THE EAGLE
INTERNATIONAL
EQUITY PORTFOLIO
[GRAPHIC OMITTED]
ANNUAL REPORT
OCTOBER 31, 1999
EAGLE
ASSET MANAGEMENT INC.
880 CARILLON PAARKWAY
P.0. BOX 10520
ST. PETERSBURG, FL
33733-0520
(727) 573-2453
(800) 237-3101
<PAGE>
December 21, 1999
Dear Fellow Shareholders:
We are pleased to provide you with the annual report for the Eagle
International Equity Portfolio (the "Fund") of Heritage Series Trust for the
fiscal year ended October 31, 1998. For this period, the Eagle class of shares
of your Fund appreciated by 23.85%, slightly higher than the 23.04% return for
the Morgan Stanley Capital International Europe, Asia, Far East ("EAFE") Index.
As you will see from the chart on page 4, your Fund has outperfomed the EAFE
Index for the period from the Fund's inception on May 1, 1995 through October
31, 1999. Your fund also offers class A, B and C shares. The financial and
investment performance information for all classes of shares of your Fund are
presented in this annual report.
The investment subadviser for your Fund is Martin Currie, Inc. of Edinburgh,
Scotland. As a reminder, your Fund's assets are allocated not only to developed
markets, but also to emerging markets around the world. Thus, we believe your
Fund should be considered a core international holding in your overall
investment portfolio. Your Fund's performance benefited in the past year by a
recovery in Japan, Asia and emerging markets, while continental Europe and the
U.K. had less robust returns during this period. We hope you find the comments
of Martin Currie, Inc. helpful in understanding how your investment portfolio
has been managed during the past year.
On behalf of all of us at Eagle and Heritage, thank you for your continuing
investment in the Eagle International Equity Portfolio. We hope you enjoyed a
wonderful holiday season and wish you a happy and healthy 2000.
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
A N N U A L R E P O R T
<PAGE>
December 2, 1999
MARKET COMMENTARY from MARTIN CURRIE, INC.
Eagle International Equity Portfolio
The final months of 1998 saw a rapid recovery from the turmoil of the third
quarter, created by crisis in Russia and collapse of confidence in Asia.
Interest rate cuts, initiated by the US, and a recovery in bond markets,
allowed major world equity markets to recover and move towards previous highs
in early 1999. This current year has been dominated by a strong recovery in
Japan, Asia and emerging market equities, as corporate restructuring, improving
economies and firmer currencies have encouraged a return of overseas buying.
European markets have been subdued in the wake of a weak start for the Euro and
evidence of sluggish growth. The UK equity market has been more volatile,
impacted by the change in the US interest rate cycle and weaker bond yields.
The Morgan Stanley Capital International Europe, Australia, Far East Index rose
by 23.04% while the Fund's Eagle Shares rose by 23.85% after expenses, during
the year ended October 31, 1999.
JAPAN (33.0% of the portfolio as of fiscal year end) rallied significantly over
the period, supported by a much stronger yen. Government support for domestic
investors and small businesses and an unprecedented change in the attitude of
Japanese corporate management, encouraged us to add to the region, taking our
position above the Index and peer group weighting. Having run a portfolio
dominated by blue chip export stocks, we switched emphasis towards domestic
recovery and restructuring plays. New holdings included Fujitsu, Sumitomo
Bakelite, Asahi Chemical, Benesse, and Kao, all reflective of domestic
restructuring. NTT Mobile, Secom (domestic security) and Rohm have been some of
your best performing shares. With a more positive view on the economy, we
unwound the yen/dollar hedge towards the end of the period. Legislation is now
in place to allow the corporate cross shareholdings to be placed in pension
schemes rather than be sold into market rallies; this allows scope for the
Index to rise further.
We substantially reduced our weighting to CONTINENTAL EUROPE (51.2% of the
portfolio as of fiscal year end). Concerns over the extent of economic recovery
and mixed political news has left markets volatile and the new currency weak.
We introduced a number of cyclical stocks into the portfolio such as Valeo,
Peugeot, Elf Aquitaine (France), Preussag (Germany) and added to the
telecommunications sector with holdings in Vivendi, France Telecom (France),
Telecom Italia (Italy) and Ericsson (Sweden). In the medium term, weaker bond
yields, a change in interest rate cycle and mixed signs of German and Italian
economic growth leave upside for the region constrained. A reduction in the UK
weighting (now 14.9% of the portfolio as of fiscal year end) took place after a
period of good returns. However, weakening bond yields and the impact of a
strong sterling on corporate profits, has left UK equities looking fully
valued. We built up our energy and resource weighting (BP Amoco, RTZ) and
continued to favour the financial sector through holdings in Legal & General
and the Halifax Group. Sales reflected concerns over pricing power, such as
Safeway (food retailing) and Marks & Spencer, all suffering in a tough retail
environment. As with Continental Europe, the telecommunications sector
continues to move ahead, and we added British Telecommunications to the list.
