THE EAGLE
INTERNATIONAL
EQUITY
PORTFOLIO
[GRAPHIC OMMITED]
ANNUAL
REPORT
OCTOBER 31, 1998
EAGLE ASSET
MANAGEMENT
880 CARILLION PARKWAY
P.O. BOX 10520
ST PETERSBURG, FL
33733-0520
(727) 573-2453
(800) 237-3101
<PAGE>
December 21, 1998
Dear Fellow Shareholders:
We are pleased to provide you with the annual report for the Eagle International
Equity Portfolio (the "Fund") of Heritage Series Trust for the fiscal year ended
October 31, 1998. For this period, the Eagle class of shares of your Fund
appreciated by 8.38% as compared to a return of +9.64% for the Morgan Stanley
Capital International Europe, Australia, Far East ("EAFE") Index. For this
period, the average performance of the International-Foreign category of mutual
funds as reported by Lipper Analytical Services, Inc. was approximately 3.70%.
As you will see from the chart on page 4, your Fund has outperformed the EAFE
Index for the period from the Fund's inception on May 1, 1995 through October
31, 1998. Your fund also offers class A, B and C shares. The financial and
investment performance information for all classes of shares of your Fund are
presented in this annual report.
The investment subadvisor for your Fund is Martin Currie, Inc. of Edinburgh,
Scotland. In the market commentary that follows, Martin Currie discusses the
performance of the Fund's investments among the various markets of the world.
Because the Fund's assets are allocated not only to developed markets, but also
to emerging markets around the world, we believe your Fund can serve as a core
international holding in your overall investment portfolio. Your Fund's
performance was benefited in the past year by a relatively low allocation of
assets to emerging markets, which generally performed worse than developed
markets during this period. We hope you find the comments of Martin Currie, Inc.
helpful in understanding how your investment portfolio has been managed during
another volatile year for many of the world's stock markets.
On behalf of all of us at Eagle and Heritage, thank you for your continuing
investment in the Eagle International Equity Portfolio. We look forward to
serving your investment needs for years to come.
Sincerely, Sincerely
/s/ STEPHEN G. HILL /s/ RICHARD K. RIESS
- -------------------- --------------------
Stephen G. Hill Richard K. Riess
President President
Heritage Series Trust Eagle Asset Management, Inc.
Eagle International Equity Portfolio
ANNUAL REPORT
<PAGE>
December 9, 1998
MARKET COMMENTARY from MARTIN CURRIE, INC.
Subadviser Eagle International Equity Portfolio
During your Fund's fiscal year, International investors generally were rewarded
by investing in large liquid stocks in developed markets. Smaller stocks
throughout the world and almost all stocks in some emerging markets suffered in
the "flight to quality" by investors.
The continuing consequences of the crisis in Asia have affected confidence in
equity valuations and forecasts for world economic growth. The early part of
your Fund's fiscal year saw the major markets of Europe and the UK move ahead,
driven by falling bond yields and corporate activity. All time highs were
reached in July for many world markets. Following the crisis in Russia and
concern over stability of banking loans, most major markets gave back their
earlier gains, with financial stocks being particularly hard hit. Some relief
for the depressed Pacific markets came in October as the dollar weakened
allowing a reduction in interest rates. Investor confidence was further restored
on the news of the Japanese banking support package -- and most international
markets have recovered from the losses seen over August and September. The
Morgan Stanley Capital International Europe, Australia, Far East Index ("EAFE
Index") rose by 9.6% while the Eagle Shares of the Eagle International Equity
Portfolio (the "Fund") rose 8.4%(1), leaving it in the top quartile of the
international fund category for the one year period ended October 31, 1998, as
measured by Lipper Analytical Services, Inc.(2)
JAPAN (13.4% of net assets at fiscal year end) continued to suffer from further
downgrades for economic and profit growth in 1999. The move towards providing a
safety net for the banking sector and strengthening of the yen, fostered the
return of liquidity to the region towards the end of the period. While we have
retained a high weighting towards the blue chip exporters, recent purchases have
included stocks whose revenues are less export-dependent.
We added substantially to CONTINENTAL EUROPE (53.4% of net assets at fiscal year
end). Nothing has changed in our emphasis on (1) stocks creating shareholder
value and (2) the restructuring of a number of sectors. Having successfully
played the consolidation of the financial sectors we took profits in early
September, ahead of the weakness in the wake of the Russian crisis. The general
move towards lower interest rates by the periphery European markets has added
technical support for both bonds and equity markets over the last month. After a
strong run, we reduced our UK position (21% of net assets at fiscal year end) in
April. The stock market suffered a general setback over September, particularly
with the collapse of the financial stocks. A change in the interest rate cycle
and weaker currency has again encouraged recovery. Pressure has reduced on
earnings forecasts and corporate activity has increased.
ASIA (3.3% of net assets at fiscal year end) continued to suffer from fragile
confidence in currencies and the impact of the economic and financial crisis. We
maintained a defensive portfolio through exposure to Australia, Taiwan, India,
and Singapore. October witnessed a strong recovery, particularly for markets
such as Hong Kong, as dollar weakness removed pressure on associated economies.
We have started to selectively add to the region.
/large bullet/2 ANNUAL REPORT
<PAGE>
Our exposure to EMERGING MARKETS was dramatically reduced over the period, with
the total sale of the remaining position in Latin America. In hindsight our
performance would have been enhanced had we exited Latin America sooner. Tough
economic conditions next year outweigh short term enthusiasm for Brazilian
reform. Holdings in Greece, Poland, Hungary and Turkey have proved profitable.
