THE EAGLE
INTERNATIONAL
EQUITY
PORTFOLIO
[GRAPHIC OMMITED]
SEMIANNUAL
(UNAUDITED)
APRIL 30, 1999
EAGLE ASSET
MANAGEMENT
880 CARILLON PARKWAY
P.O. BOX 10520
ST. PETERSBURG, FL
33733-0520
(727) 573-2453
(800) 237-3101
<PAGE>
June 21, 1999
Dear Fellow Shareholders:
It is our pleasure to provide you with the semiannual report for the Eagle
International Equity Portfolio (the "Fund") of the Heritage Series Trust for
the period ended April 30, 1999. For this period, the Eagle class of shares of
the Fund delivered a positive total return of 14.15% versus a return of 15.27%
for the Morgan Stanley Capital International Europe, Asia and Far East India
(the "EAFE Index"). Your Fund also offers class A, B and C shares. The
investment and financial information for all classes of shares of your Fund are
presented in this semiannual report.
Your Fund's investment subadviser is Martin Currie Inc. of Edinburgh, Scotland.
While a majority of your Fund's assets generally are invested in stocks of
companies in developed markets such as those in the EAFE Index, Martin Currie
has the flexibility also to allocate a portion of your Fund's assets to stocks
in emerging markets. During 1998, your Fund benefited from a very low
allocation to these emerging market stocks. During the most recent semiannual
period, your Fund has added positions in several emerging markets around the
world. These markets generally have been helped by a recovering Asia, driven in
large part by improvement in the business climate in Japan. We hope you will
read the market commentary that follows to learn more about how your Fund's
investment portfolio is positioned. Because your Fund may invest in both
developed and emerging markets around the world, we believe you should consider
the Fund to be a core international holding in your world investment portfolio.
On behalf of all of us at Eagle and Heritage, thank you for your continuing
investments with us. We continue to believe that you will be rewarded for
choosing to invest a portion of your assets in 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
SEMIANNUAL REPORT
<PAGE>
June 18, 1999
Eagle International Equity Portfolio
Commentary for the Semi-Annual Report for the period ended April 30, 1999
The Eagle International Equity Portfolio (the "Fund") invests a majority
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 Fund may
also invest a portion of the investment Portfolio in developing and emerging
markets around the world. The countries in which the Fund 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 management. The ability
to produce premium growth in earnings is paramount.
Over the six months to April 30, 1999, the EAFE Index rose by 15.27%, dominated
by a strong recovery from Japan, Asia and smaller markets. In contrast, Europe
lost ground, exacerbated by a weak start to the launch of the Euro. During this
period the Eagle Class Shares of the Fund rose by 14.15%*. Over the 52 week
period ended April 30, 1999 the Eagle Class Shares are 215/544 in the Lipper
rankings, the 40th percentile**.
CONTINENTAL EUROPEAN stockmarkets (46.6% of net assets at April 30, 1999) fell
back in the face of political wrangling and evidence of slow growth. The Euro's
weakness reflected these factors. We reduced exposure to the region over the
period. Cyclical stocks recovered over March and April. While we have made the
portfolio less defensive, our main emphasis remains on stocks benefiting from
corporate restructuring. We bought shares of Total (France), increasing our
energy exposure. We added stocks issued by Accor (France), Metro, Hoechst and
BASF (Germany) to capture some cyclical recovery. Shares of Bank of Ireland and
Argentaria (Spain) were bought to benefit from value in financials. Sales
reflected our concern over earnings for groups such as Danone, Promodes and
Nestle. We took good profits in the strongly performing shares of 1998 such as
Deutsche Bank, Credit Suisse and Ericsson.
In the UK (23.5% of net assets at April 30, 1999), the equity market moved
ahead, supported by good liquidity and corporate activity. Cyclical stocks
rallied towards the end of the period. We bought new holdings in BP Amoco,
SmithKline Beecham and British Telecommunications. We also added shares of
Scottish & Newcastle to participate in consumer recovery. We sold our holdings
in Safeway and NFC, where profits looked under pressure. The UK equity market
continues to benefit from its relationship with the bond market as yields move
towards the European average. Recovery in smaller companies has been a feature,
while corporate activity has affected every sector, highlighting the perceived
value in the UK market.
The JAPANESE stock market (20.8% of net assets at April 30, 1999) strengthened
over the period. We have begun to see the first evidence of significant change
in the Government's and company management attitudes to Japan's problems. We
added significantly to the region, encouraged by rationalisation of the banking
system, and the promotion of a more aggressive corporate culture. While we have
maintained a quality blue chip portfolio, concentrating on beneficiaries of Yen
weakness and corporate profit recovery, we have also added domestic stocks to
the list. Smaller companies have rallied as well, and we have exposure to the
sector. New holdings included Dai Nippon Printing, Fujitsu, Kao, Kubota and
Mitsui Marine and Fire, reflecting
2 SEMIANNUAL REPORT
<PAGE>
restructuring and domestic recovery themes. Twenty-five percent of the Japanese
assets remain hedged against the US dollar, although we expect the yen/dollar
relationship to be less volatile over the remainder of the year.