2 A N N U A L R E P O R T
<PAGE>
ASIA (9.3% of the portfolio as of fiscal year end) was also built up over the
period. The region benefited from the recovery in economic prospects for Japan
and a stronger yen. Firmer Asian currencies, falling interest rates and
evidence of considerable financial and corporate restructuring encouraged us to
broaden our market exposure. Having played the relatively liquid markets of
Australia, Hong Kong and Singapore, we extended the list to include Korea and
Thailand. New holdings included North and Tabcorp (Australia), Swire Pacific,
New World Development and China Everbright (Hong Kong), Singapore Telecom,
Overseas Chinese Banking Corp, Neptune Orient Lines (Singapore), Korea Telecom
and Thai Petrochemical Industry.
We increased our exposure to SMALLER MARKETS over the period, in line with a
more optimistic view on world growth, Asian recovery and rising commodity
prices. Alpha Credit Bank and Hellenic Telecom (Greece), Magyar Olaj es Gaz
(Hungary), Bank Handlowy, Telekomunikacja Polska (Poland), Hindalco (India),
Compania Vale Do Rio Doce (Brazil) Cifra (Mexico), Commercial International
Bank (Egypt) and Nedcor (South Africa) represented a significant increase to
non Index markets.
OUTLOOK
Improving world economic growth and evidence of domestic recovery in a number
of key markets has prompted a shift towards a greater cyclical emphasis within
the portfolio. Japan, Asia and selective smaller markets have the greatest
profit recovery potential in this improving environment and we have weighted
the Fund's portfolio accordingly. A change in the interest rate cycle in the US
and weak domestic bonds in both the UK and Europe, will constrain returns from
these maturer market regions. Y2K issues have distorted capital flows this
year, but we have liquidity available to capitalise on opportunities resulting
from volatility surrounding this momentous event.
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 in the Spring of
2000.
3 A N N U A L R E P O R T
<PAGE>
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST - EAGLE INTERNATIONAL
EQUITY PORTFOLIO-EAGEL SHARES ON MAY 1, 1995
[GRAPH OMITTED]
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST - EAGLE INTERNATIONAL
EQUITY PORTFOLIO- CLASS A & CLASS C SHARES ON DECEMBER 27, 1995
[GRAPH OMITTED]
(SEE FOOTNOTES ON THE FOLLOWING PAGE)
4 A N N U A L R E P O R T
<PAGE>
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST - EAGLE INTERNATIONAL
EQUITY PORTFOLIO- CLASS B SHARES ON JANUARY 2, 1998
[GRAPH OMITTED]
* Average annual returns for the Heritage Series Trust -- Eagle International
Portfolio Eagle Class A, Class B and Class C Shares are calculated in
conformance with Item 21 of Form N-1A, which assumes reinvestment of
dividends, a sales load of 4.75% for Class A Shares and a 4% contingent
deferred sales load for the complete redemption of Class B Shares. If Class
B Shares were still held at the end of the period, the value would be
$12,929. Performance presented represents historical data. The investment
return and principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their
original cost. The Fund's past performance is not indicative of future
performance and should be considered in light of the Fund's investment
policy and objectives, the characteristics and quality of its portfolio
securities, and the periods selected.
5 A N N U A L R E P O R T
<PAGE>
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
MARKET
SHARES VALUE
------ -------
COMMON STOCKS --95.1% (A)
- -------------------------
AUSTRALIA--2.5%
---------------
7,000 Brambles Industries Ltd. ............................ $ 196,858
38,700 News Corporation Ltd. ............................... 279,860
93,000 North Ltd. .......................................... 179,697
32,000 Tabcorp Holdings Ltd. ............................... 202,840
66,000 Telstra Corporation ................................. 335,737
----------
1,194,992
----------
BRAZIL--0.5%
------------
7,000 Compania Vale Do Rio Doce,
Sponsored ADR ..................................... 128,100
8,000 Petrobras, Sponsored ADR ............................ 127,000
----------
255,100
----------
EGYPT--0.3%
-----------
10,700 Commercial International Bank,
Sponsored GDR .................................... 132,145
----------
FINLAND--1.8%
-------------
7,462 Nokia AB OY ......................................... 854,039
----------
FRANCE--12.6%
-------------
1,526 Accor ............................................... 343,496
5,193 AXA-UAP Groupe ...................................... 732,489
4,232 Cap Gemini SA ....................................... 641,006
2,788 Compagnie de Saint Gobain ........................... 483,872
3,716 France Telecom ...................................... 359,012
2,394 Lafarge ............................................. 230,409
1,827 PSA Peugeot Citroen ................................. 350,716
2,682 Societe Generale .................................... 583,960
2,136 Suez Lyonnaise des Eaux ............................. 344,876
8,566 Total SA, Class "B" ................................. 1,157,856
10,531 Vivendi ............................................. 798,100
----------
6,025,792
----------
GERMANY--6.5%
-------------
9,919 BASF AG ............................................. 446,024
6,643 Bayerische Hypo-Vereinsbank
AG ................................................ 436,016
1,346 Celanese AG* ........................................ 21,235
12,974 Hoechst AG .......................................... 571,114
5,399 Mannesmann AG ....................................... 849,001
6,386 Metro AG ............................................ 343,244