OUTLOOK
The global market correction in August and September reflected the adjustment to
slowing activity in world economies and significantly weaker corporate profits
in the year ahead. The ensuing cuts in global interest rates has had both the
impact of encouraging liquidity back into maturer markets and adding vital
support to Pacific region. While we continue to favour broader European
equities, we are more encouraged with the outlook for Japan and Asia. Latin
America will remain out of favor as the full impact of recession is revealed.
Uncertainty over the extent of slower growth in 1999 will leave markets
generally volatile although we continue to invest liquidity on any weakness.
On behalf of all of us at Martin Currie, Inc., we appreciate the confidence you
have in us. We look forward to reporting to you again in the Spring of 1999.
- ----------
(1) Calculated without the imposition of front- or back-end sales charges.
(2) Lipper Analytical Services, Inc. performance rankings for the Eagle
International Equity Portfolio Eagle Shares were 99 out of 483 International
Funds, for the 1 year period ended October 31, 1998. The performance numbers
used for the Fund did not take into account any front- or back-end sales
charges. Past performance is no guarantee of future results.
/large bullet/3 ANNUAL REPORT
<PAGE>
GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION OF THE HERITAGE SERIES TRUST-EAGLE INTERNATIONAL
EQUITY PORTFOLIO-EAGEL SHARES ON MAY 1, 1995
[GRAPHIC OMITTED]
GROWTH OF $10,000 INVESTMENT
SINCE INCEPTION OF THE HERITAGE SERIES TRUST-EAGLE INTERNATIONAL
EQUITY PORTFOLIO-CLASS A & CLASS C SHARES ON DECEMBER 27, 1995
[GRAPHIC OMITTED]
(See footnotes on the following page)
/large bullet/4 ANNUAL REPORT
<PAGE>
GRWOTH OF 10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY PORTFOLIO-
CLASS B SHARES
ON JANUARY 2, 1998
[GRAPHIC OMITTED]
* Average annual returns for the Heritage Series Trust -- Eagle International
Portfolio Eagle Class, Class A, Class B and Class C Shares are calculated in
conformance with Item 21 of Form N-1A, which assumes reinvestment of dividends
and a sales load of 4.75% for Class A Shares. Performance presented represents
historical data. The investment return and principal value of an investment
will fluctuate so that an investor's shares, when redeemed, may be worth more
or less than their original cost. The Fund's past performance is not
indicative of future performance and should be considered in light of the
Fund's investment policy and objectives, the characteristics and quality of
its portfolio securities, and the periods selected. Since the period shown is
less than one year, the aggregate total return in lieu of the annualized total
return is used for Class B Shares.
/large bullet/5 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1998
MARKET
SHARES VALUE
------ -------
COMMON STOCKS--90.2%(A)
- -----------------------
AUSTRALIA--1.2%
- ----------------
28,000 Westpac Banking Corporation* ....... $ 170,398
9,900 Lend Lease Corporation ............. 218,557
31,500 Mayne Nickless, Ltd ................ 145,398
----------
534,353
----------
DENMARK--0.6%
-------------
3,500 Unidamark A/S* ..................... 266,751
----------
EGYPT--0.5%
-----------
15,000 Suez Cement Company* ............... 220,500
----------
FINLAND--1.9%
-------------
9,300 Nokia Corporation 846,378
----------
FRANCE--13.0%
-------------
3,318 L'Air Liquide SA ................... 555,399
9,500 AXA-UAP Groupe ..................... 1,073,813
3,400 Groupe Danone* ..................... 898,972
6,659 Compagnie Generale des Eaux ........ 1,520,955
1,100 Promodes ........................... 692,759
2,400 Societe Generale ................... 317,500
7,700 Elf Aquitaine SA ................... 891,143
----------
5,950,541
----------
GERMANY--12.1%
--------------
648 Bayerische Motoren Werke AG ........ 454,102
8,800 Bayerische Vereinsbank AG 698,581
5,200 Deutsche Bank AG ................... 323,332
1,700 Preussag AG* ....................... 627,045
1,100 SAP AG* ............................ 535,889
10,000 Siemens AG* ........................ 601,268
2,976 Allianz AG ......................... 1,020,446
13,100 Mannesmann AG ...................... 1,289,043
----------
5,549,706
----------
GREECE--0.4%
------------
2,455 Alpha Credit Bank .................. 195,994
----------
HONG KONG--0.9%
---------------
95,000 China Telecom (Hong Kong) Ltd.*..... 178,470
32,500 Hutchison Wampoa, Ltd. ............. 232,892
----------
411,362
----------
MARKET
SHARES VALUE
------ -----
COMMON STOCKS (CONTINUED)
- -------------------------
INDIA--0.1%
-----------
8,032 Indian Opportunities
Fund, Ltd.(c)* ...................... 66,024
------
ITALY--7.8%
-----------
95,000 Credito Italiano* ................... 509,896
103,472 ENI ................................. 615,323
48,200 IMI SPA ............................. 740,837
290,000 INA (1st Naz Association) ........... 798,603
150,700 Telecom Italia Mobil ................ 924,422
-------
3,589,081
---------
JAPAN--12.5%
------------
33,000,000 Sanwa International Finance ......... 215,839
13 NTT Mobile Communication* ........... 469,463
18,000 Canon, Incorporated ................. 340,453
3,000 FamilyMart Company .................. 152,084
8,000 Fuji Photo Film Company, Ltd ........ 293,018
13,000 Honda Motor Corporation ............. 390,290
7,000 Ito-Yokado Company, Ltd. ............ 408,303
17,000 Kao Corporation ..................... 344,141
3,000 Mabuchi Motor Company, Ltd .......... 195,574
12,000 Marui Company, Ltd .................. 208,955
3,000 Promise Company, Ltd. ............... 135,615
2,000 Riso Kagaku Corporation ............. 112,369
5,000 Rohm Company, Ltd ................... 441,757
5,000 Secom Company, Ltd. ................. 370,990
17,000 Shin-Etsu Chemical Company, Ltd...... 338,309
7,800 Sony Corporation .................... 495,111
11,000 Taisho Pharmaceutical Company ....... 294,390
18,000 Yamanouchi Pharmaceuticals .......... 515,697
---------
5,722,358
---------
NETHERLANDS--6.7%
-----------------
14,000 Ver Ned Utgebers .................... 484,038
5,600 Wolters Kluwer* ..................... 1,084,963
23,500 Royal Ahold* ........................ 781,048
8,100 Aegon* .............................. 702,727
---------
3,052,776
---------
PHILIPPINES--0.1%
-----------------
320,000 Belle Corporation* .................. 634
---------
The accompanying notes are an integral part of the financial statements.
