THE EAGLE
INTERNATIONAL [LOGO]
EQUITY PORTFOLIO
SEMIANNUAL
REPORT
(UNAUDITED)
April 30, 1998
EAGLE ASSET
MANAGEMENT
880 CARILLON PARKWAY
P.O. BOX 10520
ST. PETERSBURG, FL
33733-0520
(813) 573-2453
(800) 237-3101
<PAGE>
June 18, 1998
Dear Fellow Shareholders:
It is our pleasure to provide you with the semiannual report for the Eagle
International Equity Portfolio (the "Fund") of Heritage Series Trust for the
period ended April 30, 1998. During this period your Fund's Eagle Class Shares
appreciated by 17.21%(1). For the same period, the Morgan Stanley Capital
International Europe Asia and Far East ("EAFE Index") returned 15.44%.
As we discussed previously, your Fund's investment portfolio is managed by
Martin Currie, Inc. of Edinburgh, Scotland. Martin Currie has been an active
investor in the world's stock markets since the early part of this century. In
managing your Fund's portfolio, Martin Currie generally invests a majority of
the Fund's assets in the developed stock markets represented in the EAFE Index.
However, Martin Currie also invests a portion of your Fund's assets in
developing markets, primarily in Latin America and Asia. Given the recent
turmoil in Asian markets, we encourage you to read the commentary that follows
to better understand how your investment portfolio is currently positioned.
On behalf of all of us at Heritage and Eagle, thank you for your investments
with us. We believe that you will be rewarded for your confidence in committing
a portion of your portfolio to international stocks through investments such as
the Eagle International Equity Portfolio.
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
- ----------
(1) Calculated without the imposition of front- or back-end sales charges.
S E M I A N N U A L R E P O R T
<PAGE>
May 19, 1998
MARKET COMMENTARY from MARTIN CURRIE, INC.
Subadviser Eagle International Equity Portfolio
The Eagle International Equity Portfolio (the "Fund") invests a substantial
portion of its investment portfolio in securities traded in developed foreign
securities markets, such as those included in the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE Index"). The countries
in which it invests are selected for their ability to generate high real rates
of economic growth, consistent with reasonable political and currency
stability. Securities are selected following an intensive research process,
designed to screen out companies with either weak financial structures, market
positions or poor management. The ability to produce dependable growth in
earnings is paramount.
Over the six months to April 30, 1998, the EAFE Index rose by 15.44%, dominated
by strong returns from the UK and Continental Europe. In contrast, the Japanese
market fell further, exacerbated by a weakening currency and a collapse in
Asian markets. The Eagle Shares of the Fund rose by 17.21% during the same
period(1). The Eagle Shares of the Fund ranked in the second quartile of the
international fund category for the one year period ended April 30, 1998, as
measured by Lipper Analytical Services, Inc(2).
CONTINENTAL EUROPEAN stock markets (51% of net assets) have rallied further,
helped by converging bond markets and increased domestic buying. Corporate
restructuring, particularly in the financial sector, fueled the rise, while
markets such as Spain and Italy benefited most from falling bond yields. We
added securities to the region over the period. New holdings included
Unidanmark (Denmark), Nokia (Finland), Societe Generale (France), Bayerische
Vereinsbank (Germany), INA (Italy) and Nordbanken (Sweden). These stocks
reflect the dominant theme among companies of restructuring in the financial
sector. Sales reflected our concern over economically sensitive groups, such as
Schneider, Hoechst and Philips.
In the UK (22% of net assets), the equity market moved strongly ahead,
supported by good liquidity, corporate activity and improving bond yields.
Financial stocks were again significant outperformers. We bought a new holding
in the UK's largest property investment group, Land Securities, and built up a
holding in Zeneca which had lagged the pharmaceutical sector. Profits were
taken in Wolseley and Granada, where we believe the shares were fully valued .
The UK equity market has benefited as bond market yields moved lower towards
the European average. The new Labour administration has maintained a tough
approach to inflation; both bonds and equities have progressed. Good
institutional liquidity has meant there has been little selling pressure, even
if the fall out in Asia has caused stock market volatility.