ASIAN markets (6.9% of net assets at April 30, 1999) have rallied significantly
over the period. Markets such as South Korea, Thailand and Indonesia were
supported by stronger currencies and falling interest rates. We increased our
exposure to the region in late 1998, initially through the more liquid markets
of Singapore and Hong Kong. Our country allocation in this region is Australia,
Korea, Singapore, India, Taiwan and Hong Kong. New holdings included Telstra,
Woolworths, Fosters Brewing and News Corporation in Australia. In Hong Kong, we
increased our weighting through purchases of shares of Cheung Kong, Henderson
Land, and Dao Heng Bank. We also bought shares issued by City Developments in
Singapore. Sales included Mayne Nickless in Australia and Overseas Chinese
Banking Corp in Singapore, which we do not regard as a natural beneficiary of
stronger economic growth.
The impact of recovery in Asia has been felt particularly by the SMALLER
MARKETS category. We added again to Latin America. Brazil and Mexico make up
the bulk of our exposure. We established new positions in Israel, through
purchases of Orbotech, while we went back into South Africa with Anglo American
and Nedcor. We also made successful purchases in Emerging Europe, such as
Hellenic Telecom (Greece).
OUTLOOK
By historical standards, valuations for many equity markets look high. But
economic conditions look more robust than they were at the turn of the year.
The concerted interest rate cuts in the fourth quarter are likely to give the
economies of the US, UK and Europe a "soft landing". Substantial corporate
restructuring and foreign buying has seen Japan off its lows. In an environment
of more stable currencies and interest rates, smaller markets will prosper, but
the rally in bond yields is probably past its best. While there is clear value
in smaller companies and the more cyclical end of the market, the economic
environment is sufficiently subdued to favor marketable companies with quality
earnings.
On behalf of all of us at Martin Currie, Inc., thank you for your continuing
confidence in us. We look forward to reporting to you again after the end of
the Fund's fiscal year.
- ----------
* These returns are calculated without the imposition of either front-end or
contingent deferred sales charges.
** Lipper Analytical Services, Inc. performance rankings for the Heritage
Series Trust - Eagle International Equity Portfolio, Eagle Class Shares
were 195 out of 544 International Funds, for the 52 week period ended April
29, 1999. The performance numbers used for the Fund did not take into
account any front-end or contingent deferred sales charges. Past
performance is no guarantee of future results.
3 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1999
(UNAUDITED)
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS--99.9%(a)
- -----------------------
AUSTRALIA--2.5%
---------------
9,600 Brambles Industries Ltd ............... $ 282,096
50,000 Fosters Brewing Group Ltd ............. 145,850
6,700 News Corporation Ltd .................. 56,149
54,000 Telstra Corporation ................... 293,023
40,000 Westpac Banking Corporation* .......... 305,358
48,000 Woolworths Ltd ........................ 152,467
---------
1,234,943
---------
BRAZIL--0.8%
------------
18,000 Petrobras, Sponsored ADR .............. 261,000
6,500 Tele Norte Leste Participacoes,
Sponsored ADR ...................... 110,094
---------
371,094
---------
EGYPT--0.1%
-----------
3,000 Suez Cement Company,
Sponsored GDR ...................... 50,250
---------
FINLAND--2.2%
-------------
14,202 Nokia (AB) OY ......................... 1,094,468
---------
FRANCE--11.6%
-------------
2,902 Accor ................................. 764,885
6,801 AXA ................................... 877,955
2,090 Cap Gemini SA ......................... 319,480
3,270 Elf Aquitaine SA ...................... 507,801
3,261 PSA Peugeot Citroen ................... 540,853
3,086 Societe Generale ...................... 552,253
6,006 Total SA, Class "B" ................... 822,278
5,721 Vivendi ............................... 1,336,254
---------
5,721,759
---------
GERMANY--12.0%
--------------
1,492 Allianz AG ............................ 475,209
15,279 BASF AG ............................... 669,034
8,000 Bayerische Hypo-Vereinsbank AG* ....... 521,439
108 Bayerische Motoren Werke AG
(Non Voting) ....................... 76,042
540 Bayerische Motoren Werke AG ........... 386,769
16,898 Hoechst AG ............................ 800,620
9,664 Mannesmann AG ......................... 1,272,048
8,402 Metro AG .............................. 607,110
6,640 Preussag AG ........................... 349,322
6,640 Preussag AG (b)* ...................... 6,173
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS CONTINUED
- -----------------------
GERMANY (CONTINUED)
------------------
10,000 Siemens AG ............................ $ 739,480
----------
5,903,246
----------
GREECE--0.2%
------------
1,110 Alpha Credit Bank ..................... 79,234
1,700 Hellenic Telecom ...................... 39,439
---------
118,673
---------
HONG KONG--1.3%
---------------
19,000 Cheung Kong Holdings Ltd .............. 172,816
50,200 China Telecom (Hong Kong),
