HERITAGE
SERIES
TRUST
[MONTAGE OF PHOTOS]
FROM OUR FAMILY TO YOURS: THE INTELLIGENT CREATION OF WEALTH
AGGRESSIVE GROWTH FUND
EAGLE INTERNATIONAL EQUITY PORTFOLIO
GROWTH EQUITY FUND
MID CAP GROWTH FUND
SMALL CAP STOCK FUND
VALUE EQUITY FUND
ANNUAL REPORT
and Investment Performance
Review for the Year Ended
October 31, 1999
[HERITAGE LOGO]
SERIES TRUST(TM)
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HERITAGE SERIES TRUST
ANNUAL REPORT
TABLE OF CONTENTS
PRESIDENT'S LETTER ....................................................... 1
PORTFOLIO COMMENTARY
AGGRESSIVE GROWTH FUND
Portfolio Management Letter ........................................ 2
Performance Graphs ................................................. 3
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Investment Commentary .............................................. 4
Performance Graphs ................................................. 6
GROWTH EQUITY FUND
Portfolio Management Letter ........................................ 8
Performance Graphs ................................................. 11
MID CAP GROWTH FUND
Portfolio Management Letter ........................................ 12
Performance Graphs ................................................. 14
SMALL CAP STOCK FUND
Portfolio Management Letters ....................................... 15
Performance Graphs ................................................. 18
VALUE EQUITY FUND
Portfolio Management Letter ........................................ 20
Performance Graphs ................................................. 22
INVESTMENT PORTFOLIOS .................................................... 24
STATEMENT OF ASSETS AND LIABILITIES ...................................... 39
STATEMENT OF OPERATIONS .................................................. 40
STATEMENTS OF CHANGES IN NET ASSETS ...................................... 41
FINANCIAL HIGHLIGHTS ..................................................... 43
NOTES TO FINANCIAL STATEMENTS ............................................ 49
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December 20, 1999
Dear Fellow Shareholders:
It is my pleasure to provide you with the annual report for the Heritage
Series Trust for the fiscal year ended October 31, 1999. The investment and
financial information for each of the six funds available within Heritage
Series Trust is provided in this report. Because many of you have investments
in more than one of these funds, this combined report allows us to provide you
with the relevant information for each of your funds while reducing the volume
of mail you receive from us.
As we have discussed in our last several reports, large cap stocks have
performed better than small and mid cap stocks and "growth" stocks have
delivered better results than "value" stocks. Among the portfolios in Heritage
Series Trust, our large cap growth fund continued to be our top performer while
our small cap and value funds delivered the lowest absolute returns for the
period. With respect to the Growth Equity Fund, we have outperformed the
Standard & Poor's 500 Composite Stock Price Index thus far in 1999 just as we
did in each of the 1996, 1997 and 1998 calendar years. Fewer than one percent
of diversified U.S. equity funds can claim this record.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED OCTOBER 31, 1999
===================================================
FUND "A" SHARES* "B" SHARES* "C" SHARES*
==================================== =============== =============== ===============
<S> <C> <C> <C>
Aggressive Growth Fund +35.50% +34.44% +34.44%
Eagle International Equity Portfolio +24.68% +23.70% +23.70%
Growth Equity Portfolio +50.73% +49.65% +49.57%
Mid Cap Growth Fund +15.97% +15.17% +15.09%
Small Cap Stock Fund +2.61% +1.86% +1.86%
Value Equity Fund +0.24% -0.56% -0.50%
</TABLE>
In the pages that follow are commentaries from the portfolio managers for
each of the portfolios in Heritage Series Trust. Following the commentaries,
you will find investment portfolios and other important financial information
for all of these funds.
The Board of Trustees of Heritage Series Trust has authorized changes to
the market cap limits for our Small Cap and Mid Cap funds. Effective with the
January 2000 prospectus update, the market capitalization limits for Small Cap
and Mid Cap will be raised to $2 billion and $10 billion from $1 billion and $5
billion, respectively. In managing these funds, the portfolio managers
generally will be required to invest at least 65% of the fund's assets in
stocks with market capitalization below $2 billion for the Small Cap Stock Fund
and between $500 million and $10 billion for the Mid Cap Stock Fund. We believe
these changes will provide added flexibility to allow our portfolio managers
the opportunity to be more competitive against their peers and benchmark
indexes.
Thank you for your continuing investments with us. We hope that you will
call us at (800) 709-FUND (3863) with any comments or suggestions you wish to
share with us.
On behalf of all of us at Heritage, we hope you had a wonderful holiday
season and wish you a happy and healthy 2000.
Sincerely,
/s/ STEPHEN G. HILL
----------------------------------------
Stephen G. Hill
President
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* Calculated without the imposition of either front-end or contingent deferred
sales charges.
1
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November 15, 1999
Dear Fellow Shareholders:
I am pleased to report that for the year ended October 31, 1999, the Heritage
Series Trust - Aggressive Growth Fund (the "Fund") Class A Shares advanced
35.5%*, topping the relative benchmarks.
Check Point Software Technology was our top contributor, as the provider of
Internet firewalls benefited from strong earnings and investor interest in
Internet investments. Tanning Technology, an information technology services
company specializing in e-commerce, advanced as well, which also reflected
their position in the build-out of the Internet infrastructure. Sykes
Enterprises, a call center operator, benefited from a strong earnings report.
Tech Data, a distributor of computer equipment, was volatile and we were
fortunate in buying and selling it well. Finally, ABR Information Services and
Genesys Telecommunications Laboratories both benefited from merger agreements.
On the downside, Hibbett Sporting Goods, a sporting goods retailer, sold off
apparently due to investor apathy towards a small cap retailer; there was no
corporate news to account for the weakness. Steiner Leisure, a provider of spa
services on cruise ships, renegotiated contracts with major cruise lines at
lower rates and sold off as a result. Office Depot, a retailer of office
products, sold off following an earnings disappointment.
At the end of the period, the Fund had a price/earnings ratio of 19x 2000
earnings, an estimated 3-5 year earnings growth of 27%, and return on equity of
12%. Technology represented about 45% of the portfolio.
Although we are concerned with valuations of certain technology stocks, we
intend to keep an above-market technology weighting, reflecting our belief that
technology will drive the growth of the economy into the new millennium. Y2K
fears should soon be a distant memory and it appears interest rates may have
peaked. Such a scenario should prove very beneficial for our Fund.
Wishing you a happy and prosperous new millennium.
Sincerely,
/s/ BERT BOKSON
-----------------------------------
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Aggressive
Growth Fund
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* Calculated without the imposition of front-end sales charges.
2
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* Average annual returns for Heritage Series Trust - Aggressive Growth Fund
Class A, B and C Shares are calculated in conformance with item 21 of Form
N-1A, which assumes maximum sales load of 4.75% for Class A Shares, a 4%
contingent deferred sales load for the complete redemption of Class B
Shares, and reinvestment of dividends for Class A, B and C Shares. If Class
B Shares were still held at the end of the period, the value would be
$14,421. 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.
3
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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 Class A Shares rose by 24.68%* 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 investments. 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.
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.
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* Calculated without the imposition of front-end sales charges.
4
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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.
5
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* Average annual returns for Heritage Series Trust - Eagle International Equity
Portfolio Eagle Class, Class A and Class C Shares are calculated in
conformance with item 21 of Form N-1A, which assumes the maximum sales load
of 4.75% for Class A Shares, and reinvestment of dividends for Eagle Class,
Class A and Class C Shares. Performance presented represents historical
data. The investment return and principal value of an investment will
fluctuate so that an investor's shares, when redeemed, may be worth more or
less than their original cost. The Fund's past performance is not indicative
of future performance and should be considered in light of the Fund's
investment policy and objectives, the characteristics and quality of its
portfolio securities, and the periods selected.
6
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* Average annual returns for Heritage Series Trust - Eagle International Class
B Shares are calculated in conformance with item 21 of Form N-1A, which
assumes a 4% contingent deferred sales load for the complete redemption of
Class B Shares, and reinvestment of dividends. 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.
7
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December 10, 1999
Dear Fellow Shareholders:
The Heritage Series Trust--Growth Equity Fund has performed exceptionally well
year-to-date and for the trailing 12 months ended October 31, 1999. The Fund's
year-to-date total return thru October is up 28.56%* versus a year-to-date
total return of 11.96% for the Standard & Poor's 500 Composite Stock Price
Index ("S&P 500 Index"). For the 52-week period ending October 31, 1999, the
Class A Shares of the Fund handily outperformed the S&P 500 Index as well. Over
that time period, the Fund's total return was 50.73%* versus a total return of
25.67% for the S&P 500 Index. The Fund was rated five stars(a) by Morningstar,
based on 3,372 domestic equity funds for the three year period ending October
31, 1999. On a three-year basis, the Fund ranks in the top sixth(b) percentile
of Morningstar's large growth category peer group for the period ending October
31, 1999. This performance comes on the heels of a change in the Fund's
portfolio manager on April 1, 1999.
The Fund currently has 47 equity investments that we consider premier growth
stocks. Our investment strategy is to look for companies that have an earnings
growth rate greater than the average for companies included in the S&P 500
Index. The types of companies that we seek are dominant firms in high growth
industries. We favor those firms whose industries have significant barriers to
entry and high switching costs for their customers. Finally, we consider those
areas with the strongest potential for growth.
MARKET ENVIRONMENT
It is quite amazing to think about how far we have come in just a year's time.
Think about it. In the fall of 1998, the global economic environment was
seemingly in crisis. The Asian economies continued to struggle, Russia
defaulted on its debt, and there was pressure on Latin American governments to
devalue their currencies. Investors braced for the possibility of deflation and
negative economic growth worldwide. Those who were the most pessimistic at that
time argued that equities and asset prices could not possibly appreciate in
this deflationary environment and that we should prepare for the worst. We
disagreed with that assessment. Fortunately, these negative scenarios did not
take place in 1999 as a global economic rebound kicked into high gear.
Investors' sentiment has shifted once again and the worry has focused on
inflation, and not deflation. Since then, the U.S. Federal Reserve has raised
interest rates several times in 1999 when it appeared that the U.S. economy
might overheat from its torrid growth pace. We do not believe there will be
major inflation in the U.S. economy. There is still excess manufacturing
capacity worldwide and with the Internet invading every part of our economy, it
is our belief that inflation will be held in check. Although short-term issues
may create a choppy market for investors, we remain bullish on the intermediate
and longer-term fundamentals. Thus, we believe this type of environment will
continue to be a "stock picker's" market.
We remain very bullish on the prospects of the U.S. equity markets and the
growth style in particular. In our view, the large, multinational companies
held in the Fund should continue to compound their revenue and earnings growth
and these factors should override any near-term macroeconomic changes. We
continue to believe that the long-term market fundamentals remain outstanding.
STRUCTURAL AND STRATEGIC CHANGES
When we took over managing this Fund on April 1, 1999, we remained committed to
the Fund's large cap growth emphasis. We focus our efforts on those areas that
have the strongest growth potential. These primary areas include technology and
health care (both pharmaceuticals and medical devices). Thus, we have beefed up
the Fund's weightings in these two sectors. Despite any near-term hiccups that
the market might experience, we continue to stay the course and buy more of our
franchise names when they sell off and vice-versa.
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* Calculated without the imposition of front-end sales charges.
(a) Morningstar, Inc. brings both performance and risk together into one
evaluation. These ratings are subject to change every month. The top 10%
of domestic equity funds receive five stars and the next 22.5% receive
four stars. The performance numbers used for the Fund did take into
account front-end sales charges. Past performance is not guarantee of
future results.
(b) Morningstar, Inc. performance rankings for the Heritage Capital
Appreciation Trust Class A Shares were based on a quantitative measure of
risk-adjusted returns. This measure calculated by Morningstar shows how
well a fund has balanced risk and return relative to other funds in the
same category. For the 1-year period ended October 31, 1999, the Fund was
ranked in the 16th percentile out of 601 large growth funds. For the
3-year period ended October 31, 1999, the Fund was ranked in the 6th
percentile out of 384 large growth funds. The performance numbers used for
the fund did not take into account front-end sales charges. Past
performance is no guarantee of future results.
8
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We are big believers in the long-term growth prospects of technology,
especially the Internet. Positions in companies such as Cisco Systems,
Microsoft, and Sun Microsystems contributed to the Fund's performance. Positive
performance was also attributed to semiconductor companies like Texas
Instruments, Intel, LSI Logic, and National Semiconductor. At this time, we are
diversifying our semiconductor investments by taking some profits and investing
the proceeds into new, higher growth names. In the health care area, we have
added to blue chip names such as Johnson & Johnson, Merck, Lilly, and
Medtronic. The severe correction in 1999 in many health care stocks has given
us a number of attractive entry points for purchasing these securities as
longer-term positions. Another name that has been purchased for the Fund is
Royal Caribbean Cruise Lines. We believe this firm has solid growth prospects
and it is a nice addition to our consumer sector. Royal Caribbean is on its way
to upgrading its fleet of ships and the demand for cruises remains strong.
Retailing is an area where we have pared back the Fund somewhat because of the
new threat of the Internet. In our view, web-based, Internet models pose a
serious threat to traditional, bricks-and-mortar-based retailing models. The
web-based, Internet models are producing significantly greater revenues per
individual employee than the bricks-and-mortar-based firms are. In addition,
the web-based, Internet models are generating these higher revenues per
employee at a LOWER cost per employee than the traditional retailers are. Thus,
we believe that increased competition in the retail sector will erode margins
for all but the most efficient companies. We eliminated the Fund's positions in
the Gap, Walgreen's, and Safeway. Two retail companies that we hold in the
Fund, Wal-Mart and Home Depot, are using technology as a competitive weapon.
The financial weighting has been pared back from 28% to 12% since we took over
management of the Fund. Although the earnings for most financial companies
remain strong, we believe that many companies in this sector will not have the
proverbial "wind at their backs" going forward. Longer term, financial services
companies face many challenges with the role of the "intermediary" in question
in today's world. In our opinion, many financial services firms have
infrastructure and cultural issues that are not conducive to these challenges.
The blurring of the competitive battle lines, combined with the quickening pace
of technology that is being deployed and used as a strategic weapon, is forcing
companies to fight even harder to retain their existing base of customers. In a
world that now moves and competes on "Internet" time, the winners will be those
firms that can quickly adapt to the underlying market changes that are ahead.
Profitability and customer growth will continue to be of paramount importance
for all firms. Given our longer-term view on the financial sector, we believe
that our decision to reduce the Fund's weighting in financial stocks was a
prudent course of action. This decision proved to be especially beneficial to
the Fund's shareholders given the weakness experienced by many financial stocks
facing the wind of an uncertain, near-term interest rate environment.
We will monitor the response of financial services companies very carefully
before returning full force to this sector. In our opinion, the top financial
services firms ten years from now will look very different from those that
exist today. The Fund holds leading financial companies in dominant niches such
as American Express, AIG, and Citigroup.
TACTICAL CHANGES/VOLATILITY
Market volatility is high by any historical measurement and we believe there
are several reasons why this increased volatility is here to stay. First, there
are many more investors (both retail and institutional) in today's marketplace.
In our view, this can lead to exaggerated supply and demand situations for
securities in both up and down markets. Second, there are many more hedge funds
and money managers who trade securities that are using increasingly
sophisticated derivative instruments. Naturally, increasing the amount of
overall leverage in the financial system will increase the volatility in
short-term price movements. Third, technology is allowing investors to have
access to electronic networks, possible 24-hour trading, and the ability to
move money around the world many times over instantaneously.
We believe that this increased market volatility allows us to take advantage of
trading opportunities both on the upside and on the downside. We are adapting
by having an increased tolerance for volatility. Since we are very fundamental
with our core investment process, this volatility should continue to provide us
with trading opportunities in all types of markets. Therefore, we expect the
Fund's turnover will be higher than in the past due to short-term, tactical
trading opportunities.
The Fund added incremental performance due to the additions of initial public
offerings (IPOs) and favorable trading due to volatile market conditions. The
market favorably received the IPOs of Ariba, E.Piphany, Juniper Networks, and
Sycamore Networks. These are all companies with solid fundamentals that we
would consider core holdings.
9
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CONCLUSION
Looking ahead to next year, we believe the market is favorable based not only
on strong fundamentals and low inflation, but also because of potentially
strong earnings growth in the companies in which we prefer to invest. We remain
convinced that the real risk to investors is attempting to "time" the best
period to invest in the market. We thank you for investing with us and look
forward to working with you in the years to come.
Sincerely,
/s/ ASHI PARIKH
------------------------------------
Ashi Parikh
Managing Director
Eagle Asset Management, Inc.
Portfolio Manager, Growth Equity
Fund
10
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[GRAPH OMITTED]
* Average annual returns for Heritage Series Trust - Growth Equity Fund Class
A, B and C Shares are calculated in conformance with item 21 of Form N-1A,
which assumes the maximum sales load of 4.75% for Class A Shares, a 4%
contingent deferred sales load for the complete redemption of Class B
Shares, and reinvestment of dividends for Class A, B and C Shares. If Class
B Shares were still held at the end of the period, the value would be
$17,333. 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.
11
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December 2, 1999
Dear Fellow Shareholders:
We are pleased to present the second annual report for the Heritage Mid-Cap
Growth Fund (the "Fund"). For the one year period ended October 31, 1999, your
Fund's Class A Shares produced a 15.97%* return. For the same period the
Russell Mid Cap Growth Index and the Standard & Poor's 400 Mid Cap Index (the
"S&P Mid Cap Index") returned 37.66% and 21.06%, respectively. Year-to-date
through September, the Fund's Class A Shares earned 4.16%*. This number trails
the Russell Mid Cap Growth Index by 4.31%, but exceeds the S&P Mid Cap Index by
6.27%.
For the period June 30, 1999 through September 30, 1999, the total return for
the Class A shares was +1.85%. These results compare against 3Q 1999 returns of
- -8.40% return for the S&P Mid Cap Index. We think that the Fund's third
calendar quarter performance in a rough market represents an excellent data
point. Since we are growth-at-a reasonable price investors with an emphasis on
cash flow, we tend to hold up well in turbulent markets. Since there are a host
of growth funds that own large amounts of technology stocks and stocks with
high valuations, we feel that the fund's balanced conservatism is somewhat
unique.