4,920 Siemens AG .......................................... 441,695
----------
3,108,329
----------
GREECE--0.2%
------------
3,400 Hellenic Telecom OTE ................................ 72,043
----------
MARKET
SHARES VALUE
------ -------
COMMON STOCKS (CONTINUED)
- -------------------------
HONG KONG--2.7%
---------------
230,000 China Everbright, Ltd. .............................. 164,317
30,500 Dao Heng Bank Group, Ltd. ........................... 138,592
25,000 Henderson Land Development
Company ........................................... 113,600
155,934 Hong Kong Telecom
Company, Ltd. ..................................... 356,289
9,500 Hutchison Whampoa, Ltd. ............................. 95,385
95,000 New World Development, Ltd. ......................... 179,764
53,000 Swire Pacific Ltd., Class "A" ....................... 262,663
----------
1,310,610
----------
INDIA--0.6%
-----------
6,900 Hindalco Industries, Ltd.,
Sponsored GDR ..................................... 156,975
8,033 Indian Opportunities Fund,
Ltd. (b) * ........................................ 123,467
----------
280,442
----------
IRELAND--0.5%
-------------
31,932 Bank of Ireland ..................................... 249,221
----------
ISRAEL--0.2%
------------
1,200 Orbotech Ltd.* ...................................... 93,750
----------
ITALY--3.2%
-----------
38,688 San Paolo IMI SPA ................................... 501,350
131,000 Seat Pagine Gialle SPA .............................. 186,709
40,986 Telecom Italia Mobiliere SPA ........................ 256,080
66,355 Telecom Italia SPA .................................. 573,021
----------
1,517,160
----------
JAPAN--31.5%
------------
50,000 Asahi Chemical Industry
Company, Ltd. ..................................... 302,100
1,700 Benesse Corporation ................................. 363,575
17,000 Brigestone Corporation .............................. 467,920
21,000 Canon, Inc. ......................................... 594,131
4,000 FamilyMart Company, Ltd. ............................ 278,124
9,000 Fuji Photo Film Company, Ltd. ....................... 289,153
24,000 Fujitsu Ltd. ........................................ 722,739
56,000 Hitachi, Ltd. ....................................... 605,275
10,000 Honda Motor Company, Ltd. ........................... 421,981
6,000 Ito-Yokado Company, Ltd. ............................ 479,908
24,000 Kao Corporation ..................................... 731,946
51,000 Kubota Corporation .................................. 202,983
3,000 Mabuchi Motor Company, Ltd. ......................... 443,080
25,000 Marui Company, Ltd. ................................. 472,331
40,000 Mitsui Marine & Fire Insurance....................... 265,081
65 NTT Mobile Communication ............................ 1,726,767
The accompanying notes are an integral part of the financial statements.
6 A N N U A L R E P O R T
<PAGE>
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
MARKET
SHARES VALUE
------ -------
COMMON STOCKS (CONTINUED)
- -------------------------
JAPAN (CONTINUED)
-----------------
4,000 Promise Company, Ltd. .............................. $ 268,534
3,000 Riso Kagaku Corporation ............................ 129,472
5,200 Rohm Company, Ltd. ................................. 1,166,970
4,000 Secom Company, Ltd. ................................ 428,887
5,000 Secom Company, Ltd. (c)* ........................... 532,272
20,000 Shin-Etsu Chemical
Company, Ltd. .................................... 824,782
7,500 Sony Corporation ................................... 1,169,560
34,000 Sumitomo Bakelitel
Company, Ltd. .................................... 335,533
11,000 Taisho Pharmaceutical Company ...................... 457,850
45,000 Toppan Printing Company, Ltd. ...................... 551,980
19,000 Yamanouchi Pharmaceutical .......................... 861,897
-----------
15,094,831
-----------
MEXICO--1.7%
------------
15,000 Alpha SA ........................................... 57,584
5,560 Cemex, SA, Class "B"* .............................. 125,100
81,000 Cifra, SA* ......................................... 127,416
5,000 Desc ADS ........................................... 79,375
3,300 Grupo Televisa, SA, Sponsored
GDR* ............................................. 140,250
3,200 Telefonos de Mexico, Sponsored
ADR .............................................. 273,600
-----------
803,325
-----------
NETHERLANDS--3.4%
-----------------
16,068 Ahold (Kon) NV ..................................... 493,513
10,710 ING Groep NV ....................................... 631,759
14,634 VNU, NV ............................................ 494,878
-----------
1,620,150
-----------
POLAND--0.2%
------------
18,500 Telekomunikacja Polska,
Sponsored GDR .................................... 92,963
-----------
SINGAPORE--2.5%
---------------
9,100 Chartered Semiconductor
Manufacturing, Sponsored
ADR * ............................................ 302,006
221,000 Neptune Orient, Ltd.* .............................. 320,213
36,750 Overseas Union Bank ................................ 276,183
30,000 Singapore Airlines Ltd. ............................ 317,441
-----------
1,215,843
-----------
SOUTH AFRICA--0.3%
------------------
1,024 Anglo-American Corporation,
PLC* ............................................. 54,503
MARKET
SHARES VALUE
------ -------
COMMON STOCKS (CONTINUED)
- -------------------------
SOUTH AFRICA (CONTINUED)
------------------------
3,400 Nedcor Investment Bank
Holdings* ........................................ 1,909
3,400 Nedcor Ltd. ........................................ 66,852
-----------
123,264
-----------
SOUTH KOREA--0.7%
-----------------
7,370 Korea Telecom Corporation