Ltd.* .............................. 114,635
30,500 Dao Heng Bank Group Ltd. .............. 123,952
12,000 Henderson Land Development
Company ............................ 72,610
17,700 Hutchison Whampoa, Ltd. ............... 158,708
---------
642,721
---------
INDIA--0.7%
-----------
8,032 Indian Opportunities Fund,
Ltd. (c)* .......................... 81,606
8,900 ITC Ltd, Sponsored GDR* ............... 250,535
---------
332,141
---------
IRELAND--0.8%
-------------
19,000 Bank of Ireland ....................... 380,357
---------
ISRAEL--0.1%
------------
1,300 Orbotech* ............................. 62,400
---------
ITALY--5.1%
-----------
14,874 Assicurazioni Generali SPA ............ 579,020
38,369 San Paolo IMI SPA ..................... 575,569
83,229 Telecom Italia SPA .................... 885,386
96,000 Unicredito Italiano ................... 486,789
---------
2,526,764
---------
JAPAN--20.0%
------------
12,000 Brigestone Corporation ................ 321,554
19,000 Canon, Inc. ........................... 464,579
3,000 FamilyMart Company, Ltd ............... 141,936
9,000 Fuji Photo Film Company, Ltd .......... 339,893
27,000 Fujitsu Ltd ........................... 462,360
55,000 Hitachi, Ltd .......................... 401,608
12,000 Honda Motor Company, Ltd .............. 528,555
The accompanying notes are an integral part of the financial statements.
4 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1999
(UNAUDITED)
(CONTINUED)
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS CONTINUED
- -----------------------
JAPAN (CONTINUED)
-----------------
5,000 Ito-Yokado Company, Ltd ............. $ 306,900
19 Japan Tobacco Inc ................... 190,923
19,000 Kao Corporation ..................... 482,080
97,000 Kubota Corporation .................. 275,356
3,000 Mabuchi Motor Company, Ltd .......... 232,876
19,000 Marui Company, Ltd .................. 315,182
50,000 Mitsui Marine & Fire Insurance ...... 277,173
15 NTT Mobile Communication ............ 879,250
3,000 Promise Company, Ltd ................ 170,826
2,000 Riso Kagaku Corporation ............. 95,461
6,000 Rohm Company, Ltd ................... 723,497
6,000 Secom Company, Ltd .................. 585,831
17,000 Shin-Etsu Chemical Company,
Ltd .............................. 540,948
7,800 Sony Corporation .................... 728,270
10,000 Taisho Pharmaceutical Company........ 307,319
37,000 Toppan Printing Company, Ltd ........ 444,917
19,000 Yamanouchi Pharmaceutical ........... 601,407
---------
9,818,701
---------
MEXICO--1.4%
------------
5,000 Desc ADS ............................ 123,750
600,000 Grupo Financiero Bancomer,
Series "O" SA .................... 209,740
5,500 Grupo Televisa, SA, Sponsored
GDR .............................. 225,500
1,700 Telefonos de Mexico, Sponsored
ADR .............................. 128,562
---------
687,552
---------
NETHERLANDS--4.5%
-----------------
5,998 Aegon NV ............................ 575,018
17,561 Ahold (Kon) NV ...................... 652,083
1,661 ING Groep NV ........................ 102,298
14,000 VNU, NV ............................. 566,442
7,680 Wolters Kluwer ...................... 334,262
---------
2,230,103
---------
PHILIPPINES--0.1%
-----------------
320,000 Belle Corporation (d)* .............. 694
---------
SINGAPORE--1.8%
---------------
28,000 City Developments ................... 186,524
25,000 Overseas Chinese Banking
Corporation ...................... 234,333
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS CONTINUED
- -----------------------
SINGAPORE (CONTINUED)
---------------------
45,000 Overseas Union Bank ................. $ 230,796
23,000 Singapore Airlines Ltd .............. 211,519
---------
863,172
---------
SOUTH AFRICA--0.2%
------------------
1,024 Anglo-American Corporation* ......... 52,841
2,300 Nedcor Ltd .......................... 50,271
---------
103,112
---------
SOUTH KOREA--0.2%
-----------------
4,290 Shinhan Bank GDS* ................... 102,424
---------
SPAIN--4.1%
-----------
19,477 Argentaria SA ....................... 458,011
33,606 Banco Santander Central ............. 729,921
17,410 Telefonica SA* ...................... 815,682
15,396 Telefonica SA (e)* .................. 14,475
---------
2,018,089
---------
SWEDEN--1.7%
------------
10,599 AstraZeneca, PLC .................... 413,307
20,000 Foreningsparbanken,
AB, Class "A" ..................... 438,545
---------
851,852
---------
SWITZERLAND--4.7%
-----------------
697 Novartis AG ......................... 1,020,123
60 Roche Genus Scheine
Holdings AG ......................... 705,512
1,600 Swisscom AG ......................... 587,271
---------
2,312,906
---------
TAIWAN--0.3%
------------
11,700 Taiwan American Fund (c)* ........... 164,853
---------
UK--23.5%
---------
32,500 Allied Zurich, PLC .................. 430,810
11,000 AstraZeneca PLC ..................... 431,067
36,000 BP Amoco PLC ........................ 683,376
40,000 British Sky Broadcasting, PLC ....... 350,697
21,000 British Telecomunications, PLC ...... 350,664
55,000 Cable & Wireless, PLC ............... 787,901
36,000 General Electric Company, PLC ....... 381,069
The accompanying notes are an integral part of the financial statements.
