
Professional fees......................................... 35,671 26,962 18,235 30,005
Custodian/Fund accounting fees............................ 74,007 21,324 39,401 26,426
Amortization of state/federal registration expenses....... 20,571 13,421 32,058 12,638
Amortization of organization expenses..................... 5,200 2,833 5,000 5,301
Reports to shareholders................................... 16,223 4,889 8,747 5,623
Trustees' fees and expenses............................... 4,179 4,179 4,179 4,179
Insurance................................................. 1,628 1,487 3,265 1,794
Other..................................................... -- 55 860 281
---------- ---------- ---------- ----------
Total expenses before waiver........................ 446,154 221,255 1,081,424 280,748
Fees waived by the Manager (Note 4)................. (73,252) (12,433) -- (9,784)
---------- ---------- ---------- ----------
Total expenses after waiver......................... 372,902 208,822 1,081,424 270,964
---------- ---------- ---------- ----------
Net investment income (loss)................................ (104,113) (45,334) (156,610) 91,159
---------- ---------- ---------- ----------
Realized and Unrealized Gain (Loss) on Investments
- ---------------------------------------------
Net realized gain (loss) from investment transactions....... (143,228) 10,823 11,650,638 2,453,902
Net realized gain from foreign currency transactions........ 218,842 -- -- --
Net increase (decrease) in unrealized appreciation of
investments during the period............................. 1,890,022 2,532,260 (4,703,682) 680,672
Net decrease in unrealized appreciation from foreign
currency during the period................................ (127,547) -- -- --
---------- ---------- ---------- ----------
Net gain on investments............................. 1,838,089 2,543,083 6,946,956 3,134,574
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations........ $1,733,976 $2,497,749 $6,790,346 $3,225,733
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
25
<PAGE> 29
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED FOR THE YEAR
APRIL 30, 1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
----------------- ------------------
<S> <C> <C>
Eagle International Equity Portfolio
------------------------------
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 (decrease) 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
------------ ------------
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)........................................................ 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>
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED FOR THE PERIOD
APRIL 30, 1997 ENDED
(UNAUDITED) OCTOBER 31, 1996
----------------- ------------------
<S> <C> <C>
Growth Equity Fund
-----------------
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (45,334) $ (39,484)
Net realized gain (loss) on investment transactions....... 10,823 (54,321)
Net increase in unrealized appreciation of investments
during the period....................................... 2,532,260 2,448,602
------------ ------------
Net increase in net assets resulting from operations...... 2,497,749 2,354,797
Increase in net assets from Fund share transactions (Note
2)........................................................ 7,096,670 14,889,668
------------ ------------
Increase in net assets...................................... 9,594,419 17,244,465
Net assets beginning of period.............................. 17,246,465 2,000
------------ ------------
Net assets, end of period (including accumulated net
investment loss of $45,334 as of April 30, 1997).......... $ 26,840,884 $ 17,246,465
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
26
<PAGE> 30
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
APRIL 30, 1997 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
----------------- ------------------
<S> <C> <C>
Small Cap Stock Fund
-------------------
Increase (decrease) in net assets:
Operations:
Net investment loss....................................... $ (156,610) $ (299,620)
Net realized gain on investment transactions.............. 11,650,638 10,012,029
Net increase (decrease) in unrealized appreciation of
investments during the period........................... (4,703,682) 13,069,090
------------ ------------
Net increase in net assets resulting from operations...... 6,790,346 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)........................................................ 52,879,505 39,103,703
------------ ------------
Increase in net assets...................................... 49,758,269 58,952,815
Net assets, beginning of period............................. 120,778,868 61,826,053
------------ ------------
Net assets, end of period (including accumulated net
investment loss of $156,610 as of April 30, 1997)......... $170,537,137 $120,778,868
============ ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED
APRIL 30, 1997 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 1996
----------------- ------------------
<S> <C> <C>
Value Equity Fund
----------------
Increase (decrease) in net assets:
Operations:
Net investment income..................................... $ 91,159 $ 141,189
Net realized gain on investment transactions.............. 2,453,902 1,660,050
