HERITAGE SERIES TRUST [GRAPHIC]
[GRAPHIC]
FROM OUR FAMILY TO YOURS: THE INTELLIGENT CREATION OF WEALTH.
AGGRESSIVE GROWTH FUND
EAGLE INTERNATIONAL EQUITY PORTFOLIO
GROWTH EQUITY FUND
MID CAP STOCK FUND
SMALL CAP STOCK FUND
TECHNOLOGY FUND
VALUE EQUITY FUND
SEMIANNUAL REPORT
(Unaudited) and Investment Performance
Review for the Six-Month Period Ended
April 30, 2000
[LOGO]
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HERITAGE SERIES TRUST
SEMIANNUAL REPORT
TABLE OF CONTENTS
PRESIDENT'S LETTER ....................................................... 1
PORTFOLIO COMMENTARY AND INVESTMENT PORTFOLIO:
AGGRESSIVE GROWTH FUND
Portfolio Management Letter ........................................ 3
Investment Portfolio ............................................... 4
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Investment Commentary .............................................. 6
Investment Portfolio ............................................... 8
GROWTH EQUITY FUND
Portfolio Management Letter ........................................ 12
Investment Portfolio ............................................... 15
MID CAP STOCK FUND
Portfolio Management Letter ........................................ 17
Investment Portfolio ............................................... 19
SMALL CAP STOCK FUND
Portfolio Management Letters ....................................... 21
Investment Portfolio ............................................... 23
TECHNOLOGY FUND
Portfolio Management Letter ........................................ 26
Investment Portfolio ............................................... 31
VALUE EQUITY FUND
Portfolio Management Letter ........................................ 33
Investment Portfolio ............................................... 34
STATEMENT OF ASSETS AND LIABILITIES ...................................... 36
STATEMENT OF OPERATIONS .................................................. 38
STATEMENT OF CHANGES IN NET ASSETS ....................................... 39
FINANCIAL HIGHLIGHTS ..................................................... 42
NOTES TO FINANCIAL STATEMENTS ............................................ 49
<PAGE>
June 13, 2000
Dear Shareholders:
Please join us in congratulating Stephen G. Hill, who served as Heritage's
President since 1989, on his promotion to President and Chief Operating Officer
of Eagle Asset Management, Inc. (Eagle). During his tenure as President of
Heritage Asset Management, our fund family grew to 13 open-end funds, and
assets under management exceeded $6 billion.
In early April of this year, as Steve made the transition to Eagle (one of
Heritage's subadvisers), I assumed the position of President and Chief
Operating Officer at Heritage Asset Management. Prior to joining Heritage I
served as Executive Vice President of Sales and Marketing at Eagle. With a
background in asset management and corporate finance and nearly a decade of
experience with Eagle's Sales and Marketing team, I am especially looking
forward to the many opportunities and challenges that await Heritage in an
ever-changing market environment.
I am pleased to provide you with the semiannual report for the seven portfolios
(the "Funds") of the Heritage Series Trust for the six-month period ended April
30, 2000. The investment and financial information for each of the seven funds
included in the Heritage Series Trust is provided in this report. The
Technology Fund, launched in November 1999, became the seventh equity fund in
the Heritage Series Trust. Because many of you have investments in more than
one of the Funds in our Series Trust, this combined report allows us to provide
you with the relevant information for each of your Funds in one, easy-reference
format.
Our top performing Funds in the Heritage Series Trust were Growth Equity Fund,
Mid Cap Stock Fund, and the multi-cap Aggressive Growth Fund, all of which
provided returns greater than +30%* for the six-month period ended April 30,
2000. During most of this six-month period, investments in "growth" stocks
continued to deliver better results than investments in "value" stocks; small
capitalization stocks showed an improvement in performance during this same
time.
The table below shows the Funds' performance for the 1-, 3-, 5-year and life of
the Fund periods as of the calendar quarter ended March 31, 2000.
<TABLE>
<CAPTION>
HERITAGE SERIES TRUST
AVERAGE ANNUAL RETURN (PERIODS ENDED 3/31/00)(a)
----------------------------------------------------------
CLASS A SHARES 1-YEAR 3-YEAR 5-YEAR LIFE OF FUND(b)
------------------------------------ ----------- ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Aggressive Growth Fund +62.2% -- -- +54.6%
Eagle International Equity Portfolio +27.4% +17.5% -- +14.8%
Growth Equity Fund +63.9% +50.8% -- +40.0%
Mid Cap Stock Fund +46.8% -- -- +20.0%
Small Cap Stock Fund +34.8% +10.7% +17.9% +15.2%
Technology Fund -- -- -- +34.3%**
Value Equity Fund -0.2% +5.6% +11.9% +12.6%
</TABLE>
----------------
* These returns are calculated without the imposition of either front-end or
contingent deferred sales charges.
** Returns shown are for Technology Fund are from inception, November 18, 1999
to March 31, 2000.
(a) These performance numbers reflect the current maximum front-end sales load
for Class A Shares of 4.75%. Returns are annualized after the effects of
sales charges and do include reinvestment of dividends. Past performance
is no guarantee of future results.
(b) The inception dates for the Funds' Class A Shares are as follows:
Aggressive Growth Fund, 08/20/98; Eagle International Equity portfolio,
12/27/95; Growth Equity Fund, 11/16/95; Mid Cap Stock Fund, 11/06/97;
Small Cap Stock Fund, 05/07/93; Technology Fund, 11/18/99; Value Equity
Fund, 12/30/94.
1
<PAGE>
As the preceding table illustrates, most of our funds generated excellent
absolute returns for the one-year period ending March 31, 2000. Likewise, we
are quite pleased with the "Life of Fund" returns achieved thus far by all
seven funds. However, it is incumbent upon us to caution anyone against
extrapolating this past performance into the future. We have been fortunate
with a robust market for growth and technology stocks during the last few
years, propelled by the strength of the US economy and the competitiveness of
our most successful companies. Whether this trend continues, or we return to
more normal rates of return, is a matter open to much speculation and debate.
Absent a crystal ball, we recommend that clients broadly diversify their
portfolios and properly balance their appetite for risk and return in order to
position their portfolios for whatever lies ahead.
Commentaries from the portfolio managers of each Fund included in the Heritage
Series Trust follow. These commentaries include details about the individual
performance of these Funds, market elements and/or holdings which most impacted
Fund performance during this semi-annual reporting period (ended April 30,
2000), as well as an outlook for the coming months. We hope that you will find
the information provided by our managers helpful in understanding the dynamic
environment of the marketplace, especially with respect to your individual
investments. Following the managers' commentaries are investment portfolios and
other important financial information for all of the Funds included in Heritage
Series Trust.
Thank you for your continued support of Heritage Family of Funds and for your
investment in Heritage Series Trust. Please call your financial advisor or
Heritage at (800) 421-4184 if you have any questions.
Sincerely,
/s/ BRIAN C. LEE
----------------
Brian C. Lee
President
2
<PAGE>
June 8, 2000
Dear Fellow Shareholders:
I am pleased to report that for the six-month period ended April 30, 2000 the
Heritage Series Trust - Aggressive Growth Fund (the "Fund") Class A Shares rose
30.4%*, topping the Russell 2000 Growth Index, which was up 27.8% during the
same period.
Not surprisingly, technology was our strongest sector and all of our best
performers were technology or technology-related companies, reflecting the
leadership position of this sector in the market. Over the past six-months,
technology stocks alone have contributed over 50% of the gains in the Russell
2000 Growth Index. Most "Old Economy" sectors, such as Financial Services and
Consumer Goods, were weaker. During the period, our technology exposure
generally ran in the mid to high 30% range.
Our best performer was Coherent, Inc., which uses laser, precision-optic and
microelectronic technologies to produce a wide variety of electro-optical and
medical instruments, as the company's earnings have been strong. Another good
performer was TMP Worldwide, an advertising and executive search firm which
gained attention for its Monster.com web site, the leading Internet job search
service and one of the few Internet-related companies with earnings. Next Level
Communications, a telecom equipment company, advanced following several
positive partnership announcements and strong revenue growth. Electronics firm
DII Group benefited from a merger announcement. Finally, EMS Technologies
performed well after reporting stronger-than-expected earnings and announcing
several new contracts.
Lexicon Genetics Inc. was our worst performer, suffering from a sharp decline
in all biotech stocks immediately following its initial public offering. Royal
Caribbean Cruises sold off, due to concerns that the industry is facing an
increasingly competitive pricing environment. Navigant Consulting declined
after the company disclosed improper loans granted to certain officers, who
were subsequently dismissed, and earnings expectations were sharply lowered by
the new management team.
As of this writing, the market is in the midst of what we feel is an overdue
correction. Growth stocks that were up the most in recent months have been hit
the hardest. Internet stocks have declined particularly sharply, but nearly all
technology stocks have fallen. Over the short term, we believe that interest
rate concerns may continue to pressure the market; however, rates should peak
later in the summer, leading to a strong rally for growth stocks. Currently,
our technology weighting is approximately 33%. As of April 30, 2000 our
portfolio was trading at about 32 times projected next 12 months earnings, with
an expected average earnings growth rate of 42%.
As always, we will continue to do our best for Heritage shareholders.
Sincerely,
/s/ BERT BOKSEN
---------------
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Aggressive
Growth Fund
----------
* Calculated without the imposition of front-end or contingent deferred sales
charges.
3
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HERITAGE SERIES TRUST - AGGRESSIVE GROWTH FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
----------- -------------
COMMON STOCKS--94.9%(a)
------------------------
ANALOG SEMICONDUCTORS--1.8%
-----------------------------
22,500 Burr-Brown Corporation ............. $1,532,813
----------
AUTOMOTIVE -- 3.7%
--------------------
100,000 Gentex Corporation ................. 3,225,000
----------
BROADCASTING -- 0.2%
----------------------
22,500 Radio Unica Communications
Corporation* ...................... 216,563
----------
COMMUNICATION SERVICES -- 3.4%
------------------------
50,000 Broadwing Inc. ..................... 1,415,625
40,000 Crown Castle International
Corporation* ....................... 1,535,000
----------
2,950,625
----------
COMMUNICATIONS EQUIPMENT -- 6.6%
----------------------------------
47,249 Alcatel Alsthom S.A., Sponsored
ADR 2,146,875
35,000 Commscope, Inc.* ................... 1,662,500
40,000 Sawtek, Inc. ....................... 1,912,500
----------
5,721,875
----------
COMPUTER EQUIPMENT -- 3.7%
----------------------------
35,000 Dell Computer Corporation .......... 1,754,375
30,000 Solectron Corporation .............. 1,404,375
----------
3,158,750
----------
COMPUTER PERIPHERAL EQUIPMENT -- 0.9%
---------------------------------------
25,500 Interlink Electronics Inc. ......... 765,000
----------
EDUCATION -- 0.5%
-------------------
21,900 Strayer Education, Inc. ............ 450,319
----------
ELECTRONIC EQUIPMENT -- 9.5%
------------------------------
45,000 ACT Manufacturing Inc.* ............ 1,636,875
140,000 Ampex Corporation, Class "A"* ...... 393,750
120,000 EMS Technologies Inc ............... 2,145,000
85,000 Paradyne Networks, Inc.* ........... 2,395,937
50,000 Rockford Corporation* .............. 550,000
70,000 Windmere-Durable Holdings .......... 1,124,375
----------
8,245,937
----------
ENTERTAINMENT -- 0.9%
---------------------
43,750 World Wrestling Federation
Entertainment Inc.* ............... 746,484
----------
MARKET
SHARES VALUE
------ --------
COMMON STOCKS (CONTINUED)
-------------------------
INFORMATION RETRIEVAL SERVICES -- 3.5%
--------------------------------------
50,000 America Online, Inc. .................... 2,990,625
---------
INSURANCE -- 3.6%
-----------------
185,000 MetLife, Inc.* .......................... 3,064,062
---------
LOGIC SEMICONDUCTORS -- 0.8%
----------------------------
20,000 Intersil Holding Corporation* ........... 700,000
---------
MEDICAL EQUIPMENT -- 8.8%
-------------------------
40,000 Baxter International, Inc. .............. 2,605,000
60,000 Coherent, Inc. .......................... 3,468,750
30,000 Medtronic, Inc. ......................... 1,558,125
---------
7,631,875
---------
MEMORY & COMMODITY SEMICONDUCTORS -- 4.4%
-----------------------------------------
33,700 Fairchild Semiconductor
International Inc., Class "A"* .......... 1,600,750
45,000 Integrated Device Technology Inc. ....... 2,162,813
---------
3,763,563
---------
MISCELLANEOUS SERVICES -- 4.4%
------------------------------
30,000 Convergys Corporation ................... 1,320,000
100,000 Interim Services, Inc. .................. 1,712,500
36,500 Steiner Leisure, Ltd. ................... 734,563
---------
3,767,063
---------
OIL & GAS -- 7.4%
-----------------
70,000 Global Marine Inc. ...................... 1,680,000
20,000 Nabors Industries, Inc.* ................ 788,750
70,000 Noble Drilling Corporation* ............. 2,795,625
15,000 Schlumberger, Ltd. ...................... 1,148,438
---------
6,412,813
---------
PHARMACEUTICAL -- 7.7%
----------------------
55,500 Collateral Therapeutics, Inc.* .......... 1,359,750
30,000 Gilead Sciences Inc.* ................... 1,625,625
135,000 Lexicon Genetics, Inc.* ................. 1,316,250
39,062 Medical Manager Corporation ............. 1,249,984
75,000 Praecis Pharmaceuticals, Inc.* .......... 1,115,625
---------
6,667,234
---------
PRINTING & PUBLISHING -- 1.4%
-----------------------------
50,000 Reynolds & Reynolds Company,
Class "A" .............................. 1,187,500
---------
PROFESSIONAL SERVICES -- 1.2%
-----------------------------
10,000 Catalina Marketing Corporation .......... 1,012,500
---------
The accompanying notes are an integral part of the financial statements.