ADS* ............................................. 259,793
4,290 Shinhan Bank GDS* .................................. 91,699
-----------
351,492
-----------
SPAIN--3.4%
-----------
23,131 Argentaria SA ...................................... 513,370
49,799 Banco Santander Central Hisp ....................... 517,001
37,694 Telefonica S.A. .................................... 620,101
-----------
1,650,472
-----------
SWEDEN--2.4%
------------
17,900 Ericson, Class "B" ................................. 744,382
25,000 Foreningsparbanken, AB,
Class "A" ........................................ 398,225
-----------
1,142,607
-----------
SWITZERLAND--2.1%
-----------------
570 Clariant AG ........................................ 249,419
270 Holderbank Financiere Glarus ....................... 332,474
287 Novartis AG ........................................ 429,286
-----------
1,011,179
-----------
TAIWAN--0.1%
------------
1,700 Taiwan American Fund (b)* .......................... 22,321
-----------
THAILAND--0.3%
--------------
400,000 Thai Petrochemical Industry (d)* ................... 165,782
-----------
UK--14.9%
---------
17,500 Allied Zurich, PLC ................................. 212,794
8,000 AstraZeneca PLC .................................... 361,767
40,000 BP Amoco, PLC ...................................... 388,452
15,000 British Sky Broadcasting, PLC ...................... 161,691
13,000 British Telecomunications, PLC ..................... 235,832
29,000 Cable & Wireless, PLC .............................. 338,335
22,000 General Electric Company, PLC ...................... 239,496
22,000 GKN, PLC ........................................... 353,912
11,500 Glaxo Welcome, PLC ................................. 339,386
11,000 Halifax Group, PLC ................................. 140,444
94,000 Hilton Group, PLC .................................. 287,297
22,000 Land Securities, PLC ............................... 274,020
The accompanying notes are an integral part of the financial statements.
7 A N N U A L R E P O R T
<PAGE>
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
MARKET
SHARES VALUE
------ -------
COMMON STOCKS (CONTINUED)
- -------------------------
UK (CONTINUED)
--------------
61,000 LASMO, PLC ........................................ $ 135,317
73,000 Legal & General Group PLC ......................... 202,721
28,000 Lloyds TSB Group, PLC ............................. 387,401
16,000 McKechnie, PLC .................................... 101,221
14,000 National Westminster Bank, PLC 316,086
8,000 Rio Tinto, PLC .................................... 136,583
11,100 Royal Bank of Scotland Group,
PLC ............................................. 255,353
28,000 Scot & Newcastle, PLC ............................. 260,874
21,000 Scottish Power, PLC ............................... 194,275
38,000 Shell Transport & Trading
Company, PLC .................................... 290,978
28,000 SmithKline Beecham, PLC ........................... 361,175
23,991 Smiths Industries, PLC ............................ 325,626
40,000 Stagecoach Holdings, PLC .......................... 113,709
27,642 Unilever, PLC ..................................... 256,630
90,000 Vodafone Group .................................... 419,262
8,892 Wassall, PLC ...................................... 40,985
-----------
7,131,622
-----------
Total Common Stocks (cost $36,733,783) ............................ 45,519,474
-----------
PRINCIPAL MARKET
AMOUNT VALUE
------ -------
CONVERTIBLE PREFERRED SHARES--1.5% (a)
- --------------------------------------
JAPAN--1.5%
-----------
34,000,000 TB Finance (Cayman) 2.75%
10/01/04 (e) .................................... $ 295,914
36,000,000 Sanwa International Finance
(Bermuda) 1.25% 1/8/05 (e)....................... 447,108
-----------
743,022
-----------
Total Convertible Preferred Shares
(cost $506,793) ................................................. 743,022
-----------
Total Investment Portfolio
excluding repurchase aggreement
(cost $37,240,576) .............................................. 46,262,496
PRINCIPAL MARKET
AMOUNT VALUE
------ -------
REPURCHASE AGREEMENT--2.7%(a)
- -----------------------------
Repurchase Agreement with State Street
Bank and Trust Company, dated
October 29, 1999 @ 5.13% to be
repurchased at $1,291,552 on
November 01, 1999, collateralized by
$1,275,000 United States Treasury Notes,
6.25% due October 31, 2001,(market value
$1,324,984 including interest)
(cost $1,291,000) ............................................... 1,291,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $38,531,576)(f), 99.3%(a) ............................... 47,553,496
OTHER ASSETS AND LIABILITIES, net, 0.7%(a) ...................... 320,770
-----------
NET ASSETS, 100.0% .............................................. $47,874,266
===========
- ----------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) Martin Currie Investment Management Limited is the manager of the Indian
Opportunities Fund, Ltd. and the Taiwan American Fund.
(c) Bonus Issue-This bonus issue was converted into 5,000 shares of Secom
Company, Ltd. on November 29, 1999.
(d) Security is deemed illiquid and is fair valued by the Board of Trustees.
(e) Principal amount is stated in Japanese Yen.
(f) The aggregate indentified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation
of $9,021,920 which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $10,912,504 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$1,890,584.
ADR - American Depository Receipt
ADS - American Depository Shares
GDR - Global Depository Receipt
GDS - Global Depository Shares
The accompanying notes are an integral part of the financial statements.