Net increase in unrealized appreciation of investments
during the period....................................... 680,672 1,267,164
------------ ------------
Net increase in net assets resulting from operations...... 3,225,733 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)........................................................ 2,817,307 7,075,151
------------ ------------
Increase in net assets...................................... 4,252,247 9,502,941
Net assets, beginning of period............................. 25,673,747 16,170,806
------------ ------------
Net assets, end of period (including undistributed net
investment income of $58,536 and $102,173,
respectively)............................................. $ 29,925,994 $ 25,673,747
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
27
<PAGE> 31
- --------------------------------------------------------------------------------
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 A SHARES* CLASS C SHARES* EAGLE SHARES*
----------------------------- ----------------------------- ----------------------------------
FOR THE SIX FOR THE SIX FOR THE SIX
MONTH PERIOD FOR THE MONTH PERIOD FOR THE MONTH PERIOD FOR THE PERIOD
ENDED PERIOD ENDED ENDED PERIOD ENDED ENDED ENDED OCTOBER 31,
APRIL 30, 1997 OCTOBER 31, APRIL 30, 1997 OCTOBER 31, APRIL 30, 1997 -----------------
(UNAUDITED) 1996++ (UNAUDITED) 1996++ (UNAUDITED) 1996 1995+
-------------- ------------ -------------- ------------ -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD..................... $22.25 $21.11 $22.12 $21.11 $22.14 $20.79 $20.00
------ ------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a)................ (.01) .10 (.09) (.07) (.09) (.01) (.03)
Net realized and unrealized
gain on investments...... 1.44 1.04 1.40 1.08 1.44 1.84 .82
------ ------ ------ ------ ------ ------ ------
Total from investment
operations................. 1.43 1.14 1.31 1.01 1.35 1.83 .79
------ ------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income........ (.44) -- (.34) -- (.31) (.01) --
Distributions from net
realized gains........... (.17) -- (.17) -- (.17) (.47) --
------ ------ ------ ------ ------ ------ ------
Total Distributions.......... (.61) -- (.51) -- (.48) (.48) --
------ ------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF
PERIOD..................... $23.07 $22.25 $22.92 $22.12 $23.01 $22.14 $20.79
====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(C)(D)....... 6.51 5.40 6.00 4.78 6.15 8.93 3.95
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to
average daily net
assets(a)................ 1.97(b) 1.97(b) 2.72(b) 2.72(b) 2.60(b) 2.60 2.60(b)
Net investment income
(loss) to average daily
net assets............... (.10)(b) .44(b) (.77)(b) (.32)(b) (.80)(b) (.02) (.33)(b)
Portfolio turnover rate.... 23(c) 59 23(c) 59 23(c) 59 61
Average commission rate on
portfolio transactions... $.0224 $.0289 $.0224 $.0289 $.0224 $.0289 --
Net assets, end of period
($ millions)............. 5 3 3 1 26 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 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.
28
<PAGE> 32
- --------------------------------------------------------------------------------
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 SIX FOR THE SIX
MONTH PERIOD MONTH PERIOD
ENDED FOR THE ENDED FOR THE
APRIL 30, 1997 PERIOD ENDED APRIL 30, 1997 PERIOD ENDED
(UNAUDITED) OCTOBER 31, 1996+ (UNAUDITED) OCTOBER 31, 1996+
-------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............. $17.74 $14.29 $17.61 $14.29
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a)....................... (.02) (.03) (.09) (.15)
Net realized and unrealized gain on
investments.................................. 2.16 3.48 2.14 3.47
------ ------ ------ ------
Total from investment operations................. 2.14 3.45 2.05 3.32
------ ------ ------ ------
NET ASSET VALUE, END OF PERIOD................... $19.88 $17.74 $19.66 $17.61
====== ====== ====== ======
TOTAL RETURN (%)(C)(D)........................... 12.06 24.14 11.64 23.23
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily net
assets(a)(b)................................. 1.63 1.65 2.38 2.40
Net investment income to average daily net
assets(b).................................... (0.18) (0.19) (.92) (.96)
Portfolio turnover rate(c)..................... 23 23 23 23
Average commission rate on portfolio
transactions................................. $.0600 $.0599 $.0600 $.0599
Net assets, end of period ($ millions)......... 18 12 9 5
</TABLE>
- ---------------
* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the period
since use of the undistributed income method does not correspond with
results of operations.
+ 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 $.01 and $.11 per Class A Share, respectively. The operating
expense ratios including such items would have been 1.74% (annualized) and
2.39% (annualized) for Class A Shares, respectively. Excludes management
fees waived and expenses reimbursed by the Manager in the amount of $.01,
and $.11 per Class C Share, respectively. The operating expense ratio
including such items would have been 2.49% (annualized) and 3.14%
(annualized) for Class C Shares.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales charge.