4
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HERITAGE SERIES TRUST - AGGRESSIVE GROWTH FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
------------------------
RESTAURANTS -- 1.9%
-------------------
50,000 Outback Steakhouse, Inc. ............... $1,637,500
----------
RETAIL STORES -- 7.5%
---------------------
80,000 InterTAN, Inc. ......................... 1,105,000
180,000 Office Depot, Inc. ..................... 1,901,250
200,000 Pier 1 Imports, Inc. ................... 2,275,000
100,000 Venator Group, Inc. .................... 1,187,500
----------
6,468,750
----------
SOFTWARE -- 11.1%
-----------------
22,000 BSQUARE Corporation* ................... 385,000
115,000 Cerner Corporation ..................... 2,537,188
31,500 Ciber Inc. ............................. 568,969
170,000 Datastream Systems, Inc. ............... 2,380,000
35,000 Electronic Data Systems
Corporation ........................... 2,406,250
34,400 Firstwave Technologies, Inc.*........... 189,200
20,000 Intertrust Technologies
Corporation ........................... 460,000
10,000 IONA Technologies PLC,
Sponsored ADR* ........................ 568,125
25,500 Omega Research, Inc.* .................. 81,281
----------
9,576,013
----------
Total Common Stocks
(cost $75,195,018).................................. 81,892,864
MARKET
VALUE
-------
REPURCHASE AGREEMENT--6.5%(a)
-----------------------------
Repurchase Agreement with State Street Bank
and Trust Company, dated April 28, 2000
@ 5.60% to be repurchased at $5,644,633 on
May 01, 2000, collateralized by $5,135,000
United States Treasury Bonds, 7.25% due
May 15, 2016, (market value $5,782,756
including interest) (cost $5,642,000)........ 5,642,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $80,837,018)(b), 101.4%(a).......... 87,534,864
OTHER ASSETS AND LIABILITIES, net, (1.4%)(a) (1,249,887)
-----------
NET ASSETS, 100.0% ...................... $86,284,977
===========
----------------------
* Not an income-producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation
of $6,697,846 which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $12,982,049 and aggregate gross unrealized depreciation for all
securities in which there is an excess of tax cost over market value of
$6,284,203.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
June 2, 2000
INVESTMENT COMMENTARY from MARTIN CURRIE, INC.
Eagle International Equity Portfolio (the "Fund")
For much of the period under review, international markets have continued to
move ahead, supported by rallies in the technology, media and telecom ("TMT
stocks") sectors. Japan, Europe and Asia benefited in particular with their
indices dominated by key global TMT stocks. However, further interest rate
rises in both the United States and Europe created increased volatility, with
markets hitting a peak in mid-March this year. Since then, much of the earlier
gains have been lost. The UK market missed much of the earlier rally, impacted
by a weak bond market and a strong currency. The Euro continued to weaken
against the Dollar while the Yen was in a more stable range over the
six-months. The Morgan Stanley Capital International Europe, Australia, Far
East Index, (the "MSCI EAFE Index" or "Index") rose by 6.72% over the period to
April 30, 2000, whereas the Fund's Class A Shares rose by 11.43% * after
expenses. Over the rolling 12 months, the MSCI EAFE Index rose by 13.92% and
the Class A Shares rose by 20.92%*.
JAPAN (28.7% of net assets at April 30, 2000) continued to rally for the early
part of the period. But as the economy stalled in the first quarter and TMT
stocks fell out of favour, the market fell sharply. Having built up our
weighting in early 1999, well ahead of the Index, we took profits in early
January, reducing our exposure to a more neutral position. New holdings
included stocks with a domestic flavour such as Diawa House and Sumitomo
Electric Industries. We took substantial profits from the highly rated (and
strongly performing) TMT stocks such as Canon, Hitachi, Sony, Rohm and the
spectacular performer NTT DoCoMo. Total sales included Kubota Corporation and
Promise Co. In the short term, we will continue to run with a more neutral
stance in Japan, but the enormous change in equity ownership structure, the
unwinding of cross share ownership and the increasing corporate activity
provide support for recovery later this year.
Having run an underweight position in CONTINENTAL EUROPE (38.8% of net assets
at April 30, 2000) for much of 1999, we began to add towards the turn of the
year with profits raised in Japan. Part of this move was driven by increasing
signs of economic recovery in France and Italy and, in part, an expectation
that the Euro would stabilise, if not rally. New holdings reflected a wish to
increase our TMT stock exposure and Europe contains some of the most
interesting opportunities. Tietoenator (Finland), Alstom (France), Alcatel
(France), Deutsch Telecom (Germany), Mediaset (Italy), Elsevier (Netherlands)
and Amadeus Global Travel (Spain) are all examples of this trend. Sales
reflected a reduction in exposure to companies where earnings remained under
pressure: Peugeot, Accor, Compagnie de Saint Gobain and Lafarge (France). We
continue to add to the region on weakness as earnings momentum improves for the
region as a whole. We have remained underweight the UK Index (16.4% of net
assets at April 30, 2000) concerned that rising interest rates, a dependency on
'old economy' stocks and the impact of a strong Sterling would see the Index
lagging the rest of Europe. New holdings reflected the TMT theme such as
Orange, Sage and WPP Group. Sales reduced exposure to the financial sector;
Halifax, Legal & General, National Westminster Bank and Lloyds where profit
margins remain under pressure.
ASIA (9.1% of net assets at April 30, 2000) continued to represent an
overweight position against the Index, but in part, this reflected exposure to
non-Index markets such as India, Korea, Malaysia, Taiwan and Thailand. The
region rallied as currencies and economies continued to improve and company
results reflected the dramatically changed trading conditions. It is also a
prime area for equipment supplies and electronic manufacturing. As a technology
play, the region also suffered profit taking in late March and April. New
holdings included AMP Ltd (Australia) China Telecom (Hong Kong), Li & Fung,
Television Broadcasts, I Cable Communications (Hong Kong), Malayan Banking,
Natsteel Electronics (Singapore) Singapore Telecom, Samsung Electronics (South
Korea) and Compal Electronics (Taiwan). We sold Telstra
----------------
* Calculated without the imposition of either front-end or contingent deferred
sales charges. See the first letter by Brian C. Lee for a full statement of
returns. Past performance is no guarantee of future results.
6
<PAGE>
and Tabcorp (Australia) and a number of less focussed groups in Hong Kong,
China Everbright, Dao Heng Bank and Henderson Land. In Singapore, we sold
Overseas Chinese Banking Corp, Singapore Airlines and Neptune Oriental Lines to
fund the purchase of more technology sensitive groups. While reducing our
overall exposure to Asia, we remain overweight against the Index.
We have had selective exposure to SMALLER MARKETS over the period, which have
rallied on the back of stronger world growth, rising commodity prices and the
interest in telecom and technology related sectors. While we find all of this
in Asia, as described above, we also continued to favour Brazil, where we
bought Embratel Participacoes and Unibanco. In Mexico, we added Grupo
Financiero Banamex. In both countries, stronger economies have resulted in
improving financial health for the banks. Nice Systems in Israel and Softline
in South Africa are good examples of quality technology related stocks in
smaller markets. Sales included Companie Val Do Rio Doce (Brazil), Cemex
(Mexico), Commercial International Bank (Egypt) Orbotech and Anglo American
(South Africa)
OUTLOOK
Until investors are convinced that the pressures on the world economy are under
control, we anticipate that the current volatility in world markets will
continue. The direction of US monetary policy and the need for an easing in the
pace of economic expansion provide the main focus. But the situation is finely
poised. Too severe a move in interest rates, or too negative a reaction in the
equity market, could precipitate a much harder economic landing than desired -
and a more dramatic reaction from world stockmarkets.
We continue to believe that the US economy will gradually ease from its peak in
late 1999, and that the inflation increases, which have become evident, will
dissipate gradually, as the year unfolds. We remain enthusiastic about the
outlook for markets for the rest of the year and retain a low overall cash
position. In currency markets, we are unhedged. We see the Euro as a cheap
currency and believe that the Yen will remain within a fairly narrow trading
range.
On behalf of all of us at Martin Currie, Inc., thank you for your continuing
confidence in us. We look forward to reporting to you again after the end of
the Fund's fiscal year.