The JAPANESE stock market (15% of net assets) has weakened further. Apart from
a rally in domestic stocks in the first two months of this year, the pressure
to restructure on the financial sector and economically sensitive
- ----------
(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 199 out of 455
International Funds, for the 1 year period ended April 30, 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/
2
S E M I A N N U A L R E P O R T
<PAGE>
sectors such as construction, has remained intense. Bankruptcies have
increased. We have maintained a quality blue chip portfolio, concentrating on
beneficiaries of yen weakness and corporate profit recovery. This policy offset
the worst of the index fall. We have increased the convertible content of the
portfolio, protecting downside in anticipation of a further slowdown in
economic growth. With an Asian export market in disarray, we are concerned that
the yen may weaken further and as a result, we have hedged approximately 50% of
the Japanese assets against the US dollar. We see no reason to purchase
additional Japanese securities until there is clearer commitment to tax reform
in Japan.
ASIAN markets (7% of net assets) were devastated over the period. ASEAN (the
Association of Southeast Asian Nations) markets, such as South Korea, Thailand
and Indonesia were very weak. India, Taiwan and Australia stood out in
contrast. We substantially reduced our exposure to the region in mid-1997 and
reduced the portfolio's holdings in Hong Kong in October, ahead of the market
decline. Exposure to the ASEAN markets has been limited as the portfolio has
concentrated on Australia, New Zealand, India, Taiwan and Hong Kong. New
holdings included Woodside Petroleum (Australia) and Telecom Corp of New
Zealand. We took short-term profits in Telstra Corp (Australia), Mahanagar
Telephone Nigam (India) and Singapore Press. Apart from a rally over January
and February, we remain very defensive in our approach to the region. We have
no holdings in Indonesia.
The impact of Asia on the world markets has been felt particularly by the
SMALLER MARKETS category. We reduced our exposure to Latin American securities
substantially. This region now represents 3% of net assets, having been close
to 10% at its peak. Brazil and Mexico make up the bulk of our exposure. We
established new positions in Israel, through purchases of ECI Telecom and Teva
Pharmaceutical. We also made successful purchases in Emerging Europe, through
Alpha Credit Bank (Greece) and Matav (Hungary).
OUTLOOK
Looking ahead, the impact of the Asian crises is likely to leave markets
volatile. However, slowing growth in the Pacific region may well help restrain
the US economy and reduce pressure for higher interest rates in the maturer
markets of the UK and Europe. Broader Europe, or `Euroland' as it has been
named, will continue to benefit from corporate restructuring and lower bond
yields. The increasing move to equity ownership by domestic investors is being
fueled by the search for higher returns and changing pensions legislation. The
UK market continues to benefit from good liquidity and robust earnings growth.
Continental Europe and the UK make up the majority of the Fund where valuations
remain attractive and earnings momentum is positive. We remain cautious on the
Pacific region. Defensive stock selection in Japan -- and asset allocation in
Asia -- is appropriate in an environment of falling growth forecasts, currency
volatility and financial and social instability. Smaller markets will remain
out of favor, as capital flows seek safety in maturer markets and stronger
currencies.