8 A N N U A L R E P O R T
<PAGE>
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
------------------------ ----- ------
Common Stocks
Aerospace ..................................... $ 325,626 0.7%
Airlines ...................................... 317,441 0.7%
Auto Manufacturers ............................ 421,981 0.9%
Auto Parts and Equipment ...................... 353,912 0.7%
Banking ....................................... 4,106,232 8.6%
Broadcasting .................................. 301,941 0.6%
Building ...................................... 1,285,455 2.7%
Capital Goods ................................. 558,959 1.2%
Chemicals ..................................... 1,628,197 3.3%
Conglomerates ................................. 495,007 1.0%
Consumer Goods and Services ................... 3,142,913 6.5%
Cosmetics and Toiletries ...................... 731,946 1.5%
Electronic and Electrical Equipment ........... 4,368,082 9.0%
Finance ....................................... 1,401,643 2.9%
Food .......................................... 1,028,267 2.1%
Forest Products ............................... 179,697 0.4%
Industrials, Diversified ...................... 1,215,425 2.5%
Insurance ..................................... 1,577,402 3.3%
Leisure and Hotels ............................ 630,793 1.3%
Mining ........................................ 191,086 0.4%
Office Equipment .............................. 1,316,870 2.8%
Oil and Gas ................................... 2,099,603 4.4%
Pharmaceuticals ............................... 2,828,099 6.0%
Publishing .................................... 279,860 0.6%
Real Estate ................................... 453,784 1.0%
Recreational Products ......................... 289,153 0.6%
Restaurants ................................... 260,874 0.5%
Retail Stores ................................. 1,079,655 2.3%
Securities .................................... 145,788 0.3%
Services ...................................... 1,344,726 2.8%
Software ...................................... 641,006 1.3%
Steel and Iron ................................ 571,114 1.2%
Telecommunications ............................ 7,309,619 15.5%
Tires and Rubber .............................. 467,920 1.0%
Transportation and Storage .................... 832,147 1.7%
Utilities, Diversified ........................ 798,100 1.7%
Utilities, Electric ........................... 194,275 0.4%
Utilities, Water .............................. 344,876 0.7%
Convertible Preferred Shares
Banking ....................................... 295,914 0.6%
Finance ....................................... 447,108 0.9%
Repurchase Agreement ............................ 1,291,000 2.7%
----------- ----
Total Investments ............................... $47,553,496 99.3%
=========== ====
OPEN FORWARD FOREIGN CURRENCY CONTRACTS
OCTOBER 31, 1999
GROSS UNREALIZED
CONTRACT IN DELIVERY APPRECIATION
TO DELIVER EXCHANGE FOR DATE (DEPRECIATION)
- -------------------------- ------------------ -------- ----------------
USD 95,825 EUR 91,349 11/01/99 $ (280)
USD 3,503,000 JPY 386,993,820 11/22/99 (221,192)
JPY 386,993,820 USD 3,676,202 11/22/99 47,990
----------
Net Unrealized Depreciation $ (173,482)
==========
- ----------
EUR - Euro JPY - Japanese Yen USD - United States Dollar
The accompanying notes are an integral part of the financial statements.
9 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C> <C>
Investments, at market value (identified cost $37,240,576 ) (Note 1) ............................... $46,262,496
Repurchase agreement (cost $1,291,000) (Note 1) .................................................... 1,291,000
Cash ............................................................................................... 10,760
Receivables:
Investments sold ................................................................................. 7,655,613
Fund shares sold ................................................................................. 517,511
Dividends and interest ........................................................................... 46,972
Foreign taxes recoverable ........................................................................ 36,692
Deferred organization expenses (Note 1) ............................................................ 5,200
Deferred state qualification expenses (Note 1) ..................................................... 7,834
Prepaid insurance .................................................................................. 1,328
-----------
Total assets .................................................................................. 55,835,406
LIABILITIES
- -----------
Payables (Note 4):
Investments purchased ............................................................................ $ 7,464,352
Fund shares redeemed ............................................................................. 128,567
Accrued management fee ........................................................................... 86,796
Accrued distribution fee ......................................................................... 34,435
Unrealized depreciation of forward currency contracts ............................................ 173,482
Other accrued expenses ........................................................................... 73,508
-----------
Total liabilities ............................................................................. 7,961,140
-----------
Net assets, at market value ........................................................................ $47,874,266
===========
NET ASSETS
- ----------
Net assets consist of:
Paid-in capital (Note 5) ......................................................................... $32,464,483
Accumulated net investment income (Notes 1 and 5) ................................................ 78,478
Accumulated net realized gain (Notes 1 and 5) .................................................... 6,487,318
Net unrealized appreciation on investments and other assets and liabilities denominated in
foreign currencies ............................................................................. 8,843,987
-----------
Net assets, at market value ........................................................................ $47,874,266
===========
EAGLE CLASS SHARES
- ------------------
Net asset value, redemption and offering price per share ($32,204,989 divided by 1,037,481 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ................................ $ 31.04
===========
CLASS A SHARES
- --------------
Net asset value and redemption price per share ($7,910,457 divided by 250,659 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ................................ $ 31.56
===========