/large bullet/6 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1998
(CONTINUED)
MARKET
SHARES VALUES
------ ------
COMMON STOCKS (CONTINUED)
- -------------------------
SINGAPORE--0.6%
---------------
30,000 Overseas Union Bank (China) ........ $ 130,876
23,000 Singapore Airlines (SIA)* .......... 141,321
----------
272,197
----------
SPAIN--3.1%
-----------
5,500 Telefonica de Espana SA ............ 248,332
23,000 ENDESA* ............................ 579,653
57,000 Banco Central Hispanoamer SA* ...... 629,242
----------
1,457,227
----------
SWEDEN--1.6%
------------
16,000 LM Ericsson* ....................... 360,748
22,000 Astra AB ........................... 356,521
----------
717,269
----------
SWITZERLAND--5.7%
-----------------
3,970 Credit Suisse Group ................ 610,014
230 Nestle SA* ......................... 488,748
847 Novartis AG ........................ 1,524,888
----------
2,623,650
----------
TAIWAN--0.4%
------------
11,700 Taiwan American Fund* .............. 180,765
----------
UK--21.0%
---------
49,558 Safeway, PLC ....................... 248,835
64,000 Unilever, PLC ...................... 642,700
14,000 British Sky Broadcasting* .......... 114,113
56,000 Cable & Wireless, PLC .............. 627,972
38,000 GKN, PLC ........................... 461,740
26,500 Allied Zurich* ..................... 314,906
23,500 British American Tobacco
Industries* ....................... 211,114
55,500 NFC, PLC ........................... 104,502
66,000 General Electric Company, PLC ...... 527,466
21,500 Glaxo Wellcome, PLC ................ 667,873
121,000 Ladbroke Group, PLC ................ 443,007
22,000 Land Securities PLC ................ 310,220
74,000 LASMO, PLC ......................... 210,551
16,000 McKechnie, PLC ..................... 89,175
56,000 Marks & Spencer, PLC ............... 414,743
22,000 National Westminster Bank, PLC ..... 371,528
29,000 Vodafone Group* .................... 388,298
36,950 Reckitt & Colman, PLC .............. 638,840
17,100 Royal Bank of Scotland
Group, PLC ......................... 226,672
69,000 Scottish Power, PLC ................ 679,053
87,000 Shell Transport & Trading
Company, PLC ....................... 525,660
MARKET
SHARES VALUES
------ ------
COMMON STOCKS (CONTINUED)
- -------------------------
U.K. (CONTINUED)
----------------
31,731 Smiths Industries, PLC ..... 424,865
45,000 Lloyds TSB Group, PLC ...... 555,459
25,999 Wassall, PLC ............... 82,460
8,000 Zeneca Group ............... 307,157
----------
9,588,909
----------
Total Common Stocks
(cost $35,935,938)................... 41,246,475
----------
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUES
--------- -------- -----------
BONDS--1.4%(A)
- --------------
JAPAN--0.9%
-----------
$ 420,000 MBL International
Finance (Bermuda),
3.0%(d) .............. 11/30/02 382,200
----------
POLAND--0.5%
------------
373,000 Electrim, 2% .......... 05/30/04 237,558
----------
Total Bonds (cost $690,351).......... 619,758
----------
Total investment portfolio
excluding repurchase agreement
(cost $36,626,289)................. 41,866,233
REPURCHASE AGREEMENT--0.8%(A)
- -----------------------------
Repurchase Agreement with State Street Bank and
Trust, dated October 30, 1998 @ 5.3% to be
repurchased at $378,167 on November 2, 1998,
collateralized by $375,000 United States Treasury
Notes, 5.375% due June 30, 2000, (market value
$388,596 including interest) (cost $378,000)... $ 378,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $37,004,289)(b), 92.4%(a)............. 42,244,233
OTHER ASSETS AND LIABILITIES, net, 7.6%(a) .... 3,494,344
-----------
NET ASSETS, 100.0% ............................ $45,738,577
===========
- ----------------
* 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 $5,239,944 which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$6,701,675 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $1,461,731.
(c) Martin Currie Investment Management Limited is the manager of the Indian
Opportunities Fund, Ltd.
(d) Convertible Bond
The accompanying notes are an integral part of the financial statements.