The accompanying notes are an integral part of the financial statements.
29
<PAGE> 33
- --------------------------------------------------------------------------------
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 SIX FOR THE SIX FOR THE YEARS
MONTH PERIOD FOR THE YEARS ENDED MONTH PERIOD ENDED
ENDED OCTOBER 31, ENDED OCTOBER 31,
APRIL 30, 1997* --------------------------------- APRIL 30, 1997* ---------------
(UNAUDITED) 1996* 1995 1994 1993+ (UNAUDITED) 1996* 1995++
--------------- ------ ------ ------ ------ --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD... $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)...... (.01) (.05) .02 (.01) (.01) (.09) (.22) (.02)
Net realized and unrealized gain on
investments........................ 1.36 6.12 3.62 .64 1.29 1.33 6.11 3.14
------ ------ ------ ------ ------ ------ ------ ------
Total from investment operations....... 1.35 6.07 3.64 .63 1.28 1.24 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 PERIOD......... $23.55 $24.08 $18.86 $16.20 $15.57 $23.20 $23.84 $18.79
====== ====== ====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(C).................... 5.91(d) 33.18 23.97 4.05 8.96(d) 5.49(d) 32.22 19.91(d)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets(a)................ 1.30(b) 1.41 1.88 1.91 2.00(b) 2.04(b) 2.13 2.36(b)
Net investment income to average
daily net assets................... (.04)(b) (.21) .15 (.07) (.15)(b) (.79)(b) (.94) (.46)(b)
Portfolio turnover rate.............. 38 80 89 95 97 38 80 89
Average commission rate on portfolio
transactions....................... $.0626 $.0637 -- -- -- $.0626 $.0637 --
Net assets, end of period ($
millions).......................... 129 96 57 42 40 41 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 in fiscal 1993 of less than
$.01 per share. The operating expense ratio including such items would have
been 2.09% (annualized). The year 1994 includes previously waived management
fees paid to the Manager of less than $.01 per share.
(b) Annualized.
(c) Does not reflect the imposition of a sales charge.
(d) Not annualized.
The accompanying notes are an integral part of the financial statements.
30
<PAGE> 34
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST-VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES* CLASS C SHARES*
------------------------------------ -------------------------------------
FOR THE SIX FOR THE YEARS FOR THE SIX FOR THE YEARS
MONTH PERIOD ENDED MONTH PERIOD ENDED
ENDED OCTOBER 31, ENDED OCTOBER 31,
APRIL 30, 1997 ----------------- APRIL 30, 1997 ------------------
(UNAUDITED) 1996 1995+ (UNAUDITED) 1996 1995++
-------------- ------ ------ -------------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD.... $20.27 $18.00 $14.29 $20.06 $17.92 $15.27
------ ------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income(a).............. .10 .17 .08 .02 .02 .01
Net realized and unrealized gain on
investments......................... 2.32 2.76 3.63 2.32 2.74 2.64
------ ------ ------ ------ ------ ------
Total from investment operations........ 2.42 2.93 3.71 2.34 2.76 2.65
------ ------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income.............................. (.15) (.11) -- (.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 PERIOD.......... $21.24 $20.27 $18.00 $21.07 $20.06 $17.92
====== ====== ====== ====== ====== ======
TOTAL RETURN (%)(D)..................... 12.62(c) 16.59 25.96(c) 12.29(c) 15.65 17.35(c)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average
daily net assets(a)................. 1.63(b) 1.65 1.65(b) 2.38(b) 2.40 2.40(b)
Net investment income to average daily
net assets.......................... .95(b) .89 1.05(b) .21(b) .13 .28(b)
Portfolio turnover rate............... 69(c) 129 82(b) 69(c) 129 82(b)
Average commission rate on portfolio
transactions........................ $.0580 $.0550 -- $.0580 $.0550 --
Net assets, end of period ($
millions)........................... 18 15 12 12 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 $.01, $.07 and $.13 per Class A Share, respectively. The
operating expense ratios including such items would have been 1.70%
(annualized), 1.99% and 3.49% (annualized) for Class A Shares, respectively.
Excludes management fees waived and expenses reimbursed by the Manager in
the amount of $.01, $.07 and $.13 per Class C Share, respectively. The
operating expense ratio including such items would have been 2.45%
(annualized), 2.74% and 4.24% (annualized) for Class C Shares.