Maximum offering price per share (100/95.25 of $31.56) ............................................. $ 33.13
===========
CLASS B SHARES
- --------------
Net asset value and redemption price per share ($458,757 divided by 14,881 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ................................ $ 30.83
===========
CLASS C SHARES
- --------------
Net asset value and offering price per share ($7,300,063 divided by 236,759 shares
of beneficial interest outstanding, no par value) (Notes 1 and 2) ................................ $ 30.83
===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
10 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
<TABLE>
<S> <C> <C>
INVESTMENT INCOME
- -----------------
Income:
Dividends (net of $84,150 foreign withholding taxes)........................ $ 737,523
Interest (net of $3 foreign withholding taxes).............................. 46,306
-----------
Total income ............................................................ 783,829
Expenses (Notes 1 and 4):
Management fee ............................................................. $ 477,822
Distribution fee (Eagle Shares) ............................................ 332,966
Distribution fee (Class A Shares) .......................................... 18,407
Distribution fee (Class B Shares) .......................................... 3,928
Distribution fee (Class C Shares) .......................................... 67,266
Shareholder servicing fees (Eagle Shares) .................................. 3,330
Shareholder servicing fees (Class A Shares) ................................ 9,572
Shareholder servicing fees (Class B Shares) ................................ 511
Shareholder servicing fees (Class C Shares) ................................ 8,745
Custodian/Fund accounting fees ............................................. 165,632
Professional fees .......................................................... 61,680
Amortization of state qualification expenses ............................... 41,775
Reports to shareholders .................................................... 12,776
Organization expenses ...................................................... 10,400
Trustees' fees and expenses ................................................ 9,478
Other ...................................................................... 4,254
----------
Total expenses before waiver ............................................ 1,228,542
Fees waived by Manager (Note 4) ......................................... (24,049) 1,204,493
---------- -----------
Net investment loss .......................................................... (420,664)
-----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain from investment transactions ............................... 6,904,858
Net realized gain from foreign currency transactions ......................... 216,150
Net unrealized appreciation of investments during the year ................... 3,686,213
Net unrealized depreciation from foreign currency liabilities during the year (177,933)
-----------
Net gain on investments ................................................. 10,629,288
-----------
Net increase in net assets resulting from operations ......................... $10,208,624
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
11 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
---------------- ----------------
<S> <C> <C>
Increase in net assets:
Operations:
Net Investment loss ................................................................... $ (420,664) $ (264,871)
Net realized gain from investment transactions ........................................ 6,904,858 234,230
Net realized gain (loss) from foreign currency transactions ........................... 216,150 (68,794)
Net unrealized appreciation of investments during the year. ........................... 3,686,213 3,293,526
Net unrealized appreciation (depreciation) from foreign currrency during the year ..... (177,933) 95,909
------------ -----------
Net increase in net assets resulting from operations .................................. 10,208,624 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) ................. (7,860,802) 1,913,671
------------ -----------
Increase in net assets .................................................................. 2,135,689 4,123,654
Net assets, beginning of year ........................................................... 45,738,577 41,614,923
------------ -----------
Net assets, end of year (including undistributed net investment income of $78,478 and
accumulated net investment loss of $113,865, respectively.) ........................... $ 47,874,266 $45,738,577
============ ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
12 A N N U A L R E P O R T
<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 YEARS ENDED
OCTOBER 31,
---------------------------------------------------------------
1999 1998 1997 1996 1995/dagger/
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR ......................... $ 25.17 $ 23.83 $ 22.14 $ 20.79 $ 20.00
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) .................... (0.27) (0.17) (0.11) (0.01) (0.03)
Net realized and
unrealized gain on
investments .................. 6.26 2.13 2.28 1.84 0.82
--------- --------- --------- --------- ---------
Total from Investment
Operations .................... 5.99 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 YEAR ....................... $ 31.04 $ 25.17 $ 23.83 $ 22.14 $ 20.79
========= ========= ========= ========= =========
TOTAL RETURN(%)(b) ............. 23.85 8.38 (c) 9.98 (c) 8.93 3.95 (d)
RATIOS (%)/ SUPPLEMENTAL
DATA:
Operating expenses, net, to
average daily net
assets(a) .................... 2.60 2.60 2.60 2.60 2.60 (e)
Net investment income
(loss) to average daily
net assets ................... (0.95) (0.67) (0.47) (0.02) (0.33)(e)
Portfolio turnover rate (d) ... 78 71 50 59 61
Net assets, end of year
($ millions) ................. 32 33 32 22 10
<CAPTION>
CLASS A SHARES*
-----------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------------------------------------
1999 1998 1997 1996/dagger//dagger/
---------- ---------- ---------- --------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
YEAR ........................... $ 25.43 $ 23.97 $ 22.25 $ 21.11
--------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income
(loss)(a) ..................... (0.09) (0.01) 0.05 0.10
Net realized and
unrealized gain on
investments ................... 6.34 2.14 2.28 1.04
--------- --------- --------- ---------
Total from Investment
Operations .................... 6.25 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 YEAR ........................ $ 31.56 $ 25.43 $ 23.97 $ 22.25