Unlike most mid-cap funds, the Fund has a large exposure to small
capitalization stocks. With a median market capitalization of approximately
$1.8 billion, the Fund is one quarter the size of a typical mid-cap fund. For
reference purposes, the median market capitalization of the S&P Mid Cap Index
and the Russell Mid Cap indices are, respectively, $1.7 billion and $3 billion.
While the Fund's numbers are beating the S&P Mid Cap Index, as of this writing,
we feel that the market is not favoring our style and is at odds with
long-term, growth-at-a reasonable price investors. Some facts:
a) Despite their small index weights, 2 to 3% of incremental performance
has come from Internet stocks. Given their valuation levels, we have
difficulty holding these stocks. The Internet stocks we own are largely
undiscovered. For instance, marketing services stocks such as Catalina
Marketing, Nielsen Media Research, Harte-Hanks, and TMPW Worldwide are
stealth Internet stocks. Our holdings in cable and telecommunications
(Western Wireless, Insight Communications, Price Cellular) also
represent indirect Internet plays, as these providers represent digital
highways for the movement of data.
b) The bottom 80% of stocks in the small cap market, as ranked by
price-to-earning ratios, have averaged returns of -5.6% this year. The
top quintile, as ranked by price-to-earning ratios, is up 11.39%.
Stocks without earnings are up 34%.
c) 3% of the Standard & Poor's 500 Composite Stock Price Index
year-to-date return thru September is due to the top quintile of stocks.
Price momentum has never worked better. The historical average since 1959
for this group is 31% (Source. S.C. Bernstein).
We think that the Fund will be in good stead if a correction in technology and
high multiple stocks occurs. Our technology stocks tend to have reasonable
multiples. Our emphasis on cash flow becomes an important factor in rough
markets. Growth firms require capital and firms that generate capital
internally become more valuable in bad market conditions.
Our emphasis on valuation also pays off in terms of take-overs. Take-overs of
note this year include Executive Risk (insurance), Gulfstream (aircraft), Xomed
(medical products), Nielsen Media Research (media), and Metro Networks (radio).
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* Calculated without the imposition of front-end charges.
12
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The Fund is currently over weighted in consumer stocks, communications and
health care and under weighted in basic materials, financial services,
transportation, and utilities.
Some comments about these sector weightings follow:
Although we tend to favor well-run financial stocks, we are having difficulty
finding favorably priced financial stocks with solid fundamentals. The
property/casualty insurance industry has suffered numerous disappointments, the
sub-prime consumer lending sector is suffering from over-capacity, and bank
lending spreads seem to be narrowing. The valuations assigned to Internet and
on-line finance firms are extremely high. Our core finance holdings for the
past several years, Protective Life and Radian Group, have extremely solid
fundamentals. Despite this fact, returns for both stocks have been poor this
year, which has not helped the Fund's performance.
Returns in our health care holdings have also hurt the Fund's performance. Most
of the value names in the health care market this year were in health care
services stocks. We had some exposure in this area, particularly in hospitals,
from our Health Management Associates holding, which has subsequently been
sold. Services stocks continue to suffer from the effects of the Balanced
Budget Act cuts of 1997, and we are looking to selectively re-enter this area.
The rest of our holdings in health care - Patterson Dental (dental supplies),
Sybron (lab supplies), Xomed (medical devices), and Varian Medical (medical
devices) have generally performed in-line with the market.
The Fund's very large over-weighting in consumer cyclical stocks is in business
services, advertising and marketing services, education, publishing, and
telecommunication stocks. We have tended to de-emphasize retail stocks which
traditionally are a large part of consumer cyclicals. This decision is based on
fundamentals.
In consumer staples, our exposure is primarily in broadcast and media stocks,
with some exposure in entertainment stocks. We have de-emphasized food,
beverage, household products, and restaurant stocks. As with consumer
cyclicals, this weight is also based on fundamentals.
As we enter 2000, we are confident that the Fund is well positioned. Many small
and mid-cap stocks are much cheaper than large cap stocks. Our mix of stable
growth stocks should serve well if equity markets continue their current
course.
As always, we thank you for your support and we will always strive to add value
for the benefit of all of us as shareholders.
Sincerely,
/s/ TODD L. MCCALLISTER
----------------------------------------
Todd L. McCallister
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Mid Cap Growth Fund
13
<PAGE>
[GRAPH OMITTED]
[GRAPH OMITTED]
* Average annual returns for Heritage Series Trust - Mid Cap Growth Fund Class
A, B and C Shares are calculated in conformance with item 21 of Form N-1A,
which assumes the maximum sales load of 4.75% for Class A Shares, a 4%
contingent deferred sales load for the complete redemption of Class B
Shares, and reinvestment of dividends for Class A, B and C Shares. If Class
B Shares were still held at the end of the period, the value would be
$11,319. 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.
14
<PAGE>
November 16, 1999
Dear Fellow Shareholders:
It is our pleasure to update you on the progress and prospects for our
portion of the Heritage Series Trust-Small Cap Stock Fund (the "Fund").
For the twelve months ending October 31, 1999 the Fund's Class A Shares
returned 2.61%* versus 14.87% for the Russell 2000 Index, 11.13% for the
Standard & Poors Small Cap 600 Index and .72% for the Russell 2000 Value Index.
The Russell 2000 Index was particularly supported by the presence of
several Internet stocks which were included in the Russell 2000 until June 30.
These were not small capitalization companies and had valuation characteristics
not relevant to the Fund, so the other indices more accurately reflected what
happened in the small cap universe during the period.
The market was quite narrow during this period. Large caps did better than
small caps; high growth did better than growth at a reasonable price; growth
did better than value.
Investors like Awad Asset Management that stuck to strict valuation
disciplines and investment style were punished. Investors who migrated to
Internet and high growth, high price to earnings technology stocks did better.
This hurt the Fund's returns relative to the indices, as we stayed true to our
value, growth at a reasonable price style.
Positions in technology in the Fund that had a positive impact were
StarTek, Zebra, Periphonics and Comdisco. The Publishing sector also added to
the Fund's worth with positions in Houghton Mifflin and CMP Media. StarTek
benefitted from being perceived as an Internet fulfillment firm; Zebra's
earnings were better than expected, as were Periphonics. Comdisco was
recognized as a technology company; CMP Media was taken over; and Houghton
Mifflin was recognized as a potential takeover candidate.
We were hurt by our holdings in the healthcare sector, as LTC Properties,
Health Management Systems and Lanvision provided negative returns. LTC was
hurt, as it leases facilities to the nursing home industry which is under
pressure. Health Management and Lanvision went down from neglect as this sector
of the market was ignored.
Ultimately, the markets will refocus on small cap stocks and on value
stocks. As this happens, the Heritage Small Cap Fund should do very well. As we
move from a momentum market to a relative value market, funds should flow from
the speculative sector to the small cap arena. As this happens, we believe that
the Fund should experience better returns.
We believe the Fund is filled with good growing companies selling at modest
valuations.
Sincerely,
/s/ JAMES D. AWAD
--------------------------------
James D. Awad
Chairman
Awad Asset Management, Inc.
Portfolio Manager, Small Cap
Stock Fund
- ----------
* Calculated without the imposition of front-end sales charges.
15
<PAGE>
November 15, 1999
Dear Fellow Shareholders:
For the year ended October 31, 1999, the Heritage Small Cap Fund ("The
Fund") Class A Shares advanced 2.61%,* underperforming the Russell 2000, which
advanced 14.87%, in the comparable period. Primary factors that influenced
Eagle Asset Management's ("Eagle") portion of the Fund's underperformance were
underweighting of technology (only about 13% technology weighting for much of
the period), not trading out of several big winners which encountered problems
in the quarter and a style problem as growth at a reasonable price did not
work.
Eagle's portion of the Fund had about a 13% technology weighting. This
proved to be far too low. Best performing small cap funds for the third quarter
had about a 45% technology weighting for much of the period. (Worth noting,
several of the currently better performing funds stumbled badly in 1997, while
we had outstanding performance).
Two of our poorest performing stocks for the period, Inspire Insurance
Solutions and Strayer Education had been big winners. In hindsight, we should
have been more aggressive in trading out of winning positions.
Lastly, as shown in the table below, high price/earnings multiple stocks
were favored for the first nine months of the calendar year. While this seems
counter-intuitive, the following table indicates that a low price-earnings
strategy was ill-fated. The Fund's price-earnings ratio was about 13x.
1/1/99 THROUGH 9/30/99
-------------------------------------
QUINTILES RETURN PRICE/EARNINGS
----------- --------------- -------------------
1 -6.69% 8.4 - 10.1
2 -3.79% 11.6 - 13.2
3 -7.19% 14.7 - 17.0
4 -4.87% 20.0 - 25.7
5 +11.39% 46.0 - 4677.1
Source: Frank Russell Company; Prudential Securities.
On a positive note, Genesys Telecommunications, World Color Press, ABR
Information Systems, Computer Management Associates and Trident were up
significantly in the period due to merger announcements. Sykes Enterprises
performed well in the period due to a strong third quarter earnings report and
progress with its e-commerce bundled solutions. Coherent stock rose reflecting
a positive turn in their medical division as well as speculation regarding a
future production order from a semiconductor company.
We have taken certain steps to improve performance. Recently we increased
our technology weighting from 13% to over 20%. We are trimming our holdings of
financial services. While we still like the group, they had grown too large a
portfolio weighting. We are also reducing holdings in several of our
economically sensitive positions. In recent weeks performance has improved,
largely reflecting these adjustments.
We believe the portfolio is attractively positioned. As of period-end, the
portfolio had a price-to-earnings ratio of roughly 12 times expected year 2000
earnings per share, an anticipated earnings growth rate of 16%, and a return on
equity of 14%.
Going forward I remain optimistic about small cap stocks. Valuations
remain compelling both on an absolute and relative basis. Forecasted
price/earnings ratios are about 75% of those of large cap stocks.**
- ----------
* Calculated without the imposition of front-end sales charges.
** Source: Frank Russell Company, Prudential Securities
16
<PAGE>
With the exception of technology, I have not seen small cap stocks as
attractively priced since the mid-1970s. While timing a recovery can be
frustrating, I believe future returns will be outstanding.
As always, we will endeavor to do our best for our shareholders.
Sincerely,
/s/ BERT BOKSEN
---------------------------------------
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Small Cap Stock Fund
17
<PAGE>
[GRAPH OMITTED]
[GRAPH OMITTED]
* Average annual returns for Heritage Series Trust - Small Cap Stock Fund Class
A and B Shares are calculated in conformance with item 21 of Form N-1A,
which assumes the maximum sales load of 4.75% for Class A Shares, a 4%
contingent deferred sales load for the complete redemption of Class B
Shares, and reinvestment of dividends for Class A and B Shares. If Class B
Shares were still held at the end of the period, the value would be $8,010.
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.
18
<PAGE>
[GRAPH OMITTED]
* Average annual returns for Heritage Series Trust - Small Cap Stock Fund Class
C Shares are calculated in conformance with item 21 of Form N-1A, which
assumes reinvestment of dividends for Class C Shares. Performance presented
represents historical data. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. The Fund's past performance
is not indicative of future performance and should be considered in light of
the Fund's investment policy and objectives, the characteristics and quality
of its portfolio securities, and the periods selected.
19
<PAGE>
November 16, 1998
Dear Fellow Shareholders:
"Value" stocks have been down but not out. Over the last several weeks we
have witnessed a resurgence in value-oriented stocks. Much of the change is due
to new government legislation that appears to be ready for approval. Financial
stocks received a big boost from HR 10 which eliminates the legislative barrier
between banks, brokers, and insurance companies, thus allowing banks to enter
insurance and brokerage activities to a greater extent than heretofore allowed.
Most stocks in this group rallied based on the expectation of an acquisition
explosion. The emergence of the group is very much appreciated at this time due
to the doldrums it has gone through as interest rates ramped this year. Also,
health care stocks improved based upon the likelihood that financial relief
would be coming from a reinstatement on some Medicare cuts and the curtailing
of further reductions in payments. Demographic trends favor stocks in this
category due to the aging of America and the increased demands that are
expected to take place in this segment over the foreseeable future.
Furthermore, we expect U.S. corporate profits to significantly increase
through the second half of this year and at least the first two quarters of
2000 (albeit off depressed levels in the comparative period). Plus, the global
recovery appears to be picking up steam, which bodes well for cyclically
depressed industries such as steel, chemicals, metals and mining, and forest
products. The valuation gap between growth and value narrowed slightly in the
second quarter, but has since widened due to the enormous runup in technology
stocks.
Nevertheless, we are very encouraged with the economy's vibrance as we
move into the new millennium and the tremendous strides that domestic companies
have made in improving their productivity which, in fact, has kept inflation in
check despite higher labor costs and increases in basic material cost. Thus, we
expect the growth/value gap to narrow accordingly as the year progresses and to
finally witness a sustained improvement in value stocks as a whole and our
portfolio in particular, which we think is well positioned for the year ahead.
The level of relative performance of the Heritage Series Trust Value
Equity Fund (the "Fund") has not been up to our standards and we look forward
to turning the performance around now that the Fund totally reflects our
positions on an ongoing basis. Performance of the Fund's Class A Shares for the
fiscal year ended in October showed a gain of only 0.2%* versus the Russell
1000 Value Index that was up about 16.5%. Much of the shortfall in performance
occurred earlier in the year and in October, and we have begun to see
performance improvement in November, which is reversing the portfolio's
negative trend of the past year.
During the past year the Fund's performance benefited from the market's
psychology of anything "technology" is good. Thus, our overall investment in
the group did exceptionally well with large gains in Electronic Data Systems,
IBM, and Intel. In addition, telecommunication stocks have had an extraordinary
run due to the explosion of the Internet and data transmission. BellSouth, SBC
Communications, and US West have been beneficiaries of this momentum. However,
auto-related stocks such as Dana and Goodyear have hurt the performance and are
trading at historically low valuations. Also, financial stocks have been hit
hard due to rising interest rates and fierce competition in the marketplace. In
particular, Chubb, Hartford Financial, and First Union were negatively
affected. Retail stocks such as Albertson's and Kmart have had a tough time,
which was generally reflected by most companies in the industry.
- ----------------
* Calculated without the imposition of front-end sales charges.
20
<PAGE>
We have completed the transition of the Heritage Value Equity Fund on a
reasonably tax effective basis. The re-positioning more fully reflects our
philosophy of achieving superior returns with a lower level of risk than the
market averages. On an ongoing basis we will do all we can to offer our fellow
shareholders the kind of returns that they should expect from us as we move
into the next millennium.
<TABLE>
Sincerely, Sincerely,
<S> <C>
/s/ JEROME D. FISHER /s/ RUSSELL S. TOMPKINS
- ------------------------------------------ ------------------------------------------
Jerome D. Fisher Russell S. Tompkins
Managing Partner Managing Partner
Director of Equity Research Chief Operating Officer
Osprey Partners Investment Management, LLC Osprey Partners Investment Management, LLC
Portfolio Manager, Value Equity Fund Portfolio Manager, Value Equity Fund
</TABLE>
21
<PAGE>
[GRAPH OMITTED]
[GRAPH OMITTED]
* Average annual returns for Heritage Series Trust - Value Equity Fund Class A
and B Shares are calculated in conformance with item 21 of Form N-1A, which
assumes the maximum sales load of 4.75% for Class A Shares, a 4% contingent
deferred sales load for the complete redemption of Class B Shares, and
reinvestment of dividends for Class A and B Shares. If Class B Shares were
still held at the end of the period, the value would be $9,279. 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. Effective May 18, 1999, 100% of the assets of the Value Equity
Fund were allocated to Osprey Partners Investment Management, LLC., (See
Note 4).
22
<PAGE>
[GRAPH OMITTED]
* Average annual returns for Heritage Series Trust - Value Equity Fund Class C
Shares are calculated in conformance with item 21 of Form N-1A, which
assumes reinvestment of dividends for Class C Shares. Performance presented
represents historical data. The investment return and principal value of an
investment will fluctuate so that an investor's shares, when redeemed, may
be worth more or less than their original cost. The Fund's past performance
is not indicative of future performance and should be considered in light of
the Fund's investment policy and objectives, the characteristics and quality
of its portfolio securities, and the periods selected. Effective May 18,
1999, 100% of the assets of the Value Equity Fund were allocated to Osprey
Partners Investment Management, LLC., (See Note 4).