/large bullet/
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S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1998
(UNAUDITED)
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS--96.9%(a)
- -----------------------
ARGENTINA--0.3%
--------------
4,300 YPF Sociedad Anonima,
Sponsored ADR ........................ $ 149,963
----------
AUSTRALIA--1.4%
--------------
9,900 Lend Lease Corporation ............... 227,296
41,000 Mayne Nickless, Ltd .................. 221,480
32,500 Woodside Petroleum ................... 212,617
----------
661,393
----------
AUSTRIA--0.7%
-------------
2,200 V.A. Technologie AG .................. 316,240
----------
BELGIUM--1.6%
-------------
1,300 Generale de Banque ................... 751,054
----------
BRAZIL--1.2%
------------
6,900 Centrais Electricas
Brasileiras, ADR ..................... 142,313
10,000 Petroleo Brasileiro .................. 251,094
1,500 Telecomunicaceus
Brasileiras, ADR ..................... 182,718
----------
576,125
----------
CHILE--0.2%
-----------
3,500 Compania de Telefonos de
Chile SA, ADR ........................ 87,719
----------
DENMARK--0.6%
-------------
3,500 Unidanmark A/S ....................... 294,090
----------
FINLAND--1.6%
-------------
11,400 Nokia Corporation .................... 766,056
----------
FRANCE--12.4%
-------------
9,100 AXA-UAP Groupe ....................... 1,068,807
6,659 Compagnie Generale des Eaux .......... 1,238,523
6,400 Elf Aquitaine SA ..................... 840,060
2,950 L'Air Liquide SA ..................... 544,751
1,300 Promodes ............................. 626,535
17,000 Rhone-Poulenc SA ..................... 831,758
3,600 Societe Generale ..................... 749,825
----------
5,900,259
----------
MARKET
SHARES VALUE
------ ------------
COMMON STOCKS (CONTINUED)
- -------------------------
GERMANY--12.8%
--------------
3,676 Allianz AG ........................... $1,130,519
540 Bayerische Motoren Werke AG .......... 595,804
9,900 Bayerische Vereinsbank AG ............ 753,030
11,700 Deutsche Bank AG ..................... 900,376
1,400 Mannesmann AG ........................ 1,110,919
1,700 Preussag AG .......................... 604,385
15,001 VEBA AG .............................. 991,401
----------
6,086,434
----------
GREECE--0.7%
------------
3,300 Alpha Credit Bank .................... 348,023
----------
HONG KONG--1.0%
---------------
31,100 Citic Pacific, Ltd ................... 95,556
31,000 CLP Holdings ......................... 148,877
25,500 Hutchison Whampoa, Ltd ............... 157,688
32,400 New World Development, Ltd ........... 92,231
----------
494,352
----------
INDIA--1.0%
-----------
8,032 Indian Opportunities
Fund, Ltd.(c) ........................ 85,461
13,500 Mahanagar Telephone
Nigam Ltd ............................ 217,688
12,000 Videsh Sanchar Nigam, Ltd ............ 148,560
----------
451,709
----------
ISRAEL--1.3%
------------
11,000 ECI Telecom, Ltd ..................... 335,500
6,500 Teva Pharmaceutical .................. 277,875
----------
613,375
----------
ITALY--7.0%
-----------
80,472 ENI .................................. 540,387
8,000 Gucci NV ............................. 372,500
54,000 IMI SPA .............................. 884,071
290,000 INA (1st Naz Association) ............ 866,881
120,000 Telecom Italia Mobil ................. 684,224
----------
3,348,063
----------
The accompanying notes are an integral part of the financial statements.
/large bullet/
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S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1998
(UNAUDITED)
(CONTINUED)
MARKET
SHARES VALUE
------ ------------
COMMON STOCKS (CONTINUED)
- -------------------------
JAPAN--14.1%
------------
38,000 Asahi Chemical Industries
Company, Ltd ........................ $ 133,233
18,000 Cannon, Incorporated ................ 425,722
8,000 Fuji Photo Film Company, Ltd ........ 284,721
39,000 Hitachi, Ltd ........................ 279,666
14,000 Honda Motor Corporation ............. 507,783
9,000 Ito-Yokado Company, Ltd. ............ 465,846
19,000 Kao Corporation ..................... 279,243
3,000 Mabuchi Motor Company, Ltd .......... 173,644
15,000 Marui Company, Ltd .................. 236,890
15,000 Mitsui Fudosan Company, Ltd ......... 136,920
3,000 Promise Company Ltd ................. 152,335
2,000 Riso Kagaku Corporation ............. 104,428
5,000 Rohm Company, Ltd ................... 564,455
33,000,000 Sanwa International Finance ......... 240,942
5,000 Secom Company, Ltd .................. 294,695