========= ========= ========= =========
TOTAL RETURN(%)(b) .............. 24.68 9.04 (c) 10.71 (c) 5.40 (d)
RATIOS (%)/ SUPPLEMENTAL
DATA:
Operating expenses, net, to
average daily net
assets(a) ..................... 1.97 1.97 1.97 1.97 (e)
Net investment income
(loss) to average daily
net assets .................... (0.32) (0.02) 0.22 0.44 (e)
Portfolio turnover rate (d) .... 78 71 50 59
Net assets, end of year
($ millions) .................. 8 7 6 3
<CAPTION>
CLASS B SHARES*
----------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
-----------------------------------------
1999 1998/dagger//dagger//dagger/
--------- ----------------------------
<S> <C> <C>
Net asset value, beginning of
year .......................... $ 25.03 $ 23.95
-------- ---------
Income from Investment
Operations:
Net investment income
(loss)(a) .................... (0.30) (0.16)
Net realized and
unrealized gain on
investments .................. 6.22 1.24
-------- ---------
Total from Investment
Operations ................... 5.92 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 year ....................... $ 30.83 $ 25.03
======== =========
Total Return(%)(b) ............. 23.70 4.51 (d)
Ratios (%)/ Supplemental
Data:
Operating expenses, net, to
average daily net
assets(a) ..................... 2.72 2.72 (e)
Net investment income
(loss) to average daily
net assets .................... (1.04) (0.71)(e)
Portfolio turnover rate (d)..... 78 71
Net assets, end of year
($ millions)................... 0.5 0.2
<CAPTION>
CLASS C SHARES*
------------------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
-------------------------------------------------------------------
1999 1998 1997 1996/dagger//dagger/
--------- --------- ---------- --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
year ........................... $ 25.03 $ 23.73 $ 22.12 $ 21.11
-------- --------- --------- ---------
Income from Investment
Operations:
Net investment income
(loss)(a) ..................... (0.30) (0.20) (0.13) (0.07)
Net realized and
unrealized gain on
investments ................... 6.22 2.12 2.25 1.08
-------- --------- --------- ---------
Total from Investment
Operations .................... 5.92 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 year ........................ $ 30.83 $ 25.03 $ 23.73 $ 22.12
======== ========= ========= =========
Total Return(%)(b) .............. 23.70 8.24 (c) 9.79 (c) 4.78 (d)
Ratios (%)/ Supplemental
Data:
Operating expenses, net, to
average daily net
assets(a) ..................... 2.72 2.72 2.72 2.72 (e)
Net investment income
(loss) to average daily
net assets .................... (1.06) (0.79) (0.52) (0.32)(e)
Portfolio turnover rate (d)..... 78 71 50 59
Net assets, end of year
($ millions)................... 7 6 4 1
</TABLE>
- --------
* Per share amounts have been calculated using the monthly average share
method.
/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 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 2.65%,
2.71%, 2.86%, 3.31% and 5.09% (annualized) for Eagle Shares, respectively.
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 2.02%, 2.08%, 2.23% and 2.69%
(annualized) for Class A Shares, respectively. Excludes management fees
waived by Eagle in the amount of $.01 and $.03 per Class B Share,
respectively. The operating expense ratio including such items would have
been 2.77% and 2.83% (annualized) for Class B Shares, respectively.
Excludes management fees waived by 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 2.77%, 2.83%, 2.98% and 3.44%
(annualized) for Class C Shares, respectively.
(b) Calculated without the imposition of a sales charge.
(c) These returns are calculated based on the published net asset value at
October 31, 1997.
(d) Not annualized.
(e) Annualized.
The accompanying notes are an integral part of the financial statements.
13 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust")
is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a diversified,
open-end management investment company consisting of six separate
investment Portfolios, the Eagle International Equity Portfolio (the
"Fund"), the Aggressive Growth Fund, Small Cap Stock Fund, the Value
Equity Fund, the Growth Equity Fund, and the Mid Cap Growth Fund. The
Fund primarily seeks capital appreciation principally through
investments in a portfolio of international 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 Aggressive Growth Fund, 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: The Fund values investment securities at market
value based on the last quoted sales price as reported by the principal
securities exchange on which the security is traded. If no sale is
reported, the last bid price is used and in the absence of a market
quote, securities are valued using such methods as the Board of Trustees
believes would reflect fair market value. Securities that are quoted in
a foreign currency will be valued daily in U.S. dollars at the foreign
currency exchange rates prevailing at the time the Fund calculates its
daily net asset value per share. Although the Fund values its assets in
U.S. dollars on a daily basis, it does not intend to convert holdings of
foreign currencies into U.S. dollars on a daily basis. Short term
investments having a maturity of 60 days or less are valued at 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 of 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.
14 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
DISTRIBUTION OF NET REALIZED GAINS: Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to the
Fund, will be distributed to shareholders in the following fiscal year.
The Fund uses the identified cost method for determining realized gain
or loss on investments for both financial and federal income tax
reporting purposes.
EXPENSES: The Fund is charged for those expenses that are directly
attributable to it, such as management fees, custodian/fund accounting
fees, distribution fees, etc., while other expenses such as insurance
expense, are all allocated proportionately among the Trust. Expenses of
the Fund are allocated to each class of shares based upon their relative
percentage of current net assets. All expenses that are directly
attributable to a specific class of shares, such as distribution and
shareholder servicing fees, are charged directly to that class.
STATE QUALIFICATION EXPENSES: State qualification fees are amortized
based either on the time period covered by the qualification or as
related shares are sold, whichever is appropriate for each state.
ORGANIZATION EXPENSES: Expenses incurred in connection with the
formation of the Fund were deferred and are being amortized on a
straight-line basis over 60 months from the date of commencement of
operations.