23
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - AGGRESSIVE GROWTH FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS--96.9%(a)
- -----------------------
ADVERTISING/COMMUNICATIONS--7.8%
--------------------------------
25,000 Catalina Marketing
Corporation.* ..................................... $2,340,625
30,000 TMP Worldwide Inc.* ................................. 1,873,125
----------
4,213,750
----------
BROADCASTING--6.4%
------------------
20,000 Emmis Communications,
Class "A"* ........................................ 1,442,500
22,500 Radio Unica* ........................................ 644,062
5,000 Tivo Inc.* .......................................... 214,375
48,750 World Wrestling Federation
Entertainment Inc* ................................ 1,176,093
----------
3,477,030
----------
DATA PROCESSING--14.1%
----------------------
35,000 Bsquare Corporation* ................................ 1,384,688
55,000 Data Return Corporation* ............................ 828,438
100,000 Datastream Systems, Inc. ............................ 1,025,000
25,000 Electronic Data Systems
Corporation ....................................... 1,462,500
5,000 Lexmark International Group,
Inc.,Class "A"* ................................... 390,312
25,500 Omega Research Inc.* ................................ 146,625
20,000 Tech Data Corporation* .............................. 376,250
100,000 The 3DO Company* .................................... 750,000
40,000 Transaction Systems Architects
Inc., Class "A" ................................... 1,230,000
----------
7,593,813
----------
EDUCATION--0.9%
---------------
28,000 Strayer Education, Inc. ............................. 491,750
----------
ELECTRONICS/ELECTRIC--14.1%
---------------------------
140,000 Amprex Corporation,
Class "A"* ........................................ 341,250
90,000 Artesyn Technologies, Inc.* ......................... 1,777,500
10,000 Chartered Semiconductor,
Sponsored ADR* .................................... 331,875
30,000 Fairchild Semiconductor
International Inc., Class "A"*..................... 757,500
40,800 PSC Inc.* ........................................... 300,900
35,000 Sawtek, Inc.* ....................................... 1,435,000
7,500 Silicon Image Inc.* ................................. 331,406
5,000 Sycamore Networks Inc.* ............................. 1,075,000
35,000 The DII Group, Inc.* ................................ 1,260,000
----------
7,610,431
----------
GRAPHIC ARTS--1.4%
------------------
31,712 Quebecor Printing Inc. .............................. 731,358
----------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
-------------------------
INTERNET--2.8%
--------------
5,000 Akamai Technologies Inc.* .......................... 725,938
10,000 CareInsite Inc.* ................................... 437,500
45,000 Firstwave Technologies, Inc.* ...................... 98,438
2,500 Interwoven Inc.* ................................... 195,938
----------
1,457,814
----------
LEISURE/AMUSEMENT--6.3%
-----------------------
20,000 Royal Caribbean Cruises, Ltd. ...................... 1,061,250
121,500 Steiner Leisure, Ltd.* ............................. 2,300,906
----------
3,362,156
----------
MANUFACTURING/DISTRIBUTIONS--1.4%
---------------------------------
30,000 Meade Instruments Corporation * .................... 765,000
----------
MEDICAL EQUIPMENT/SUPPLY--6.1%
------------------------------
75,000 Coherent, Inc.* .................................... 1,542,188
40,000 Lasersight Inc.* ................................... 552,500
24,062 Medical Manager Corporation* ....................... 1,206,107
----------
3,300,795
----------
OFFICE EQUIPMENT--1.2%
----------------------
50,000 Office Depot Inc.* ................................. 621,875
----------
OIL & GAS--2.0%
---------------
70,000 Global Marine Inc.* ................................ 1,063,125
----------
PHARMACEUTICAL--1.5%
--------------------
55,500 Collateral Therapeutics, Inc.* ..................... 783,938
----------
RETAIL STORES--7.5%
-------------------
15,000 Abercrombie & Fitch Company,
Class "A"* ....................................... 408,750
60,000 Hibbett Sporting Goods, Inc.* ...................... 956,250
50,000 Micro Warehouse, Inc.* ............................. 606,250
15,000 Tandy Corporation .................................. 944,062
50,000 Urban Outfitters Inc.* ............................. 1,100,000
----------
4,015,312
----------
SECURITIES--1.6%
----------------
16,000 Dain Ruscher Corporation ........................... 859,000
----------
SERVICES--7.7%
--------------
15,000 Central Parking Corporation ........................ 402,188
60,000 Navigant Consulting
Corporation* ..................................... 1,713,750
65,000 Sykes Enterprises, Inc.* ........................... 2,006,875
----------
4,122,813
----------
TELECOMMUNICATIONS--14.1%
-------------------------
50,000 Cincinnati Bell Inc. ............................... 1,040,625
100,000 Ems Technologies Inc.* ............................. 956,250
37,000 Genesys Telecomm Labs Inc.* ........................ 1,817,625
40,000 Paradyne Networks
Corporation* ..................................... 1,215,000
25,000 Splitrock Services* ................................ 546,875
22,000 Tellabs, Inc.* ..................................... 1,391,500
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - AGGRESSIVE GROWTH FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
TELECOMMUNICATIONS (CONTINUED)
------------------------------
20,000 Williams Communications
Group* ........................................ $ 637,500
------------
7,605,375
------------
Total Common Stocks
(cost $47,365,421) ............................................ 52,075,335
REPURCHASE AGREEMENT-- 10.1%(a)
- -------------------------------
Repurchase Agreement with State Street
Bank and Trust Company, dated
October 29, 1999 @ 5.13% to be repurchased
at $5,416,314 on November 1, 1999,
collateralized by $4,980,000 United States
Treasury Notes, 7.88% due November 15,
2004, (market value $5,543,921 including
interest) (cost $5,414,000) ..................................... 5,414,000
------------
TOTAL INVESTMENT PORTFOLIO
(cost $52,779,421) (b), 107.0%(a) 57,489,335
OTHER ASSETS AND LIABILITIES, net, (7.0%)(a) .................... (3,736,968)
------------
NET ASSETS, 100.0% $ 53,752,367
============
- ----------
* Non income-producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation of
$4,709,914 which consists of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost of
$7,370,189 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value of $2,660,275.
The accompanying notes are an integral part of the financial statements.
25
<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
----------
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
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
HONG KONG (CONTINUED)
---------------------
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
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
The accompanying notes are an integral part of the financial statements.
26
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
JAPAN (CONTINUED)
-----------------
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
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
-----------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
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
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
----------
The accompanying notes are an integral part of the financial statements.
27
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
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 agreement
(cost $37,240,576) .............................................. 46,262,496
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 1, 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.
28
<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.
29
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS--89.0%(a)
- -----------------------
ADVERTISING/COMMUNICATIONS--3.6%
--------------------------------
65,000 Omnicom Group, Inc. ............................... $ 5,720,000
-----------
BROADCASTING--1.0%
------------------
38,600 AT&T-Liberty Media Group,
Class "A"* ...................................... 1,531,938
-----------
CONGLOMERATES/DIVERSIFIED--4.7%
-------------------------------
54,600 General Electric Company .......................... 7,401,713
-----------
DATA PROCESSING--18.1%
----------------------
120,900 Cisco Systems, Inc.* .............................. 8,946,600
92,600 Dell Computer Corporation* ........................ 3,715,575
26,000 Epiphany Inc.* .................................... 2,236,000
35,900 First Data Corporation ............................ 1,640,181
30,000 Intertrust Technologies
Corporation* .................................... 1,635,000
84,600 Microsoft Corporation*. ........................... 7,830,787
10,700 Oracle Corporation* ............................... 508,918
19,900 Sun Microsystems, Inc.* ........................... 2,105,668
-----------
28,618,729
-----------
ELECTRONICS/ELECTRIC--11.7%
---------------------------
8,700 Applied Micro Circuits
Corporation* .................................... 676,969
9,500 Broadcom Corporation,
Class "A" ....................................... 1,214,219
3,400 Chartered Semiconductor,
Sponsored ADR* .................................. 112,838
10,500 Conexant Systems, Inc. * .......................... 980,438
27,150 Intel Corporation ................................. 2,102,428
57,500 LSI Logic Corporation* ............................ 3,058,281
36,100 Microchip Technology Inc.* ........................ 2,405,162
85,700 National Semiconductor
Corporation* .................................... 2,565,643
14,900 RF Micro Devices Inc.* ............................ 769,212
15,300 Solectron Corporation* ............................ 1,151,325
8,900 Sycamore Networks Inc.* ........................... 1,913,500
17,000 Texas Instruments Inc. ............................ 1,525,750
-----------
18,475,765
-----------
FILMED ENTERTAINMENT--0.6%
--------------------------
14,000 Time Warner, Inc. ................................. 975,625
-----------
FINANCE--5.1%
-------------
21,400 American Express Company .......................... 3,295,600
42,300 Citigroup, Inc. ................................... 2,289,488
46,400 Freddie Mac ....................................... 2,508,500
-----------
8,093,588
-----------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
INSURANCE--2.8%
---------------
43,575 American International
Group, Inc. ..................................... 4,485,502
-----------
INTERNET--5.7%
--------------
3,200 Akamai Technologies, Inc.* ........................ 464,600
46,600 America Online, Inc.* ............................. 6,043,438
1,500 Juniper Networks Inc.* ............................ 413,437
11,300 YAHOO! Inc.* ...................................... 2,023,406
-----------
8,944,881
-----------
LEISURE/AMUSEMENT--0.4%
-----------------------
10,500 Royal Caribbean Cruises, Ltd....................... 557,156
-----------
MACHINERY--1.5%
---------------
58,200 PRI Automation Inc.* .............................. 2,335,275
-----------
MEDICAL EQUIPMENT/SUPPLY--5.2%
------------------------------
55,900 Guidant Corporation ............................... 2,760,063
32,500 Johnson & Johnson ................................. 3,404,375
61,600 Medtronic Inc. .................................... 2,132,900
-----------
8,297,338
-----------
PHARMACEUTICAL--13.1%
---------------------
32,600 American Home Products
Corporation ..................................... 1,703,350
76,000 Bristol-Myers Squibb
Company ......................................... 5,837,750
38,800 Eli Lilly & Company ............................... 2,672,350
36,550 Merck & Company, Inc. ............................. 2,908,009
105,500 Pfizer, Inc. ...................................... 4,167,250
69,000 Schering-Plough Corporation ....................... 3,415,500
-----------
20,704,209
-----------
RETAIL STORES-8.9%
------------------
11,000 Costco Wholesale Corporation*...................... 883,438
63,100 Home Depot, Inc. .................................. 4,764,050
32,000 Kohl's Corporation* ............................... 2,394,000
107,500 Wal-Mart Stores, Inc. ............................. 6,093,906
-----------
14,135,394
-----------
TELECOMMUNICATIONS-5.7%
-----------------------
94,300 Aspect Telecommunications
Corporation*. ................................... 2,375,182
65,000 Cincinnati Bell Inc. .............................. 1,352,813
11,900 Lucent Technologies Inc. .......................... 764,575
37,200 MCI WorldCom, Inc.* ............................... 3,192,225
38,500 Qwest Communications
International* .................................. 1,386,000
-----------
9,070,795
-----------
The accompanying notes are an integral part of the financial statements.
30
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
UTILITIES-GAS--1.1%
-------------------
42,400 Enron Corporation .............................. $ 1,693,350
------------
Total Common Stocks
(cost $91,980,085)............................................. 141,041,258
------------
REPURCHASE AGREEMENT -- 11.1%(a)
- --------------------------------
Repurchase Agreement with State
Street Bank and Trust Company,
dated October 29, 1999 @ 5.13%
to be repurchased at $17,655,545 on
November 1, 1999, collateralized by
$18,005,000 United States Treasury Notes,
5.63% due September 30, 2001,
(market value $18,020,542 including interest)
(cost $17,648,000) .............................................. 17,648,000
------------
TOTAL INVESTMENT PORTFOLIO
(cost $109,628,085)(b), 100.2%(a).............................. 158,689,258
OTHER ASSETS AND LIABILITIES, net, (0.2%)(a) .................... (270,851)
------------
NET ASSETS, 100.0% .............................................. $158,418,407
============
- ----------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation
of $49,061,173, which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $49,150,469 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$89,296.
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - MID CAP GROWTH FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS -- 94.8% (a)
- --------------------------
ADVERTISING/COMMUNICATIONS -- 9.6%
----------------------------------
8,000 Catalina Marketing Corporation * ................. $ 749,000
31,000 Harte-Hanks Communications,
Inc. ........................................... 614,188
12,000 Lamar Advertising Company * ...................... 648,000
7,200 TMP Worldwide Inc. * ............................. 449,550
----------
2,460,738
----------
AEROSPACE -- 1.9%
-----------------
8,000 Alliant Techsystems, Inc. * ...................... 492,000
----------
BANKING -- 1.2%
---------------
15,000 Golden State Bancorp ............................. 313,125
----------
BROADCASTING -- 14.1%
---------------------
7,100 Adelphia Communications,
Class "A" * .................................... 387,838
12,000 Emmis Communications,
Class "A" * .................................... 865,500
20,700 Insight Communications Inc. * .................... 489,038
10,000 Pegasus Communications
Corporation * .................................. 442,500
5,200 Radio Unica * .................................... 148,850
24,500 Saga Communications Inc.,
Class "A" * .................................... 591,062
5,000 Spanish Broadcasting System,
Class "A" * .................................... 133,125
12,600 Westwood One, Inc. * ............................. 581,175
----------
3,639,088
----------
CHEMICALS -- 1.5%
-----------------
9,000 Minerals Technologies, Inc. ...................... 388,125
----------
DATA PROCESSING -- 11.0%
------------------------
8,400 CSG Systems International, Inc. * ................ 288,225
8,500 Electronic Arts Inc. * ........................... 686,906
18,000 National Computer Systems Inc. ................... 680,625
13,400 Synopsys, Inc. * ................................. 834,987
6,400 Zebra Technologies Corporation,
Class "A" * .................................... 348,000
----------
2,838,743
----------
EDUCATION -- 1.1%
-----------------
13,500 Devry Inc. * ..................................... 284,344
----------
ELECTRONICS/ELECTRIC -- 8.4%
----------------------------
20,000 Fairchild Semiconductor
International Inc., Class "A" * ................ 505,000
10,000 LSI Logic Corporation * .......................... 531,875
8,000 Sanmina Corporation * ............................ 720,500
11,300 The DII Group, Inc. * ............................ 406,800
----------
2,164,175
----------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
FINANCE -- 6.2%
---------------
41,500 Federated Investors, Inc. ........................ 715,875
17,000 Radian Group Inc. ................................ 897,812
----------
1,613,687
----------
HEALTH CARE CENTERS -- 1.9%
---------------------------
10,500 Lincare Holdings, Inc. * ......................... 295,313
12,400 Stericycle Inc. * ................................ 193,750
----------
489,063
----------
INSURANCE -- 4.0%
-----------------
17,200 Protective Life Corporation ...................... 622,425
16,500 Stancorp Financial Group ......................... 418,687
----------
1,041,112
----------
LEISURE/AMUSEMENT -- 2.8%
-------------------------
25,000 Harrah's Entertainment, Inc. *.................... 723,438
----------
MACHINERY -- 5.6%
-----------------
12,200 Kulicke & Soffa Industries * ..................... 359,138
4,000 Novellus Systems Inc. * .......................... 310,000
33,000 Sybron International
Corporation * .................................. 785,812
----------
1,454,950
----------
MANUFACTURING/DISTRIBUTIONS -- 2.1%
-----------------------------------
20,000 Aptargroup Inc. .................................. 537,500
----------
MEDICAL EQUIPMENT/SUPPLY -- 5.4%
--------------------------------
25,000 Novoste Corporation * ............................ 429,688
6,000 Patterson Dental Company * ....................... 270,375
33,000 Varian Medical Systems Inc. ...................... 695,062
----------
1,395,125
----------
OIL & GAS -- 2.8%
-----------------
16,000 Newfield Exploration
Company * ...................................... 471,000
17,800 Petroleum Geo-Services,
Sponsored ADR * ................................ 260,325
----------
731,325
----------
PUBLISHING -- 6.1%
------------------
17,000 IDG Books Worldwide Inc. * ....................... 303,875
30,000 John Wiley & Sons, Inc.,
Class "A" ...................................... 506,250
18,000 Valassis Communications, Inc. .................... 774,000
----------
1,584,125
----------
RETAIL STORES -- 2.1%
---------------------
18,000 BJ's Wholesale Club, Inc. * ...................... 554,625
----------
SERVICES -- 2.7%
----------------
18,750 Iron Mountain, Inc. * ............................ 567,188
4,000 Jupiter Communications Inc * ..................... 137,500
----------
704,688
----------
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - MID CAP GROWTH FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
TELECOMMUNICATIONS -- 4.3%
--------------------------
24,150 Price Communications
Corporation * ................................. $ 525,262
5,000 Telephone & Data Systems, Inc. .................. 576,250
-----------
1,101,512
-----------
Total Common Stocks (cost $21,105,526) ........................... 24,511,488
-----------
REPURCHASE AGREEMENT -- 1.0%(a)
- -------------------------------
Repurchase Agreement with State Street
Bank and Trust Company, dated
October 29, 1999 @ 5.13% to be
repurchased at $268,115 on
November 1, 1999, collateralized by
$265,000 United States Treasury Notes,
6.25% due October 31, 2001, (market value
$275,262 including interest)
(cost $268,000) .................................................. 268,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $21,373,526)(b), 95.8%(a) ................................ 24,779,488
OTHER ASSETS AND LIABILITIES, net, 4.2%(a) ....................... 1,089,272
-----------
NET ASSETS, 100.0% ............................................... $25,868,760
===========
- ----------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation
of $3,405,962 which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $4,062,787 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$656,825.