7,000 Shimachu Company, Ltd ............... 126,152
17,000 Shin-Etsu Chemical
Company, Ltd ........................ 331,419
7,800 Sony Corporation .................... 648,919
5,000 Sumitomo Electric Industries, Ltd.... 59,583
15,000 Taisho Pharmaceutical Company........ 317,364
34,000 Toppan Printing Company, Ltd. ....... 404,126
8,000 Toyota Motor Corporation ............ 208,554
15,000 Yamanouchi Pharmaceuticals .......... 354,768
----------
6,731,408
----------
MEXICO--1.4%
------------
75,000 Cifra SA DE CV ...................... 127,535
22,000 Grupo Carso SA, Series A1 ........... 138,538
65,000 Grupo Financiero Banamex ............ 203,125
3,400 Telefonos De Mexico ................. 192,525
----------
661,723
----------
NETHERLANDS--1.3%
-----------------
42,000 Elsevier N.V. ....................... 634,127
----------
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS (CONTINUED)
- -------------------------
NEW ZEALAND--0.4%
-----------------
53,000 Telecom Corporation of
New Zealand, Ltd ...................... $ 204,196
----------
PHILIPPINES--0.1%
----------------
504,600 Belle Corporation ..................... 9,008
----------
SINGAPORE--0.3%
---------------
24,700 Development Bank of Singapore ......... 163,886
----------
SPAIN--3.5%
-----------
19,035 Banco de Santander SA ................. 1,006,118
19,000 Banco Central Hispanoamer SA .......... 632,502
----------
1,638,620
----------
SWEDEN--3.7%
------------
34,500 Astra AB .............................. 708,538
6,300 Incentive AB .......................... 610,307
61,800 Nordbanken Holding AB ................. 454,999
----------
1,773,844
----------
SWITZERLAND--5.3%
-----------------
6,120 Credit Suisse Group ................... 1,345,951
717 Novartis AG ........................... 1,185,045
----------
2,530,996
----------
TAIWAN--0.8%
------------
22,000 Taiwan American Fund .................. 377,300
----------
THAILAND--0.2%
--------------
41,000 Thai Farmers Bank ..................... 93,881
----------
UK--22.0%
---------
56,000 Cable & Wireless, PLC ................. 641,647
57,000 General Electric
Company, PLC .......................... 471,952
20,000 GKN, PLC .............................. 578,085
24,500 Glaxo Wellcome, PLC ................... 692,581
102,000 Ladbroke Group, PLC ................... 560,898
18,000 Land Securities, PLC .................. 321,560
84,000 LASMO, PLC ............................ 369,182
45,000 Lloyds TSB Group, PLC ................. 674,056
The accompanying notes are an integral part of the financial statements.
/large bullet/
5
S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1998
(UNAUDITED)
(CONTINUED)
MARKET
SHARES VALUE
------ ------------
COMMON STOCKS (CONTINUED)
- -------------------------
UK (CONTINUED)
--------------
56,000 Marks & Spencer, PLC ............ $ 532,521
24,000 McKechnie, PLC .................. 199,921
30,000 National Westminster
Bank, PLC ..................... 600,666
111,000 NFC, PLC ........................ 333,277
32,950 Reckitt & Colman, PLC ........... 664,141
43,100 Royal Bank of Scotland
Group, PLC .................... 665,422
58,558 Safeway, PLC. ................... 349,191
69,000 Scottish Power, PLC ............. 634,501
87,000 Shell Transport & Trading
Company, PLC .................. 647,586
31,731 Smiths Industries, PLC .......... 456,723
64,000 Unilever, PLC ................... 681,926
39,357 Wassall, PLC .................... 205,397
5,000 Zeneca Group .................... 215,443
-----------
10,496,676
-----------
Total Common Stocks
(cost $37,768,213)...................................... 46,160,520
-----------
PRINCIPAL MARKET
AMOUNT VALUE
--------- -------------
BONDS--1.2%(a)
- ----------------
JAPAN--1.2%
-----------
$ 380,000 MBL International Finance
(Bermuda)
3.0%, due 11/30/02(d) ............. $ 382,850
23,000,000 Nitto Denko Corporation
2.2%, due 03/31/99(d)(e) .......... 187,872
-----------
Total Bonds (cost $645,503).................................... 570,722
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $38,413,716)(b) 98.1%(a)............................... 46,731,242
OTHER ASSETS AND LIABILITIES, net, 1.9%(a) .................... 896,664
-----------
NET ASSETS, 100.0% ............................................ $47,627,906
===========
- ----------
(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 $8,317,526 which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $9,661,419 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$1,343,893.