(b) Annualized.
(c) Not annualized.
(d) Does not reflect the imposition of a sales charge.
The accompanying notes are an integral part of the financial statements.
31
<PAGE> 35
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company and presently offers shares in four
series, the 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 that the Fund's investment
subadvisers believe are undervalued and therefore offer above-average
potential for long-term capital appreciation. 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 within
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
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 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.
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 allocated 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 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: 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.
32
<PAGE> 36
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
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 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 ENDED FOR THE PERIOD 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>
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 ENDED FOR THE PERIOD 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>
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 ENDED FOR THE YEAR 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>
33
<PAGE> 37
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Transactions in Class A Shares of the Growth Equity Fund during the six
month period ended April 30, 1997 and for the period ended October 31,
1996 were as follows:
<TABLE>
<CAPTION>
GROWTH EQUITY FUND
----------------------------------------------------
FOR THE SIX MONTH
PERIOD ENDED FOR THE PERIOD ENDED
APRIL 30, 1997 OCTOBER 31, 1996
----------------------- -----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- -------- ----------- ------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................. 345,677 $ 6,472,001 764,029 $11,657,911
Shares redeemed......................................... (129,017) (2,440,759) (79,658) (1,284,160)
-------- ----------- ------- -----------
Net increase............................................ 216,660 $ 4,031,242 684,371 $10,373,751
=========== ===========
Shares outstanding:
Beginning of period................................... 684,441 70
-------- -------
End of period......................................... 901,101 684,441
======== =======
</TABLE>
Transactions in Class C Shares of the Growth Equity Fund during the six
month period ended April 30, 1997 and for the period ended October 31,
1996 were as follows:
<TABLE>
<CAPTION>
GROWTH EQUITY FUND
------------------------------------------------------
FOR THE SIX MONTH
PERIOD ENDED FOR THE PERIOD ENDED
APRIL 30, 1997 OCTOBER 31, 1996
------------------------ ------------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................ 185,969 $ 3,468,203 319,149 $ 4,976,551
Shares redeemed........................................ (21,561) (402,775) (29,417) (460,634)
--------- ----------- --------- -----------
Net increase........................................... 164,408 $ 3,065,428 289,732 $ 4,515,917
=========== ===========
Shares outstanding:
Beginning of period.................................. 289,802 70
--------- ---------
End of period........................................ 454,210 289,802
========= =========
</TABLE>
Transactions in Class A Shares of the Small Cap Stock Fund during the six
month period ended April 30, 1997 and for the year ended October 31, 1996
were as follows:
<TABLE>
<CAPTION>
SMALL CAP STOCK FUND
------------------------------------------------------
FOR THE SIX MONTH
PERIOD ENDED FOR THE YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
------------------------ ------------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................ 1,582,241 $37,908,832 1,691,124 $38,648,805
Shares issued on reinvestment of distributions......... 335,280 7,590,750 121,498 2,404,449
Shares redeemed........................................ (399,945) (9,643,640) (878,130) (20,167,883)
--------- ----------- --------- -----------
Net increase........................................... 1,517,576 $35,855,942 934,492 $20,885,371
=========== ===========
Shares outstanding:
Beginning of period.................................. 3,978,995 3,044,503
--------- ---------
End of period........................................ 5,496,571 3,978,995
========= =========
</TABLE>
34
<PAGE> 38
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Transactions in Class C Shares of the Small Cap Stock Fund during the six
month period ended April 30, 1997 and for the year ended October 31, 1996
were as follows:
<TABLE>
<CAPTION>
SMALL CAP STOCK FUND
------------------------------------------------------
FOR THE SIX MONTH
PERIOD ENDED FOR THE YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
------------------------ ------------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold............................................ 772,847 $18,281,343 960,949 $21,587,317
Shares issued on reinvestment of distributions......... 93,252 2,086,050 14,285 281,141
Shares redeemed........................................ (141,838) (3,343,830) (161,609) (3,650,126)
--------- ----------- --------- -----------
Net increase........................................... 724,261 $17,023,563 813,625 $18,218,332