/large bullet/7 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1998
(CONTINUED)
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
- ------------------------ ------ --------
Common Stocks
Aerospace ................................... $ 424,865 0.9%
Airlines .................................... 141,321 0.3%
Auto Manufacturers .......................... 844,393 1.8%
Auto Parts and Equipment .................... 461,740 1.0%
Banking ..................................... 4,396,229 9.6%
Broadcasting ................................ 114,113 0.2%
Building Materials .......................... 220,500 0.5%
Capital Goods ............................... 112,369 0.2%
Chemicals ................................... 893,707 2.0%
Conglomerates ............................... 232,892 0.5%
Consumer Goods and Services ................. 2,008,925 4.4%
Cosmetics and Toiletries .................... 344,141 0.8%
Data Processing ............................. 535,889 1.2%
Electronic and Electrical Equipment ......... 2,261,175 4.9%
Energy ...................................... 615,322 1.3%
Finance ..................................... 2,501,543 5.5%
Food ........................................ 3,656,312 8.0%
Household Goods ............................. 638,840 1.4%
Industrials, Diversified .................... 1,460,678 3.2%
Insurance ................................... 3,111,892 6.8%
Leisure and Hotels .......................... 443,007 1.0%
Office Equipment ............................ 340,453 0.7%
Oil and Gas ................................. 1,627,353 3.6%
Pharmaceuticals ............................. 2,141,638 4.7%
Publishing .................................. 1,084,963 2.4%
Real Estate ................................. 528,778 1.2%
Recreational Products ....................... 293,018 0.6%
Retail Stores ............................... 1,280,837 2.8%
Securities .................................. 246,789 0.5%
Services .................................... 370,990 0.8%
Steel and Iron .............................. 627,045 1.4%
Telecommunications .......................... 4,044,082 8.8%
Tobacco ..................................... 211,114 0.5%
Transportation and Storage .................. 249,900 0.6%
Utilities, Diversified ...................... 1,520,954 3.3%
Utilities, Electric ......................... 1,258,708 2.8%
Bonds ....................................... 619,758 1.4%
Repurchase Agreement ........................ 378,000 0.8%
----------- ----
Total Investments ........................... $42,244,233 92.4%
=========== ====
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
OCTOBER 31, 1998
GROSS UNREALIZED
CONTRACT IN DELIVERY APPRECIATION
TO DELIVER EXCHANGE FOR DATE (DEPRECIATION)
- ---------------------- -------------------- -------- ---------------
JPY 175,032,000 USD 1,483,448 01/13/99 $34,934
USD 1,560,000 JPY 175,032,000 01/13/99 41,618
SEK 1,454,125 USD 186,352 11/03/98 46
-------
Net Unrealized Appreciation $76,598
=======
- ----------
SEK - Swedish Krona
JPY - Japanese Yen
USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
/large bullet/8 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1998
<TABLE>
<S> <C> <C>
ASSETS
- ------
Investments, at market value (identified cost $37,004,289 ) (Note 1)...................... $42,244,233
Foreign currency (cost $1,510,797)........................................................ 1,518,071
Cash ..................................................................................... 760
Receivables:
Investments sold ........................................................................ 6,731,088
Fund shares sold ........................................................................ 138,670
Dividends and interest .................................................................. 79,112
Foreign taxes recoverable ............................................................... 62,384
Unrealized appreciation of forward currency contracts ................................... 76,598
Deferred organization expenses (Note 1) .................................................. 15,600
Deferred state qualification expenses (Note 1) ........................................... 8,832
Prepaid Insurance ........................................................................ 4,891
-----------
Total assets ........................................................................ 50,880,239
LIABILITIES
- -----------
Payables (Note 4):
Investments purchased ................................................................... $4,594,369
Accrued management fee .................................................................. 403,068
Accrued distribution fee ................................................................ 32,376
Fund shares redeemed .................................................................... 25,634
Other accrued expenses .................................................................. 86,215
----------
Total liabilities ................................................................... 5,141,662
-----------
Net assets, at market value .............................................................. $45,738,577
===========
NET ASSETS
- ----------
Net assets consist of:
Paid-in capital ......................................................................... $40,320,043
Accumulated net investment loss (Note 1) ................................................ (113,865)
Accumulated net realized gain (Notes 1 and 5) ........................................... 196,692
Net unrealized appreciation on investments and other assets and liabilities denominated
in foreign currencies .................................................................. 5,335,707
-----------
Net assets, at market value .............................................................. $45,738,577
===========
EAGLE CLASS SHARES
- ------------------
Net asset value, redemption and offering price per share ($32,825,885 divided by
1,304,178 shares of beneficial interest outstanding, no par value) (Notes 1 and 2) ...... $ 25.17
===========
CLASS A SHARES
- --------------
Net asset value and redemption price per share ($6,817,746 divided by 268,138 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ....................... $ 25.43
===========
Maximum offering price per share (100/95.25 of $25.43).................................... $ 26.70
===========
CLASS B SHARES
- --------------
Net asset value and redemption price per share ($233,985 divided by 9,348 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ....................... $ 25.03
===========
CLASS C SHARES
- --------------