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
33
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS -- 96.8% (a)
- --------------------------
ADVERTISING/COMMUNICATIONS -- 0.7%
----------------------------------
15,000 Catalina Marketing
Corporation* ......................................... $ 1,404,375
-----------
ARM/AMMUNITION -- 0.6%
----------------------
60,000 North Fork Bancorporation ....................... 1,241,250
-----------
BANKING -- 5.2%
---------------
95,900 Capital Crossing Bank* .......................... 1,420,519
125,000 Commercial Federal
Corporation ................................... 2,453,125
196,000 Doral Financial Corporation ..................... 2,511,250
52,500 Independence Community Bank
Corporation ................................... 626,719
100,000 ITLA Capital Corporation* ....................... 1,512,500
37,500 Pacific Crest Capital, Inc. ..................... 567,188
55,000 Staten Island Bancorp, Inc. ..................... 1,065,625
-----------
10,156,926
-----------
BROADCASTING -- 0.9%
--------------------
68,750 World Wrestling Federation
Entertainment Inc* ............................ 1,658,593
-----------
COSMETICS/TOILETRIES/DRUGS -- 0.7%
----------------------------------
174,500 NBTY, Inc.* ..................................... 1,406,906
-----------
DATA PROCESSING -- 15.7%
------------------------
40,000 Ancor Communications Inc.* ...................... 1,267,500
85,000 Barra Inc.* ..................................... 1,877,969
55,000 Bell & Howell Company* .......................... 1,546,875
35,000 Bsquare Corporation* ............................ 1,384,688
50,000 CACI International Inc.,
Class "A"* .................................... 1,071,875
133,500 Comdisco, Inc. .................................. 2,695,031
55,000 Data Return Corporation* ........................ 828,438
100,000 Datastream Systems, Inc.* ....................... 1,025,000
173,962 Eclipsys Corporation* ........................... 2,761,647
207,500 Health Management Systems,
Inc.* ......................................... 894,844
216,800 LanVision Systems, Inc.* ........................ 162,600
149,875 Printronix, Inc.* ............................... 3,072,438
65,000 Research In Motion Ltd.* ........................ 1,998,750
79,000 Silicon Storage Technology Inc.* ................ 1,347,937
85,000 Sterling Software, Inc.* ........................ 1,864,687
50,000 Transaction Systems Architects
Inc., Class "A"* .............................. 1,537,500
97,500 Zebra Technologies
Corporation, Class "B"* ....................... 5,301,562
-----------
30,639,341
-----------
EDUCATION -- 2.3%
-----------------
116,250 New Horizons Worldwide, Inc.* .................. 1,598,438
165,000 Strayer Education, Inc. ......................... 2,897,812
-----------
4,496,250
-----------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
ELECTRONICS/ELECTRIC -- 3.3%
----------------------------
270,000 Artesyn Technologies, Inc.* ..................... 5,332,500
25,000 C-Cube Microsystems Inc.* ....................... 1,112,500
-----------
6,445,000
-----------
FINANCE -- 3.4%
---------------
260,000 Cash America
International, Inc. ........................... 2,453,750
98,000 Investors Financial Services
Corporation ................................... 3,626,000
10,000 Kansas City Southern
Industries, Inc. .............................. 474,375
27,500 Resource America, Inc. .......................... 199,375
-----------
6,753,500
-----------
FOOD -- 3.7%
------------
70,000 Corn Products International,
Inc. .......................................... 2,279,375
125,000 Del Monte Foods Company* ........................ 1,742,188
104,000 J. M. Smucker Company,
Class "B"* .................................... 1,748,500
60,000 Smithfield Foods, Inc.* ......................... 1,365,000
-----------
7,135,063
-----------
GRAPHIC ARTS -- 2.4%
--------------------
202,960 Quebecor Printing Inc. .......................... 4,680,765
-----------
HEALTH CARE CENTERS -- 0.7%
---------------------------
119,750 Bergen Brunswig Corporation,
Class "A" ..................................... 853,219
80,000 Horizon Health Corporation* ..................... 435,000
-----------
1,288,219
-----------
HOTELS/MOTELS/INNS -- 0.8%
--------------------------
100,000 Cavanaughs Hospitality
Corporation* .................................. 756,250
150,000 Lodgian, Inc.* .................................. 721,875
-----------
1,478,125
-----------
HOUSEHOLD PRODUCTS -- 0.3%
--------------------------
50,000 Windmere-Durable Holdings ....................... 650,000
-----------
INSURANCE -- 3.1%
-----------------
94,375 Annuity And Life Re
(Holdings), Ltd. .............................. 2,217,812
75,000 Fremont General Corp. ........................... 646,875
210,000 INSpire Insurance Solutions,
Inc.* ......................................... 1,338,750
105,000 Presidential Life Corporation................... 1,929,375
-----------
6,132,812
-----------
LEATHER/SHOES -- 2.9%
---------------------
310,000 Genesco Inc.* ................................... 4,107,500
150,000 Shoe Carnival, Inc.* ............................ 1,593,750
-----------
5,701,250
-----------
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST- SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
LEISURE/AMUSEMENT -- 2.0%
-------------------------
60,000 Action Performance Companies,
Inc.* ......................................... $ 1,220,625
35,000 International Speedway
Corporation, Class "A" ........................ 1,806,875
46,000 Steiner Leisure, Ltd.* .......................... 871,125
-----------
3,898,625
-----------
MANUFACTURING/DISTRIBUTIONS -- 3.4%
-----------------------------------
100,000 Gentex Corporation* ............................. 1,718,750
130,000 Hughes Supply, Inc. ............................. 2,819,375
150,000 Mail-Well, Inc.* ................................ 2,006,250
-----------
6,544,375
-----------
MEDICAL EQUIPMENT/SUPPLY -- 6.8%
--------------------------------
123,456 Angiosonics, Inc.(b)* ........................... 87,160
47,000 Beckman Coulter Inc. ............................ 2,162,000
200,000 Coherent, Inc.* ................................. 4,112,500
140,733 Cooper Companies, Inc. .......................... 3,518,325
50,000 Covance Inc.* ................................... 484,375
31,250 Medical Manager Corporation* .................... 1,566,406
233,000 Somanetics Corporation* ......................... 349,500
44,444 SurVivaLink Corporation(b)* ..................... 26,666
148,900 Thermo Cardiosystems, Inc.* ..................... 939,931
-----------
13,246,863
-----------
OFFICE EQUIPMENT -- 1.1%
------------------------
150,000 Global Imaging Systems, Inc.* ................... 2,071,875
-----------
OIL & GAS -- 1.0%
-----------------
86,400 Chieftain International, Inc.*................... 1,652,400
50,000 Horizon Offshore, Inc.* ......................... 312,500
-----------
1,964,900
-----------
PHARMACEUTICAL -- 2.6%
----------------------
110,000 Collateral Therapeutics, Inc.*................... 1,553,750
88,500 Emisphere Technologies Inc.* .................... 1,106,250
350,000 Vion Pharmaceuticals Inc.* ...................... 2,362,500
-----------
5,022,500
-----------
POLLUTION CONTROL -- 1.4%
-------------------------
180,000 IMCO Recycling, Inc. ............................ 2,632,500
-----------
PUBLISHING -- 4.1%
------------------
40,000 Houghton Mifflin Company ........................ 1,695,000
215,200 John Wiley & Sons, Inc.,
Class "A"* .................................... 3,631,500
147,000 Penton Media Inc. ............................... 2,719,500
-----------
8,046,000
-----------
REAL ESTATE INVESTMENT TRUST -- 1.8%
------------------------------------
159,400 LTC Properties, Inc. ............................ 1,693,625
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
REAL ESTATE INVESTMENT TRUST (CONTINUED)
----------------------------------------
110,000 Meristar Hospitality
Corporation ................................... 1,766,875
-----------
3,460,500
-----------
REAL ESTATE/LAND DEVELOPMENT -- 1.5%
------------------------------------
152,300 LNR Property Corporation ........................ 2,950,813
-----------
RETAIL STORES -- 2.8%
---------------------
130,000 Bradlees Inc. ................................... 1,462,500
200,000 Charming Shoppes ................................ 993,750
100,000 Claire's Stores Inc. ............................ 1,762,500
65,000 Micro Warehouse, Inc.* .......................... 788,125
102,500 U.S. Vision, Inc.* .............................. 371,562
-----------
5,378,437
-----------
SECURITIES -- 7.0%
------------------
85,000 Advest Group, Inc. .............................. 1,641,563
100,000 Dain Rauscher Corporation ....................... 5,368,750
119,999 Legg Mason, Inc. ................................ 4,364,964
94,350 Southwest Securities Group, Inc. ................ 2,246,709
-----------
13,621,986
-----------
SERVICES -- 10.3%
-----------------
95,200 Burns International Services
Corporation* .................................. 957,950
102,500 Cunningham Graphics
International, Inc.* .......................... 1,101,875
120,000 Interim Services, Inc.* ......................... 1,972,500
55,000 Iron Mountain, Inc.* ............................ 1,663,750
127,000 MPW Industrial Services
Group, Inc.* .................................. 1,016,000
70,000 Navigant Consulting
Corporation* .................................. 1,999,375
178,500 RCM Technologies, Inc.* ......................... 2,063,906
84,000 StarTek, Inc.* .................................. 3,811,500
130,000 Sykes Enterprises, Inc.* ........................ 4,013,750
195,000 Telespectrum Worldwide Inc.* .................... 804,375
54,500 Teletech Holdings Inc.* ......................... 773,218
-----------
20,178,199
-----------
TELECOMMUNICATIONS -- 4.3%
--------------------------
90,000 American Tower Corporation,
Class "A" ..................................... 1,715,625
50,000 Comdial Corporation* ............................ 371,875
40,000 Ems Technologies Inc* ........................... 382,500
40,500 Genesys Telecomm Labs Inc.* ..................... 1,989,563
50,000 InterVoice-Brite Inc.* .......................... 618,750
50,000 Paradyne Networks Corporation* .................. 1,518,750
70,000 Splitrock Services* ............................. 1,531,250
100,000 Trex Communications, Inc.(b)* ................... 400,000
-----------
8,528,313
-----------
Total Common Stocks (cost $182,692,042) .......................... 188,814,269
-----------
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST- SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
------ -------------
CONVERTIBLE BONDS -- 0.4% (a)
- -----------------------------
DATA PROCESSING -- 0.1%
-----------------------
$100,000 Proscape Technologies, Inc.,
6.5%, Series "B" Subordinated
Convertible Debentures due
11/18/01 (b) ................................. $ 100,000
------------
MEDICAL EQUIPMENT/SUPPLY -- 0.3%
--------------------------------
1,000,000 Angeion Corporation, 7.5%, due
04/15/03 ..................................... 550,000
------------
Total Convertible Bonds
(cost $1,100,000).............................................. 650,000
------------
Total Investment Portfolio excluding
repurchase agreement (cost $183,792,042) ...................... 189,464,261
------------
REPURCHASE AGREEMENT -- 3.8%(a)
- -------------------------------
Repurchase Agreement with State Street
Bank and Trust Company, dated
October 29, 1999 @ 5.13% to be
repurchased at $7,369,149 on
November 1, 1999, collateralized by
$7,515,000 United States Treasury Bonds,
5.63% due September 30, 2001, (market value
$7,521,487 including interest)
(cost $7,366,000)................................................ 7,366,000
------------
TOTAL INVESTMENT PORTFOLIO
(cost $191,158,042)(c), 101.0%(a) ............................. 196,830,261
OTHER ASSETS AND LIABILITIES, net, (1.0%)(a) .................... (1,865,893)
------------
NET ASSETS, 100.0% .............................................. $194,964,368
============
- ----------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) Private placement securities are fair valued by the Board of Trustees.
(c) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation of
$5,672,219 which consists of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost of
$33,396,883 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $27,724,664.
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------------
COMMON STOCK -- 97.7% (a)
- -------------------------
AUTO PARTS/EQUIPMENT -- 5.6%
----------------------------
12,000 Dana Corporation .................................. $ 354,750
10,000 Goodyear Tire & Rubber
Company ......................................... 413,125
18,000 TRW Inc ........................................... 771,750
----------
1,539,625
----------
BANKING -- 9.7%
---------------
11,000 Bank of New York
Company, Inc. ................................... 460,625
10,500 First Union Corporation ........................... 448,219
22,000 National City Corporation ......................... 649,000
16,000 Regions Financial Corporation ..................... 481,000
14,000 Union Planters Corporation ........................ 623,000
----------
2,661,844
----------
CHEMICALS -- 8.4%
-----------------
15,000 Air Products & Chemicals Inc. ..................... 412,500
8,400 E.I. du Pont de Nemours &
Company ......................................... 541,275
46,300 Millennium Chemicals Inc. ......................... 856,550
13,000 Rohm & Haas Company ............................... 497,250
----------
2,307,575
----------
COSMETICS/TOILETRIES -- 2.6%
----------------------------
11,500 Kimberly-Clark Corporation ........................ 725,937
----------
DATA PROCESSING -- 5.7%
-----------------------
15,000 3Com Corporation * ................................ 435,000
6,000 Electronic Data Systems
Corporation ..................................... 351,000
8,000 International Business Machines
Corporation ..................................... 787,000
----------
1,573,000
----------
ELECTRONICS -- 2.6%
-------------------
33,000 Arrow Electronics Inc. ............................ 719,813
----------
ELECTRONICS/ELECTRIC -- 2.0%
----------------------------
7,000 Intel Corporation ................................. 542,063
----------
FOOD -- 7.8%
------------
13,300 Albertson's Inc. .................................. 482,956
23,000 ConAgra, Inc. ..................................... 599,438
27,600 Interstate Bakeries ............................... 558,900
27,000 Universal Foods Corporation ....................... 516,375
----------
2,157,669
----------
HEALTH CARE CENTERS -- 3.3%
---------------------------
20,000 Manor Care Inc. * ................................. 315,000
30,000 Tenet Healthcare Corporation * .................... 583,125
----------
898,125
----------
INSURANCE -- 6.6%
-----------------
9,000 Chubb Corporation ................................. 493,875
MARKET
SHARES VALUE
------ -------------
COMMON STOCKS (CONTINUED)
- -------------------------
INSURANCE (CONTINUED)
---------------------
30,000 Everest Reinsurance Holdings ...................... 772,500
10,500 Hartford Financial Services ....................... 544,031
----------
1,810,406
----------
MACHINERY -- 1.8%
-----------------
14,000 Deere & Company ................................... 507,500
----------
MANUFACTURING/DISTRIBUTIONS -- 4.8%
-----------------------------------
12,000 Parker Hannifin Corporation ....................... 549,750
35,000 Sherwin-Williams Company .......................... 783,125
----------
1,332,875
----------
MINING/DIVERSIFIED -- 2.2%
--------------------------
10,000 Alcoa Inc. ........................................ 607,500
----------
OIL & GAS -- 12.6%
------------------
18,000 Baker Hughes Inc. ................................. 502,875
22,340 Conoco Inc., Class "B" ............................ 605,973
25,000 EL Paso Energy Corporation ........................ 1,025,000
10,000 Exxon Corporation ................................. 740,625
10,000 Royal Dutch Petroleum
Company, NY Shares,
Sponsored ADR * ................................. 599,375
----------
3,473,848
----------
PHARMACEUTICAL -- 2.2%
----------------------
13,800 Cardinal Health, Inc. ............................. 595,125
----------
RAILROADS -- 2.2%
-----------------
19,000 Burlington Northern Santa Fe
Corporation ..................................... 605,625
----------
RETAIL STORES -- 1.5%
---------------------
40,200 K Mart Corporation ................................ 404,512
----------
TELECOMMUNICATIONS -- 10.3%
---------------------------
14,000 BellSouth Corporation ............................. 630,000
15,000 Cable & Wireless Plc, Sponsored
ADR * ........................................... 525,000
15,000 SBC Communications, Inc. .......................... 764,062
15,000 US West Inc. ...................................... 915,937
----------
2,834,999
----------
TRANSPORTATION -- 2.0%
----------------------
17,000 CNF Transportation Inc. ........................... 562,063
----------
UTILITIES-ELECTRIC -- 3.8%
--------------------------
10,000 FPL Group, Inc. ................................... 503,125
14,400 Texas Utilities Company ........................... 558,000
----------
1,061,125
----------
Total Common Stocks
(cost $27,533,530) ............................................... 26,921,229
----------
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - VALUE EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1999
(CONTINUED)
- --------------------------------------------------------------------------------
MARKET
VALUE
-------------
REPURCHASE AGREEMENT--1.2% (a)
Repurchase Agreement with State Street
Bank and Trust Company, dated
October 29, 1999 @ 5.13% to be
repurchased at $342,146 on
November 1, 1999, collateralized by
$340,000 United States Treasury Notes,
6.50% due May 31, 2001 (market value
$352,730 including interest)
(cost $342,000) ............................................... $ 342,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $27,875,530)(b). 98.9%(a) ............................. 27,263,229
298,910
-----------
OTHER ASSETS AND LIABILITIES, net, 1.1% (a) ................... $27,562,139
===========
- ----------
* Non-income producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized depreciation
of $612,301 which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost
of $2,182,102 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$2,794,403.