7
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--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS--95.5%(a)
-----------------------
AUSTRALIA -- 1.6%
-----------------
28,000 AMP Ltd.* ......................... $ 245,280
10,000 Brambles Industries Ltd. .......... 281,488
10,700 News Corporation Ltd. ............. 135,886
93,000 North Ltd. ........................ 159,949
---------
822,603
---------
BRAZIL -- 0.9%
--------------
8,500 Embratel Participacoes, SA,
Sponsored ADR .................... 191,250
5,300 Petrobras, Sponsored ADR .......... 126,538
4,800 UBB Unibanco Uniao
De Barncos, Sponsored GDR* . 119,700
---------
437,488
---------
FINLAND -- 3.7%
---------------
29,704 Nokia AB OY ....................... 1,703,946
3,862 Tietoenator ....................... 186,080
---------
1,890,026
---------
FRANCE -- 14.5%
---------------
2,914 Alcatel ........................... 675,525
9,118 Alstom* ........................... 227,206
9,141 Aventis SA ........................ 504,422
7,973 AXA-UAP Groupe .................... 1,182,190
3,073 Cap Gemini SA ..................... 603,431
7,626 Carrefour ......................... 496,388
2,025 France Telecom* ................... 313,326
1,711 Societe Generale .................. 354,336
1,915 Sodexho Alliance .................. 286,905
3,092 Suez Lyonnaise des Eaux ........... 484,887
7,482 Total Fina SA, Class "B" .......... 1,135,235
11,687 Vivendi ........................... 1,155,961
---------
7,419,812
---------
GERMANY -- 2.4%
---------------
5,968 Bayerische Hypo-Vereinsbank AG 363,509
8,200 Deutsche Telekom* ................. 532,185
559 Sap AG ............................ 329,559
---------
1,225,253
---------
GREECE -- 0.1%
--------------
1,900 Hellenic Telecom OTE* ............. 42,772
---------
HONG KONG -- 3.1%
-----------------
124,000 Bank of East Asia Ltd. ............ 268,243
60,000 China Telecom (Hong Kong) Ltd.* 429,441
28,500 Hutchison Whampoa, Ltd. ........... 413,457
125,000 i-CABLE Communications, Ltd.* ..... 54,563
49,000 Li & Fung Ltd. .................... 191,239
35,000 Television Broadcasts ............. 239,274
---------
1,596,217
---------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
-------------------------
INDIA -- 0.6%
-------------
8,033 Indian Opportunities Fund,
Ltd. (b)* .......................... 123,226
10,900 Videsh Sanchar Nigam, Ltd. .......... 203,285
---------
326,511
---------
IRELAND -- 0.3%
---------------
19,932 Bank of Ireland ..................... 134,452
---------
ISRAEL -- 0.2%
--------------
1,400 Nice Systems Ltd,
Sponsored ADR * .................... 91,613
---------
ITALY -- 4.6%
-------------
27,953 Alleanza Assicuraz .................. 289,189
16,538 Mediaset* ........................... 268,369
38,688 San Paolo IMI SPA ................... 541,637
88,505 Telecom Italia Mobiliare SPA ........ 844,829
30,084 Telecom Italia SPA * ................ 420,633
---------
2,364,657
---------
JAPAN -- 28.2%
--------------
49,000 Asahi Chemical Industry
Company, Ltd. ...................... 282,165
3,400 Benesse Corporation ................. 303,912
16,000 Brigestone Corporation .............. 347,359
18,000 Canon, Inc. ......................... 823,219
27,000 Daiwa House Industry Company ........ 179,975
5,000 FamilyMart Company, Ltd. ............ 183,308
7,000 Fuji Photo Film Company, Ltd. ....... 280,609
17,000 Fujitsu Ltd. ........................ 481,600
40,000 Hitachi, Ltd. ....................... 477,711
9,000 Honda Motor Company, Ltd. ........... 402,444
6,000 Ito--Yokado Company, Ltd. ........... 438,272
23,000 Kao Corporation ..................... 700,551
3,000 Mabuchi Motor Company, Ltd. ......... 330,510
22,000 Marui Company, Ltd. ................. 413,461
40,000 Mitsui Marine & Fire Insurance ...... 175,902
12,000 MKC-STAT Corporation * .............. 246,632
6,000 Namco Ltd. .......................... 244,966
44 NTT Mobile Communication ............ 1,470,537
3,000 Riso Kagaku Corporation ............. 83,322
3,300 Rohm Company, Ltd. .................. 1,105,957
8,000 Secom Company, Ltd. ................. 671,018
19,000 Shin-Etsu Chemical
Company, Ltd. ...................... 1,004,398
8,500 Sony Corporation .................... 980,410
45,000 Sumitomo Bakelite Company, Ltd. . 495,348
25,000 Sumitomo Electric Industries* ....... 333,056
The accompanying notes are an integral part of the financial statements.
8
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------
COMMON STOCKS (CONTINUED)
-------------------------
JAPAN -- (CONTINUED)
--------------------
11,000 Taisho Pharmaceutical
Company ........................... $ 368,653
45,000 Toppan Printing Company, Ltd........ 470,768
1,500 Trend Micro Inc.* .................. 224,969
17,000 Yamanouchi Pharmaceutical .......... 898,671
----------
14,419,703
----------
MALAYSIA -- 0.5%
----------------
65,000 Malayan Banking Berhad ............. 270,263
----------
MEXICO -- 1.6%
--------------
81,000 Wal Mart de Mexico* ................ 187,221
3,300 Grupo Televisa, SA,
Sponsored GDR * .................... 209,344
29,000 Grupo Financiero Banamex, SA,
Series "O"* ....................... 104,782
5,100 Telefonos de Mexico,
Sponsored ADR ...................... 299,944
----------
801,291
----------
NETHERLANDS -- 4.1%
-------------------
50,681 Elsevier, NV ....................... 492,993
22,258 VNU, NV ............................ 1,190,815
7,419 ING Groep NV ....................... 404,812
----------
2,088,620
----------
POLAND -- 0.2%
--------------
15,000 Telekomunikacja Polska,
Sponsored GDR* .................... 114,000
----------
SINGAPORE -- 1.7%
-----------------
3,900 Chartered Semiconductor
Manufacturing, Sponsored
ADR * ............................. 340,763
47,000 Natsteel Electronics Ltd.* ......... 269,909
180,000 Singapore Telecom * ................ 259,478
----------
870,150
----------
SOUTH AFRICA -- 0.2%
--------------------
3,400 Nedcor Investment
Bank Holdings ...................... 1,454
96,000 Softline Ltd.* ..................... 98,683
----------
100,137
----------
SOUTH KOREA -- 0.8%
-------------------
2,700 Samsung Electronics,
Sponsored GDR ..................... 432,675
----------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
-------------------------
SPAIN -- 3.8%
-------------
19,952 Amadeus Global Travel,
Series "A"* .......................... 246,682
35,220 Banco Bilbao Vizcaya
Argenta .............................. 480,278
43,438 Banco Santander Central Hisp .......... 452,944
35,183 Telefonica S.A.* ...................... 782,990
-------
1,962,894
---------
SWEDEN -- 4.0%
--------------
17,400 Ericsson, Class "B" ................... 1,546,710
23,100 Foreningsparbanken, AB,
Class "A" ............................ 340,085
5,800 Securitas AB, Series "B" .............. 150,078
---------
2,036,873
---------
SWITZERLAND -- 1.3%
-------------------
360 Holderbank Financiere Glarus .......... 407,063
197 Novartis AG ........................... 275,187
---------
682,250
---------
TAIWAN -- 0.5%
--------------
17,468 Compal Electronics .................... 241,059
---------
THAILAND -- 0.2%
----------------
320,000 Thai Petrochemical Industry (c)*...... 78,182
---------
UK -- 16.4%
-----------
21,000 3I Group, PLC* ........................ 420,470
17,500 Allied Zurich, PLC .................... 174,106
8,000 AstraZeneca PLC ....................... 335,430
45,000 BP Amoco, PLC ......................... 388,497
13,000 British Sky Broadcasting, PLC* ........ 318,786
22,000 British Telecomunications, PLC ........ 393,909
26,000 Cable & Wireless, PLC ................. 431,525
22,000 GKN, PLC* ............................. 304,851
18,500 Glaxo Welcome, PLC .................... 571,751
65,000 Hilton Group, PLC ..................... 273,245
18,000 HSBC Holdings, PLC .................... 198,978
36,000 Marconi ............................... 452,280
4,000 Rio Tinto, PLC ........................ 62,278
22,893 Royal Bank of Scotland
Group, PLC ........................... 357,140
38,000 Sage Group, PLC ....................... 423,319
11,000 Scot & Newcastle, PLC ................. 80,494
38,000 Shell Transport &
Trading Company, PLC ................. 311,351
28,000 SmithKline
Beecham, PLC .......................... 383,633
The accompanying notes are an integral part of the financial statements.
9
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS (CONTINUED)
-------------------------
UK -- (CONTINUED)
-----------------
23,991 Smiths Industries, PLC ............ $ 281,140
65,000 Stagecoach Holdings, PLC .......... 64,010
439,333 Vodafone Airtouch, PLC ............ 2,011,019
11,000 WPP Group PLC* .................... 177,259
----------
8,415,471
----------
Total Common Stocks
(cost $37,556,302).............................. 48,864,972
----------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ------
CONVERTIBLE PREFERRED SHARES -- 0.5%(a)
---------------------------------------
JAPAN -- 0.5%
-------------
30,000,000 Sanwa International Finance
(Bermuda) 1.25% 01/08/05 (d)...... 283,294
----------
Total Convertible Preferred Shares
(cost $250,348)................................... 283,294
----------
CONVERTIBLE BONDS--0.1%(a)
--------------------------
FRANCE--0.1%
------------
$42,174 Lafarge, 0.0%, 03/01/20 ........... $ 32,474
----------
Total Convertible Bonds
(cost $30,095).................................... 32,474
----------
Total Investment Portfolio
excluding repurchase agreement
(cost $37,836,745)................................ 49,180,740
MARKET
VALUE
-------------
REPURCHASE AGREEMENT--1.9%(a)
-----------------------------
Repurchase Agreement with State Street Bank
and Trust Company, dated April 28, 2000 @
5.60% to be repurchased at $961,448 on May 01,
2000, collateralized by $980,000 United States
Treasury Notes, 4.63% due December 31, 2000,
(market value $994,818 including interest)
(cost $961,000).............................................. 961,000
-----------
TOTAL INVESTMENT PORTFOLIO,
(cost $38,797,745)(e), 98.0%(a) ............................ 50,141,740
OTHER ASSETS AND LIABILITIES, net, (2.0%)(a) ................ 1,037,831
-----------
NET ASSETS, 100.0% .......................................... $51,179,571
===========
----------------------
* Not an 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.
(c) Security is deemed illiquid and is fair valued by the Board of Trustees.
(d) Principal amount is stated in Japanese Yen.
(e) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation of
$11,343,995 which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$13,952,748 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $2,608,753
ADR -- American Depository Receipt
GDR -- Global Depository Receipt
The accompanying notes are an integral part of the financial statements.
10
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST -- EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
------------------------ ----------- --------
COMMON STOCKS
Aerospace & Defense ...................... $ 281,140 0.6%
Automobiles .............................. 1,054,654 2.1%
Banks .................................... 3,881,565 7.6%
Chemicals ................................ 1,860,092 3.6%
Construction & Building Materials ........ 587,038 1.1%
Diversified Industries ................... 1,155,962 2.3%
Electronic & Electrical Equipment ........ 2,854,513 5.6%
Engineering & Machinery .................. 227,206 0.4%
Food & Drug Retailers .................... 679,696 1.3%
General Retailers ........................ 1,038,954 2.0%
Household Goods & Textiles ............... 980,410 1.9%
Insurance ................................ 175,902 0.3%
Information Technology Hardware .......... 6,280,451 12.2%
Leisure, Entertainment & Hotels .......... 518,211 1.0%
Life Assurance ........................... 1,716,658 3.4%
Media & Photography ...................... 3,702,780 7.3%
Mining ................................... 222,227 0.4%
Oil & Gas ................................ 1,961,622 3.8%
Personal Care & Household Products ....... 700,551 1.4%
Pharmaceuticals .......................... 3,337,747 6.6%
Real Estate .............................. 174,106 0.3%
Restaurants, Pubs & Breweries ............ 80,494 0.2%
Software & Computer Services ............. 2,359,355 4.7%
Speciality & Other Finance ............... 1,468,201 2.9%
Support Services ......................... 1,603,152 3.1%
Telecommunication Services ............... 8,996,015 17.5%
Transportation & Storage ................. 481,384 0.9%
Utilities, Water ......................... 484,886 0.9%
CONVERTIBLE PREFERRED SHARES ...............
Banks .................................... 283,294 0.6%
CONVERTIBLE BONDS ..........................
Construction & Building Materials ........ 32,474 0.1%
REPURCHASE AGREEMENT ....................... 961,000 1.9%
----------- ----
TOTAL INVESTMENTS ................. $50,141,740 98.0%
=========== ====
The accompanying notes are an integral part of the financial statements.