5 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1999
(UNAUDITED)
(CONTINUED)
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS CONTINUED
- -----------------------
UK (CONTINUED)
--------------
38,000 GKN, PLC .............................. $ 648,596
25,500 Glaxo Welcome, PLC .................... 755,622
120,000 Ladbroke Group, PLC ................... 576,720
22,000 Land Securities, PLC .................. 288,617
74,000 LASMO, PLC ............................ 190,470
37,000 Lloyds TSB Group, PLC ................. 596,409
32,000 Marks & Spencer, PLC .................. 219,427
16,000 McKechnie, PLC ........................ 115,054
22,000 National Westminster Bank,
PLC ................................... 529,101
19,950 Reckitt & Colman, PLC ................. 236,850
17,100 Royal Bank of Scotland Group,
PLC ................................... 403,829
27,000 Scottish & Newcastle, PLC ............. 336,620
58,000 Scottish Power, PLC ................... 477,719
87,000 Shell Transport & Trading
Company, PLC .......................... 652,199
40,000 SmithKline Beecham, PLC ............... 528,940
31,731 Smiths Industries, PLC ................ 490,038
50,000 Unilever, PLC ......................... 444,403
29,000 Vodafone Group ........................ 534,169
25,999 Wassall, PLC .......................... 104,980
-----------
11,545,347
-----------
Total Common Stocks
(cost $40,682,994).............................. 49,137,621
-----------
MARKET
SHARES VALUE
------ ----------
CONVERTIBLE PREFERRED BONDS--0.8%(a)
- ------------------------------------
JAPAN--0.8%
-----------
33,000,000 Sanwa International Finance
(Bermuda) 1.25% 01/08/05 (f) ......... $ 306,732
12,000,000 TB Finance (Cayman) 2.75%
10/01/04 (f) ......................... 80,142
-----------
386,874
-----------
Total Convertible Preferred Bonds
(cost $344,102)................................. 386,874
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $41,027,096) (g) 100.7% (a)............... 49,524,495
OTHER ASSETS AND LIABILITIES,
net, (0.7%) .................................... (342,368)
-----------
NET ASSETS, 100.0% ................................ $49,182,127
===========
- ----------------------
* Not an income producing security.
(a) Percentages indicated are based on net assets.
(b) Rights - These rights, if exercised by May 3, 1999, may be converted into
622 shares of Preussag AG at a strike price of $39.00 per share.
(c) Martin Currie Investment Management Limited is the manager of the Indian
Opportunities Fund, Ltd. and the Taiwan American Fund.
(d) Warrants - These warrants, if exercised by December 6, 1999, may be
converted into 320,000 shares of Belle Corporation at a strike price of
8.5 Philippine Pesos.
(e) Rights - These rights, when exercised by May 20, 1999, will convert into
308 shares of Telefonica SA.
(f) Principal amount is stated in Japanese Yen.
(g) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation
of $8,497,399 which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $9,625,776 and aggregate gross unrealized depreciation for all
securities in which there is an excess tax cost over market value of
$1,128,377.
ADR -- American Depository Receipt.
GDR -- Global Depository Receipt.
GDS -- Global Depository Shares.
The accompanying notes are an integral part of the financial statements.