=========== ===========
Shares outstanding:
Beginning of period.................................. 1,047,546 233,921
--------- ---------
End of period........................................ 1,771,807 1,047,546
========= =========
</TABLE>
Transactions in Class A Shares of the Value Equity Fund during the six
month period ended April 30, 1997 and for the year ended October 31, 1996
were as follows:
<TABLE>
<CAPTION>
VALUE EQUITY FUND
---------------------------------------------------
FOR THE SIX MONTH
PERIOD ENDED FOR THE YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
---------------------- -----------------------
CLASS A SHARES SHARES AMOUNT SHARES AMOUNT
-------------- ------- ----------- -------- -----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 93,449 $ 1,952,317 267,317 $ 5,100,504
Shares issued on reinvestment of distributions........... 54,761 1,062,355 23,052 430,843
Shares redeemed.......................................... (79,181) (1,639,783) (192,041) (3,697,351)
------- ----------- -------- -----------
Net increase............................................. 69,029 $ 1,374,889 98,328 $ 1,833,996
=========== ===========
Shares outstanding:
Beginning of period.................................... 760,289 661,961
------- --------
End of period.......................................... 829,318 760,289
======= ========
</TABLE>
Transactions in Class C Shares of the Value Equity Fund during the six
month period ended April 30, 1997 and for the year ended October 31, 1996
were as follows:
<TABLE>
<CAPTION>
VALUE EQUITY FUND
---------------------------------------------------
FOR THE SIX MONTH
PERIOD ENDED FOR THE YEAR ENDED
APRIL 30, 1997 OCTOBER 31, 1996
---------------------- ----------------------
CLASS C SHARES SHARES AMOUNT SHARES AMOUNT
-------------- ------- ---------- ------- ----------
<S> <C> <C> <C> <C>
Shares sold.............................................. 85,437 $1,763,112 307,936 $5,887,055
Shares issued on reinvestment of distributions........... 34,665 668,696 9,456 176,072
Shares redeemed.......................................... (47,572) (989,390) (43,021) (821,972)
------- ---------- ------- ----------
Net increase............................................. 72,530 $1,442,418 274,371 $5,241,155
========== ==========
Shares outstanding:
Beginning of period.................................... 511,695 237,324
------- -------
End of period.......................................... 584,225 511,695
======= =======
</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) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES
--------------------------
PURCHASES SALES
----------- -----------
<S> <C> <C>
Eagle International Equity Portfolio........................ $12,542,576 $ 6,389,355
Growth Equity Fund.......................................... $11,352,783 $ 4,957,960
Small Cap Stock Fund........................................ $94,305,754 $52,780,228
Value Equity Fund........................................... $18,667,926 $18,259,684
</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 period ended April 30, 1997 aggregated $44,837, $417,129, $258,225
and $42,524, of which $0, $1,560, $63,146, and $0, was paid to Raymond James
& Associates, Inc., respectively.
35
<PAGE> 39
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT AND
TRUSTEES' FEES.
EAGLE INTERNATIONAL EQUITY PORTFOLIO:
------------------------------------
Under the Fund's Investment Advisory and Administration Agreement with
Eagle, the Fund agrees to pay to Eagle a fee equal to an annualized
rate of 1.00% of the Fund's average daily net assets, computed daily
and payable monthly. Currently, Eagle 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, 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
Eagle before the end of the year ending October 31, 1999, the Fund may
be required to pay Eagle a portion or all of the waived management fee.
In addition, the Fund may be required to pay 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, ("Martin Currie") 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.
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, as 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. Eagle and the Distributor
are wholly owned subsidiaries of Raymond James Financial, Inc.
GROWTH EQUITY FUND:
------------------
Under the Fund's Investment Advisory and Administration Agreement with
the Manager, the Fund agrees to pay to the Manager a fee equal to an
annualized rate of .75% of the Fund's average daily net assets,
computed daily and payable monthly. From inception to February 28,
1997, the Manager voluntarily agreed to waive its fee and, if
necessary, reimburse the Fund to the extent that Fund operating
expenses exceeded 1.65% for Class A Shares and 2.40% for Class C Shares
on an annual basis of the Fund's average daily net assets attributable
to each class of shares. Effective March 1, 1997, the Manager has
voluntarily agreed to waive its fee and, if necessary, reimburse the
Fund to the extent that Fund operating expenses exceed 1.60% for Class
A Shares and 2.35% for Class C Shares on an annual basis of the Fund's
average daily net assets. Management fees of $12,433 were waived during
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 $76,210 for the year ended October 31, 1996,
if total Fund expenses fall below the annual expense limitations before
the end of the year ending October 31, 1998.