(c) Martin Currie Investment Management Limited is the manager of the Indian
Opportunities Fund, Ltd.
(d) Convertible bond.
(e) Principal amount is stated in Japanese Yen.
ADR--American Depository Receipt.
MARKET % OF NET
VALUE ASSETS
---------- -------
INDUSTRY DIVERSIFICATION
- ------------------------
Common Stocks
Banking ....................................... $ 6,589,014 13.8%
Basic Industries .............................. 3,128,915 6.6%
Capital Goods ................................. 5,133,856 10.8%
Consumer Goods and Services ................... 6,374,725 13.4%
Diversified Industrials ....................... 458,641 1.0%
Electronic and Electrical
Equipment ................................. 471,952 1.0%
Energy ........................................ 2,164,910 4.5%
Engineering ................................... 1,234,729 2.6%
Finance ....................................... 7,691,913 16.2%
Foods ......................................... 681,926 1.4%
Household Goods ............................... 664,141 1.4%
Insurance ..................................... 1,068,807 2.2%
Leisure and Hotels ............................ 560,898 1.2%
Oil, Exploration and Production ............... 369,182 0.8%
Oil, Integrated ............................... 1,111,297 2.3%
Pharmaceuticals ............................... 1,858,032 3.9%
Real Estate ................................... 778,007 1.6%
Retail Trade .................................. 881,712 1.8%
Telecommunications ............................ 1,440,110 3.0%
Transportation and Storage .................... 554,756 1.2%
Utilities ..................................... 2,942,997 6.2%
Bonds
Capital Goods ................................. 187,872 0.4%
Finance ....................................... 382,850 0.8%
----------- ----
Total Investments .............................. $46,731,242 98.1%
=========== ====
The accompanying notes are an integral part of the financial statements.
/large bullet/
6
S E M I A N N U A L R E P O R T
<PAGE>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
APRIL 30, 1998
(UNAUDITED)
GROSS UNREALIZED
CONTRACT IN DELIVERY APPRECIATION
TO DELIVER EXCHANGE FOR DATE (DEPRECIATION)
- ---------------------- -------------------- ---------- -----------------
ARS 1,397 USD 1,396 05/04/98 $ (1)
BEL 533,000 USD 14,328 05/04/98 (78)
ESP 66,623 USD 438 05/04/98 1
FIM 38,542 USD 7,041 05/04/98 (35)
GRD 3,750,000 USD 11,833 05/04/98 (95)
JPY 531,654,600 USD 3,995,000 07/08/98 (61,700)
---------
Net Unrealized Depreciation $ (61,908)
=========
- ----------
ARS - Argentine Peso
BEL - Belgian Franc
ESP - Spanish Peseta
FIM - Finnish Markka
GRD - Greek Drachma
JPY - Japanese Yen
USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
/large bullet/
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S E M I A N N U A L R E P O R T
<PAGE>
<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1998
(UNAUDITED)
<S> <C> <C>
ASSETS
- ------
Investments, at market value (identified cost $38,413,716) (Note 1)............ $46,731,242
Foreign currency (cost $542,499)............................................... 542,586
Receivables:
Investments sold ............................................................. 5,519,833
Fund shares sold ............................................................. 216,156
Dividends and interest ....................................................... 191,308
Foreign taxes recoverable .................................................... 58,017
Deferred organization expenses (Note 1) ....................................... 20,800
Deferred state qualification expenses (Note 1) ................................ 32,052
-----------
Total assets ............................................................. 53,311,994
LIABILITIES
- -----------
Payables (Note 4):
Investments purchased ........................................................ $4,948,700
Accrued management fee ....................................................... 236,878
Accrued distribution fee ..................................................... 34,599
Unrealized depreciation on forward currency contracts ........................ 61,908
Other accrued expenses ....................................................... 402,003
----------
Total liabilities ........................................................ 5,684,088
-----------
Net assets, at market value ................................................... $47,627,906
===========
NET ASSETS
- ----------
Net assets consist of:
Paid-in capital .............................................................. $38,730,134
Undistributed net investment loss ............................................ (166,185)
Accumulated net realized gain (Notes 1 and 5) ................................ 809,809
Net unrealized appreciation on investments and other assets and
liabilities denominated in foreign currencies ............................... 8,254,148
-----------
Net assets, at market value ................................................... $47,647,906
===========
EAGLE CLASS SHARES
- ------------------
Net asset value, redemption and offering price per share ($34,864,982 divided by
1,280,264 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ............ $ 27.23
===========
CLASS A SHARES
- --------------