6 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 1999
(UNAUDITED)
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
- ------------------------ ----------- --------
COMMON STOCKS
Aerospace ...................................... 490,038 1.0%
Airlines ....................................... 211,519 0.4%
Auto Manufacturers ............................. 1,590,847 3.2%
Auto Parts and Equipment ....................... 648,596 1.3%
Banking ........................................ 5,725,849 11.6%
Brewers ........................................ 145,850 0.3%
Broadcasting ................................... 576,197 1.2%
Building Materials ............................. 122,860 0.2%
Capital Goods .................................. 560,978 1.1%
Chemicals ...................................... 540,948 1.1%
Conglomerates .................................. 1,124,308 2.3%
Consumer Goods and Services .................... 2,889,127 5.9%
Cosmetics and Toiletries ....................... 482,080 1.0%
Electronics and Electrical Equipment ........... 3,206,800 6.5%
Finance ........................................ 1,059,127 2.2%
Food ........................................... 1,238,422 2.5%
Household Goods ................................ 236,850 0.5%
Industrials, Diversified ....................... 1,767,438 3.6%
Insurance ...................................... 3,215,185 6.5%
Leisure and Hotels ............................. 1,341,605 2.7%
Mining ......................................... 52,841 0.1%
Office Equipment ............................... 926,939 1.9%
Oil and Gas .................................... 3,117,124 6.3%
Pharmaceuticals ................................ 3,743,174 7.6%
Publishing ..................................... 390,411 0.8%
Real Estate .................................... 475,141 1.0%
Recreational Products .......................... 339,893 0.7%
Restaurants and Pubs ........................... 336,620 0.7%
Retail Stores .................................. 993,976 2.0%
Securities ..................................... 246,459 0.5%
Services ....................................... 867,927 1.8%
Software ....................................... 319,480 0.6%
Steel and Iron ................................. 1,156,115 2.3%
Telecommunications ............................. 6,217,427 12.6%
Tires and Rubber ............................... 321,554 0.7%
Tobacco ........................................ 190,923 0.4%
Transportation and Storage ..................... 438,545 0.9%
Utilities, Diversified ......................... 1,350,729 2.7%
Utilities, Electric ............................ 477,719 1.0%
CONVERTIBLE PREFERRED BONDS
Finance ........................................ 386,874 0.8%
----------- -----
Total Investments ............................... $49,524,495 100.7%
=========== =====
The accompanying notes are an integral part of the financial statements.
7 SEMIANNUAL REPORT
<PAGE>
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
APRIL 30, 1999
CONTRACT IN DELIVERY GROSS UNREALIZED
TO DELIVER EXCHANGE FOR DATE APPRECIATION
- ------------------- ------------------- ---------- -----------------
CHF 3,322 USD 2,193 05/03/99 $ 0.00
USD 10,840 CHF 16,531 05/03/99 0.00
USD 2,750 EUR 2,607 05/03/99 0.00
USD 2,337,000 JPY 276,093,180 07/06/99 4,199.18
-----------
Net Unrealized Appreciation $ 4,199.18
==========
- ----------
CHF - Switzerland Francs
EUR - Euro
JPY - Japanese Yen
USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
8 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
ASSETS
- -------
Investments, at market value (identified cost $41,027,096) (Note 1)...................... $49,524,495
Foreign currency (cost $815,077)......................................................... 814,887
Cash .................................................................................... --
Receivables:
Investments sold ....................................................................... 4,399,805
Fund shares sold ....................................................................... 19,564
Dividends and interest ................................................................. 144,024
Foreign taxes recoverable .............................................................. 53,147
Unrealized appreciation of forward currency contracts ................................... 4,199
Deferred organization expenses (Note 1) ................................................. 10,400
Deferred state qualification expenses (Note 1) .......................................... 22,068
Prepaid Insurance ....................................................................... 3,123
-----------
Total assets ....................................................................... 54,995,712
LIABILITIES
- -----------
Payables (Note 4):
Investments purchased .................................................................. $3,720,142
Accrued management fee ................................................................. 624,076
Accrued distribution fee ............................................................... 35,808
Fund shares redeemed ................................................................... 188,469
Other accrued expenses ................................................................. 1,245,090
----------
Total liabilities .................................................................. 5,813,585
-----------
Net assets, at market value ............................................................. $49,182,127
===========
NET ASSETS
- ----------
Net assets consist of:
Paid-in capital ........................................................................ $37,574,138
Accumulated net investment loss (Notes 1 and 5) ........................................ (396,029)
Accumulated net realized gain (Notes 1 and 5) .......................................... 3,512,258
Net unrealized appreciation on investments and other assets
and liabilities denominated in foreign currencies ..................................... 8,491,760
-----------
Net assets, at market value ............................................................. $49,182,127