CAPITAL ACCOUNTS: The Fund reports the undistributed net investment
income (accumulated net investment loss) and accumulated net realized
gain (loss) accounts on a basis approximating amounts available for
future tax distributions (or to offset future taxable realized gains
when a capital loss carryforward is available). Accordingly, the Fund
may periodically make reclassifications among certain capital accounts
without impacting the net asset value of the Fund.
OTHER: For purposes of these financial statements, investment security
transactions are accounted for on a trade date basis. Dividend income
and distributions to shareholders are recorded on the ex-dividend date.
Interest income is recorded on the accrual basis.
Note 2: FUND SHARES. At October 31, 1999, there was an unlimited number of
shares of beneficial interest of no par value authorized.
Transactions in Eagle Shares and Class A, B and C Shares of the Fund
during the year ended October 31, 1999, were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED EAGLE SHARES A SHARES
OCTOBER 31, 1999 ---------------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT
----------- ------------- --------- -------------
<S> <C> <C> <C> <C>
Shares sold . ............... 137,206 $ 3,951,774 27,491 $ 780,723
Shares issued on
reinvestment
of distributions .......... 5,474 151,150 1,024 28,582
Shares redeemed ............. (409,377) (11,689,394) (45,994) (1,298,534)
-------- ------------- ------- ------------
Net increase (decrease) ..... (266,697) $ (7,586,470) (17,479) $ (489,229)
============= ============
Shares outstanding:
Beginning of year .......... 1,304,178 268,138
--------- -------
End of year ................ 1,037,481 250,659
========= =======
<CAPTION>
FOR THE YEAR ENDED B SHARES C SHARES
OCTOBER 31, 1999 ------------------------ --------------------------
SHARES AMOUNT SHARES AMOUNT
--------- ---------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold . ............... 9,353 $ 254,995 45,492 $ 1,262,451
Shares issued on
reinvestment
of distributions .......... 58 1,581 1,009 27,703
Shares redeemed ............. (3,878) (109,438) (43,865) (1,222,395)
------ ---------- ------- ------------
Net increase (decrease) ..... 5,533 $ 147,138 2,636 $ 67,759
========== ============
Shares outstanding:
Beginning of year .......... 9,348 234,123
------ -------
End of year ................ 14,881 236,759
====== =======
</TABLE>
15 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Transactions in Eagle Shares, Class A Shares and Class 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) $ (622,802) 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 year ended October 31,
1999, purchases and sales on investment securities (excluding repurchase
agreements and short term obligations) aggregated $37,080,096 and
$36,465,810, 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 a rate
of 1.00% on the first $100 million of average daily net assets and 0.80%
of any excess over $100 million of the Fund's average daily net assets,
computed daily and payable monthly. The Manager contractually waived its
investment advisory 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 $24,049 were waived for
the Fund for the year ended October 31, 1999. If total Fund expenses
fall below the expense limitation agreed to by Eagle before the end of
the year ending October 31, 2001, the Fund may be required to pay the
Manager a portion or all of the waived management fees. In addition, the
Fund may be required to pay the Manager, a portion or all of the
management fees waived of $52,276 in fiscal 1998 if total Fund expenses
fall below the annual expense limitations before the end of the year
ending October 31, 2000.
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 the average daily net assets on
the first $100 million of net assets and .40% thereafter without regard
to any reduction due to the imposition of expense limitations. For the
year ended October 31, 1999 the Subadviser earned $238,911 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 receives a fee in the amount of .10% from the Manager for
performing these administrative services.
Raymond James & Associates, Inc. (the "Distributor") has advised the
Fund that it received $19,272 in front-end sales charges for Class A
Shares, and $2,439 and $2,202 in contingent deferred sales charges for
Class B and C Shares for the year ended October 31, 1999, respectively.
The Distributor paid sales commissions to salespersons from these fees
and 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
16 A N N U A L R E P O R T
<PAGE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Class, Class B and Class C Distribution Plans, the Fund may pay the
Distributor a fee equal to 1.00% of the average daily net assets. Such
fees are accrued daily and payable monthly. Class B Shares will convert
to Class A Shares eight years after the end of the calendar month in
which the shareholder's order to purchase Class B Shares 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, 1999, to reflect
reclassifications arising from permanent book/tax differences primarily
attributable to foreign currency gains, a net operating loss and basis
difference in passive foreign investment companies (PFICs), the Fund
credited undistributed net investment income $613,007 and paid in
capital $5,242 and debited accumulated net realized gain $618,249.
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, 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.
17 A N N U A L R E P O R T
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Trustees and Shareholders of
Heritage Series Trust - Eagle International Equity Portfolio
In our opinion, the accompanying statement of assets and liabilities,
including the investment portfolio, and the related statements of operations
and of changes in net assets and the financial highlights present fairly, in
all material respects, the financial position of the Heritage Series Trust -
Eagle International Equity Portfolio (the "Fund") at October 31, 1999, the
results of its operations for the year then ended, the changes in its net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits, which included confirmation of securities at October 31, 1999 by
correspondence with the custodian, provide a reasonable basis for the opinion
expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Tampa, Florida
December 15, 1999
18 A N N U A L R E P O R T
<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
Annual Report
October 31, 1999