11
<PAGE>
May 24, 2000
Dear Fellow Shareholders:
The Heritage Series Trust - Growth Equity Fund (the "Fund") has performed well
year-to-date and for the trailing six-months. Through April 30, 2000, the
Fund's Class A Shares year-to-date total return is up 6.6%* versus a
year-to-date total return of -0.8% for the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500 Index"). For the six-month period ending April 30,
2000, 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 +37.7%* versus a total
return of +7.2% for the S&P 500 Index. The Fund is rated five stars(a) by
Morningstar, based on 3,606 domestic equity funds for the overall period ending
April 30, 2000. 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 April 30, 2000.
As of April 30, 2000, the Fund consisted of 62 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, a high profit margin, and consistency
and predictability of earnings. 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
Over the past several months, there have been wide swings not only in the
behavior of the NASDAQ Composite, but also in the Dow Jones Industrial Average.
In our view, these wide swings in the financial markets are due primarily to
two factors. First, investors remain uncertain over how long the U.S. Federal
Reserve will continue to raise interest rates. When we last presented an update
for the Fund six-months ago, we mentioned that investors' sentiment had shifted
to a greater worry about potential inflation, rather than deflation. This theme
continued into the year 2000. Just last week (on May 16, 2000), the Fed raised
interest rates a half percentage point.
While the Fed has moved to act on near-term inflation worries, we do not
believe there will be major inflation in the U.S. economy over the long term.
Our thoughts about the long-run situation remain unchanged from our last update
of the Fund and they bear repeating here. There is still excess manufacturing
capacity worldwide. Also, U.S. companies are utilizing the Internet to improve
their productivity and to reduce their costs. It is our belief that inflation
will be held in check.
Another factor affecting market conditions is a wholesale review by investors
of the entire Internet phenomenon. Investors are reevaluating the realistic
earnings prospects of both "old economy" and "new economy" companies in the
"Internet era." While the markets continue to seesaw back and forth as the
economy makes its transition, we believe this type of environment will continue
to be a "stock picker's" market.
----------------
* Calculated without the imposition of either front-end or contingent
deferred 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 no guarantee of
future results.
(b) Morningstar, Inc. performance rankings for the Growth Equity Fund 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 April 30, 2000, the Fund was ranked in the 4th percentile out
653 large growth funds. For the 3-year period ended April 30, 2000, the
Fund was ranked in the 6th percentile out of 428 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.
12
<PAGE>
Although short-term issues may create a choppy market for investors, we remain
very bullish on the prospects of the U.S. equity markets and the growth style
in particular. In our view, the large, multi-national companies held in the
Fund should continue to compound their revenue and earnings growth targets.
These factors should override any near-term macroeconomic changes. We continue
to believe that the long-term market fundamentals remain outstanding.
HERITAGE GROWTH EQUITY PORTFOLIO REVIEW FOR THE SIX MONTHS ENDING APRIL 30,
2000
The Heritage Growth Equity portfolio delivered solid performance numbers over
the past six months because of positive gains mainly in the technology sector.
The Fund also experienced gains in its consumer, communications, capital goods,
and energy sectors. Several areas detracted from the Fund's performance over
the past six-months. These sectors included health care and financials.
The Fund benefited from its overweight position in the technology sector. Some
of our winners over the past six-months include Cisco Systems, National
Semiconductor, LSI Logic, JDS Uniphase, E-Tek Dynamics, Microchip Technology,
Intertrust Technologies, and Aspect Communications. Dell also positively
contributed to the Fund's performance as well. Many of the Fund's technology
holdings should benefit from the build-out not only of the Internet, but also
the wireless and optical areas. While the overall technology sector performed
well over the past six months, this was not true for all of the Fund's
technology holdings. For example, Microsoft and Cadence Design Systems
exhibited negative returns for the Fund's six-month performance. In spite of
this, these two names remain in the portfolio as the long-term fundamentals of
these two firms remain intact.
The consumer sector of the Fund added to the Fund's positive performance over
the past six months. Home Depot, Omnicom, and Time Warner boosted the Fund's
performance. After America Online (one of the Fund's holdings) announced its
intention to purchase Time Warner, we decided to take profits and reinvest the
proceeds in other names. The Fund's position in AOL remains intact however. One
of our larger consumer names, Wal-Mart, was slightly negative for the Fund, as
was our position in AMFM. Both names remain in the Fund, as they are clear
leaders in their competitive spheres. We eliminated Clorox and Kohl's because
of their deteriorating fundamentals.
The communications sector made a slight positive contribution as well with
gains in Nortel, Nokia, and Broadwing. One of our long-running growth themes is
the development of the wireless area in the communications sector. We are
actively seeking other potential winners in this area.
The Fund also had positive performances from two of its smaller sector
weightings, capital goods and energy. While the capital goods area is not a
large component of the Heritage Growth Equity Fund, it made a positive
contribution during this recent six-month time period. One of the Fund's larger
positions, General Electric, also proved to be positive for performance. The
Fund is underweighted in energy stocks as well. We added Cooper Cameron, Enron,
and Smith International to take advantage of a cyclical upturn in
energy-related stocks. These names provided some nice gains at the margin to
the Fund's performance.
Health care has been a difficult sector in which to invest over the past six
months and the Fund's holdings have suffered as a result. Uncertainty over
government reimbursements for Medicare and Medicaid has caused many investors
to shun these fundamentally sound, health care companies. For example, the
Fund's holdings in Pfizer, Merck, Johnson & Johnson, Schering-Plough,
Bristol-Myers Squibb, and Lilly contributed to the underperformance of the
Fund's health care sector. Nevertheless, Baxter International, Medtronic, and
Guidant managed to generate positive performance over the six months ending
April 30, 2000.
Investors' fears over rising interest rates caused the financial sector
weighting to detract from the Fund's overall positive performance. High quality
names such as American Express, Goldman Sachs, and Freddie
13
<PAGE>
Mac did not perform as well as we had hoped. On the positive side, the Fund's
holdings in Citigroup and AIG helped offset the overall weakness in the sector.
As long as interest rates continue to move upward, the financial holdings in
the Fund will most likely remain under negative pressure. Despite the near-term
underperformance of our financial sector holdings, we remain confident about
the long-term prospects for the names in this group.
CONCLUSION
Looking ahead to the next six months, we believe that there is a limit as to
how far the Federal Reserve can raise short-term interest rates. If interest
rates are raised too high, there are several potential negative outcomes that
the financial markets will find unsettling, especially with regards to trade.
First, the U.S. dollar could become so strong as to weaken U.S. exports to
overseas markets. When U.S. exports become even more expensive to buy, foreign
consumers will purchase fewer U.S. goods. Naturally, this is bad news for U.S.
multi-nationals that depend on exports to grow their overall businesses. Higher
U.S. interest rates may also limit the extent to which European and Asian
economies could grow over the short term.
We believe the long-term outlook for the market is favorable based upon several
factors. Not only are there strong fundamentals, but also the actions of the
Federal Reserve to prevent the economy from overheating appear to be having an
effect. In addition, we still see strong earnings growth in the companies in
which we prefer to invest. It is a company's earnings, as knowledgeable
investors know, that ultimately drives valuation. 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 PARIK
--------------
Ashi Parikh
Managing Director
Eagle Asset Management, Inc.
Portfolio Manager, Growth Equity Fund
14
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ------
COMMON STOCKS--99.0%
--------------------
ANALOG SEMICONDUCTORS -- 5.7%
-----------------------------
251,550 National Semiconductor
Corporation* .......................... $15,281,662
-----------
BANKS -- 1.6%
-------------
71,500 Citigroup Inc. ......................... 4,249,781
-----------
BROADCASTING -- 1.4%
--------------------
57,700 AMFM Inc.* ............................. 3,829,838
-----------
CHEMICALS -- 0.4%
-----------------
25,000 Immunex Corporation* ................... 984,375
-----------
COMMUNICATION SEMICONDUCTORS -- 2.9%
------------------------------------
73,750 JDS Uniphase Corporation* .............. 7,646,952
-----------
COMMUNICATION SERVICES -- 0.5%
------------------------------
24,900 AT&T Wireless Group* ................... 792,131
65,950 GoAmerica, Inc.* ....................... 655,378
-----------
1,447,509
-----------
COMMUNICATION EQUIPMENT -- 9.2%
-------------------------------
165,100 Cisco Systems, Inc.* ................... 11,446,073
90,200 Nokia Corporation, Sponsored
ADR, Class "A" ........................ 5,130,124
48,500 Nortel Networks Corporation* ........... 5,492,625
8,000 SDL, Inc.* ............................. 1,560,000
10,750 Teradyne, Inc.* ........................ 1,182,500
-----------
24,811,322
-----------
COMPUTER EQUIPMENT -- 4.5%
--------------------------
214,700 Dell Computer Corporation* ............. 10,761,838
21,750 Gateway Inc.* .......................... 1,201,687
-----------
11,963,525
-----------
COMPUTER PERIPHERAL EQUIPMENT -- 4.1%
-------------------------------------
57,900 EMC Corporation* ....................... 8,044,481
103,600 Interlink Electronics Inc.* ............ 3,108,000
-----------
11,152,481
-----------
COMPUTER SYSTEMS DESIGN -- 2.9%
-------------------------------
204,650 Cadence Design Systems, Inc.*........... 3,440,678
46,700 Sun Microsystems, Inc.* ................ 4,293,481
-----------
7,734,159
-----------
ELECTRONIC EQUIPMENT -- 4.7%
----------------------------
39,600 General Electric Company ............... 6,227,100
82,250 Sycamore Networks Inc.* ................ 6,456,625
-----------
12,683,725
-----------
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS (CONTINUED)
-------------------------
FINANCIAL INSTITUTIONS -- 1.3%
------------------------------
23,000 American Express Company ................ 3,451,438
---------
INDUSTRIAL MEASURING DEVICES -- 6.3%
------------------------------------
145,100 KLA-Tencor Corporation* ................. 10,864,362
94,800 Microchip Technology Inc.* .............. 5,883,525
----------
16,747,887
----------
INFORMATION RETRIEVAL SERVICES -- 3.2%
--------------------------------------
103,500 America Online, Inc.* ................... 6,190,594
46,850 Corillian Corporation* .................. 585,625
13,200 YAHOO! Inc.* ............................ 1,719,300
----------
8,495,519
----------
INSURANCE -- 2.9%
-----------------
38,925 American International
Group, Inc. ............................ 4,269,585
211,000 MetLife, Inc.* .......................... 3,494,688
----------
7,764,273
----------
LOGIC SEMICONDUCTORS -- 4.6%
----------------------------
59,100 Intel Corporation ....................... 7,494,619
78,100 LSI Logic Corporation* .................. 4,881,250
----------
12,375,869
----------
MACHINERY -- 6.9%
-----------------
96,800 Applied Materials Inc.* ................. 9,855,450
190,500 Lam Research Corporation* ............... 8,739,188
----------
18,594,638
----------
MEDICAL EQUIPMENT -- 4.3%
-------------------------
40,300 Baxter International, Inc. .............. 2,624,537
34,400 Guidant Corporation ..................... 1,973,700
60,800 Johnson & Johnson ....................... 5,016,000
33,800 Medtronic, Inc. ......................... 1,755,488
----------
11,369,725
----------
MEMORY & COMMODITY SEMICONDUCTORS -- 7.0%
-----------------------------------------
108,800 Atmel Corporation* ...................... 5,324,400
38,600 Fairchild Semiconductor
International Inc., Class "A"* .......... 1,833,500
88,600 Integrated Device Technology
Inc.* .................................. 4,258,339
29,300 Intersil Holding Corporation* ........... 1,025,500
283,500 SCG Holding Corporation* ................ 6,219,281
----------
18,661,020
----------
MISCELLANEOUS SERVICES -- 2.7%
------------------------------
150,600 Ceridian Corporation .................... 3,266,138
93,800 Convergys Corporation* .................. 4,127,200
----------
7,393,338
The accompanying notes are an integral part of the financial statements.