Net asset value and offering price per share ($5,860,961 divided by 234,123 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ....................... $ 25.03
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/9 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1998
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
- -----------------
Income:
Dividends (net of $109,332 foreign withholding taxes)........................ $ 789,656
Interest (net of $604 foreign withholding taxes)............................. 86,630
----------
Total income ............................................................ 876,286
Expenses (Notes 1 and 4):
Management fee .............................................................. $ 453,725
Distribution fee (Eagle Shares) ............................................. 334,486
Distribution fee (Class A Shares) ........................................... 17,058
Distribution fee (Class B Shares) ........................................... 1,059
Distribution fee (Class C Shares) ........................................... 49,947
Shareholder servicing fees (Eagle Shares) ................................... 4,929
Shareholder servicing fees (Class A Shares) ................................. 9,178
Shareholder servicing fees (Class B Shares) ................................. 138
Shareholder servicing fees (Class C Shares) ................................. 6,692
Custodian/Fund accounting fees .............................................. 154,539
Professional fees ........................................................... 54,510
Amortization of state qualification expenses ................................ 45,975
Reports to shareholders ..................................................... 36,662
Organization expenses ....................................................... 10,400
Trustees' fees and expenses ................................................. 9,071
Other ....................................................................... 5,064
----------
Total expenses before waiver ............................................ 1,193,433
Fees waived by Manager (Note 4) ......................................... (52,276) 1,141,157
---------- ----------
Net investment loss .......................................................... (264,871)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain from investment transactions ............................... 234,230
Net realized loss from foreign currency transactions ......................... (68,794)
Net increase in unrealized appreciation of investments during the year ....... 3,293,526
Net increase in unrealized appreciation from foreign currency during the year 95,909
----------
Net gain on investments ................................................. 3,554,871
----------
Net increase in net assets resulting from operations ......................... $3,290,000
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/10 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------
OCTOBER 31, 1998 OCTOBER 31, 1997
------------------ -----------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment loss ............................................................. $ (264,871) $ (131,673)
Net realized gain on investment transactions .................................... 234,230 1,149,279
Net realized gain (loss) from foreign currency transactions ..................... (68,794) 200,478
Net increase in unrealized appreciation of investments during the year .......... 3,293,526 1,394,725
Net increase (decrease) in unrealized appreciation from foreign currency
during the year ................................................................ 95,909 (142,713)
----------- -----------
Net increase in net assets resulting from operations ............................ 3,290,000 2,470,096
----------- -----------
Distributions to shareholders from:
Net investment income Eagle Shares, ($0.31 per share)............................ -- (318,525)
Net investment income Class A Shares, ($0.05 and $0.44 per share, respectively).. (13,340) (62,318)
Net investment income Class C Shares, ($0.34 per share).......................... -- (18,908)
Net realized gains Eagle Shares, ($0.62 and $0.17 per share, respectively)....... (808,740) (172,431)
Net realized gains Class A Shares, ($0.62 and $0.17 per share, respectively)..... (155,218) (23,850)
Net realized gains Class C Shares, ($0.62 and $0.17 per share, respectively)..... (102,719) (9,263)
Increase in net assets from Fund share transactions (Note 2) ..................... 1,913,671 13,835,836
----------- -----------
Increase in net assets ........................................................... 4,123,654 15,700,637
Net assets, beginning of year .................................................... 41,614,923 25,914,286
----------- -----------
Net assets, end of year (including accumulated net investment loss of $113,865 and
distribution in excess of net investment income of $40,256, respectively)........ $45,738,577 $41,614,923
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/11 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding
throughout each year and other performance information derived from the
financial statement.
<TABLE>
<CAPTION>
EAGLE SHARES*
--------------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------------------------------------------
1998 1997 1996 1995/dagger/
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year ..................... $ 23.83 $ 22.14 $ 20.79 $ 20.00
--------- --------- -------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................. ( 0.17) ( 0.11) ( 0.01) ( 0.03)
Net realized and
unrealized gain on
investments ................ 2.13 2.28 1.84 0.82
--------- --------- -------- ---------
Total from Investment
Operations ................. 1.96 2.17 1.83 0.79
--------- --------- -------- ---------
LESS DISTRIBUTIONS:
Dividends from net
investment income .......... -- ( 0.31) ( 0.01) --
Distributions from net
realized gains ............. ( 0.62) ( 0.17) ( 0.47) --
--------- --------- -------- ---------
Total Distributions ......... ( 0.62) ( 0.48) ( 0.48) --
--------- --------- -------- ---------
NET ASSET VALUE, END
OF YEAR ..................... $ 25.17 $ 23.83 $ 22.14 $ 20.79
========= ========= ======== =========
TOTAL RETURN(%)(d) ........... 8.38 (e) 9.98 (e) 8.93 3.95 (c)
RATIOS (%)/
SUPPLEMENTAL DATA:
Operating expenses, net,
to average daily net
assets (a) ................. 2.60 2.60 2.60 2.60 (b)
Net investment income
(loss) to average daily
net assets ................. ( 0.67) ( 0.47) ( 0.02) ( 0.33)(b)
Portfolio turnover
rate (c) ................... 71 50 59 61
Net assets, end of
year ($ millions)........... 33 32 22 10
</TABLE>
<TABLE>
<CAPTION>