===========
EAGLE CLASS SHARES
- ------------------
Net asset value, redemption and offering price per share ($34,427,400 divided by
1,202,735 shares of beneficial interest outstanding, no par value) (Notes 1 and 2) ..... $ 28.62
===========
CLASS A SHARES
- --------------
Net asset value and redemption price per share ($7,478,283 divided by 257,809 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ...................... $ 29.01
===========
Maximum offering price per share (100/95.25 of $29.01)................................... $ 30.46
===========
CLASS B SHARES
- --------------
Net asset value and redemption price per share ($413,357 divided by 14,530 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ...................... $ 28.45
===========
CLASS C SHARES
- --------------
Net asset value and offering price per share ($6,863,087 divided by 241,221 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ...................... $ 28.45
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
9 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE SIX MONTH PERIOD ENDED APRIL 30, 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
- -----------------
Income:
Dividends (net of $25,511 foreign withholding taxes)........................... $ 301,202
Interest (net of $2 foreign withholding taxes)................................. 23,849
----------
Total income .............................................................. 325,051
Expenses (Notes 1 and 4):
Management fee ................................................................ $ 240,579
Distribution fee (Eagle Shares) ............................................... 171,066
Distribution fee (Class A Shares) ............................................. 8,877
Distribution fee (Class B Shares) ............................................. 1,720
Distribution fee (Class C Shares) ............................................. 32,285
Shareholder servicing fees (Eagle Shares) ..................................... 1,711
Shareholder servicing fees (Class A Shares) ................................... 4,616
Shareholder servicing fees (Class B Shares) ................................... 224
Shareholder servicing fees (Class C Shares) ................................... 4,197
Custodian/Fund accounting fees ................................................ 77,419
Professional fees ............................................................. 34,871
Amortization of state qualification expenses .................................. 22,383
Reports to shareholders ....................................................... 12,575
Organization expenses ......................................................... 5,200
Trustees' fees and expenses ................................................... 5,394
Other ......................................................................... 2,050
---------
Total expenses before waiver .............................................. 625,167
Fees waived by Eagle/Manager (Note 4) ..................................... (17,952) 607,215
--------- ----------
Net investment loss ............................................................ (282,164)
----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain from investment transactions ................................. 3,281,022
Net realized gain from foreign currency transactions ........................... 246,677
Net increase in unrealized appreciation of investments during the period ....... 2,346,615
Net increase in unrealized appreciation from foreign currency during the period 809,438
----------
Net gain on investments ................................................... 6,683,752
----------
Net increase in net assets resulting from operations ........................... $6,401,588
==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
10 SEMIANNUAL REPORT
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE SIX MONTH
PERIOD ENDED FOR THE
APRIL 30, 1999 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1998
----------------- ----------------
<S> <C> <C>
Increase in net assets:
Operations:
Net investment loss ......................................................... $ (282,164) $ (264,871)
Net realized gain on investment transactions ................................ 3,281,022 234,230
Net realized gain (loss) from foreign currency transactions ................. 246,677 (68,794)
Net increase in unrealized appreciation of investments during the period .... 2,346,615 1,977,238
Net increase in unrealized appreciation from
foreign currency during the period ......................................... 809,438 1,412,197
------------ -----------
Net increase in net assets resulting from operations ........................ 6,401,588 3,290,000
------------ -----------
Distributions to shareholders from:
Net investment income Class A Shares, ($0.05 per share)...................... -- (13,340)
Net realized gains Eagle Shares, ($0.12 and $0.62 per share, respectively)... (151,973) (808,740)
Net realized gains Class A Shares, ($0.12 and $0.62 per share, respectively). (30,773) (155,218)
Net realized gains Class B Shares, ($0.12 per share)......................... (1,581) --
Net realized gains Class C Shares, ($0.12 and $0.62 per share, respectively). (27,806) (102,719)
Increase (decrease) in net assets from Fund share transactions (Note 2) ...... (2,745,905) 1,913,671
------------ -----------
Increase in net assets ....................................................... 3,443,550 4,123,654
Net assets, beginning of period .............................................. 45,738,577 41,614,923
------------ -----------
Net assets, end of period (including undistributed net investment loss of
$396,029 and $113,865 respectively).......................................... $ 49,182,127 $45,738,577
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 SEMIANNUAL REPORT
<PAGE>
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
FINANCIAL HIGHLIGHTS
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
EAGLE SHARES*
---------------------------------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1999 ----------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995/dagger/