15
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS (CONTINUED)
-------------------------
OIL & GAS -- 1.6%
-----------------
20,100 Cooper Cameron Corporation* ........ $ 1,507,500
16,300 Enron Corporation .................. 1,135,906
21,900 Smith International, Inc. .......... 1,664,400
-----------
4,307,806
-----------
PHARMACEUTICAL -- 6.8%
----------------------
39,100 American Home Products
Corporation ....................... 2,196,931
8,000 Genentech Inc.* .................... 936,000
53,500 Lexicon Genetics, Inc.* ............ 521,625
71,950 Merck & Company, Inc. .............. 5,000,525
135,500 Pfizer, Inc. ....................... 5,707,938
93,500 Schering-Plough Corporation ........ 3,769,219
-----------
18,132,238
-----------
PLASTIC PRODUCTS -- 0.6%
------------------------
39,500 Weatherford International, Inc.* . 1,604,688
-----------
PROFESSIONAL SERVICES -- 1.2%
-----------------------------
35,050 Omnicom Group, Inc. ................ 3,191,741
-----------
RETAIL STORES -- 5.0%
---------------------
111,650 Home Depot, Inc. ................... 6,259,378
126,000 Wal-Mart Stores, Inc. .............. 6,977,250
-----------
13,236,628
-----------
SECURITY DEALERS -- 1.1%
------------------------
18,500 Goldman Sachs Group, Inc. .......... 1,725,125
15,750 Morgan Stanley Dean Witter
& Company ......................... 1,208,813
-----------
2,933,938
-----------
SOFTWARE -- 5.6%
----------------
175,200 Microsoft Corporation* ............. 12,220,200
3,700 VeriSign, Inc.* .................... 515,688
14,000 Veritas Software Corporation* ...... 1,501,718
16,200 Vignette Corporation* .............. 780,638
-----------
15,018,244
-----------
Total Common Stocks
(cost $206,603,253) ............................ 265,064,319
MARKET
VALUE
--------------
REPURCHASE AGREEMENT -- 4.2%(a)
-------------------------------
Repurchase Agreement with State Street
Bank and Trust Company, dated
April 28, 2000 @ 5.60% to be repurchased
at $11,325,283 on May 01, 2000,
collateralized by $10,300,000 United
States Treasury Bonds, 7.25% due
May 15, 2016, (market value
$11,599,296 including interest)
(cost $11,320,000) .......................................... 11,320,000
----------
TOTAL INVESTMENT PORTFOLIO
(cost $217,923,253)(b), 103.2%(a) .......................... 276,384,319
OTHER ASSETS AND LIABILITIES, net, (3.2%)(a) ................ (8,565,918)
------------
NET ASSETS, 100.0% .......................................... $267,818,401
============
----------------------
* 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
$58,461,066 which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$61,489,140 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $3,028,074.
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
16
<PAGE>
June 8, 2000
Dear Fellow Shareholders:
I'm pleased to report to you the performance for the Heritage Mid Cap Stock
Fund (the "Fund") for the six-month period ended April 30, 2000. During this
period your Fund's Class A Shares return was +37.5%*, surpassing the Standard &
Poor's MidCap 400 Index (the "S&P MidCap Index") by over 16%. For the one year
period ended April 30, 2000, the Class A Shares of your Fund had a positive
return of +50.9%* compared to 23.5% for the S&P MidCap Index.
OVERVIEW
With a $1.9 billion median market cap, the Fund has the same median market
capitalization as the S&P MidCap Index. This compares to an average median
market capitalization of $10 billion for the largest 50 mid-cap growth funds
and mid-cap blend mutual funds (source: Microsoft Investor). Clearly, other
mutual fund managers are much larger than the indices. Our emphasis on finding
unknown undervalued stocks leads us to smaller stocks in the mid-cap universe.
With approximately 30% of our Fund in technology, we are in-line with most
large mid-cap blend funds. The 25 largest mid-cap growth funds generally have
50-60% of their assets in technology (source: Microsoft Investor). We are a
diversified "stock-pickers" fund. We generally have market weights or a slight
overweight in industrial stocks, energy stocks, finance stocks, and health care
stocks. Our chronic overweighting in media stocks is usually balanced by
underweighting in traditional consumer cyclical stocks such as retail.
SOME NOTES ON FUND PERFORMANCE
Stock market performance during most of 1999 and the first two months of 2000
was primarily a result of extremely strong performance in technology and
biotechnology stocks. Stocks without any operating history or earnings did
well--depending on the sector, non-earnings stocks were up between 100 and 200
percent in 1999.
The differential performance in the growth and value indices highlights the
narrowness of the market. On a trailing-12 month basis through April 30, 2000,
the growth part of the S&P MidCap Index was up 40% while its value counterpart
gained 3%.
The narrowness continued the first two months of the year with an astounding
23% gap between the mid-cap growth and mid-cap value indices -15% versus -8%.
Despite several increases in short-term rates, the general belief was that new
economy stocks were impervious to economic influences.
We have never seen a period where momentum investing worked so well.
FUND COMPOSITION
Since the only non-earnings stocks we are able to own (given our philosophy)
are cash-flow rich media stocks and telecommunications stocks, we were
fortunate to hold our own in 1999 and the first part of the year 2000. Media
companies that had new economy implications such as Pegasus Communications
(satellite provider), GM Hughes (satellite provider), Emmis Communications
(radio), Westwood One (radio), Nielsen Media Research (TV and Internet
Ratings), TeleCorp (PCS), Price Communications (wireless), Lamar (billboards),
National Computer (education), Primedia (magazines and business-to-business
internet), Penton Media (trade shows), Telephone and Data (wireless), Western
Wireless (wireless), and SBS communications (TV and internet) contributed
greatly to our performance.
We strive to own a market weight in technology with an emphasis on firms that
have earnings. Our holdings in technology have been concentrated in relatively
low multiple contract manufacturing firms (Plexus, Act, SCI, Sanmina),
semi-conductor companies (Varian, LSI, Vishay, Lattice, Amkor, Fairchild),
electronic distributors (Arrow), and electronic component manufacturers
(Xircom, Commscope, Zebra, Symbol).
----------------
* Calculated without the imposition of either front-end or contingent deferred
sales charges.
17
<PAGE>
We find it difficult to invest directly in the new Internet computing paradigm,
as most of these stocks are quite big and expensive. Two sectors - Web software
and networking - are very visible beneficiaries of the Internet Revolution. For
instance, the six leading newcomers in Web software and/or communications
infrastructure (Siebel, Veritas, Verisign, BEA Systems, Check Point, and
Brocade) average $24 billion in market cap. Four out of these six (BEA Systems,
Check Point, Verisign, and Brocade) are in either the small or mid-cap indices.
Even after the severe tech correction in March and April, these stocks sell at
516 times earnings per share ("EPS") or 58 times ("58x") sales!
At 50x earnings, we own Visual Networks, a leading provider of monitoring
software for the Internet. Other software holdings with reasonable relative
multiples include Adobe (53x EPS), Sungard Data Systems (18x), Concord EFS
(18x) and Advent (50x). Our experience with inexpensive software firms (<25x
EPS) such as Synopsis (electronic design software), Micros (hospital software),
and Kronos' time management software) has been frustrating at best. Clearly,
most of the incremental software spending is going towards the Internet and
most software business models need a net-centric emphasis to succeed.
At 10%, we are slightly underweighted in the finance sector compared to the S&P
MidCap Index. For the most part, our finance holdings performed in line with
the value indices during 1999 and until recently have not added to performance.
Stocks like Radian (private mortgage insurance), Stancorp Financial (disability
insurance), SEI Investments (investments) and Federated (investments) rebounded
strongly in March and April, and are up 21%, 20%, 28% and 55%, respectively.
Both SEI and Federated have large bond business and are not geared to the stock
market. As we feel we are late in the credit cycle, we own very few
credit-related stocks such as credit cards or banks. A major disappointment in
the Fund was long-term holding Protective Life. Protective missed earnings for
the first time in 10 years. We sold the stock as we suspect their problems
might be longer term in nature.
At 12-13% health-care, we are in line with market weights. Unlike many funds,
we do not own biotechnology stocks and most of our health care stocks are at
low or reasonable multiples. Examples include: Lincare (respiratory therapy,
12x), Datascope (cardiac devices, 18x), Varian Medical (cancer treatment 23x),
Patterson Dental (dental supplies, 24x), Sybron (lab equipment 18x) and Quest
(lab diagnostics, 27x). Varian and Quest have been our real winners in this
sector this year, with Varian and Quest up 42% and 83%, respectively. Our only
non-earnings stock was Novoste, a cardiac medical device company. We sold the
stock when the company came out with positive news with their final product
trials. Novoste now faces the difficult task of growing revenue and earnings.
A BIG CHANGE IN THE MARKET
The NASDAQ Composite Index declined 18% during March and April 2000 versus a
6.3% increase in the S&P 500 (driven by value stocks). Due to our diversity,
our Fund was up 7.8%. Clearly, our Fund is not making the same bet on
technology that other funds are making. The largest midcap growth fund in the
industry was down -5.5% in this period while the largest mid-cap blend fund was
down -4.7%. For reference, the largest value fund was up 9.2% (Source:
Microsoft Investor).
Furthermore, most stocks outside of technology have done very little for three
years. If the market broadens, diversified funds like ours stand to benefit.