The Manager has entered into an agreement with Eagle to provide to the
Fund investment advice, portfolio management services including the
placement of brokerage orders, and certain compliance and other
services for a fee payable by the Manager equal to 50% of the fees
payable by the Fund to the Manager without regard to any reduction due
to the imposition of expense limitations.
The Distributor has advised the Fund that it received $120,635 in
front-end sales charges and $10 in contingent deferred sales for the
six months ended April 30, 1997. From these fees, the Distributor paid
commissions to salespersons and incurred other distribution costs.
Pursuant to a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund is authorized to
pay the Distributor a fee pursuant to the Class A Distribution Plan of
up to 0.35% of average daily net assets for the services it provides in
connection with the promotion and distribution of Fund shares. However,
at the present time the Board of Trustees has authorized payments of
only .25% of average daily net assets. Under the Class C Distribution
Plan the Fund may pay the Distributor a fee equal to 1.00% of the
average daily net assets. Such fees are accrued daily and payable
monthly. During the six month period ended April 30, 1997 $19,440 and
$34,418 were paid for distribution fees for Class A Shares and Class C
Shares, respectively. The Manager, Eagle and the Distributor are all
wholly owned subsidiaries of Raymond James Financial, Inc.
SMALL CAP STOCK FUND:
--------------------
Under the Fund's Investment Advisory and Administration Agreement with
the Manager, the Fund agrees to pay to the Manager a fee equal to an
annualized rate of 1.00% of the first $50,000,000 of the Fund's average
daily net assets and .75% of any excess over $50,000,000 of such
assets, computed daily and payable monthly. From inception to February
28, 1996 the Manager has voluntarily agreed to waive its fee and, if
necessary, reimburse the Fund to the extent that Fund operating
expenses exceeded 2.00% for Class A Shares (2.75% for Class C Shares
effective April 3, 1995) on an annual basis of the Fund's average daily
net assets. From March 1, 1996 to February 28, 1997, the Manager
voluntarily agreed to waive its fee and, if necessary, reimburse the
Fund to the extent that Fund operating expenses exceeded 1.80% for
Class A Shares and 2.55% for Class C Shares on an annual basis of the
Fund's average daily net assets. Effective March 1, 1997, the Manager
has voluntarily agreed to waive its fee and, if necessary, reimburse
the Fund to the extent that Fund operating expenses exceed
36
<PAGE> 40
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HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
1.60% for Class A Shares and 2.35% for Class C Shares on an annual
basis of the Fund's average daily net assets. No fees were waived and
no expenses were reimbursed for the six month period ended April 30,
1997.
The Manager has entered into agreements with Awad & Associates, Inc., a
division of Raymond James & Associates, Inc., and Eagle (the
"Subadvisers") for the Subadvisers to provide to the Fund investment
advice, portfolio management services including the placement of
brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to 50% of the fees payable by the Fund to
the Manager without regard to any reduction due to the imposition of
expense limitations.
The Distributor has advised the Fund that it received $697,604 in
front-end sales charges and $7,526 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 Share Distribution plan adopted in accordance
with Rule 12b-1 of the Investment Company Act of 1940, as amended, the
Fund is authorized to pay the Distributor a fee of up to 0.35% of
average daily net assets for services it provides in connection with
the promotion and distribution of Fund shares. However, at the present
time the Board of Trustees has authorized payments of only .25% of
average daily net assets for Class A Shares. Under the Class C
Distribution Plan the Fund may pay the Distributor a fee equal to 1.00%
of the average daily net assets. Such fees are accrued daily and
payable monthly. During the six month period ended April 30, 1997
$143,241 and $165,282 were paid for distribution fees for Class A
Shares and Class C Shares, respectively. The Manager, the Subadvisers
and the Distributor are all wholly owned subsidiaries of Raymond James
Financial, Inc.
VALUE EQUITY FUND:
-----------------
Under the Fund's Investment Advisory and Administration Agreement with
Heritage Asset Management, Inc. (the "Manager"), the Fund agrees to pay
to the Manager a fee equal to an annualized rate of .75% of the Fund's
average daily net assets, computed daily and payable monthly. From
inception to February 28, 1997, the Manager voluntarily agreed to waive
its fee and, if necessary, reimburse the Fund to the extent that Fund
operating expenses exceeded 1.65% for Class A Shares (2.40% for Class C
Shares effective April 3, 1995) on an annual basis of the Fund's
average daily net assets attributable to each class of shares.