ADR - American Depository Receipt
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EAGLE
AGGRESSIVE INTERNATIONAL GROWTH
GROWTH EQUITY EQUITY
FUND PORTFOLIO FUND
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
- ------
Investments, at market value (identified cost
$47,365,421, $37,240,576, $91,980,085, $21,105,526,
$183,792,042 and $27,533,530, respectively) (Note 1) $ 52,075,335 $ 46,262,496 $ 141,041,258
Repurchase agreement, at market value (identified cost
$5,414,000, $1,291,000, $17,648,000, $268,000,
$7,366,000 and $342,000, respectively) (Note 1) .... 5,414,000 1,291,000 17,648,000
Cash ................................................. 49 10,760 967
Receivables:
Investments sold ................................... 1,553,324 7,655,613 4,789,210
Fund shares sold ................................... 221,630 517,511 646,143
Dividends and interest ............................. 2,314 46,972 44,742
Foreign taxes recoverable .......................... -- 36,692 --
Deferred organization expenses (Note 1) .............. -- 5,200 5,666
Deferred state qualification expenses (Note 1) ....... 20,681 7,834 14,886
Prepaid insurance .................................... -- 1,328 1,518
------------- ------------- -------------
Total assets .................................... $ 59,287,333 $ 55,835,406 $ 164,192,390
------------- ------------- -------------
LIABILITIES
- -----------
Payables (Note 4):
Investments purchased .............................. $ 5,241,287 $ 7,464,352 $ 5,323,796
Fund shares redeemed ............................... 105,491 128,567 183,235
Accrued management fee ............................. 106,134 86,796 93,018
Accrued distribution fee ........................... 25,862 34,435 84,501
Other accrued expenses ............................. 56,192 73,508 89,433
Unrealized depreciation of forward currency
contracts ........................................ -- 173,482 --
------------- ------------- -------------
Total liabilities ............................... $ 5,534,966 $ 7,961,140 $ 5,773,983
------------- ------------- -------------
Net assets, at market value .......................... $ 53,752,367 $ 47,874,266 $ 158,418,407
============= ============= =============
NET ASSETS
- ----------
Net assets consist of:
Paid-in capital (Note 5) ........................... $ 43,188,096 $ 32,464,483 $ 89,185,890
Undistributed net investment income (loss)
(Notes 1 and 5) .................................. -- 78,478 --
Accumulated net realized gain (loss) (Notes 1 and 5) 5,854,357 6,487,318 20,171,344
Net unrealized appreciation (depreciation) on
investments and other assets and liabilities
denominated in foreign currencies ................ 4,709,914 8,843,987 49,061,173
------------- ------------- -------------
Net assets, at market value .......................... $ 53,752,367 $ 47,874,266 $ 158,418,407
============= ============= =============
Net assets, at market value
Class A Shares ..................................... $ 27,402,212 $ 7,910,457 $ 67,171,735
Class B Shares ..................................... 10,416,222 458,757 16,216,202
Class C Shares ..................................... 15,933,933 7,300,063 75,030,470
Eagle Shares ....................................... -- 32,204,989 --
------------- ------------- -------------
Total ........................................... $ 53,752,367 $ 47,874,266 $ 158,418,407
============= ============= =============
Shares of beneficial interest outstanding
Class A Shares ..................................... 1,317,722 250,659 1,546,474
Class B Shares ..................................... 505,461 14,881 384,547
Class C Shares ..................................... 773,291 236,759 1,779,961
Eagle Shares ....................................... -- 1,037,481 --
------------- ------------- -------------
Total .............................................. 2,596,474 1,539,780 3,710,982
============= ============= =============
Net Asset Value -- offering and redemption price per
share (Notes 1 and 2)
Class A Shares ................................... $ 20.80 $ 31.56 $ 43.44
============= ============= =============
Maximum offering price per share (100/95.25 of
$20.80, $31.56, $43.44, $16.56, $23.21 and $18.33) $ 21.83 $ 33.13 $ 45.60
============= ============= =============
Class B Shares ..................................... $ 20.61 $ 30.83 $ 42.17
============= ============= =============
Class C Shares ..................................... $ 20.61 $ 30.83 $ 42.15
============= ============= =============
Eagle Shares $ 31.04
=============
<CAPTION>
MID CAP SMALL CAP VALUE
GROWTH STOCK EQUITY
FUND FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS
- ------
Investments, at market value (identified cost
$47,365,421, $37,240,576, $91,980,085, $21,105,526,
$183,792,042 and $27,533,530, respectively) (Note 1) $ 24,511,488 $ 189,464,261 $ 26,921,229
Repurchase agreement, at market value (identified cost
$5,414,000, $1,291,000, $17,648,000, $268,000,
$7,366,000 and $342,000, respectively) (Note 1) .... 268,000 7,366,000 342,000
Cash ................................................. 718 373 66
Receivables:
Investments sold ................................... 1,760,447 3,251,587 766,322
Fund shares sold ................................... 20,707 80,988 111,166
Dividends and interest ............................. 2,858 45,935 47,154
Foreign taxes recoverable .......................... -- -- --
Deferred organization expenses (Note 1) .............. 15,509 -- 1,767
Deferred state qualification expenses (Note 1) ....... 16,940 9,326 10,674
Prepaid insurance .................................... 948 2,845 1,328
------------- ------------- -------------
Total assets .................................... $ 26,597,615 $ 200,221,315 $ 28,201,706
------------- ------------- -------------
LIABILITIES
- -----------
Payables (Note 4):
Investments purchased .............................. $ 500,263 $ 3,123,100 $ 531,958
Fund shares redeemed ............................... 122,683 1,764,524 23,185
Accrued management fee ............................. 40,961 135,498 17,495
Accrued distribution fee ........................... 12,635 86,819 13,731
Other accrued expenses ............................. 52,313 147,006 53,198
Unrealized depreciation of forward currency
contracts ........................................ -- -- --
------------- ------------- -------------
Total liabilities ............................... $ 728,855 $ 5,256,947 $ 639,567
------------- ------------- -------------
Net assets, at market value .......................... $ 25,868,760 $ 194,964,368 $ 27,562,139
============= ============= =============
NET ASSETS
- ----------
Net assets consist of:
Paid-in capital (Note 5) ........................... $ 22,075,245 $ 194,487,112 $ 27,502,628
Undistributed net investment income (loss)
(Notes 1 and 5) .................................. -- 31,078 54,770
Accumulated net realized gain (loss) (Notes 1 and 5) 387,553 (5,226,041) 617,042
Net unrealized appreciation (depreciation) on
investments and other assets and liabilities
denominated in foreign currencies ................ 3,405,962 5,672,219 (612,301)
------------- ------------- -------------
Net assets, at market value .......................... $ 25,868,760 $ 194,964,368 $ 27,562,139
============= ============= =============
Net assets, at market value
Class A Shares ..................................... $ 14,549,544 $ 124,883,049 $ 14,717,906
Class B Shares ..................................... 2,074,027 9,490,522 1,016,106
Class C Shares ..................................... 9,245,189 60,590,797 11,828,127
Eagle Shares ....................................... -- -- --
------------- ------------- -------------
Total ........................................... $ 25,868,760 $ 194,964,368 $ 27,562,139
============= ============= =============
Shares of beneficial interest outstanding
Class A Shares ..................................... 878,429 5,380,077 802,947
Class B Shares ..................................... 127,121 423,535 56,257
Class C Shares ..................................... 566,498 2,702,718 654,941
Eagle Shares ....................................... -- -- --
------------- ------------- -------------
Total .............................................. 1,572,048 8,506,330 1,514,145
============= ============= =============
Net Asset Value -- offering and redemption price per
share (Notes 1 and 2)
Class A Shares ................................... $ 16.56 $ 23.21 $ 18.33
============= ============= =============
Maximum offering price per share (100/95.25 of
$20.80, $31.56, $43.44, $16.56, $23.21 and $18.33) $ 17.39 $ 24.37 $ 19.24
============= ============= =============
Class B Shares ..................................... $ 16.32 $ 22.41 $ 18.06
============= ============= =============
Class C Shares ..................................... $ 16.32 $ 22.42 $ 18.06
============= ============= =============
Eagle Shares .......................................
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED OCTOBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EAGLE
AGGRESSIVE INTERNATIONAL GROWTH
GROWTH EQUITY EQUITY
FUND PORTFOLIO FUND
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
- -----------------
Income:
Dividends ......................................... $ 71,718 $ 737,523(a) $ 571,726
Interest .......................................... 259,885 46,306(b) 278,404
------------ ------------ ------------
Total income ................................... 331,603 783,829 850,130
Expenses (Notes 1 and 4):
Management fee .................................... 382,703 477,822 932,644
Distribution fee (Class A Shares) ................. 52,009 18,407 134,727
Distribution fee (Class B Shares) ................. 76,078 3,928 108,805
Distribution fee (Class C Shares) ................. 98,589 67,266 595,810
Distribution fee (Eagle Shares) ................... -- 332,966 --
Shareholder servicing fees ........................ 38,673 -- 114,755
Shareholder servicing fees (Class A Shares) ....... -- 9,572 --
Shareholder servicing fees (Class B Shares) ....... -- 511 --
Shareholder servicing fees (Class C Shares) ....... -- 8,745 --
Shareholder servicing fees (Eagle Shares) ......... -- 3,330 --
Custodian/Fund accounting fees .................... 59,360 165,632 73,792
Professional fees ................................. 39,693 61,680 23,389
Amortization of state qualification expenses ...... 46,629 41,775 43,713
Organization expenses ............................. -- 10,400 5,666
Reports to shareholders ........................... 14,774 12,776 22,026
Trustees' fees and expenses ....................... 9,141 9,478 9,178
Other ............................................. -- 4,254 4,913
------------ ------------ ------------
Total expenses before waiver ................... 817,649 1,228,542 2,069,418
Fees waived by Eagle/Manager (Note 4) .......... (55,188) (24,049) --
------------ ------------ ------------
Total expenses after waiver .................... 762,461 1,204,493 2,069,418
------------ ------------ ------------
Net investment income (loss) ........................ (430,858) (420,664) (1,219,288)
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain (loss) from investment transactions 6,487,570 6,904,858 24,524,653
Net realized gain from foreign currency transactions -- 216,150 --
Net unrealized appreciation (depreciation) of
investments during the year ....................... 3,177,004 3,686,213 25,441,900
Net realized gain from covered call options written
during the year ................................... -- -- --
Net unrealized depreciation from foreign currency
liabilities during the year ....................... -- (177,933) --
------------ ------------ ------------
Net gain (loss) on investments ...................... 9,664,574 10,629,288 49,966,553
------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations ........................................ $ 9,233,716 $ 10,208,624 $ 48,747,265
============ ============ ============
<CAPTION>
MID CAP SMALL CAP VALUE
GROWTH STOCK EQUITY
FUND FUND FUND
------------ ------------ ------------
<S> <C> <C> <C>
INVESTMENT INCOME
- -----------------
Income:
Dividends ......................................... $ 70,303 $ 1,825,980 $ 571,257
Interest .......................................... 44,087 809,955 60,329
------------ ------------ ------------
Total income ................................... 114,390 2,635,935 631,586
Expenses (Notes 1 and 4):
Management fee .................................... 210,881 1,960,400 227,557
Distribution fee (Class A Shares) ................. 39,528 390,705 41,462
Distribution fee (Class B Shares) ................. 21,386 102,748 10,806
Distribution fee (Class C Shares) ................. 101,676 781,631 126,758
Distribution fee (Eagle Shares) ................... -- -- --
Shareholder servicing fees ........................ 36,410 292,147 37,058
Shareholder servicing fees (Class A Shares) ....... -- -- --
Shareholder servicing fees (Class B Shares) ....... -- -- --
Shareholder servicing fees (Class C Shares) ....... -- -- --
Shareholder servicing fees (Eagle Shares) ......... -- -- --
Custodian/Fund accounting fees .................... 56,942 88,607 56,772
Professional fees ................................. 26,253 28,047 42,933
Amortization of state qualification expenses ...... 47,303 42,133 31,601
Organization expenses ............................. 5,170 -- 10,602
Reports to shareholders ........................... 12,343 43,891 20,539
Trustees' fees and expenses ....................... 9,151 9,178 9,178
Other ............................................. 2,776 11,924 4,036
------------ ------------ ------------
Total expenses before waiver ................... 569,819 3,751,411 619,302
Fees waived by Eagle/Manager (Note 4) .......... (27,644) -- (76,169)
------------ ------------ ------------
Total expenses after waiver .................... 542,175 3,751,411 543,133
------------ ------------ ------------
Net investment income (loss) ........................ (427,785) (1,115,476) 88,453
------------ ------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
- --------------------------------------------------
Net realized gain (loss) from investment transactions 1,928,034 (2,081,165) 931,457
Net realized gain from foreign currency transactions -- -- --
Net unrealized appreciation (depreciation) of
investments during the year ....................... 2,467,882 11,574,223 (1,115,216)
Net realized gain from covered call options written
during the year ................................... -- -- 17,466
Net unrealized depreciation from foreign currency
liabilities during the year ....................... -- -- --
------------ ------------ ------------
Net gain (loss) on investments ...................... 4,395,916 9,493,058 (166,293)
------------ ------------ ------------
Net increase (decrease) in net assets resulting from
operations ........................................ $ 3,968,131 $ 8,377,582 $ (77,840)
============ ============ ============
</TABLE>
- ----------------
(a) Net of $84,150 foreign withholding taxes.
(b) Net of $3 foreign withholding taxes.
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
---------------- ----------------
<S> <C> <C>
AGGRESSIVE GROWTH FUND
- ----------------------
Increase in net assets:
Operations:
Net Investment loss ........................................... $ (430,858) $ (5,426)
Net realized gain (loss) from investment transactions ......... 6,487,570 (202,355)
Net unrealized appreciation of investments during the year .... 3,177,004 1,532,910
------------ ------------
Net increase in net assets resulting from operations .......... 9,233,716 1,325,129
Increase in net assets from Fund share transactions (Note 2) .... 26,033,474 17,160,048
------------ ------------
Increase in net assets .......................................... 35,267,190 18,485,177
Net assets, beginning of year ................................... 18,485,177 --
------------ ------------
Net assets, end of year ......................................... $ 53,752,367 $ 18,485,177
============ ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
---------------- ----------------
<S> <C> <C>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
- ------------------------------------
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 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 $0.62 per share, respectively) ........ (27,806) (102,719)
Net realized gains Eagle Shares, ($ 0.12 and $0.62 per share, respectively) .......... (151,973) (808,740)
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>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
------------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
---------------- ----------------
<S> <C> <C>
GROWTH EQUITY FUND
- ------------------
Increase in net assets:
Operations:
Net Investment loss ........................................... $ (1,219,288) $ (480,255)
Net realized gain (loss) from investment transactions ......... 24,524,653 (3,134,021)
Net unrealized appreciation of investments during the year .... 25,441,900 13,613,823
------------- -------------
Net increase in net assets resulting from operations .......... 48,747,265 9,999,547
Distributions to shareholders from:
Net realized gains Class A Shares, ($0.32 per share) .......... -- (324,394)
Net realized gains Class C Shares, ($0.32 per share) .......... -- (263,908)
Increase in net assets from Fund share transactions (Note 2) .... 25,151,363 32,315,932
------------- -------------
Increase in net assets .......................................... 73,898,628 41,727,177
Net assets, beginning of year ................................... 84,519,779 42,792,602
------------- -------------
Net assets, end of year ......................................... $ 158,418,407 $ 84,519,779
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
41
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
--------------- ----------------
<S> <C> <C>
MID CAP GROWTH FUND
- -------------------
Increase (decrease) in net assets:
Operations:
Net Investment loss ........................................................ $ (427,785) $ (302,320)
Net realized gain (loss) from investment transactions ...................... 1,928,034 (1,540,482)
Net unrealized appreciation of investments during the year ................. 2,467,882 938,080
------------ ------------
Net increase (decrease) in net assets resulting from operations ............ 3,968,131 (904,722)
Increase (decrease) in net assets from Fund share transactions (Note 2) ..... (5,928,377) 28,733,728
------------ ------------
Increase (decrease) in net assets ........................................... (1,960,246) 27,829,006
Net assets, beginning of year ............................................... 27,829,006 --
------------ ------------
Net assets, end of year ..................................................... $ 25,868,760 $ 27,829,006
============ ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
--------------- ----------------
<S> <C> <C>
SMALL CAP STOCK FUND
- --------------------
Decrease in net assets:
Operations:
Net Investment loss .................................................................... $ (1,115,476) $ (1,505,367)
Net realized loss from investment transactions ......................................... (2,081,165) (2,922,849)
Net unrealized appreciation (depreciation) of investments during the year .............. 11,574,223 (70,263,882)
------------- -------------
Net increase (decrease) in net assets resulting from operations ........................ 8,377,582 (74,692,098)
Distributions to shareholders from:
Net realized gains Class A Shares, ($1.73 per share) ................................... -- (13,224,158)
Net realized gains Class C Shares, ($1.73 per share) ................................... -- (5,438,602)
Increase (decrease) in net assets from Fund share transactions (Note 2) ................. (80,494,684) 48,086,681
------------- -------------
Decrease in net assets .................................................................. (72,117,102) (45,268,177)
Net assets, beginning of year ........................................................... 267,081,470 312,349,647
------------- -------------
Net assets, end of year (including undistributed net investment income of $31,078 for
the year ended October 31, 1999) ........................................................ $ 194,964,368 $ 267,081,470
============= =============
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED
-----------------------------------
OCTOBER 31, 1999 OCTOBER 31, 1998
--------------- ----------------
<S> <C> <C>
VALUE EQUITY FUND
- -----------------
Decrease in net assets:
Operations:
Net Investment income .............................................................. $ 88,453 $ 149,444
Net realized gain (loss) from investment transactions .............................. 931,457 (46,890)
Net realized gain from covered call options written (Note 1) ....................... 17,466 --
Net unrealized depreciation of investments during the year ......................... (1,115,216) (1,519,457)
------------ ------------
Net decrease in net assets resulting from operations ............................... (77,840) (1,416,903)
Distributions to shareholders from:
Net investment income Class A Shares, ($ 0.16 and $0.20 per share, respectively). .. (152,941) (171,438)
Net investment income Class B Shares, ($ 0.01 per share) ........................... (752) --
Net investment income Class C Shares, ($ 0.01 and $0.05 per share, respectively). .. (9,859) (31,101)
Net realized gains Class A Shares, ($ 0.12 and $4.90 per share, respectively). ..... (110,747) (4,141,640)
Net realized gains Class B Shares, ($ 0.12 per share) .............................. (6,528) --
Net realized gains Class C Shares, ($ 0.12 and $4.90 per share, respectively). ..... (85,565) (3,207,816)
Increase (decrease) in net assets from Fund share transactions (Note 2) ............. (4,259,045) 4,709,907
------------ ------------
Decrease in net assets .............................................................. (4,703,277) (4,258,991)
Net assets, beginning of year ....................................................... 32,265,416 36,524,407
------------ ------------
Net assets, end of year (including undistributed net investment income of
$54,770 and $129,446, respectively) ................................................ $ 27,562,139 $ 32,265,416
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
42
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - AGGRESSIVE GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES * CLASS B SHARES *
------------------------- -------------------------------
FOR THE YEARS ENDED FOR THE YEARS ENDED
OCTOBER 31 OCTOBER 31
------------------------- -------------------------------
1999 1998/dagger/ 1999 1998/dagger//dagger/
-------- ------------ -------- --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ............................ $ 15.35 $ 14.29 $ 15.33 $ 14.29
-------- --------- -------- ----------
Income from Investment Operations:
Net investment loss (a) ...................................... (0.15) -- (0.29) (0.03)
Net realized and unrealized gain on investments .............. 5.60 1.06 5.57 1.07
-------- --------- -------- ----------
Total from Investment Operations ............................. 5.45 1.06 5.28 1.04
-------- --------- -------- ----------
Net asset value, end of year .................................. $ 20.80 $ 15.35 $ 20.61 $ 15.33
======== ========= ======== ==========
Total Return (%) (b) .......................................... 35.50 7.42 (c) 34.44 7.28 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ........................................ 1.65 1.65 (d) 2.40 2.40 (d)
Net investment income (loss) to average daily net assets ..... (.78) .08 (d) (1.53) (.77)(d)
Portfolio turnover rate (c) .................................. 195 34 195 34
Net assets, end of year ($ millions) ......................... 27 11 10 4
<CAPTION>
CLASS C SHARES *
--------------------------
FOR THE YEARS ENDED
OCTOBER 31
--------------------------
1999 1998/dagger/
-------- ------------
<S> <C> <C>
Net asset value, beginning of year ............................ $ 15.33 $ 14.29
-------- ----------
Income from Investment Operations:
Net investment loss (a) ...................................... (0.29) (0.03)
Net realized and unrealized gain on investments .............. 5.57 1.07
-------- ----------
Total from Investment Operations ............................. 5.28 1.04
-------- ----------
Net asset value, end of year .................................. $ 20.61 $ 15.33
======== ==========
Total Return (%) (b) .......................................... 34.44 7.28 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ........................................ 2.40 2.40 (d)
Net investment income (loss) to average daily net assets ..... (1.53) (.71)(d)
Portfolio turnover rate (c) .................................. 195 34
Net assets, end of year ($ millions) ......................... 16 3
</TABLE>
- -------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period August 20, 1998 (commencement of operations) to
October 31, 1998.