Net asset value and redemption price per share ($7,395,471 divided by 269,681 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ............ $ 27.42
===========
Maximum offering price per share (100/95.25 of $27.42)......................... $ 28.79
===========
CLASS B SHARES
- --------------
Net asset value and redemption price per share ($117,076 divided by 4,320 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ............ $ 27.10
===========
CLASS C SHARES
- --------------
Net asset value and offering price per share ($5,250,377 divided by 193,724 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ............ $ 27.10
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/
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<PAGE>
<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 1998
(UNAUDITED)
<S> <C> <C>
INVESTMENT INCOME
- -----------------
Income:
Dividends (net of $39,645 foreign withholding taxes)........................... $ 383,452
Interest (net of $369 foreign withholding taxes)............................... 5,749
----------
Total income .............................................................. 389,201
Expenses (Notes 1 and 4):
Management fee ................................................................ $ 215,982
Distribution fee (Eagle Shares) ............................................... 3,202
Distribution fee (Class A Shares) ............................................. 4,522
Distribution fee (Class B Shares) ............................................. 20
Distribution fee (Class C Shares) ............................................. 3,009
Shareholder servicing fees (Eagle Shares) ..................................... 161,800
Shareholder servicing fees (Class A Shares) ................................... 8,103
Shareholder servicing fees (Class B Shares) ................................... 156
Shareholder servicing fees (Class C Shares) ................................... 21,615
Custodian/Fund accounting fees ................................................ 72,873
Amortization of state qualification expenses .................................. 20,967
Professional fees ............................................................. 33,679
Reports to shareholders ....................................................... 14,192
Organization expenses ......................................................... 5,200
Trustees' fees and expenses ................................................... 4,435
Insurance expense ............................................................. 2,072
Other ......................................................................... 359
---------
Total expenses before waiver .............................................. 572,186
Fees waived by Manager (Note 4) ........................................... (30,140) 542,046
--------- ----------
Net investment loss ............................................................ (152,845)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain from investment transactions ................................. 906,977
Net realized loss from foreign currency transactions ........................... (80,408)
Net increase in unrealized appreciation of investments during the period ....... 6,023,119
Net increase in unrealized appreciation from foreign currency during the period 284,757
----------
Net gain on investments ................................................... 7,134,445
----------
Net increase in net assets resulting from operations ........................... $6,981,600
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/
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<PAGE>
<TABLE>
<CAPTION>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTH
PERIOD ENDED
APRIL 30, 1998 FOR THE YEAR ENDED
(UNAUDITED) OCTOBER 31, 1997
------------------ -------------------
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment loss ............................................................... $ (152,845) $ (131,673)
Net realized gain on investment transactions ...................................... 906,977 1,149,279
Net realized gain (loss) from foreign currency transactions ....................... (80,408) 200,478
Net increase in unrealized appreciation of investments during the period .......... 6,023,119 1,394,725
Net increase (decrease) in unrealized appreciation from foreign currency
during the period ................................................................ 284,757 (142,713)
----------- -----------
Net increase in net assets resulting from operations .............................. 6,981,600 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) ....................... 111,400 13,835,836
----------- -----------
Increase in net assets ............................................................. 6,012,983 15,700,637
Net assets, beginning of period .................................................... 41,614,923 25,914,286
----------- -----------
Net assets, end of period (including accumulated net investment loss of $166,185 and
distribution in excess of net investment income of $40,256, respectively).......... $47,627,906 $41,614,923
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
/large bullet/
10
S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding throughout
each period and other performance information derived from the financial
statements.