Effective March 1, 1997, the Manager has voluntarily agreed to waive
its fee and, if necessary, reimburse the Fund to the extent that Fund
operating expenses exceed 1.60% for Class A Shares and 2.35% for Class
C Shares on an annual basis of the Fund's average daily net assets.
Management fees of $9,784 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 $115,974 and $76,062 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 Eagle Asset Management,
Inc. ("Eagle") to provide to the Fund investment advice, portfolio
management services including the placement of brokerage orders, and
certain compliance and other services for a fee payable by the Manager
equal to 50% of the fees payable by the Fund to the Manager with
respect to the assets allocated to Eagle, without regard to any
reduction due to the imposition of expense limitations.
As of May 24, 1996, pursuant to a shareholders vote, the Manager
entered into an agreement with Dreman Value Advisors, Inc., ("Dreman")
as an additional subadviser, to provide to the Fund investment advice,
portfolio management services including the placement of brokerage
orders, and certain compliance and other services for a fee payable by
the Manager equal to .35% of the Fund's average daily net assets with
respect to the assets allocated to Dreman. If, however, the manager's
fee is reduced due to the imposition of asset level breakpoints,
Dreman's fee will be reduced proportionately, provided that in no event
will such fee be reduced below .35% on the first $50 million of the
Fund's average daily net assets. Since June 1, 1996, all the assets of
the Fund have been allocated to Dreman.
Raymond James & Associates, Inc. (the "Distributor") has advised the
Fund that it received $40,530 in front-end sales charges and $1,254 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 a plan adopted in accordance with Rule 12b-1 of the
Investment Company Act of 1940, as amended, the Fund is authorized to
pay the Distributor a fee pursuant to the Class A Distribution Plan of
up to 0.35% of average daily net assets for the services it provides in
connection with the promotion and distribution of Fund shares. However,
at the present time the Board of Trustees has authorized payments of
only .25% of average daily net assets. Under the Class C Distribution
Plan the Fund may pay the Distributor a fee equal to 1.00% of the
average daily net assets. Such fees are accrued daily and payable
monthly. During the six month period ended April 30, 1997, $21,206 and
$56,624 were paid for distribution fees for Class A Shares and Class C
Shares, respectively. The Manager and the Distributor are all wholly
owned 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 April 30, 1997 was $9,400, $4,400,
$29,200 and $6,800, 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 $14,277, $19,237, and $14,687,
during the current period of which $9,600, $12,800, and $10,000, was
payable as of April 30, 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
37
<PAGE> 41
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HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
- --------------------------------------------------------------------------------
person of the Manager receives an annual fee of $8,000, an additional fee
of $2,000 for each combined quarterly meeting of the Heritage funds
attended and $1,000 for each special Trustees meeting attended. Trustees'
fees and expenses are paid equally by each of the Heritage funds.
Note 5: FEDERAL INCOME TAXES.
EAGLE INTERNATIONAL EQUITY PORTFOLIO
------------------------------------
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.
GROWTH EQUITY FUND:
------------------
For the year ended October 31, 1996, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss, the Fund credited accumulated net realized loss on
investments and debited paid-in capital $39,484.
SMALL CAP STOCK FUND:
--------------------
For the year ended October 31, 1996, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss, the Fund credited accumulated net realized loss on
investments $303,698 and debited paid-in capital $18,962 and
accumulated net realized gain $284,736.
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, 1996, the Fund had 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.
38
<PAGE> 42
HERITAGE FAMILY OF FUNDS (TM)
From Our Family to Yours: The Intelligent Creation of Wealth.
HERITAGE MONEY MARKET FUNDS
Cash Trust Money Market
Cash Trust Municipal Money Market
HERITAGE BOND FUNDS
Intermediate Government
High Yield
HERITAGE STOCK FUNDS
Income-Growth
Value Equity
Growth Equity
Capital Appreciation
Small Cap
International
This report is for the information of shareholders of Heritage Series Trust,
Eagle International Equity Portfolio, Growth Equity Fund, Small Cap Stock Fund
and Value Equity Fund. It may also be used as sales literature when preceded
or accommpanied by a prospectus.
(c)1997 Heritage Asset Management, Inc.
19M 4/97 [RECYCLE LOGO] Printed on recycled paper
Heritage Series Trust
[HERITAGE LOGO] P.O. Box 33022
St. Petersburg, FL 33733
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Address Change Requested