/dagger//dagger/ For the period January 2, 1998 (commencement of Class B
Shares) to October 31, 1998.
(a) Excludes management fees waived by the Manager in the amount of $0.03 per
Class A, B and C Shares, for the year ended October 31, 1999. The
operating expense ratios including such items would have been 1.79% ,
2.54% and 2.54% for Class A, B and C Shares for the year ended October 31,
1999, respectively. Excludes management fees waived and expenses
reimbursed by the Manager in the amount of $.07 per Class A, B and C
Shares for the year ended October 31, 1998. The operating expense ratios
including such items would have been 3.64% (annualized), 4.39%
(annualized) and 4.39 (annualized) for Class A, B and C Shares,
respectively.
(b) Does not reflect the imposition of a sales charge.
(c) Not annualized.
(d) Annualized.
The accompanying notes are an integral part of the financial statements.
43
<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>
CLASS A SHARES*
-----------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------------------------------------
1999 1998 1997 1996/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/
-------- --------------------
<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/
--------- --------- --------- ------------
<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
<CAPTION>
EAGLE SHARES*
--------------------------------------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------------------------------------------------------------------
1999 1998 1997 1996 1995/dagger//dagger//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
</TABLE>
- -------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period December 27, 1995 (commencement of Class A and Class C
Shares) to October 31, 1996.
/dagger//dagger/ For the period January 2, 1998 (commencement of Class B
Shares) to October 31, 1998.
/dagger//dagger//dagger/ For the period May 1, 1995 (commencement of
operations) to October 31, 1995.
(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 2.02%, 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. 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.
(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.
44
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - GROWTH EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES *
-------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31
-------------------------------------------------
1999 1998 1997 1996/dagger/
-------- --------- -------- -------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 28.82 $ 23.77 $ 17.74 $ 14.29
-------- -------- -------- ---------
Income from Investment Operations:
Net investment loss (a) .................. (0.20) (0.11) (0.07) (0.03)
Net realized and unrealized gain
on investments .......................... 14.82 5.48 6.10 3.48
-------- -------- -------- ---------
Total from Investment Operations .......... 14.62 5.37 6.03 3.45
-------- -------- -------- ---------
Less Distributions:
Distributions from net realized
gains ................................... -- (0.32) -- --
-------- -------- -------- ---------
Net asset value, end of year .............. $ 43.44 $ 28.82 $ 23.77 $ 17.74
======== ======== ======== =========
Total Return (%) (b) ...................... 50.73 22.84 33.99 24.14 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) .................... 1.24 1.38 1.61 1.65 (d)
Net investment loss to average daily
net assets .............................. (.56) (.40) (.35) (.19)(d)
Portfolio turnover rate (c) .............. 160 54 50 23
Net assets, end of year ($ millions) ..... 67 40 24 12
<CAPTION>
CLASS B SHARES *
--------------------------------
FOR THE YEARS ENDED
OCTOBER 31
--------------------------------
1999 1998/dagger//dagger/
-------- --------------------
<S> <C> <C>
Net asset value, beginning of year ........ $ 28.18 $ 24.33
-------- ----------
Income from Investment Operations:
Net investment loss (a) .................. (0.47) (0.23)
Net realized and unrealized gain
on investments .......................... 14.46 4.08
-------- ----------
Total from Investment Operations .......... 13.99 3.85
-------- ----------
Less Distributions:
Distributions from net realized
gains ................................... -- --
-------- ----------
Net asset value, end of year .............. $ 42.17 $ 28.18
======== ==========
Total Return (%) (b) ...................... 49.65 15.82 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) .................... 1.98 2.11 (d)
Net investment loss to average daily
net assets .............................. (1.30) (1.10)(d)
Portfolio turnover rate (c) .............. 160 54
Net assets, end of year ($ millions) ..... 16 5
<CAPTION>
CLASS C SHARES *
--------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31
--------------------------------------------------
1999 1998 1997 1996/dagger/
-------- -------- -------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 28.18 $ 23.42 $ 17.61 $ 14.29
-------- -------- -------- ---------
Income from Investment Operations:
Net investment loss (a) .................. ( 0.47) ( 0.31) ( 0.24) ( 0.15)
Net realized and unrealized gain
on investments .......................... 14.44 5.39 6.05 3.47
-------- -------- -------- ---------
Total from Investment Operations .......... 13.97 5.08 5.81 3.32
-------- -------- -------- ---------
Less Distributions:
Distributions from net realized
gains ................................... -- ( 0.32) -- --
-------- -------- -------- ---------
Net asset value, end of year .............. $ 42.15 $ 28.18 $ 23.42 $ 17.61
======== ======== ======== =========
Total Return (%) (b) ...................... 49.57 21.93 32.99 23.23 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) .................... 1.99 2.13 2.36 2.40 (d)
Net investment loss to average daily
net assets .............................. ( 1.31) ( 1.15) ( 1.14) ( .96)(d)
Portfolio turnover rate (c) .............. 160 54 50 23
Net assets, end of year ($ millions) ..... 75 39 18 5
</TABLE>
- -------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period November 16, 1995 (commencement of operations) to
October 31, 1996.
/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 Manager in
the amount of $0.11 per Class A and C Shares for the period ended October
31, 1996. The operating expense ratios including such items would have
been 2.39% (annualized) for Class A Shares and 3.14% (annualized) for
Class C Shares for the year ended October 31, 1996, respectively. The year
ended October 31, 1997 includes recovery of previously waived management
fees paid to the manager of $.01 per Class A and C Shares. The operating
expense ratios excluding such items would have been 1.54% for Class A
Shares and 2.29% for Class C Shares.
(b) Does not reflect the imposition of a sales charge.
(c) Not annualized.
(d) Annualized.
The accompanying notes are an integral part of the financial statements.
45
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - MID CAP GROWTH FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES * CLASS B SHARES *
-------------------------- --------------------------------
FOR THE YEARS ENDED FOR THE YEARS ENDED
OCTOBER 31 OCTOBER 31
-------------------------- --------------------------------
1999 1998/dagger/ 1999 1998/dagger//dagger/
-------- ------------ -------- --------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of year ............................ $ 14.28 $ 14.29 $ 14.17 $ 14.42
-------- ---------- -------- ----------
Income from Investment Operations:
Net investment loss (a) ...................................... (0.18) (0.15) (0.30) (0.23)
Net realized and unrealized gain (loss) on investments ....... 2.46 0.14 2.45 (0.02)
-------- ---------- -------- ----------
Total from Investment Operations ............................. 2.28 (0.01) 2.15 (0.25)
-------- ---------- -------- ----------
Net asset value, end of year .................................. $ 16.56 $ 14.28 $ 16.32 $ 14.17
======== ========== ======== ==========
Total Return (%) (b) .......................................... 15.97 (0.07) (c) 15.17 (1.73) (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ........................................ 1.60 1.60 (d) 2.35 2.35 (d)
Net investment loss to average daily net assets ...... ....... (1.19) (.99)(d) (1.94) (1.85)(d)
Portfolio turnover rate (c) .................................. 192 129 192 129
Net assets, end of year ($ millions) ......................... 15 16 2 2
<CAPTION>
CLASS C SHARES *
--------------------------
FOR THE YEARS ENDED
OCTOBER 31
--------------------------
1999 1998/dagger/
-------- ------------
<S> <C> <C>
Net asset value, beginning of year ............................ $ 14.18 $ 14.29
-------- ----------
Income from Investment Operations:
Net investment loss (a) ...................................... (0.30) (0.25)
Net realized and unrealized gain (loss) on investments ....... 2.44 0.14
-------- ----------
Total from Investment Operations ............................. 2.14 (0.11)
-------- ----------
Net asset value, end of year .................................. $ 16.32 $ 14.18
======== ==========
Total Return (%) (b) .......................................... 15.09 (0.77) (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ........................................ 2.35 2.35 (d)
Net investment loss to average daily net assets ...... ....... (1.95) (1.75)(d)
Portfolio turnover rate (c) .................................. 192 129
Net assets, end of year ($ millions) ......................... 9 9
</TABLE>
- -------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period November 6, 1997 (commencement of operations) to
October 31, 1998.
/dagger//dagger/ For the period January 2, 1998 (commencement of Class B
Shares) to October 31, 1998.
(a) Excludes management fees waived by the Manager in the amount of $0.02 and
$.03 per Class A Shares for the two years ended October 31, 1999. The
operating expense ratios including such items would have been 1.70% and
1.86% (annualized) per Class A Shares, respectively. Excludes management
fees waived by the Manager in the amount of $0.02 and $.03 per Class B
Shares for the two years ended October 31, 1999. The operating expense
ratios including such items would have been 2.45% and 2.61% (annualized)
per Class B Shares, respectively. Excludes management fees waived by the
Manager in the amount of $0.02 and $.03 per Class C Shares for the two
years ended October 31, 1999. The operating expense ratios including such
items would have been 2.45% and 2.61% (annualized) per Class C Shares,
respectively.
(b) Does not reflect the imposition of a sales charge.
(c) Not annualized.
(d) Annualized.
The accompanying notes are an integral part of the financial statements.
46
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - SMALL CAP STOCK FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES
--------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31
---------------------------------------------------------
1999 * 1998 * 1997 * 1996 * 1995
-------- --------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 22.62 $ 30.39 $ 24.08 $ 18.86 $ 16.20
-------- --------- -------- -------- --------
Income from Investment Operations:
Net investment income (loss) ............. (0.04) (0.06) (0.02) (0.05) 0.02
Net realized and unrealized gain
(loss) on investments ................... 0.63 (5.98) 8.21 6.12 3.62
-------- --------- -------- -------- --------
Total from Investment Operations ......... 0.59 (6.04) 8.19 6.07 3.64
-------- --------- -------- -------- --------
Less Distributions:
Dividends from net investment
income .................................. -- -- -- (0.01) (0.01)
Distributions from net realized
gains ................................... -- (1.73) (1.88) (0.84) (0.97)
-------- --------- -------- -------- --------
Total Distributions ...................... -- (1.73) (1.88) (0.85) (0.98)
-------- --------- -------- -------- --------
Net asset value, end
of year .................................. $ 23.21 $ 22.62 $ 30.39 $ 24.08 $ 18.86
======== ========= ======== ======== ========
Total Return (%) (a) ...................... 2.61 (20.96) 36.68 33.18 23.97
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets ........................ 1.26 1.22 1.25 1.41 1.88
Net investment income (loss) to
average daily net assets ................ (.18) (.22) (.09) (.21) .15
Portfolio turnover rate (b) .............. 42 52 54 80 89
Net assets, end of year ($ millions) ..... 125 174 222 96 57
<CAPTION>
CLASS B SHARES *
-----------------------------
FOR THE YEARS ENDED
OCTOBER 31
-----------------------------
1999 1998/dagger/
-------- --------------
<S> <C> <C>
Net asset value, beginning of year ........ $ 22.00 $ 27.98
-------- -----------
Income from Investment Operations:
Net investment income (loss) ............. (0.22) (0.20)
Net realized and unrealized gain
(loss) on investments ................... 0.63 (5.78)
-------- -----------
Total from Investment Operations ......... 0.41 (5.98)
-------- -----------
Less Distributions:
Dividends from net investment
income .................................. -- --
Distributions from net realized
gains ................................... -- --
-------- -----------
Total Distributions ...................... -- --
-------- -----------
Net asset value, end
of year .................................. $ 22.41 $ 22.00
======== ===========
Total Return (%) (a) ...................... 1.86 (21.37) (b)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets ........................ 2.01 1.98 (c)
Net investment income (loss) to
average daily net assets ................ (.95) (.93) (c)
Portfolio turnover rate (b) .............. 42 52
Net assets, end of year ($ millions) ..... 9 9
<CAPTION>
CLASS C SHARES
---------------------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31
---------------------------------------------------------------------
1999* 1998 * 1997 * 1996 * 1995 /dagger//dagger/
-------- --------- -------- -------- ---------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ........ $ 22.01 $ 29.83 $ 23.84 $ 18.79 $ 15.67
-------- --------- -------- -------- ----------
Income from Investment Operations:
Net investment income (loss) ............. (0.22) (0.26) (0.23) (0.22) (0.02)
Net realized and unrealized gain
(loss) on investments ................... 0.63 (5.83) 8.10 6.11 3.14
-------- --------- -------- -------- ----------
Total from Investment Operations ......... 0.41 (6.09) 7.87 5.89 3.12
-------- --------- -------- -------- ----------
Less Distributions:
Dividends from net investment
income .................................. -- -- -- -- --
Distributions from net realized
gains ................................... -- (1.73) (1.88) (0.84) --
-------- --------- -------- -------- ----------
Total Distributions ...................... -- (1.73) (1.88) (0.84) --
-------- --------- -------- -------- ----------
Net asset value, end
of year .................................. $ 22.42 $ 22.01 $ 29.83 $ 23.84 $ 18.79
======== ========= ======== ======== ==========
Total Return (%) (a) ...................... 1.86 (21.55) 35.63 32.22 19.91 (b)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets ........................ 2.01 1.97 2.00 2.13 2.36 (c)
Net investment income (loss) to
average daily net assets ................ (.94) (.96) (.85) (.94) (.46)(c)
Portfolio turnover rate (b) .............. 42 52 54 80 89
Net assets, end of year ($ millions) ..... 61 84 90 25 4.0
</TABLE>
- -------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period January 2, 1998 (commencement of Class B Shares) to
October 31,1998.
/dagger//dagger/ For the period April 3, 1995 (commencement of Class C Shares)
to October 31, 1995.
(a) Does not reflect the imposition of a sales charge.
(b) Not annualized.
(c) Annualized.
The accompanying notes are an integral part of the financial statements.
47
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST - VALUE EQUITY FUND
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout each period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES *
------------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31
------------------------------------------------------------
1999 1998 1997 1996 1995/dagger/
-------- -------- -------- -------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ....... $ 18.56 $ 24.27 $ 20.27 $ 18.00 $ 14.29
-------- -------- -------- -------- ------------
Income from Investment Operations:
Net investment income (loss) (a) ........ 0.12 0.15 0.22 0.17 0.08
Net realized and unrealized gain
(loss) on investments .................. (0.07) (0.76) 5.23 2.76 3.63
-------- -------- -------- -------- ------------
Total from Investment Operations ........ 0.05 (0.61) 5.45 2.93 3.71
-------- -------- -------- -------- ------------
Less Distributions:
Dividends from net investment
income ................................. (0.16) (0.20) (0.15) (0.11) --
Distributions from net realized
gains .................................. (0.12) (4.90) (1.30) (0.55) --
-------- -------- -------- -------- ------------
Total Distributions ..................... (0.28) (5.10) (1.45) (0.66) --
-------- -------- -------- -------- ------------
Net asset value, end
of year .................................. $ 18.33 $ 18.56 $ 24.27 $ 20.27 $ 18.00
======== ======== ======== ======== ============
Total Return (%) (b) ..................... 0.24 (3.52) 28.69 16.59 25.96(c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ................... 1.45 1.45 1.61 1.65 1.65(d)
Net investment income (loss) to
average daily net assets ............... .63 .74 .96 .89 1.05(d)
Portfolio turnover rate (c) ............. 137 132 155 129 82
Net assets, end of year ($ millions) ..... 15 18 19 15 12
<CAPTION>
CLASS B SHARES *
--------------------------------
FOR THE YEARS ENDED
OCTOBER 31
--------------------------------
1999 1998/dagger//dagger/
-------- ---------------------
<S> <C> <C>
Net asset value, beginning of year ....... $ 18.29 $ 19.60
-------- -------
Income from Investment Operations:
Net investment income (loss) (a) ........ (0.02) 0.02
Net realized and unrealized gain
(loss) on investments .................. (0.08) (1.33)
-------- -------
Total from Investment Operations ........ (0.10) (1.31)
-------- -------
Less Distributions:
Dividends from net investment
income ................................. (0.01) --
Distributions from net realized
gains .................................. (0.12) --
-------- -------
Total Distributions ..................... (0.13) --
-------- -------
Net asset value, end
of year .................................. $ 18.06 $ 18.29
======== =======
Total Return (%) (b) ..................... (0.56) (6.68)(c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ................... 2.20 2.20 (d)
Net investment income (loss) to
average daily net assets ............... (.13) .15 (d)
Portfolio turnover rate (c) ............. 137 132
Net assets, end of year ($ millions) ..... 1 1
<CAPTION>
CLASS C SHARES *
-----------------------------------------------------------------------------
FOR THE YEARS ENDED
OCTOBER 31
-----------------------------------------------------------------------------
1999 1998 1997 1996 1995 /dagger//dagger//dagger/
-------- -------- -------- -------- -----------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year ....... $ 18.28 $ 23.98 $ 20.06 $ 17.92 $ 15.27
-------- -------- -------- -------- ------------
Income from Investment Operations:
Net investment income (loss) (a) ........ (0.02) -- 0.05 0.02 0.01
Net realized and unrealized gain
(loss) on investments .................. (0.07) (0.75) 5.20 2.74 2.64
-------- -------- -------- -------- ------------
Total from Investment Operations ........ (0.09) (0.75) 5.25 2.76 2.65
-------- -------- -------- -------- ------------
Less Distributions:
Dividends from net investment
income ................................. (0.01) (0.05) (0.03) (0.07) --
Distributions from net realized
gains .................................. (0.12) (4.90) (1.30) (0.55) --
-------- -------- -------- -------- ------------
Total Distributions ..................... (0.13) (4.95) (1.33) (0.62) --
-------- -------- -------- -------- ------------
Net asset value, end
of year .................................. $ 18.06 $ 18.28 $ 23.98 $ 20.06 $ 17.92
======== ======== ======== ======== ============
Total Return (%) (b) ..................... (0.50) (4.27) 27.79 15.65 17.35(c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average
daily net assets (a) ................... 2.20 2.20 2.36 2.40 2.40(d)
Net investment income (loss) to
average daily net assets ............... (.12) (.01) .21 .13 .28(d)
Portfolio turnover rate (c) ............. 137 132 155 129 82
Net assets, end of year ($ millions) ..... 12 14 13 10 4.0
</TABLE>
- -------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period December 30, 1994 (commencement of operations) to
October 31,1995.