<TABLE>
<CAPTION>
EAGLE SHARES*
--------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1998 ---------------------------------------------
(UNAUDITED) 1997 1996 1995/dagger/
---------------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......... $ 23.83 $ 22.14 $ 20.79 $ 20.00
--------- --------- -------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................. ( 0.10) ( 0.11) ( 0.01) ( 0.03)
Net realized and
unrealized gain on
investments ................ 4.12 2.28 1.84 0.82
--------- --------- -------- ---------
Total from Investment
Operations ................. 4.02 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 PERIOD ................... $ 27.23 $ 23.83 $ 22.14 $ 20.79
========= ========= ======== =========
TOTAL RETURN(%)(D) ........... 17.21 (c) 9.98 (e) 8.93 3.95 (c)
RATIOS (%)/
SUPPLEMENTAL DATA:
Operating expenses, net,
to average daily net
assets(a) .................. 2.59 (b) 2.60 2.60 2.60 (b)
Net investment income
(loss) to average daily
net assets ................. ( 0.80)(b) ( 0.47) ( 0.02) ( 0.33)(b)
Portfolio turnover rate ..... 32 (c) 50 59 61
Net assets, end of period
($ millions)................ 35 32 22 10
<CAPTION>
CLASS A SHARES* CLASS B SHARES*
-------------------------------------------------------- -----------------------------
FOR THE
SIX MONTH FOR THE
PERIOD PERIOD
ENDED FOR THE YEARS ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30,
1998 --------------------------------------- 1998/dagger//dagger//dagger/
(UNAUDITED) 1997 1996/dagger//dagger/ (UNAUDITED)
---------------- ---------------- ---------------------- -----------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......... $ 23.97 $ 22.25 $ 21.11 $ 23.95
--------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................. ( 0.02) 0.05 0.10 0.01
Net realized and
unrealized gain on
investments ................ 4.14 2.28 1.04 3.14
--------- --------- --------- ---------
Total from Investment
Operations ................. 4.12 2.33 1.14 3.15
--------- --------- --------- ---------
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 PERIOD ................... $ 27.42 $ 23.97 $ 22.25 $ 27.10
========= ========= ========= =========
TOTAL RETURN(%)(D) ........... 17.58 (c) 10.71 (e) 5.40 (c) 13.11 (c)
RATIOS (%)/
SUPPLEMENTAL DATA:
Operating expenses, net,
to average daily net
assets(a) .................. 1.96 (b) 1.97 1.97 (b) 2.71 (b)
Net investment income
(loss) to average daily
net assets ................. ( 0.14)(b) 0.22 0.44 (b) 0.22 (b)
Portfolio turnover rate ..... 32 (c) 50 59 32(c)
Net assets, end of period
($ millions)................ 7 6 3 0.1
<CAPTION>
CLASS C SHARES*
-------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1998 --------------------------------------
(UNAUDITED) 1997 1996/dagger//dagger/
---------------- ---------------- ---------------------
<S> <C> <C> <C>
NET ASSET VALUE,
BEGINNING OF PERIOD ......... $ 23.73 $ 22.12 $ 21.11
--------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................. ( 0.11) ( 0.13) ( 0.07)
Net realized and
unrealized gain on
investments ................ 4.10 2.25 1.08
--------- --------- ---------
Total from Investment
Operations ................. 3.99 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 PERIOD ................... $ 27.10 $ 23.73 $ 22.12
========= ========= =========
TOTAL RETURN(%)(D) ........... 17.15 (c) 9.79 (e) 4.78 (c)
RATIOS (%)/
SUPPLEMENTAL DATA:
Operating expenses, net,
to average daily net
assets(a) .................. 2.71 (b) 2.72 2.72 (b)
Net investment income
(loss) to average daily
net assets ................. ( 0.87)(b) ( 0.52) ( 0.32)(b)
Portfolio turnover rate ..... 32 (c) 50 59
Net assets, end of period
($ millions)................ 5 4 1
</TABLE>
- ----------
* Per share amounts have been calculated using the monthly average share
method, which more appropriately presents per share data for the year since
use of the undistributed income method does not correspond with results of
operations.
/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 April 30, 1998.