CLASS A SHARES* CLASS B SHARES*
-------------------------------------------------------- ------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------------------------------------
1998 1997 1996/dagger//dagger/ 1998/dagger//dagger//dagger/
---------------- ---------------- ---------------------- ------------------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of year ..................... $ 23.97 $ 22.25 $ 21.11 $ 23.95
--------- --------- --------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................. ( 0.01) 0.05 0.10 ( 0.16)
Net realized and
unrealized gain on
investments ................ 2.14 2.28 1.04 1.24
--------- --------- --------- ----------
Total from Investment
Operations ................. 2.13 2.33 1.14 1.08
--------- --------- --------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income .......... ( 0.05) ( 0.44) -- --
Distributions from net
realized gains ............. ( 0.62) ( 0.17) -- --
--------- --------- --------- ----------
Total Distributions ......... ( 0.67) ( 0.61) -- --
--------- --------- --------- ----------
NET ASSET VALUE, END
OF YEAR ..................... $ 25.43 $ 23.97 $ 22.25 $ 25.03
========= ========= ========= ==========
TOTAL RETURN(%)(D) ........... 9.04 (e) 10.71 (e) 5.40 (c) 4.51 (c)
RATIOS (%)/
SUPPLEMENTAL DATA:
Operating expenses, net,
to average daily net
assets (a) ................. 1.97 1.97 1.97 (b) 2.72 (b)
Net investment income
(loss) to average daily
net assets ................. ( 0.02) 0.22 0.44 (b) ( 0.71) (b)
Portfolio turnover
rate (c) ................... 71 50 59 71
Net assets, end of
year ($ millions)........... 7 6 3 0.2
</TABLE>
<TABLE>
<CAPTION>
CLASS C SHARES*
-------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
-------------------------------------------------------
1998 1997 1996/dagger//dagger/
---------------- ---------------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning
of year ..................... $ 23.73 $ 22.12 $ 21.11
--------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................. ( 0.20) ( 0.13) ( 0.07)
Net realized and
unrealized gain on
investments ................ 2.12 2.25 1.08
--------- --------- ---------
Total from Investment
Operations ................. 1.92 2.12 1.01
--------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net
investment income .......... -- ( 0.34) --
Distributions from net
realized gains ............. ( 0.62) ( 0.17) --
--------- --------- ---------
Total Distributions ......... ( 0.62) ( 0.51) --
--------- --------- ---------
NET ASSET VALUE, END
OF YEAR ..................... $ 25.03 $ 23.73 $ 22.12
========= ========= =========
TOTAL RETURN(%)(d) ........... 8.24 (e) 9.79 (e) 4.78 (c)
RATIOS (%)/
SUPPLEMENTAL DATA:
Operating expenses, net,
to average daily net
assets (a) ................. 2.72 2.72 2.72 (b)
Net investment income
(loss) to average daily
net assets ................. ( 0.79) ( 0.52) ( 0.32)(b)
Portfolio turnover
rate (c) ................... 71 50 59
Net assets, end of
year ($ millions)........... 6 4 1
<FN>
- ----------
* 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.
/dagger/ For the period May 1, 1995 (commencement of operations) to October 31,
1995.
/dagger//dagger/ For the period December 27, 1995 (commencement of Class A and
Class C Shares) to October 31, 1996.
/dagger//dagger//dagger/ For the period January 2, 1998 (commencement of Class
B Shares) to October 31, 1998.
(a) Excludes management fees waived by the Eagle in the amount of $.03 $.06 and
$.16 per Class A Share, respectively. The operating expense ratio including
such items would have been 2.08% 2.23% and 2.69% (annualized) for Class A
Shares, respectively. Excludes management fees waived by the Eagle in the
amount of $.03 per Class B Share. The operating expense ratio including such
items would have been 2.83% for Class B Shares. Excludes management fees
waived by the Eagle in the amount of $.03, $.06, and $.16 per Class C Share,
respectively. The operating expense ratio including such items would have
been 2.83%, 2.98% and 3.44% (annualized) for Class C Shares, respectively.
Excludes management fees waived and expenses reimbursed by the Eagle in the
amount of $.03, $.06, $.16 and $.17 per Eagle Share, respectively. The
operating expense ratios including such items would have been 2.71%, 2.86%,
3.31% and 5.09% (annualized) for Eagle Shares, respectively.
(b) Annualized.
(c) Not annualized.
(d) Calculated without the imposition of a sales charge. (e) These returns are
calculated based on the published net asset value at October 31, 1997.
</FN>
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/12 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust")
is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company consisting of six separate
investment Portfolios, the Eagle International Equity Portfolio (the
"Fund"), the Aggressive Growth Fund, Small Cap Stock Fund, the Value
Equity Fund, the Growth Equity Fund, and the Mid Cap Growth Fund. The
Fund primarily seeks capital appreciation principally through investment
in an international portfolio of equity securities.
The Fund currently offers Eagle Class, Class A, Class B and Class C
Shares. The Eagle Class of shares are subject to certain minimum
investment requirements and are sold without any sales charge. Class A
Shares are sold subject to a maximum sales charge of 4.75% of the amount
invested payable at the time of purchase. Class B Shares, which were
offered to shareholders beginning January 2, 1998, are sold subject to a
5% maximum contingent deferred sales load (based on the lower of
purchase price or redemption price), declining over a six-year period.
Class C Shares are sold subject to a contingent deferred sales charge of
1% of the lower of net asset value or purchase price payable upon any
redemptions less than one year after purchase. The financial statements
for the Small Cap Stock Fund, Growth Equity Fund, Mid Cap Growth Fund
and Value Equity Fund are presented separately. The preparation of
financial statements in accordance with generally accepted accounting
principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures. Actual results could differ
from those estimates. The following is a summary of significant
accounting policies:
SECURITY VALUATION: 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 Fund calculates its
daily net asset value per share. Although the Fund values its assets in
U.S. dollars on a daily basis, it does not intend to convert holdings of
foreign currencies into U.S. dollars on a daily basis. Short term
investments having a maturity of 60 days or less are valued at amortized
cost, which approximates market.