/dagger//dagger/ For the period January 2, 1998 (commencement of Class B
Shares) to October 31,1998.
/dagger//dagger//dagger/ For the period April 3, 1995 (commencement of Class C
Shares) to October 31,1995.
(a) Excludes management fees waived by the Manager in the amount of $.05 per
Class A Shares, $.05 per Class B Shares and $.05 per Class C Shares for
the year ended October 31, 1999. The operating expense ratios including
such items would have been 1.70%, 2.45% and 2.45% for Class A, Class B and
Class C, respectively. Excludes management fees waived by the Manager in
the amount of $.03 per Class A Shares, $.02 per Class B Shares and $.03
per Class C Shares for the year ended October 31, 1998. The operating
expense ratios including such items would have been 1.58%, 2.33%
(annualized) and 2.33% for Class A, Class B and Class C, respectively. The
year ended October 31, 1997 includes recovery of previously waived
management fees paid to the Manager of $.02 per Class A and Class C
Shares. The operating expense ratio excluding such items would have been
1.53% and 2.28% for Class A and Class C Shares, respectively. Excludes
management fees waived and expenses reimbursed by the Manager in the
amount of $.07 and $.13 per Class A Shares, for the two years ended
October 31, 1996. The operating expense ratios including such items would
have been 1.99% and 3.49% (annualized) for Class A Shares for the two
years ended October 31, 1996. Excludes management fees waived and expenses
reimbursed by the Manager in the amount of $.07 and $.13 per Class C
Shares, for the two years ended October 31, 1996. The operating expense
ratio including such items would have been 2.74% and 4.24% (annualized)
for Class C Shares for the two years ended October 31, 1996.
(b) Does not reflect the imposition of a sales charge. Effective May 18, 1999,
100% of the assets of the Value Equity Fund were allocated to Osprey
Partners Investment Management, LLC., (See Note 4).
(c) Not annualized.
(d) Annualized.
The accompanying notes are an integral part of the financial statements.
48
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
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 and presently
offers shares in six series, the Aggressive Growth Fund, the Eagle
International Equity Portfolio, the Growth Equity Fund, the Mid Cap
Growth Fund, the Small Cap Stock Fund, and the Value Equity Fund
(each, a "Fund" and collectively, the "Funds"). The Aggressive Growth
Fund primarily seeks long-term capital appreciation by investing in
equity securities of companies that may have significant growth
potential. The Eagle International Equity Portfolio primarily seeks
capital appreciation through investments in a portfolio of
international equity securities. The Growth Equity Fund primarily
seeks growth through long-term capital appreciation. The Mid Cap
Growth Fund primarily seeks long-term appreciation by investing
primarily in equity securities of companies with medium capitalization
that are believed to have above average growth potential. The Small
Cap Stock Fund seeks long-term capital appreciation by investing
principally in the equity securities of companies with small market
capitalization. The Value Equity Fund primarily seeks long-term
capital appreciation and, secondarily, seeks current income. The Funds
currently offer Class A, Class B and Class C Shares. Class A Shares
are sold subject to a maximum sales charge of 4.75% of the amount
invested payable at the time of purchase. Class 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, which were offered to shareholders beginning April 3,
1995, 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 made in less than one year of purchase. The Eagle
International Equity Portfolio also issues Eagle Class Shares, which
are subject to certain minimum investment requirements and are sold
without any sales charge. The preparation of financial statements in
accordance with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts and disclosures. Actual results could differ from those
estimates. The following is a summary of significant accounting
policies:
SECURITY VALUATION: Each Fund values investment securities at market
value based on the last quoted sales price as reported by the
principal securities exchange on which the security is traded. If no
sale is reported, the last bid price is used and in the absence of a
market quote, securities are valued using such methods as the Board of
Trustees believes would reflect fair market value. Securities that are
quoted in a foreign currency will be valued daily in U.S. dollars at
the foreign currency exchange rates prevailing at the time the Eagle
International Equity Portfolio calculates its daily net asset value
per share. Although the Eagle International Equity Portfolio values
its assets in U.S. dollars on a daily basis, it does not intend to
convert holdings of foreign currencies into U.S. dollars on a daily
basis. Short term investments having a maturity of 60 days or less are
valued at amortized cost, which approximates market.
FOREIGN CURRENCY TRANSACTIONS: The books and records of the Eagle
International Equity Portfolio are maintained in U.S. dollars. Foreign
currency transactions are translated into U.S. dollars on the
following basis: (i) market value of investment securities, other
assets and other liabilities at the daily rates of exchange, and (ii)
purchases and sales of investment securities, dividend and interest
income and certain expenses at the rates of exchange prevailing on the
respective dates of such transactions. The Eagle International Equity
Portfolio does not isolate that portion of gains and losses on
investments which is due to 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 Eagle International Equity
Portfolio may enter into forward foreign currency contracts which are
valued daily at the appropriate exchange rates. The resultant
unrealized exchange gains and losses are included in the Statement of
Operations as unrealized foreign currencies gain or loss. The Eagle
International Equity Portfolio records realized gains or losses on
delivery of the currency or at the time the forward contract is
extinguished (compensated) by entering into a closing transaction
prior to delivery.
REPURCHASE AGREEMENTS: Each Fund enters into repurchase agreements
whereby a Fund, through its custodian, receives delivery of the
underlying securities, the market value of which at the time of
purchase is required to be in an amount of at least 100% of the resale
price.
FEDERAL INCOME TAXES: Each Fund is treated as a single corporate
taxpayer as provided for in the Tax Reform Act of 1986, as amended. A
Fund's policy is to comply with the requirements of the Internal
Revenue Code of 1986, as amended, which are applicable to regulated
investment companies and to distribute substantially all of its
taxable income to its shareholders. Accordingly, no provision has been
made for federal income and excise taxes.
49
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
DISTRIBUTION OF NET REALIZED GAINS: Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to
each Fund, will be distributed to shareholders in the following fiscal
year. Each Fund uses the identified cost method for determining
realized gain or loss on investments for both financial and federal
income tax reporting purposes.
STATE 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.
OPTION ACCOUNTING PRINCIPLES: When a Fund writes a covered call
option, an amount equal to the premium received by the Fund is
included in the Fund's Statement of Assets and Liabilities as an asset
and as an equivalent liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of
the option written. The current market value of a written option is
based on the last offering price on the principal exchange on which
such option is traded. The Fund receives a premium on the sale of an
option, but gives up the opportunity to profit from any increase in
stock value above the exercise price of the option. If an option that
a Fund has written either expires on its stipulated expiration date,
or the Fund enters into a closing purchase transaction, the Fund
realizes a gain (or loss if the cost of a closing purchase transaction
exceeds the premium received when the option was sold) without regard
to any unrealized gain or loss on the underlying security, and the
liability related to such option is extinguished. If a call option
that a Fund has written is exercised, the Fund realizes a capital gain
or loss from the sale of the underlying security, and the proceeds
from such sale are increased by the premium originally received.
EXPENSES: Each 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 each Fund are allocated to each class of shares based upon their
relative percentage of current net assets. All expenses that are
directly attributable to a specific class of shares, such as
distribution fees and shareholders service fees with respect to Eagle
International Equity Portfolio, are charged directly to that class.
ORGANIZATION EXPENSES: Expenses incurred in connection with the
formation of each Fund, except the Aggressive Growth Fund, were
deferred and are being amortized on a straight-line basis over 60
months from the date of commencement of operations for the respective
Funds. The Small Cap Stock Fund organization expenses have been
amortized completely. Subsequent to June 30, 1998, organization costs
of approximately $49,000 in the Aggressive Growth Fund were absorbed
by Heritage Asset Management, Inc.
CAPITAL ACCOUNTS: Each Fund reports the undistributed net investment
income and accumulated net realized gain (loss) accounts on a basis
approximating amounts available for future tax distributions (or to
offset future taxable realized gains when a capital loss carryforward
is available). Accordingly, each Fund may periodically make
reclassifications among certain capital accounts without impacting the
net asset value of the Fund.
OTHER: 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.
AGGRESSIVE GROWTH FUND
----------------------
Transactions in Class A, B and C Shares of the Fund during the year
ended October 31, 1999, were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 -------------------------- ------------------------ ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 816,167 $ 15,241,364 302,485 $ 5,661,744 645,799 $ 12,067,581
Shares redeemed . .............. (228,646) (4,233,253) (49,661) (930,205) (94,328) (1,773,757)
-------- ------------ ------- ----------- ------- ------------
Net increase ................... 587,521 $ 11,008,111 252,824 $ 4,731,539 551,471 $ 10,293,824
============ =========== ============
Shares outstanding:
Beginning of year ............. 730,201 252,637 221,820
-------- ------- -------
End of year ................... 1,317,722 505,461 773,291
========= ======= =======
</TABLE>
50
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Transactions in the Class A, B and C Shares of the Fund during the period
August 20, 1998 (commencement of operations) to October 31, 1998, were as
follows:
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
FOR THE PERIOD ENDED OCTOBER 31, 1998 ----------------------- --------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ -------- ----------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ....................... 758,002 $10,793,788 254,153 $3,604,086 224,375 $3,201,056
Shares redeemed ................... (27,801) (380,444) (1,516) (22,060) (2,555) (36,378)
------- ----------- ------- ---------- ------- ----------
Net increase ...................... 730,201 $10,413,344 252,637 $3,582,026 221,820 $3,164,678
=========== ========== ==========
Shares outstanding:
Beginning of period .............. -- -- --
------- ------- -------
End of period .................... 730,201 252,637 221,820
======= ======= =======
</TABLE>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
------------------------------------
Transactions in Class A, B and C Shares and Eagle Shares of the Fund
during the year ended October 31, 1999, were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ----------------------- --------------------
SHARES AMOUNT SHARES AMOUNT
------- ------------ ------ ----------
<S> <C> <C> <C> <C>
Shares sold ..................... 27,491 $ 780,723 9,353 $ 254,995
Shares issued on reinvestment
of distributions .............. 1,024 28,582 58 1,581
Shares redeemed ................. (45,994) (1,298,534) (3,878) (109,438)
------- ------------ ------ ----------
Net increase (decrease) ......... (17,479) $ (489,229) 5,533 $ 147,138
============ ==========
Shares outstanding:
Beginning of year .............. 268,138 9,348
------- ------
End of year .................... 250,659 14,881
======= ======
<CAPTION>
C SHARES EAGLE SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ----------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
------- ------------ ------ -------------
<S> <C> <C> <C> <C>
Shares sold ..................... 45,492 $ 1,262,451 137,206 $ 3,951,774
Shares issued on reinvestment
of distributions .............. 1,009 27,703 5,474 151,150
Shares redeemed ................. (43,865) (1,222,395) (409,377) (11,689,394)
------- ------------ -------- -------------
Net increase (decrease) ......... 2,636 $ 67,759 (266,697) $ (7,586,470)
============ =============
Shares outstanding:
Beginning of year .............. 234,123 1,304,178
------- ---------
End of year .................... 236,759 1,037,481
======= =========
</TABLE>
Transactions in Class A Shares, Class C Shares, and Eagle 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>
A SHARES B SHARES
FOR THE YEAR ENDED OCTOBER 31, 1998 ---------------------- -----------------
SHARES AMOUNT SHARES AMOUNT
------ ------------ ------- ---------
<S> <C> <C> <C> <C>
Shares sold . ................... 57,108 $ 1,498,668 9,521 $ 247,499
Shares issued on reinvestment of
distributions ................. 6,686 158,113 -- --
Shares redeemed ................. (51,418) (1,323,329) (173) (4,682)
------- ------------ ----- ---------
Net increase (decrease) ......... 12,376 $ 333,452 9,348 $ 242,817
============ =========
Shares outstanding:
Beginning of year . ............ 255,762 --
------- -----
End of year .................... 268,138 9,348
======= =====
<CAPTION>
C SHARES EAGLE SHARES
FOR THE YEAR ENDED OCTOBER 31, 1998 ----------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
------- ------------ --------- -------------
<S> <C> <C> <C> <C>
Shares sold . ................... 138,692 $ 3,626,639 161,915 $ 4,255,168
Shares issued on reinvestment of
distributions ................. 4,371 102,414 34,247 805,842
Shares redeemed ................. (67,332) (1,769,569) (223,287) (5,683,092)
------- ------------ -------- ------------
Net increase (decrease) ......... 75,731 $ 1,959,484 (27,125) $ (622,082)
============ ============
Shares outstanding:
Beginning of year . ............ 158,392 1,331,303
------- ---------
End of year .................... 234,123 1,304,178
======= =========
</TABLE>
51
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
GROWTH EQUITY FUND
------------------
Transactions in Class A, B and C Shares of the Fund during the year ended
October 31, 1999, were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 -------------------------- -------- ------------- ----------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- -------------- -------- ------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 493,710 $ 17,871,948 241,317 $ 8,402,380 775,238 $ 25,998,482
Shares redeemed ................ (331,288) (12,049,577) (40,337) (1,454,604) (395,353) (13,617,224)
-------- ------------- ------- ------------ -------- -------------
Net increase ................... 162,422 $ 5,822,371 200,980 $ 6,947,776 379,885 $ 12,381,258
============= ============ =============
Shares outstanding:
Beginning of year ............. 1,384,052 183,567 1,400,076
--------- ------- ---------
End of year ................... 1,546,474 384,547 1,779,961
========= ======= =========
</TABLE>
Transactions in Class A 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>
A SHARES B SHARES C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1998 ------------------------- --------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ -------- ----------- -------- --------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 586,531 $ 16,436,873 185,913 $5,192,150 854,527 $ 23,502,787
Shares issued on reinvestment of
distributions ................ 12,951 312,499 -- -- 10,879 258,383
Shares redeemed ................ (244,224) (6,562,209) (2,346) (65,655) (248,450) (6,758,896)
-------- ------------ ------- ---------- -------- ------------
Net increase ................... 355,258 $ 10,187,163 183,567 $5,126,495 616,956 $ 17,002,274
============ ========== ============
Shares outstanding:
Beginning of year ............. 1,028,794 -- 783,120
--------- ------- --------
End of year ................... 1,384,052 183,567 1,400,076
========= ======= =========
</TABLE>
MID CAP GROWTH FUND
-------------------
Transactions in Class A, B and C Shares of the Fund during the year ended
October 31, 1999, were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ----------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT
----------- -------------- --------- ------------
<S> <C> <C> <C> <C>
Shares sold . .................. 167,255 $ 2,515,905 42,991 $ 656,381
Shares redeemed ................ (418,149) (6,408,277) (71,859) (1,083,381)
-------- ------------- ------- ------------
Net decrease ................... (250,894) $ (3,892,372) (28,868) $ (427,000)
============= ============
Shares outstanding:
Beginning of year ............. 1,129,323 155,989
--------- -------
End of year ................... 878,429 127,121
========= =======
<CAPTION>
C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ---------------------------
SHARES AMOUNT
---------- -------------
<S> <C> <C>
Shares sold . .................. 192,230 $ 2,895,086
Shares redeemed ................ (295,178) (4,504,091)
-------- -------------
Net decrease ................... (102,948) $ (1,609,005)
=============
Shares outstanding:
Beginning of year ............. 669,446
--------
End of year ................... 566,498
========
</TABLE>
52
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Transactions in Class A and Class C Shares of the Fund during the period
November 6, 1997 (commencement of operations) to 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>
A SHARES B SHARES C SHARES
FOR THE PERIOD ENDED OCTOBER 31, 1998 --------------------------- --------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------- --------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ...................... 1,498,547 $ 21,897,656 164,784 $2,531,799 804,758 $ 11,737,195
Shares redeemed .................. (369,224) (5,364,630) (8,795) (114,655) (135,312) (1,953,637)
--------- ------------ ------- ---------- -------- ------------
Net increase ..................... 1,129,323 $ 16,533,026 155,989 $2,417,144 669,446 $ 9,783,558
============ ========== ============
Shares outstanding:
Beginning of period ............. -- -- --
--------- ------- --------
End of period ................... 1,129,323 155,989 669,446
========= ======= ========
</TABLE>
SMALL CAP STOCK FUND
--------------------
Transactions in Class A, B and C Shares of the Fund during the year ended
October 31, 1999, were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ----------------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ---------- -------------
<S> <C> <C> <C> <C>
Shares sold ....................... 842,703 $ 20,207,077 167,884 $ 3,950,709
Shares redeemed ................... (3,151,721) (75,402,363) (148,184) (3,460,431)
---------- -------------- -------- ------------
Net increase (decrease) ........... (2,309,018) $ (55,195,286) 19,700 $ 490,278
============== ============
Shares outstanding:
Beginning of year ................ 7,689,095 403,835
---------- --------
End of year ...................... 5,380,077 423,535
========== ========
<CAPTION>
C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ------------------------------
SHARES AMOUNT
----------- ---------------
<S> <C> <C>
Shares sold ....................... 621,819 $ 14,595,795
Shares redeemed ................... (1,747,954) (40,385,471)
---------- --------------