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 Stock Fund
18
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - MID CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ---------
COMMON STOCKS--97.2%(a)
-----------------------
BROADCASTING -- 7.5%
--------------------
8,000 Cablevision Systems Corporation,
Class "A"* ........................ $ 541,500
17,700 Insight Communications
Company, Inc.* .................... 360,638
14,800 Lodgenet Entertainment
Corporation* ...................... 381,100
29,150 Price Communications
Corporation* ...................... 590,287
30,625 Saga Communications Inc.,
Class "A"* ........................ 620,156
---------
2,493,681
---------
COMMUNICATION SERVICES -- 6.8%
------------------------------
9,500 Adelphia Business Solutions
Inc.* ............................. 332,500
12,000 Commonwealth Telephone
Enterprises Inc. .................. 582,750
14,000 Crown Castle International
Corporation* ...................... 537,250
9,700 MDSI Mobile Data Solutions Inc.*.... 339,500
12,500 Telesystem International Wireless
Inc., Sponsored ADR* .............. 412,500
---------
2,204,500
---------
COMMUNICATIONS EQUIPMENT -- 3.7%
--------------------------------
16,000 Commscope, Inc.* ................... 760,000
5,300 Gilat Satellite Networks Ltd* ...... 455,137
---------
1,215,137
---------
COMPUTER EQUIPMENT -- 1.3%
---------------------------
18,000 International Game Technology ...... 438,750
---------
COMPUTER PERIPHERAL EQUIPMENT -- 2.9%
-------------------------------------
9,300 Xircom Inc.* ....................... 366,768
10,400 Zebra Technologies Corporation,
Class "A"* ........................ 592,800
---------
959,568
---------
COMPUTER SYSTEMS DESIGN -- 7.0%
-------------------------------
23,000 National Computer Systems
Inc. .............................. 1,183,062
6,400 SEI Investments Company ............ 764,000
9,300 Visual Networks, Inc.* ............. 362,700
---------
2,309,762
---------
CONSTRUCTION & CONSTRUCTION PRODUCTS -- 1.5%
--------------------------------------------
15,100 Elcor Corporation .................. 480,369
---------
ELECTRONIC EQUIPMENT -- 9.4%
----------------------------
11,200 ACT Manufacturing Inc.* ............ 407,400
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS (CONTINUED)
-------------------------
ELECTRONIC EQUIPMENT (CONTINUED)
--------------------------------
8,400 Amphenol Corporation
Class "A"* ......................... 535,500
8,700 Plexus Corporation* ................. 666,637
5,800 Sanmina Corporation* ................ 348,363
10,600 Varian Semiconductor
Equipment Associates, Inc.* ........ 712,850
4,700 Vishay Intertechnology, Inc.* ....... 394,213
---------
3,064,963
---------
HEALTH CARE -- 2.2%
-------------------
23,500 Lincare Holdings, Inc.* ............. 716,750
---------
INDUSTRIAL MEASURING DEVICES -- 3.9%
------------------------------------
5,100 General Motors Corporation,
Class "H" .......................... 491,194
11,400 Roper Industries Inc. ............... 359,100
8,000 SCI Systems Inc.* ................... 426,000
---------
1,276,294
---------
INFORMATION RETRIEVAL SERVICES -- 1.2%
--------------------------------------
11,800 CNET Networks, Inc.* ................ 407,838
---------
INSURANCE -- 3.1%
-----------------
11,000 Radian Group Inc. ................... 560,313
16,500 Stancorp Financial Group ............ 480,563
---------
1,040,876
---------
LOGIC SEMICONDUCTORS -- 2.0%
----------------------------
6,000 Lattice Semiconductor
Corporation* ....................... 404,250
4,200 LSI Logic Corporation* .............. 262,500
---------
666,750
---------
MEDICAL EQUIPMENT -- 8.9%
-------------------------
32,500 Edwards Lifesciences
Corporation* ....................... 487,500
12,000 Patterson Dental Company* ........... 577,500
36,000 Sybron International Corporation* 1,120,500
19,000 Varian Medical Systems Inc.* ........ 760,000
---------
2,945,500
---------
MEMORY & COMMODITY SEMICONDUCTORS -- 3.4%
-----------------------------------------
7,000 Amkor Technology, Inc.* ............. 428,312
15,000 Fairchild Semiconductor
International Inc., Class "A"* ..... 712,500
---------
1,140,812
---------
The accompanying notes are an integral part of the financial statements.
19
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - MID CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -------
COMMON STOCKS (CONTINUED)
-------------------------
METAL PRODUCTS 3.0%
-------------------
6,200 Alliant Techsystems, Inc.* ......... $ 431,675
20,000 Aptargroup Inc. .................... 570,000
---------
1,001,675
---------
MISCELLANEOUS SERVICES -- 5.4%
------------------------------
22,000 Concord EFS, Inc.* ................. 492,250
11,500 H&R Block, Inc. .................... 480,843
12,750 Iron Mountain Inc.* ................ 446,250
3,700 Jupiter Communications Inc* ........ 96,431
10,600 NetRatings, Inc.* .................. 280,900
---------
1,796,674
---------
OIL & GAS -- 2.0%
-----------------
16,000 Newfield Exploration Company ....... 650,000
---------
OTHER INVESTMENT COMPANIES -- 1.4%
----------------------------------
16,500 Federated Investors, Inc.,
Class "B" ......................... 466,125
---------
PHARMACEUTICAL -- 2.2%
----------------------
12,800 Quest Diagnostics Inc.* ............ 744,800
---------
POLLUTION CONTROL -- 1.2%
-------------------------
19,000 Stericycle Inc.* ................... 399,000
---------
PRINTING & PUBLISHING -- 5.7%
-----------------------------
16,000 Harte-Hanks Communications,
Inc. .............................. 396,000
30,000 John Wiley & Sons, Inc., Class "A" 517,500
16,500 Primedia Inc.* ..................... 344,438
18,000 Valassis Communications, Inc. ...... 613,125
---------
1,871,063
---------
PROFESSIONAL SERVICES -- 5.2%
-----------------------------
9,000 Catalina Marketing Corporation* .... 911,250
16,000 Core Laboratories N.V.,
Sponsored ADR* .................... 454,000
14,000 Penton Media Inc. .................. 368,375
---------
1,733,625
---------
RETAIL STORES -- 2.4%
---------------------
9,300 BJ's Wholesale Club, Inc.* ......... 329,568
25,000 Family Dollar Stores Inc. .......... 476,563
---------
806,131
---------
SOFTWARE -- 3.9%
----------------
3,000 Adobe Systems Inc. ................. 362,813
10,400 Advent Software, Inc.* ............. 546,000
11,500 SunGard Data Systems Inc.* ......... 397,469
---------
1,306,282
---------
MARKET
VALUE
------------
COMMON STOCKS (CONTINUED)
-------------------------
Total Common Stocks
(cost $27,827,017).......................................... 32,136,925
REPURCHASE AGREEMENT--3.2%(a)
-----------------------------
Repurchase Agreement with State Street Bank
and Trust Company, dated April 28, 2000
@ 5.60% to be repurchased at $1,050,490 on
May 01, 2000, collateralized by $960,000
United States Treasury Bonds, 7.25% due
May 15, 2016, (market value $1,081,099
including interest) (cost $1,050,000) ....................... 1,050,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $28,877,017)(b), 100.4%(a)............................. 33,186,925
OTHER ASSETS AND LIABILITIES, net, (0.4%)(a) ................ (133,833)
-----------
NET ASSETS, 100% ............................................ $33,053,092
===========
----------------------
* 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 $4,309,908 which consists
of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value
over tax cost of $5,385,441 and aggregate gross unrealized
depreciation for all securities in which there is an excess
of tax cost over market value of $1,075,533.
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
20
<PAGE>
June 7, 2000
Dear Fellow Shareholders:
During the six-month period ending April 30, 2000, the Heritage Series Trust -
Small Cap Stock Fund (the "Fund") Class A Shares returned 24.3%* versus 18.7%
for the Russell 2000 Index.
During the period, the Fund's growth oriented investments generally
outperformed value oriented investments, so that our higher growth holdings
helped the Fund's performance more than it's deeper value investments did. It
is important to note that as we approached the end of the reporting period, the
phenomenon reversed itself somewhat as value investments outperformed growth
investments from mid-March through April 30th.
In terms of industry sectors, Awad's portion of the Fund's holdings was helped
by participation in medical equipment, publishing, security dealers, computer
equipment, pharmaceuticals and electronic equipment industries. Conversely,
investments in healthcare and wholesale products negatively influenced our
portion of the portfolio.
In terms of individual securities, Investors Financial Services, LTX
Corporation, Zebra Technologies, John Wiley & Sons, Silicon Storage and Penton
Media had the largest positive impact on our portion of the portfolio. All of
these securities improved in price as investors became aware of the magnitude
of their earnings.
On the other hand, Audible, Eclipsys and Capital Crossing were a deterrent to
performance. Audible and Capital Crossing went down in price for no logical
reason; transitory market sentiment was responsible. On the other hand,
Eclipsys reported disappointing earnings due to a difficult healthcare industry
environment.
As the reporting period ended, the market began to shift away from a momentum
environment with special interest in technology to a more broadly based market
where relative value has become more critical. This change should be helpful to
the Fund, which has a value and growth at a reasonable price investment
orientation.
Going forward, we believe that strong earnings and a stabilization of interest
rates should be helpful to security prices. Equally importantly, we believe the
migration to a relative value market should be particularly helpful to our
portion of the Fund, as our research-oriented approach to investing becomes
more relevant during balanced markets.
We look forward to doing well for our shareholders.
Sincerely,
/s/ JAMES D. AWAD
-----------------
James D. Awad
Chairman
Awad Asset Management, Inc.
Portfolio Manager, Small Cap
Stock Fund
----------------
* Calculated without the imposition of either front-end or contingent deferred
sales charges.
21
<PAGE>
June 13, 2000
Dear Fellow Shareholders:
For the six-month period ended April 30, 2000, Heritage Series Trust-Small Cap
Stock Fund (the "Fund") Class A Shares were up 24.3%*, outperforming the
Russell 2000 Index, which was up 18.7% for the period.
Aiding our performance was the decision six-months ago to increase our
weighting in the Technology sector, as this was our best performing sector.
Over the past six-months, technology stocks alone have contributed over 50% of
the gains in the Russell 2000. Currently we are weighted approximately 29% in
Technology.
By far our biggest winner for the period was Coherent, a lasers/optics
technology company that rose dramatically due in part to a strong earnings
report and increased attention in the market to fiber optics companies.
Southwest Securities, a financial services firm, performed well after
announcing solid quarterly earnings and revenues. Gentex, which makes
auto-dimming rear view mirrors for automobiles, reported record revenues for
the fourth quarter of 1999 and record earnings for the year. Next Level
Communications, which designs and markets high-speed, high-volume and broadband
communications equipment, announced strong revenue growth. Finally, biotech
firm Collateral Therapeutics announced positive results on several clinical
trials, including gene therapy for patients with coronary artery disease and
heart failure.
Sykes Enterprises was our worst performer after the company announced
disappointing earnings and subsequently announced a restatement of 1999
earnings as well as lowered future earnings estimates. Navigant Consulting
declined after the company disclosed improper loans granted to certain
officers, who were subsequently dismissed, and earnings expectations were
sharply lowered by the new management team. Metrocall declined largely due to a
broad sell-off in technology stocks in April, although the company has
announced good earnings.
Over the short term, interest rate concerns may continue to pressure the
market; however, rates should peak later in the summer leading to a strong
rally. We are comfortable with how our portion of the portfolio is positioned
going forward, with an expected 2000 earnings per share growth rate of
approximately 30% and a price to 2000 earnings ratio of just 18 times as of
April 30, 2000. For the most part, our holdings had very positive first quarter
earnings announcements and we expect the companies to continue performing well.
As always we will endeavor to do our best for shareholders.
Sincerely,
/s/ BERT BOKSEN
---------------
Bert Boksen
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Small Cap Stock Fund
----------------
* Calculated without the imposition of front-end or contingent deferred sales
charges.