FOREIGN CURRENCY TRANSACTIONS: The books and records of the Fund are
maintained in U.S. dollars. Foreign currency transactions are translated
into U.S. dollars on the following basis: (i) market value of investment
securities, other assets and other liabilities at the daily rates of
exchange, and (ii) purchases and sales of investment securities,
dividend and interest income and certain expenses at the rates of
exchange prevailing on the respective dates of such transactions. The
Fund does not isolate that portion of gains and losses on investments
which is due to changes in foreign exchange rates from that which is due
to changes in market prices of the investments. Such fluctuations are
included with the net realized and unrealized gains and losses from
investments. Net realized gain (loss) and unrealized appreciation
(depreciation) from foreign currency transactions include gains and
losses between trade and settlement date on securities transactions,
gains and losses arising from the sales of foreign currency and gains
and losses between the ex and payment dates on dividends, interest, and
foreign withholding taxes.
FORWARD FOREIGN CURRENCY CONTRACTS: The Fund may enter into forward
foreign currency contracts which are valued daily at the appropriate
exchange rates. The resultant unrealized exchange gains and losses are
included in the Statement of Operations as unrealized foreign currencies
gain or loss. The Fund records realized gains or losses on delivery of
the currency or at the time the forward contract is extinguished
(compensated) by entering into a closing transaction prior to delivery.
REPURCHASE AGREEMENTS: The Fund enters into repurchase agreements
whereby the Fund, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of purchase
is required to be in an amount to at least 100% of the resale price.
FEDERAL INCOME TAXES: The Fund's policy is to comply with the
requirements of the Internal Revenue Code of 1986, as amended which are
applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders.
Accordingly, no provision has been made for federal income and excise
taxes.
/large bullet/13 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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.
The Fund uses the identified cost method for determining realized gain
or loss on investments for both financial and federal income tax
reporting purposes.
EXPENSES: The 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 funds. Expenses of the Fund are allocated to each class of shares
based upon their relative percentage of current net assets. All expenses
that are directly attributable to a specific class of shares, such as
distribution and shareholder servicing fees, are charged directly to
that class.
STATE QUALIFICATION EXPENSES: State qualification fees are amortized
based either on the time period covered by the qualification or as
related shares are sold, whichever is appropriate for each state.
ORGANIZATION EXPENSES: Expenses incurred in connection with the
formation of the Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.
CAPITAL ACCOUNTS: The Fund reports the undistributed net investment
income (accumulated net investment loss) and accumulated net realized
gain (loss) accounts on a basis approximating amounts available for
future tax distributions (or to offset future taxable realized gains
when a capital loss carryforward is available). Accordingly, the Fund
may periodically make reclassifications among certain capital accounts
without impacting the net asset value of the Fund.
OTHER: For purposes of these financial statements, investment security
transactions are accounted for on a trade date basis. Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
Interest income is recorded on the accrual basis.
Note 2: FUND SHARES. At October 31, 1998, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Eagle Shares, Class A Shares and C Shares of the Fund
during the year ended October 31, 1998, and Class B Shares from January
2, 1998 (commencement of Class B Shares) to October 31, 1998 were as
follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED EAGLE SHARES A SHARES
OCTOBER 31, 1998 ----------------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold ..................... 161,915 $ 4,255,168 57,108 $ 1,498,668
Shares issued on reinvestment
of distributions ............... 34,247 805,842 6,686 158,113
Shares redeemed ................. (223,287) (5,683,092) (51,418) (1,323,329)
-------- ------------- ------- -------------
Net increase (decrease) ......... (27,125) $ (622,082) 12,376 $ 333,452
============= =============
Shares outstanding:
Beginning of year .............. 1,331,303 255,762
--------- -------
End of year .................... 1,304,178 268,138
========= =======
<CAPTION>
FOR THE YEAR ENDED B SHARES C SHARES
OCTOBER 31, 1998 -------------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------------ ---------------
<S> <C> <C> <C> <C>
Shares sold ..................... 9,521 $247,499 138,692 $ 3,626,639
Shares issued on reinvestment
of distributions ............... -- -- 4,371 105,414
Shares redeemed ................. (173) (4,682) (67,332) (1,769,569)
----- -------- ------- -------------
Net increase (decrease) ......... 9,348 $242,817 75,731 $ 1,962,484
======== =============
Shares outstanding:
Beginning of year .............. -- 158,392
----- -------
End of year .................... 9,348 234,123
===== =======
</TABLE>
/large bullet/14 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Transactions in Eagle Shares, Class A Shares and C Shares of the Fund
during the year ended October 31, 1997, were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED EAGLE SHARES A SHARES C SHARES
OCTOBER 31, 1997 ---------------------------- -------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------- -------------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................. 459,654 $ 11,104,451 145,840 $3,468,293 121,689 $2,915,342
Shares issued on reinvestment
of distributions ........... 21,188 475,249 3,346 75,081 1,158 25,899
Shares redeemed ............. (125,683) (2,972,703) (33,267) (815,865) (18,479) (439,911)
-------- ------------ ------- ---------- ------- ----------
Net increase ................ 355,159 $ 8,606,997 115,919 $2,727,509 104,368 $2,501,330
============ ========== ==========
Shares outstanding:
Beginning of year .......... 976,144 139,843 54,024
-------- ------- -------
End of year ................ 1,331,303 255,762 158,392
========= ======= =======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the year ended October 31,
1998, purchases and sales on investment securities (excluding repurchase
agreements and short term obligations) aggregated $32,460,363 and
$30,858,067, respectively.