Net increase (decrease) ........... (1,126,135) $ (25,789,676)
==============
Shares outstanding:
Beginning of year ................ 3,828,853
----------
End of year ...................... 2,702,718
==========
</TABLE>
Transactions in Class A 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>
A SHARES B SHARES
FOR THE YEAR ENDED OCTOBER 31, 1998 ---------------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
---------- -------------- ---------- ------------=
<S> <C> <C> <C> <C>
Shares sold ........................ 2,324,448 $ 65,942,936 430,520 $12,003,417
Shares issued on reinvestment of
distributions .................... 450,837 12,564,851 -- --
Shares redeemed .................... (2,402,109) (65,619,657) (26,685) (623,843)
---------- -------------- ------- -----------
Net increase ....................... 373,176 $ 12,888,130 403,835 $11,379,574
============== ===========
Shares outstanding:
Beginning of year ................. 7,315,919 --
---------- -------
End of year ....................... 7,689,095 403,835
========== =======
<CAPTION>
C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1998 ----------------------------
SHARES AMOUNT
----------- --------------
<S> <C> <C>
Shares sold ........................ 1,681,715 $ 46,062,174
Shares issued on reinvestment of
distributions .................... 196,455 5,363,217
Shares redeemed .................... (1,067,827) (27,606,414)
---------- --------------
Net increase ....................... 810,343 23,818,977
==============
Shares outstanding:
Beginning of year ................. 3,018,510
----------
End of year ....................... 3,828,853
==========
</TABLE>
53
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
VALUE EQUITY FUND
-----------------
Transactions in Class A, B and C Shares of the Fund during the year ended
October 31, 1999, were as follows:
<TABLE>
<CAPTION>
A SHARES B SHARES C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ---------------------------- ---------------------- --------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------- --------- ----------- --------- --------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ..................... 136,595 $ 2,740,843 28,808 $ 558,979 154,403 $ 3,058,861
Shares issued on reinvestment of
distributions ................. 13,519 254,838 389 7,278 5,023 93,852
Shares redeemed ................. (302,249) (5,780,061) (22,484) (428,531) (249,936) (4,765,104)
-------- ------------- ------- ---------- -------- -------------
Net increase (decrease) ......... (152,135) $ (2,784,380) 6,713 $ 137,726 (90,510) $ (1,612,391)
============= ========== =============
Shares outstanding:
Beginning of year .............. 955,082 49,544 745,451
-------- ------- --------
End of year .................... 802,947 56,257 654,941
======== ======= ========
</TABLE>
Transactions in Class A 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>
A SHARES B SHARES C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1998 ------------------------- -------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ----------- ------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 173,321 $ 3,500,708 51,939 $ 998,767 194,603 $ 3,691,922
Shares issued on reinvestment of
distributions ................ 216,712 4,225,878 -- -- 165,685 3,204,346
Shares redeemed ................ (291,484) (5,797,438) (2,395) (43,713) (270,892) (5,070,563)
-------- ------------ ------ --------- -------- ------------
Net increase ................... 98,549 $ 1,929,148 49,544 $ 955,054 89,396 $ 1,825,705
============ ========= ============
Shares outstanding:
Beginning of year ............. 856,533 -- 656,055
-------- ------ --------
End of year ................... 955,082 49,544 745,451
======== ====== ========
</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) were as follows:
<TABLE>
<CAPTION>
INVESTMENT SECURITIES
-----------------------------
PURCHASES SALES
------------ ------------
<S> <C> <C>
Aggressive Growth Fund ....................... $ 92,945,289 $ 66,116,984
Eagle International Equity Portfolio ......... 37,080,096 36,465,810
Growth Equity Fund ........................... 199,068,229 188,114,864
Mid Cap Growth Fund .......................... 52,206,092 58,850,111
Small Cap Stock Fund ......................... 98,562,362 160,694,892
Value Equity Fund ............................ 39,709,252 42,627,955
</TABLE>
Transactions in covered call options written on equity securities were as
follows:
<TABLE>
<CAPTION>
NUMBER OF PREMIUMS
VALUE EQUITY FUND CONTRACTS RECEIVED
- ----------------- ---------- -----------
<S> <C> <C>
Outstanding, October 31, 1998 ......... 330 $ 144,269
Written .............................. 60 12,510
Closed ............................... -- --
Exercised ............................ (280) (139,313)
Expired .............................. (110) (17,466)
---- ----------
Outstanding, October 31, 1999 ......... 0 $ 0
==== ==========
</TABLE>
54
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 4: MANAGEMENT, SUBADVISORY, DISTRIBUTION, SHAREHOLDER SERVICING AGENT,
FUND ACCOUNTING AND TRUSTEES' FEES. Under the Trust's Investment
Advisory and Administrative Agreements with Heritage Asset Management,
Inc. (the "Manager"), the Growth Equity, Mid Cap Growth and Value Equity
Funds agree to pay to the Manager a fee equal to an annual rate of 0.75%
of the Funds' average daily net assets, computed daily and payable
monthly. For the Aggressive Growth Fund and Small Cap Stock Fund, the
management fee for each Fund is 1.0% on the first $50 million and 0.75%
of any excess over $50 million of average daily net assets. Under the
Fund's Investment Advisory and Administrative Agreement with Eagle Asset
Management, Inc. ("Eagle"), the Eagle International Equity Portfolio
annual management fee is 1.0% on the first $100 million of average daily
net assets and 0.80% of any excess over $100 million of average daily
net assets. The Manager contractually waived its investment advisory
fees and, if necessary, reimbursed each Fund to the extent that Class A,
Class B and Class C annual operating expenses exceeded that Fund's
average daily net assets attributable to that class for the 1999 fiscal
year as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B AND CLASS C
-------- -------------------
<S> <C> <C>
Aggressive Growth Fund ....................... 1.65% 2.40%
Eagle International Equity Portfolio ......... 1.97% 2.72%
Growth Equity Fund ........................... 1.45% 2.20%
Mid Cap Growth Fund .......................... 1.60% 2.35%
Small Cap Stock Fund ......................... 1.30% 2.05%
Value Equity Fund ............................ 1.45% 2.20%
</TABLE>
Management fees of $55,188 were waived for the Aggressive Growth Fund
for the year ended October 31, 1999. If total Fund expenses fall below
the expense limitation agreed to by the Manager before the end of the
year ended October 31, 2001, the Aggressive Growth Fund may be required
to pay the Manager a portion or all of the waived management fees. In
addition, the Aggressive Growth Fund may be required to pay the Manager,
a portion or all of the management fees waived of $25,861 and reimbursed
expenses of $25,530 in fiscal 1998 if total Fund expenses fall below the
annual expense limitations before the end of the year ending October 31,
2000. Management fees of $24,049 were waived for the Eagle International
Equity Portfolio 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 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 $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. Management fees of $27,644 were waived by the Mid Cap Growth Fund
for the year ended October 31, 1999. If total Fund expenses fall below
the expense limitation agreed to by the Manager before the end of the
year ended October 31, 2001, the Mid Cap Growth Fund may be required to
pay the Manager a portion or all of the waived management fees. In
addition, the Mid Cap Growth Fund may be required to pay the Manager, a
portion or all of the management fees waived of $60,948 in fiscal 1998
if total Fund expenses fall below the annual expense limitations before
the end of the year ending October 31, 2000. Management fees of $76,169
were waived by the Value Equity fund for the year ended October 31,
1999. If total Fund expenses fall below the expense limitation agreed to
by the Manager before the end of the year ended October 31, 2001, the
Value Equity Fund may be required to pay the Manager a portion or all of
the waived management fees. In addition, the Value Equity Fund may be
required to pay the Manager, a portion or all of the management fees
waived of $48,072 in fiscal 1998 if total Fund expenses fall below the
annual expense limitations before the end of the year ending October 31,
2000.
Eagle has entered into an agreement with Martin Currie, Inc., a New York
Corporation, to provide the Eagle International Equity Portfolio
investment advice, portfolio management services including the placement
of brokerage orders, and certain compliance and other services for an
annualized fee payable by Eagle 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 Eagle.
Heritage Asset Management, Inc. an affiliate of Eagle, provides certain
administrative services for the Eagle International Equity Portfolio.
Heritage receives a fee in the amount of 0.10% from Eagle for performing
these administrative services.
The Manager has entered into agreements with Eagle (with respect to the
Aggressive Growth Fund, Growth Equity Fund, Mid Cap Growth Fund and the
Value Equity Fund) and with Eagle and Awad Asset Management, Inc. (with
respect to the Small Cap Stock Fund) to provide investment advice,
portfolio management services including the placement of brokerage
orders and certain compliance and other services for a fee payable by
the Manager equal to 50% of the fees payable by the Fund to the Manager
without regard to any reduction due to the imposition of expense
limitations. For the year ended
55
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
October 31, 1999, the total fees the Subadvisers earned were $191,381,
$466,322, $105,440, $980,200 and $113,779 for the Aggressive Growth
Fund, Growth Equity Fund, Mid Cap Growth Fund, Small Cap Stock Fund and
Value Equity Fund, respectively.
The Manager has entered into an agreement with Osprey Partners
Investment Management, LLC ("Osprey") to provide to the Value Equity
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 .32% of the Value Equity
Fund's average daily net assets. Effective May 18, 1999, the assets of
the Value Equity Fund were allocated to Osprey. Prior to May 18, 1999,
the assets of the Fund were managed by Eagle. Eagle will continue to
serve as subadvisor to the Fund, although there are no assets currently
allocated to them.
Raymond James & Associates, Inc. (the "Distributor") has advised the
Trust that it received $245,292, $19,272, $303,861, $35,757, $320,799,
and $39,460 in front end sales charges for Class A Shares, $13,734,
$2,439, $29,289, $32,058, $60,368 and $9,483 in contingent deferred
sales charges for Class B Shares and $5,200, $2,202, $16,048, $6,126,
$31,566, and $1,545 in contingent deferred sales charges for Class C
Shares for the Aggressive Growth Fund, Eagle International Equity
Portfolio, Growth Equity Fund, Mid Cap Growth Fund, Small Cap Stock Fund
and the Value Equity Fund, respectively, for the year ended October 31,
1999. The Distributor paid sales commission to salespersons from these
fees and incurred other distribution costs.
Total agency brokerage commissions paid by the Funds and agency brokers
commissions paid directly to Raymond James & Associates, Inc., for the
year ended October 31, 1999.
<TABLE>
<CAPTION>
TOTAL AGENCY PAID TO
BROKERAGE RAYMOND JAMES
COMMISSIONS & ASSOCIATES, INC.
------------ ------------------
<S> <C> <C>
Aggressive Growth Fund ....................... $118,326 $16,500
Eagle International Equity Portfolio ......... 191,194 --
Growth Equity Fund ........................... 303,840 --
Mid Cap Growth Fund .......................... 127,029 540
Small Cap Stock Fund ......................... 347,665 48,580
Value Equity Fund ............................ 130,194 300
</TABLE>
Pursuant to a plan in accordance with Rule 12b-1 of the Investment
Company Act of 1940, as amended, the Trust is authorized to pay the
Distributor a fee pursuant to the Class A Distribution Plan of up to
.35% of the average daily net assets for the services it provides in
connection with the promotion and distribution of Fund shares. However,
at the present time the Board of Trustees has authorized payments of
only .25% of average daily net assets. Under the Class B and Class C
Distribution Plans, the Trust 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 the Class B Shares was accepted. The Manager, Eagle,
Awad Asset Management, Inc. and the Distributor are all wholly owned
subsidiaries of Raymond James Financial, Inc.
The Manager also is the Dividend Paying and Shareholder Servicing Agent
for the Aggressive Growth Fund, Eagle International Equity Portfolio,
the Growth Equity Fund, the Mid Cap Growth Fund, the Small Cap Stock
Fund and the Value Equity Fund. The amount payable to the Manager for
such expenses as of October 31, 1999 was $15,200, $14,671, $39,200,
$12,000, $90,000 and $12,400, respectively. In addition, the Manager
performs Fund Accounting services for the Aggressive Growth Fund, the
Growth Equity Fund, the Mid Cap Growth Fund, the Small Cap Stock Fund
and the Value Equity Fund and charged $40,829, $49,494, $38,911, $49,801
and $39,620 during the current period, of which $14,400, $17,200,
$13,200, $17,000 and $14,000, was payable as of October 31, 1999,
respectively.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust,
Heritage Income Trust and Heritage U.S. Government Income Fund,
investment companies that also are advised by the Manager (collectively
referred to as the Heritage funds). Each Trustee of the Heritage funds
that is not an employee of the Manager or employee of an affiliate of
the Manager 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.
56
<PAGE>
- --------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
- --------------------------------------------------------------------------------
Note 5: FEDERAL INCOME TAXES.
AGGRESSIVE GROWTH FUND:
For the year ended October 31, 1999, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss, the Fund credited undistributed net investment
income and debited accumulated net realized gain $430,858. The Fund
utilized $50,287 of net tax basis capital losses during the current year
against net realized gains from investment transactions.
EAGLE INTERNATIONAL EQUITY PORTFOLIO:
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.
GROWTH EQUITY FUND:
For the year ended October 31, 1999, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss, the Fund credited undistributed net investment
income and debited accumulated net realized gain $1,219,288. The Fund
utilized $2,741,694 of net tax basis capital losses during the current
year against net realized gains from investment transactions.
MID CAP GROWTH FUND:
For the year ended October 31, 1999, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss, the Fund credited undistributed net investment
income and debited paid in capital $427,785. The Fund utilized
$1,409,298 of net tax basis capital losses during the current year
against net realized gains from investment transactions.
SMALL CAP STOCK FUND:
For the year ended October 31, 1999, to reflect reclassifications
arising from permanent book/tax differences primarily attributable to a
net operating loss and REIT distributions, the Fund credited
undistributed net investment income $1,146,554 and accumulated net
realized loss $570,917 and debited paid in capital $1,717,471. The Fund
has net tax basis capital loss carryforwards of $5,057,448, which may be
applied against any realized net taxable gains until their expiration
dates of October 31, 2006 ($1,863,838) and October 31, 2007
($3,193,610).
Note 6: FINANCIAL INVESTMENT WITH OFF-BALANCE SHEET RISK.
EAGLE INTERNATIONAL EQUITY PORTFOLIO:
The Fund may enter into forward foreign currency contracts ("forward
contracts") to facilitate settlement of foreign currency denominated
portfolio transactions, 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 holding 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 to
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.
57
<PAGE>
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HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
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Note 7: SHAREHOLDERS MEETING. (UNAUDITED)
On May 14, 1999 a special shareholders' meeting was held for the
following purposes:
(1) To approve a Subadvisory Agreement between Heritage Asset
Management, Inc. and Osprey Partners Investment Management, LLC. with
respect to the Fund;
(2) To approve a proposal to permit Heritage to hire subadvisors or
modify subadvisory agreements without shareholder approval;
The voting results were as follows:
<TABLE>
<CAPTION>
SHARES
-----------------------------------
FOR AGAINST ABSTAINING
------- -------- ----------
<S> <C> <C> <C>
To approve a Subadvisory Agreement between Heritage Asset
Management, Inc. and Osprey Partners Investment Management,
LLC. with respect to the Fund; ...................................... 686,084 22,224 76,483
To approve a proposal to permit Heritage to hire subadvisors or modify
subadvisory agreements without shareholder approval; ................ 640,290 61,124 83,377
</TABLE>
58
<PAGE>
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REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
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To the Board of Trustees and Shareholders of
Heritage Series Trust
In our opinion, the accompanying statements of assets and liabilities,
including the investment portfolios, 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 -
Aggressive Growth Fund, Heritage Series Trust - Eagle International Equity
Portfolio, Heritage Series Trust - Growth Equity Fund, Heritage Series Trust -
Mid Cap Growth Fund, Heritage Series Trust - Small Cap Stock Fund and Heritage
Series Trust - Value Equity Fund (constituting the Heritage Series Trust,
hereafter referred to as the "Trust") at October 31, 1999, the results of each
of their operations for the year then ended, the changes in each of their net
assets for each of the two years in the period then ended and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Trust'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 and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ PRICEWATERHOUSECOOPERS LLP
- ------------------------------
PricewaterhouseCoopers LLP
Tampa, Florida
December 15, 1999
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1999 FEDERAL INCOME TAX NOTICE
(UNAUDITED)
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During the year ended October 31, 1999, the Eagle International Equity
Portfolio and the Value Equity Fund paid to shareholders $211,848 and $203,264
or $0.12 and $0.12 per share, from long-term capital gains, respectively. For
such period 100% of the income dividends for the Value Equity Fund qualified
for the dividend received deduction available for corporations.
59
<PAGE>
HERITAGE FAMILY OF FUNDS (TM)
FROM OUR FAMILY TO YOURS; THE INTELLIGENT CREATION OF WEALTH.
HERITAGE STOCK FUNDS
Aggressive Growth
Capital Appreciation
Eagle International
Growth Equity
Income-Growth
MidCap
Small Cap
Technology
Value Equity
HERITAGE bOND fUNDS
High Yield
Intermediate Government
HERITAGE MONEY MARKET FUNDS
Money Market
Municipal Money market
We are pleased that mahy of you are also investors in these funds. For more
information and a prospectus for any of these mutual funds, please contact your
financial advisor. Please read the prospectus carefully before you invest in any
of the funds.
This report is for the information of shareholders of Heritage Series
Trust-Aggressive Growth Fund, Eagle International Equity Portfolio, Growth
Equity Fund, MidCap Growth Fund, Small Cap Stock Fund and Value Equity Fund. It
may also be used as sales literature when ppreceded or accompanied by a
prospectus.
(C) 1999 Heritage Asset Management, Inc.
40M 10/99
AR53415-HST
/LOGO/ HERITAGE SERIES tRUST
P.O. BOX 33022
ST. PETERSBURG, FL 33733
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ADDRESS SERVICE REQUESTED