22
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS--91.8%(a)
-----------------------
ANALOG SEMICONDUCTORS--0.8%
---------------------------
20,000 Burr-Brown Corporation ................ $1,362,500
----------
AUTOMOTIVE -- 1.8%
------------------
100,000 Gentex Corporation* ................... 3,225,000
----------
BANKS -- 3.1%
-------------
115,900 Capital Crossing Bank* ................ 1,180,731
100,000 Commercial Federal Corporation 1,556,250
100,000 ITLA Capital Corporation* ............. 1,368,750
85,000 North Fork Bancorporation ............. 1,375,938
----------
5,481,669
----------
COMMUNICATION SERVICES -- 2.8%
------------------------------
117,500 Alaska Communications Systems
Group Inc.* .......................... 1,410,000
60,000 American Tower Corporation,
Class "A" ............................ 2,790,000
139,000 Metrocall, Inc.* ...................... 834,000
----------
5,034,000
----------
COMMUNICATIONS EQUIPMENT -- 6.4%
--------------------------------
54,000 Ancor Communications Inc.* ............ 1,630,125
10,000 C-Cube Microsystems Inc.* ............. 642,500
51,500 Commscope, Inc.* ...................... 2,446,250
77,000 International Fibercom Inc.* .......... 1,400,438
59,000 LTX Corporation* ...................... 2,699,250
55,000 Sawtek, Inc.* ......................... 2,629,688
----------
11,448,251
----------
COMPUTER EQUIPMENT -- 0.2%
--------------------------
25,000 Maxtor Corporation* ................... 298,438
185,000 Quantum Corporation--Hard
Disk Drive Group* ..................... 2,162,188
----------
2,460,626
----------
COMPUTER PERIPHERAL EQUIPMENT -- 4.7%
-------------------------------------
150,000 Avid Technology, Inc.* ................ 2,062,500
25,050 Interlink Electronics Inc.* ........... 751,500
139,875 Printronix, Inc.* ..................... 2,535,234
23,000 Xircom Inc.* .......................... 907,063
38,500 Zebra Technologies Corporation,
Class "A" ............................ 2,194,500
----------
8,450,797
----------
COMPUTER SYSTEMS DESIGN -- 3.3%
-------------------------------
50,000 Affiliated Computer Services
Inc.* ................................ 1,656,250
63,962 Eclipsys Corporation* ................. 511,696
197,500 Health Management Systems,
Inc.* ................................ 777,656
75,000 INSpire Insurance Solutions, Inc.* 225,000
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS--(CONTINUED)
--------------------------
COMPUTER SYSTEMS DESIGN-- (CONTINUED)
-------------------------------------
53,500 National Computer Systems
Inc. .................................. 2,751,906
---------
5,922,508
---------
EDUCATION -- 2.3%
-----------------
116,250 New Horizons Worldwide, Inc.* .......... 2,048,906
100,000 Strayer Education, Inc. ................ 2,056,250
---------
4,105,156
---------
ELECTRONIC EQUIPMENT -- 6.1%
----------------------------
200,000 Artesyn Technologies, Inc.* ............ 4,850,000
80,000 Ems Technologies Inc* .................. 1,430,000
50,000 Paradyne Networks, Inc.* ............... 1,409,375
80,000 Universal Electronics, Inc.* ........... 1,640,000
100,000 Windmere-Durable Holdings .............. 1,606,250
---------
10,935,625
----------
ENTERTAINMENT -- 0.8%
---------------------
83,750 World Wrestling Federation
Entertainment Inc.* .................... 1,428,983
----------
FINANCIAL INSTITUTIONS -- 5.6%
------------------------------
196,000 Doral Financial Corporation ............ 2,339,750
95,000 Investors Financial Services
Corporation ........................... 7,754,375
----------
10,094,125
----------
FOOD -- 1.4%
------------
70,000 Corn Products International, Inc. ...... 1,680,000
100,000 Del Monte Foods Company* ............... 887,500
----------
2,567,500
----------
HEALTH CARE -- 0.1%
-------------------
46,325 Horizon Health Corporation* ............ 266,368
----------
HOTELS, MOTELS & INNS -- 0.3%
-----------------------------
150,000 Lodgian, Inc. .......................... 459,375
----------
INDUSTRIAL MEASURING DEVICES -- 0.9%
------------------------------------
45,000 SBS Technologies Inc.* ................. 1,552,500
----------
INFORMATION RETRIEVAL SERVICES -- 3.0%
--------------------------------------
139,000 Audible Inc.* .......................... 842,688
75,000 Nova Corporation* ...................... 2,371,875
----------
3,214,563
----------
The accompanying notes are an integral part of the financial statements.
23
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ----------
COMMON STOCKS--(CONTINUED)
--------------------------
INSURANCE -- 2.0%
-----------------
89,375 Annuity and Life Re
(Holdings), Ltd. ................... 1,932,734
105,000 Presidential Life Corporation ....... 1,671,797
---------
3,604,531
---------
LEATHER GOODS -- 2.2%
---------------------
310,000 Genesco Inc.* ....................... 4,010,625
---------
MACHINERY -- 2.5%
-----------------
53,500 Astec Industries, Inc.* ............. $1,344,188
55,000 Bell & Howell Company* .............. 1,460,937
70,000 Kaydon Corporation .................. 1,636,250
----------
4,441,375
----------
MEDICAL EQUIPMENT -- 4.5%
-------------------------
123,456 Angiosonics, Inc. (b)* .............. 39,506
91,200 Coherent, Inc.* ..................... 5,272,500
61,000 Cytyc Corporation* .................. 2,729,750
----------
8,041,756
----------
MEMORY & COMMODITY SEMICONDUCTORS -- 2.2%
-----------------------------------------
41,000 Silicon Storage Technology
Inc.* .............................. 3,997,500
----------
MISCELLANEOUS SERVICES -- 6.3%
------------------------------
120,000 Interim Services, Inc.* ............. 2,055,000
55,000 Iron Mountain Inc.* ................. 1,925,000
50,000 Korn/Ferry International* ........... 1,325,000
69,000 StarTek, Inc.* ...................... 3,544,875
46,000 Steiner Leisure, Ltd.* .............. 925,750
195,000 Telespectrum Worldwide Inc.* 962,813
22,500 Teletech Holdings Inc.* ............. 734,063
----------
11,472,501
----------
OIL & GAS -- 0.8%
-----------------
80,000 Global Industries Ltd.* ............. 1,140,000
12,500 Pride International, Inc.* .......... 282,813
----------
1,422,813
----------
PHARMACEUTICAL -- 3.3%
----------------------
105,000 Collateral Therapeutics, Inc.* ...... 2,572,500
45,000 Emisphere Technologies Inc.* ........ 1,847,108
50,000 Lexicon Genetics, Inc.* ............. 487,500
35,000 Medical Manager 1,120,000
Corporation* ........................
44,444 SurVivaLink Corporation (b)* 13,333
----------
6,040,441
----------
POLLUTION CONTROL -- 1.0%
-------------------------
180,000 IMCO Recycling, Inc. ................ 1,856,250
----------
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS--(CONTINUED)
--------------------------
PRINTING & PUBLISHING -- 6.7%
-----------------------------
90,000 Cunningham Graphics
International, Inc.* ............... 2,160,000
40,000 Houghton Mifflin Company ............ 1,662,500
215,200 John Wiley & Sons, Inc., Class
"A" ................................ 3,712,200
100,000 Mail-Well, Inc.* .................... 893,750
137,000 Penton Media Inc. ................... 3,604,813
---------
12,033,263
----------
PROFESSIONAL SERVICES -- 0.5%
-----------------------------
101,500 Ventiv Health Inc.* ................. 1,072,094
----------
REAL ESTATE INVESTMENT TRUSTS -- 1.2%
-------------------------------------
110,000 Meristar Hospitality Corporation 2,172,500
----------
RETAIL STORES -- 3.3%
---------------------
130,000 Bradlees Inc. ....................... 650,000
260,000 Cash America International, Inc. 2,340,000
63,500 Tech Data Corporation* .............. 2,663,031
97,500 U.S. Vision, Inc.* .................. 225,469
----------
5,878,500
----------
SECURITY DEALERS -- 4.1%
------------------------
85,000 Dain Rauscher Corporation* .......... 5,264,687
55,000 Investment Technology Group
Inc.* .............................. 2,062,500
----------
7,327,187
----------
SOFTWARE -- 5.9%
----------------
26,500 Barra Inc* .......................... 1,116,312
22,000 BSQUARE Corporation* ................ 385,000
85,000 Cerner Corporation* ................. 1,875,313
165,000 Datastream Systems, Inc.* ........... 2,310,000
5,000 Intertrust Technologies
Corporation* ....................... 115,000
40,000 Research In Motion Ltd.* ............ 1,700,000
75,000 S3 Incorporated.* ................... 1,054,688
50,000 Transaction Systems Architects
Inc., Class "A"* ................... 815,625
30,000 Wind River Systems, Inc.* ........... 1,280,625
-----------
10,652,563
-----------
WHOLESALE PRODUCTS -- 1.7%
--------------------------
130,000 Hughes Supply, Inc. ................. 1,982,500
20,800 Martin Marietta Materials,
Inc. ............................... 1,102,400
-----------
3,084,900
-----------
Total Common Stocks (cost $143,708,434) 165,118,345
-----------
The accompanying notes are an integral part of the financial statements.
24
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
--------- ----------
COMMON STOCKS--(CONTINUED)
--------------------------
CONVERTIBLE BONDS -- 0.3%(a)
----------------------------
MEDICAL EQUIPMENT -- 0.3%
-------------------------
1,000,000 Angeion Corporation,
7.5%, 04/15/03 (b) .......... $ 550,000
------------
Total Convertible Bonds
(cost $100,000,000)............................. 550,000
------------
Total Investment Portolio excluding
repurchase agreement
(cost $144,708,434)........................... 165,668,345
REPURCHASE AGREEMENT -- 8.9%(a)
-------------------------------
Repurchase Agreement with State Street Bank
and Trust Company, dated April 28, 2000
@ 5.60% to be repurchased at $15,894,414 on
May 01, 2000, collateralized by $14,450,000
United States Treasury Bonds, 7.25% due
May 15, 2016, (market value $16,272,799
including interest) (cost $15,887,000).......... 15,887,000
------------
TOTAL INVESTMENT PORTFOLIO excluding
(cost $160,595,434)(c), 101.0%(a)........ 181,555,345
OTHER ASSETS AND LIABILITIES, net, (1.0)%(a) (1,721,949)
------------
NET ASSETS, 100.0% ........................ $179,833,396
============
----------------------
* Non- income producing security.
(a) Percentages indicated are based on net assets.
(b) Private placement and illiquid 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 $20,959,911, which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $44,164,218 and aggregate gross unrealized depreciation for all
securities in which there is an excess tax cost over market value of
$23,204,307.
The accompanying notes are an integral part of the financial statements.
25
<PAGE>
May 26, 2000
Dear Fellow Shareholders:
The Heritage Series Trust - Technology Fund (the "Fund") has posted solid
performance numbers since it commenced operations last fall. The Fund's Class A
Shares produced a total return of +22.04%* from inception on November 18, 1999
through April 30, 2000. The Goldman Sachs Technology Index (the "GSTI")-an
index of 180 stocks designed to measure broadly the performance of the
technology sector - advanced +24.99%, while the NASDAQ Composite Index (NASDAQ)
was up +15.35%, and the S&P 500 Index returned +1.93%. The Fund's slight
underperformance relative to the GSTI was due primarily to the index's
significant bias toward large capitalization stocks. For example, the top 10
stocks in the GSTI comprise over 50% of the index. Within the Fund, we strive
for broad diversification with regard to market capitalization, and our risk
management practices discourage such high levels of portfolio concentration.
In the midst of the technology sector correction that began in March of this
year, the Fund has performed well in relation to its peers. We attribute this
outcome to our disciplined approach to stock selection, an intense focus on
risk management, and our commitment to providing shareholders with exposure to
a broad spectrum of technology industry segments. As of April 30, 2000, the
Fund was comprised of 49 equity investments across several technology sectors
including hardware, networking/communications, semiconductors, software,
services, and the Internet.
While the Fund primarily holds technology stocks, we attempt to manage
portfolio risk by investing in a blend of rapid growth, predictable growth, and
fundamental turnaround situations across a wide range of market
capitalizations. Although we usually maintain a substantial bias towards rapid
growth companies in the Fund's investment mix, we typically invest less than
15% of the Fund's assets in companies that do not generate either positive
earnings or positive operating cash flow.
Our team-based investment strategy at Eagle is aimed at building a concentrated
portfolio of technology stocks that afford the greatest opportunity for long
term capital appreciation. Quantitatively, we look for companies with profit
margins and returns on invested capital above industry norms whose stocks trade
at reasonable valuations relative to projected future cash flows. On the
qualitative side, we favor businesses with defensible and durable operating
models whose market position gives them the ability to create and sustain a
competitive advantage. Finally, we seek companies that possess deep and
talented management teams with a sound strategic vision and sufficient
intellectual capital to execute that vision.