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT
AND TRUSTEES' FEES. Under the Fund's Investment Advisory and
Administrative Agreement with Eagle Asset Management, Inc. (the
"Manager"), the Fund agrees to pay to the Manager a fee equal to an
annualized rate of 1.00% on the first $100 million and 0.80% of any
excess over $100 million of the Fund's average daily net assets,
computed daily and payable monthly. Currently, the Manager has
voluntarily agreed to waive its fee to the extent that Fund operating
expenses exceed 2.60%, 1.97%, 2.72% and 2.72% on an annual basis of the
Fund's average daily net assets for Eagle Class Shares, Class A, Class B
and Class C Shares, respectively. Management fees of $52,276 were waived
for the year ended October 31, 1998. If total Fund expenses fall below
the expense limitation agreed to by the Manager before the end of the
year ending October 31, 2000, 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 $91,433 for the year ended October 31, 1997,
if total Fund expenses fall below the annual expense limitations before
the end of October 31, 1999.
The Manager has entered into an agreement with Martin Currie, Inc., a
New York Corporation, (the "Subadviser") to provide to the Fund
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to .50% of average daily net assets on the
first $100 million of assets and .40% thereafter without regard to any
reduction due to the imposition of expense limitations. For the year
ended October 31, 1998 the Subadviser earned $226,862 for Subadviser
fees, which was paid by the Manager.
Heritage Asset Management, Inc. ("Heritage"), an affiliate of the
Manager, is the Dividend Paying and Shareholder Servicing Agent for the
Fund. Heritage also may provide certain administrative services for the
Fund and may receive a fee from the Manager for performing these
administrative services.
Raymond James & Associates, Inc. (the "Distributor") has advised the
Fund that it received $29,628 in front-end sales charges for Class A
Shares, $25 and $1,250 in contingent deferred sales charges for Class B
and C Shares for the year ended October 31, 1998, respectively. 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
/large bullet/15 ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Class, Class B and Class C Distribution Plans, 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. Class B Shares will convert
to Class A Shares eight years after the end of the calendar month in
which the shareholder's order to purchase was accepted. The Manager,
Heritage and Distributor are all wholly owned subsidiaries of Raymond
James Financial, Inc.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust,
Heritage Income Trust and Heritage U.S. Government Income Fund,
investment companies that are advised by Heritage (collectively referred
to as the Heritage funds). Each Trustee of the Heritage funds that is
not an interested person of Heritage received an annual fee of $8,666,
an additional fee of $3,250 for each combined quarterly meeting of the
Heritage funds attended and $1,000 for each special Trustees meeting
attended. Trustees' fees and expenses are paid equally by each of the
Heritage funds.
Note 5: FEDERAL INCOME TAXES. For the year ended October 31, 1998, to reflect
reclassifications arising from permanent book/tax differences primarily
attributable to foreign currency gains, a net operating loss and basis
differences in passive foreign investment companies (PFICs), the Fund
credited undistributed net investment income $204,602 and accumulated
net realized gain $48,016 and debited paid in capital $252,618.
Note 6: FINANCIAL INVESTMENT WITH OFF-BALANCE SHEET RISK. The Fund may enter
into forward foreign currency contracts ("forward contracts") to
facilitate settlement of foreign currency denominated portfolio
transactions or to manage its foreign currency exposure or to sell for a
fixed amount of U.S. dollars or other currency, the amount of foreign
currency approximating the value of some or all of its holdings
denominated in such foreign currency or an amount of foreign currency
other than the currency in which the securities to be hedged are
denominated approximating the value of some or all of its holdings to be
hedged. Additionally, when the Subadviser anticipates purchasing
securities at some time in the future, the Fund may enter into a forward
contract to purchase an amount of currency equal to some or all of the
value of the anticipated purchase for a fixed amount of U.S. dollars or
other currency.
The Fund may enter into forward contracts to hedge against changes in
future foreign exchange rates and enhance return. Forward contracts
involve elements of market risk in excess of the amount reflected in the
Statement of Assets and Liabilities. The Fund bears the risk of an
unfavorable change in the foreign exchange rate underlying the forward
contract. Risks may also arise upon entering into these contracts from
the potential inability of these parties to meet the terms of their
contracts.
/large bullet/16 ANNUAL REPORT
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of
Heritage Series Trust-Eagle International Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations and
of changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of Heritage Series Trust-Eagle
International Equity Portfolio (the "Fund") at October 31, 1998, the results of
its operations for the year then ended, the changes in each of their net assets
for each of the two years in the period then ended and the financial highlights
for each of the periods presented, in conformity with generally accepted
accounting principles. These financial statements and financial highlights
(hereafter referred to as "financial statements") are the responsibility of the
Fund's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
financial statements in accordance with generally accepted auditing standards
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Tampa, Florida
December 17, 1998
/large bullet/17ANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
P.O. Box 10520
St Petersburg, FL 33733
INVESTMENT ADVISER
Eagle Asset Management, Inc.
P.O. Box 10520
St. Petersburg, FL 33733
(800) 237-3101
INVESTMENT SUBADVISER
Martin Currie Inc.
Saltire Court
20 Castle Terrace
Edinburgh, Scotland EH1 2ES
DISTRIBUTOR
Raymond James & Associates, Inc.
P.O. Box 12749
St Petersburg, FL 33733
(813) 573-3800
TRANSFER AGENT/
DIVIDEND DISBURSING AGENT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02105
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
EAGLE INTERNATIONAL EQUITY
PORTFOLIO
Annual Report
October 31, 1998