---------------------- ---------------- ---------------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ........................ $ 25.17 $ 23.83 $ 22.14 $ 20.79 $ 20.00
----------- --------- --------- -------- ----------
Income from Investment
Operations:
Net investment loss(a) ........... ( 0.17) ( 0.17) ( 0.11) ( 0.01) ( 0.03)
Net realized and unrealized
gain on investments ............. 3.74 2.13 2.28 1.84 0.82
----------- --------- --------- -------- ----------
Total from Investment
Operations ....................... 3.57 1.96 2.17 1.83 0.79
----------- --------- --------- -------- ----------
Less Distributions:
Dividends from net
investment income ............... -- -- ( 0.31) ( 0.01) --
Distributions from net
realized gains .................. ( 0.12) ( 0.62) ( 0.17) ( 0.47) --
----------- --------- --------- -------- ----------
Total Distributions .............. ( 0.12) ( 0.62) ( 0.48) ( 0.48) --
----------- --------- --------- -------- ----------
Net asset value, end of period..... $ 28.62 $ 25.17 $ 23.83 $ 22.14 $ 20.79
=========== ========= ========= ======== ==========
Total Return (%)(b) ............... 14.15 (c)(f) 8.38 (d) 9.98 (d) 8.93 3.95 (c)
Ratios (%)/Supplemental Data:
Operating expenses, net, to
average daily net
assets(a) ....................... 2.60 (e) 2.60 2.60 2.60 2.60 (e)
Net investment income
(loss) to average daily net
assets .......................... ( 1.26) (e) ( 0.67) ( 0.47) ( 0.02) ( 0.33) (e)
Portfolio turnover rate(c) ....... 41 (c) 71 50 59 61
Net assets, end of period
($ millions)..................... 34 33 32 22 10
<CAPTION>
CLASS A SHARES*
-------------------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1999 --------------------------------------------------
(UNAUDITED) 1998 1997 1996/dagger/
---------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ........................ $ 25.43 $ 23.97 $ 22.25 $ 21.11
----------- --------- --------- ---------
Income from Investment
Operations:
Net investment loss(a) ........... ( 0.08) ( 0.01) ( 0.05) ( 0.10)
Net realized and unrealized
gain on investments ............. 3.78 2.14 2.28 1.04
----------- --------- --------- ---------
Total from Investment
Operations ....................... 3.70 2.13 2.33 1.14
----------- --------- --------- ---------
Less Distributions:
Dividends from net
investment income ............... -- ( 0.05) ( 0.44) --
Distributions from net
realized gains .................. ( 0.12) ( 0.62) ( 0.17) --
----------- --------- --------- ---------
Total Distributions .............. ( 0.12) ( 0.67) ( 0.61) --
----------- --------- --------- ---------
Net asset value, end of period..... $ 29.01 $ 25.43 $ 23.97 $ 22.25
=========== ========= ========= =========
Total Return (%)(b) ............... 14.57 (c)(f) 9.04 (d) 10.71 (d) 5.40 (c)
Ratios (%)/Supplemental Data:
Operating expenses, net, to
average daily net
assets(a) ....................... 1.97 (e) 1.97 1.97 1.97 (e)
Net investment income
(loss) to average daily net
assets .......................... ( 0.61)(e) ( 0.02) 0.22 0.44 (e)
Portfolio turnover rate(c) ....... 41 (c) 71 50 59
Net assets, end of period
($ millions)..................... 7 7 6 3
<CAPTION>
CLASS B SHARES*
---------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED
APRIL 30,
1999
(UNAUDITED) 1998/dagger//dagger/
---------------------- ----------------------
<S> <C> <C>
Net asset value, beginning
of period ........................ $ 25.03 $ 23.95
----------- ---------
Income from Investment
Operations:
Net investment loss(a) ........... ( 0.17) ( 0.16)
Net realized and unrealized
gain on investments ............. 3.71 1.24
----------- ---------
Total from Investment
Operations ....................... 3.54 1.08
----------- ---------
Less Distributions:
Dividends from net
investment income ............... -- --
Distributions from net
realized gains .................. ( 0.12) --
----------- ---------
Total Distributions .............. ( 0.12) --
----------- ---------
Net asset value, end of period..... $ 28.45 $ 25.03
=========== =========
Total Return (%)(b) ............... 14.07 (c)(f) 4.51 (c)
Ratios (%)/Supplemental Data:
Operating expenses, net, to
average daily net
assets(a) ....................... 2.72 (e) 2.72 (e)
Net investment income
(loss) to average daily net
assets .......................... ( 1.32) (e) ( 1.35)(d)
Portfolio turnover rate(c) ....... 41 (c) 71
Net assets, end of period
($ millions)..................... 0.4 0.2
<CAPTION>
CLASS C SHARES*
-------------------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1999 --------------------------------------------------
(UNAUDITED) 1998 1997 1996/dagger/
---------------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ........................ $ 25.03 $ 23.73 $ 22.12 $ 21.11
----------- --------- --------- ---------
Income from Investment
Operations:
Net investment loss(a) ........... ( 0.18) ( 0.20) ( 0.13) ( 0.07)
Net realized and unrealized
gain on investments ............. 3.72 2.12 2.25 1.08
----------- --------- --------- ---------
Total from Investment
Operations ....................... 3.54 1.92 2.12 1.01
----------- --------- --------- ---------
Less Distributions:
Dividends from net
investment income ............... -- -- ( 0.34) --
Distributions from net
realized gains ................... ( 0.12) ( 0.62) ( 0.17) --
----------- --------- --------- ---------
Total Distributions .............. ( 0.12) ( 0.62) ( 0.51) --
----------- --------- --------- ---------
Net asset value, end of period..... $ 28.45 $ 25.03 $ 23.73 $ 22.12
=========== ========= ========= =========
Total Return (%)(b) ............... 14.11 (c)(f) 8.24 (d) 9.79 (d) 4.78 (c)
Ratios (%)/Supplemental Data:
Operating expenses, net, to
average daily net
assets(a) ....................... 2.72 (e) 2.72 2.72 2.72 (e)
Net investment income
(loss) to average daily net
assets .......................... ( 1.36)(d) ( 1.15) ( 1.14) ( 0.96)(d)
Portfolio turnover rate(c) ....... 41 71 50 59
Net assets, end of period
($ millions)..................... 7 6 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 October 31, 1998.