(a) Excludes management fees waived and expenses reimbursed by the Eagle in the
amount of $.02, $.06, $.16 and $.17 per Eagle Share, respectively. The
operating expense ratios including such items would have been 2.73%
(annualized), 2.86%, 3.31% and 5.09% (annualized) for Eagle Shares,
respectively. Excludes management fees waived by the Eagle in the amount
of $.02, $.06 and $.16 per Class A Share, respectively. The operating
expense ratio including such items would have been 2.10% (annualized),
2.23% and 2.69% (annualized) for Class A Shares, respectively. Excludes
management fees waived by the Eagle in the amount of $.02 per Class B
Share. The operating expense ratio including such items would have been
2.85% (annualized) for Class B Shares. Excludes management fees waived by
the Eagle in the amount of $.02, $.06, and $.16 per Class C Share,
respectively. The operating expense ratio including such items would have
been 2.85% (annualized), 2.98% and 3.44% (annualized) for Class C 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.
The accompanying notes are an integral part of the financial statements.
/large bullet/
11
S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust")
is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company consisting of five separate
investment Portfolios, the Eagle International Equity Portfolio (the
"Fund"), the 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/
12
S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(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 April 30, 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 six month period ended April 30, 1998, and Class B Shares
from January 2, 1998 (commencement of Class B Shares) to April 30, 1998
were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED EAGLE SHARES A SHARES
APRIL 30, 1998 ----------------------------- --------------------------
(UNAUDITED) SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold ..................... 64,212 $ 1,635,201 30,881 $ 793,261
Shares issued on reinvestment
of distributions ............... 34,247 805,842 6,686 158,113
Shares redeemed ................. (149,498) (3,702,023) (23,648) (584,354)
-------- ------------ ------- -----------
Net increase (decrease) ......... (51,039) $ (1,260,980) 13,919 $ 367,020
============ ===========
Shares outstanding:
Beginning of period ............ 1,331,303 255,762
--------- -------
End of period .................. 1,280,264 269,681
========= =======
<CAPTION>
FOR THE PERIOD ENDED B SHARES C SHARES
APRIL 30, 1998 -------------------- --------------------------
(UNAUDITED) SHARES AMOUNT SHARES AMOUNT
-------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold ..................... 4,341 $112,900 43,600 $1,113,463
Shares issued on reinvestment
of distributions ............... -- -- 4,371 102,414
Shares redeemed ................. (21) (583) (12,639) (322,834)
----- -------- ------- ----------
Net increase (decrease) ......... 4,320 $112,317 35,332 $ 893,043
======== ==========
Shares outstanding:
Beginning of period ............ -- 158,392
----- -------
End of period .................. 4,320 193,724
===== =======
</TABLE>
/large bullet/
13
S E M I A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(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 six month period
ended April 30, 1998, purchases and sales on investment securities
(excluding repurchase agreements and short term obligations) aggregated
$16,423,077 and $13,641,284, 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% 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 $30,140 were
waived for the six month period ended April 30, 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 six month period ended April 30, 1998 the
Subadviser earned $108,752 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 $14,964 in front-end sales charges for Class A
Shares, $25 and $523 in contingent deferred sales charges for Class B
and C Shares for the six month period ended April 30, 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/
14
S E M I A N N U A L R E P O R T
<PAGE>
EAGEL INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(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
$8,000, an additional fee of $3,000 for each combined quarterly meeting
of the Heritage funds attended and $1,000 for each special Trustees
meeting attended. Trustees' fees and expenses are paid equally by each
of the Heritage funds.
Note 5: FEDERAL INCOME TAXES. For the year ended October 31, 1997, to
reflect reclassifications arising from permanent book/tax differences
primarily attributable to foreign currency gains, the Fund credited
undistributed net investment income and debited accumulated net
realized gain $260,960.
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/
15
S E M I A N N U A L R E P O R T
<PAGE>
(This page intentionally left blank)
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
P.O. Box 10520
St Petersburg, FL 33733 EAGLE INTERNATIONAL EQUITY
PORTFOLIO
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. SEMIANNUAL REPORT
P.O. Box 12749 (UNAUDITED)
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 APRIL 30, 1998