(a) Excludes management fees waived by Eagle in the amount of $.01, $.03, $.06
and $.16 per Class A Share, respectively. The operating expense ratio
including such items would have been 2.04% (annualized), 2.08%, 2.23% and
2.69% (annualized) for Class A Shares, respectively. Excludes management
fees waived by the Eagle in the amount of $.01, $.03 per Class B Share,
respectively. The operating expense ratio including such items would have
been 2.79% (annualized) and 2.83 (annualized) for Class B Shares,
respectively. Excludes management fees waived by the Eagle in the amount of
$.01, $.03, $.06, and $.16 per Class C Share, respectively. The operating
expense ratio including such items would have been 2.79% (annualized),
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 $.01, $.03, $.06, $.16 and $.17 per Eagle Share, respectively.
The operating expense ratios including such items would have been 2.67%
(annualized), 2.71%, 2.86%, 3.31% and 5.09% (annualized) for Eagle Shares,
respectively.
(b) Calculated without the imposition of a sales charge.
(c) Not annualized.
(d) These returns are calculated based on the published net asset value at
October 31, 1997.
(e) Annualized.
(f) These returns are calculated based on the published net asset value at
April 30, 1999.
12 SEMIANNUAL REPORT
<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 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.
13 SEMIANNUAL REPORT
<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, 1999, there was an unlimited number of shares
of beneficial interest of no par value authorized.
Transactions in Class Eagle, A, B and C Shares of the Fund during the
six month period ended April 30, 1999, were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 1999 EAGLE SHARES A SHARES
(UNAUDITED) ----------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
------------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold ..................... 44,313 $ 1,203,429 13,972 $ 382,554
Shares issued on reinvestment
of distributions ............... 5,474 151,150 1,024 28,582
Shares redeemed ................. (151,230) (4,158,113) (25,325) (686,411)
-------- ------------ ------- ----------
Net increase (decrease) ......... (101,443) $ (2,803,534) (10,329) $ (275,275)
============ ==========
Shares outstanding:
Beginning of year .............. 1,304,178 268,138
--------- -------
End of year .................... 1,202,735 257,809
========= =======
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 1999 B SHARES C SHARES
(UNAUDITED) ----------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ----------- ------------ -------------
<S> <C> <C> <C> <C>
Shares sold ..................... 7,150 $ 190,623 29,962 $ 810,481
Shares issued on reinvestment
of distributions ............... 58 1,581 1,009 27,707
Shares redeemed ................. (2,026) (58,788) (23,873) (643,700)
------ --------- ------- -----------
Net increase (decrease) ......... 5,182 $ 138,416 7,098 $ 194,488
========= ===========
Shares outstanding:
Beginning of year .............. 9,348 234,123
------ -------
End of year .................... 14,530 241,221
====== =======
</TABLE>
14 SEMIANNUAL REPORT
<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, 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 ............... -- -- 4,371 102,414
Shares redeemed ................. (173) (4,682) (67,332) (1,769,569)
----- -------- ------- -------------
Net increase (decrease) ......... 9,348 $242,817 75,731 $ 1,959,484
======== =============
Shares outstanding:
Beginning of year .............. -- 158,392
----- -------
End of year .................... 9,348 234,123
===== =======
</TABLE>
Note 3: PURCHASES AND SALES OF SECURITIES. For the six month period ended
April 30, 1999, purchases and sales on investment securities (excluding
repurchase agreements and short term obligations) aggregated $20,500,901
and $19,381,116 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
contractually 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 $17,952 were waived
for the Eagle International Equity Portfolio for the six month period
ended April 30, 1999. If total Fund expenses fall below the expense
limitation agreed to by Eagle before the end of the year ended October
31, 2001, Eagle International Equity Portfolio may be required to pay
Eagle a portion or all of the waived management fees. In addition, the
Eagle International Equity Portfolio may be required to pay Eagle, a
portion or all of the management fees waived of $91,433 in fiscal 1997
and $52,276 for fiscal 1998 if total Fund expenses fall below the annual
expense limitations before the end of the year ending October 31, 1999,
and 2000, respectively.
The Manager has entered into an agreement with Martin Currie, Inc., a
New York Corporation, (the "Subadviser") to provide to the Fund
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for a fee
payable by the Manager equal to .50% of average daily net assets on the
first $100 million of assets and .40% thereafter without regard to any
reduction due to the imposition of expense limitations. For the six
month period ended April 30, 1999 the Subadviser earned $120,282 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 $11,211 in front-end sales charges for Class A
Shares, $2,189 and $1,740 in contingent deferred sales charges for Class
B and C Shares for the six month period ended April 30, 1999,
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
15 SEMIANNUAL REPORT
<PAGE>
EAGLE 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 $8,666,
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.
16 SEMIANNUAL 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
(727) 573-3800
TRANSFER AGENT/
DIVIDEND DISBURSING AGENT
Heritage Asset Management, Inc.
P.O. Box 33022
St. Petersburg, FL 33733
CUSTODIAN
State Street Bank and Trust Company
P.O. Box 1912
Boston, MA 02105
LEGAL COUNSEL
Kirkpatrick & Lockhart LLP
EAGLE INTERNATIONAL EQUITY
PORTFOLIO
Semiannual Report
(unaudited)
April 30, 1999