In practice, this means we engage in lots of reading, financial modeling,
and-most importantly-active dialogue with industry participants. We speak
frequently to technology company CEOs and CFOs, industry analysts, engineers,
salespeople, and venture capitalists regarding issues such as products,
partners, competition, financial targets, and talent retention. We maintain a
research office in Sunnyvale, California, and this location affords us frequent
access to inhabitants of one of the most unique industrial ecosystems in the
world-Silicon Valley. We firmly believe the only way to consistently uncover
emerging opportunities and threats within the technology sector is to spend a
significant proportion of our time living where the value is created and
destroyed every day. It is our view that the primary risk in technology
investing is "not knowing what you own." The best way for us to maintain a
fresh base of fundamental knowledge is to keep our ears to the ground,
especially in an industry where the pace of change continues to accelerate.
----------------
* These returns are calculated without the imposition of either fron-end or
contingent deferred sales charges.
26
<PAGE>
TECHNOLOGY MARKET ENVIRONMENT
During the month of March 2000, we saw the beginning of a significant
correction in technology stock prices. There are several factors that we
believe are causing near term instability in the market for technology stocks.
These include:
1. A normal period of consolidation following recent strong gains.
2. A reassessment of risk levels and appropriate valuations.
3. Prospects for higher inflation and a rise in interest rates.
4. A reversal of the supply/demand imbalance in newly public technology stocks.
5. An increase in overall market volatility driven partly by the increasing
presence of leveraged and short-term oriented investors.
In retrospect, it is not too surprising that technology investors have decided
to consolidate some of their gains from recent months. In 1999, the NASDAQ
produced a stunning return of +85.6%, and the GSTI was up +88.6%. Through the
first quarter of 2000, the NASDAQ "only" returned +12.4% (with the GSTI up
+15.8%). The strong growth prospects rightfully associated with the technology
sector continue to draw the attention of a wide variety of investors. This
intense focus often leads to periods of excess followed by natural periods of
digestion as fundamental attributes such as revenue, earnings, and cash flow
growth must eventually "catch up" with valuation levels.
A reassessment of risk levels and valuations has also been a factor in the
downturn of the technology market. While the fundamental growth trend in
technology remains positive (and on a significantly steeper trajectory than
most other parts of the economy), the actual revenues, earnings, and cash flows
produced by many newly public technology companies simply have not justified
their peak valuations. Consequently, many investors have begun to apply more
scrutiny to companies' ability to produce real earnings and cash flows over a
sustained period of time.
Prospects for higher inflation have shortened the time horizon over which
companies must demonstrate meaningful progress towards their financial
objectives. Higher interest rates have a negative influence on the discounted
cash flow models commonly used by investors to value companies. In short,
applying a higher discount rate greatly diminishes the present value of
earnings and cash flows that are expected in the distant future. Accordingly,
the market's emphasis shifts to near-term financial performance and investors
become more discerning as to the long-term viability of unproven business
models. This combination usually has a decidedly negative impact on the
valuation of many technology stocks.
On the positive side, the inflation outlook may hold a silver lining for
technology stocks, particularly with regards to a tighter employment market. As
labor becomes more expensive, the decision to substitute capital for labor
becomes more compelling for business decision-makers. It is our contention that
technology has become the primary tool used by companies to increase labor
productivity, and technology goods now represent more than 50% of most
corporate capital budgets. A tighter labor market could drive this percentage
significantly higher with obvious positive effects on the demand for technology
products and services.
In our view, an excess supply of newly public technology stocks has also
contributed to the recent market correction. The end of the lock-up period for
many initial public offerings (IPOs) launched in 1998 and 1999 has driven a
supply shock of floated shares-reversing the supply/demand imbalance that
previously drove many technology shares to unsustainable levels. The increased
supply of existing shares and additional
27
<PAGE>
technology IPOs now coming to market have allowed investors to be more
discriminating in how they assess the relative earnings growth prospects of
less mature companies.
Finally, we believe technology sector volatility has been magnified by the
increasing proliferation of hedge funds, day traders, and other short-term
oriented investors whose use of leverage magnifies their impact on the market.
The primary impact of these market participants is felt in exaggerated market
movements both on the upswing and during corrections.
Like most investors, we are not pleased to see sharp market corrections such as
the one recently occurring in the technology sector. In spite of these
declines, we remain committed to our long-term investment philosophy and
strongly believe these price corrections are healthy for the market as they
encourage more disciplined and discerning investment approaches. The torrid
pace of appreciation in technology stocks simply was not sustainable, and the
recent adjustment to lower valuation levels has provided us the opportunity to
build core positions in some of our favorite technology stocks at much more
attractive price points. Most importantly, this valuation reset enables greater
capital appreciation opportunities for long-term oriented technology investors.
HERITAGE TECHNOLOGY PORTFOLIO REVIEW FOR THE PERIOD ENDING APRIL 30, 2000
The Heritage Technology portfolio's performance since its November 18, 1999
inception was driven by positive gains in the semiconductor, communications,
services, software, and hardware sectors. The Internet sector was the principal
area that detracted from the Fund's performance over this time period.
The continuation of the current semiconductor upcycle helped to boost the
performance of the Fund through April 30, 2000. National Semiconductor,
Fairchild Semiconductor, MEMC Electronic Materials, LSI Logic, Intel, and Texas
Instruments were among the better performing names in the Fund. We also believe
Motorola, whose stock has treaded water in recent months, remains a good
fundamental story. The firm produced another positive earnings surprise
recently, but we did note operating margin deterioration in the company's
handset business. We remain bullish on the Motorola's prospects, however. We
expect the company's revenue and earnings to continue on a healthy growth track
despite near term challenges related to product transitions and component
supply constraints. In our opinion, these negative issues are transitory, and
we look for Motorola to meet or exceed consensus earnings expectations for the
coming year.
In the communications sector, solid gains from Cisco Systems, JDS Uniphase,
Nortel Networks, Broadcom, Sycamore Networks, and Nokia have helped the Fund's
performance since inception. In the case of Cisco Systems, it remains among the
top holdings in the Fund. In our view, the company should continue to
experience accelerating revenue growth. Cisco has a number of attractive
opportunities available in upgrading the global telecommunications
infrastructure.
The services sector outperformed for the Fund primarily based on the strength
of our position in Convergys, a leading billing systems provider to the
communications industry.
The hardware area also had a positive impact on the Fund's performance. EMC,
Jabil, and Dell helped the Fund in this area. On the negative side, Gateway and
Solectron detracted from our performance during the Fund's opening months.
These names remain in the portfolio, and we expect them to significantly
outgrow their current valuations over the coming year.
Software benefited the Fund as well. Vitria Technology, Aspect Communications,
and Oracle boosted the Fund's performance. Two of our larger software
positions, Cadence Design Systems and Microsoft, held back the Fund's
performance. We believe Cadence should return to a healthy earnings growth
trajectory in the second half of 2000, and we discuss Microsoft's business
prospects in more detail below.
Microsoft remains one of the Fund's top holdings despite the adverse judicial
rulings against the company. We believe the company is experiencing a temporary
earnings slowdown caused by both a pause in PC
28
<PAGE>
demand associated with Y2K purchase lockdowns early this year and an impending
product transition to Windows 2000. We believe Microsoft's revenue and earnings
growth are likely to re-accelerate over the next twelve months driven by the
rollout of one of the strongest product cycles in the firm's history. As for
the effects of the U.S. government's anti-trust case against the company, we
believe a "worst case" outcome is already in the public domain. Looking ahead,
we believe the company will meet with greater legal success during the appeals
process. At current valuation levels, we find the stock quite attractive.
The Internet sector underperformed for the Fund overall. In the case of
well-established Internet companies, the Fund's performance was mixed. America
Online and Amazon.com detracted from the Fund's performance, while Yahoo!
contributed strong positive performance. These three names remain in the Fund,
and we believe they continue to represent some of the few blue chip investments
spawned by the new economy. Over the coming months, we expect investors will
come to appreciate the predictability of AOL's growth, the immense
international growth opportunities available to Yahoo!, and the long-term power
of Amazon's operating model as it approaches a crucial inflection point.
Regarding less mature Internet technologies, our strategy has been to follow a
basket investment approach in segments where clear winners have yet to emerge.
This strategy was initially appropriate for newly emerging business models that
compete in the business-to-business (B2B) e-commerce arena. Earlier this year,
however, we sold the Fund's holdings in Internet Capital Group and VerticalNet
as we came to believe that these companies might not be well positioned to
succeed over time. Instead, we believe companies providing critical enabling
software in addition to supporting online B2B marketplaces (that simply
aggregate buyers and sellers) should demonstrate better staying power with
higher margins and more predictable cash flows. Consequently, we have chosen to
concentrate our B2B exposure in companies such as Ariba, CommerceOne, I2, and
Oracle. We believe the B2B e-commerce space represents a huge value creation
opportunity for the ultimate winners.
TECHNOLOGY OUTLOOK
Fundamentally speaking, we remain very positive on several technology trends we
believe will drive investment opportunities in the coming year. Some of the
more important trends can be described as follows:
1. A continuation of the semiconductor upcycle driven by the persistence of
tight supply conditions and healthy unit demand.
2. An increasing tendency on the part of companies to outsource many non-core
functions such as product assembly and testing, product repair and support
services, and data center management.
3. Rapid adoption of optical transmission and switching platforms by
telecommunications service providers. These platforms can reduce network
costs by 70% relative to electronic alternatives.
4. The beginning of a robust Windows 2000 upgrade cycle that should bolster
corporate demand for PCs, servers, and related computing products.
5. Substantial expenditures on broadband telecommunications infrastructure to
support the rapid rollout of cable and DSL technologies to consumers and
businesses.
6. Continued strong demand across the globe for wireless communications
devices, wireless infrastructure, and related services.
7. Accelerating demand for storage products and services as Internet-based
transactions and communications continue to drive a massive proliferation
of electronic data.
29
<PAGE>
8. Continued aggressive spending on Internet commerce infrastructure (hardware,
software, and services) by companies of all sizes.
Investors should place the most recent technology stock correction in proper
perspective. The fundamental outlook for the sector has rarely been better.
Currently, we do not face a macroeconomic shock akin to the Asian contagion or
other major disturbances that might significantly slow demand for technology
products and services. More importantly, we are in the early stages of the
evolution of the most important technology phenomenon in several generations:
the Internet. It is possible that the Internet will create (and destroy) more
shareholder value than any technological advancement preceding it, and we are
in the first or second inning of what is likely to be a very long ball game.
How early are we in the evolution of the Internet? Today, less than five
percent of the global population uses the Internet regularly, and less than one
percent of worldwide commerce is conducted via the Internet. These numbers
suggest that global adoption of Internet technology is literally in its
infancy. We believe the Internet will ultimately become an extremely disruptive
and ubiquitous technology platform. However, we are still a long way from
unleashing the true power of this medium by transforming it into a secure,
reliable, fast, and convenient means of facilitating a broad spectrum of
communications and transactions. To drive this transformation, expenditures on
Internet infrastructure products and services will likely be immense over the
next several years (in the hundreds of billions of dollars), and technology
budgets should continue to grow at a healthy clip. We believe many attractive
technology investment opportunities are likely to emerge as a result.
Sincerely,
/s/ DUANE A. EATHERLY, CFA
--------------------------
Duane A. Eatherly, CFA
Eagle Asset Management, Inc.
Portfolio Manager, Heritage Technology Fund
30
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - TECHNOLOGY FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS--98.3%(a)
-----------------------
ANALOG SEMICONDUCTORS--3.5%
---------------------------
67,050 National Semiconductor
Corporation* .......................... $4,073,288
----------
COMMUNICATION SEMICONDUCTORS -- 1.3%
------------------------------------
5,000 Broadcom Corporation,
Class "A"* ............................ 861,875
6,900 JDS Uniphase Corporation* .............. 715,444
----------
1,577,319
----------
COMMUNICATION SERVICES -- 1.4%
------------------------------
35,000 Crown Castle International
Corporation* .......................... 1,343,125
31,500 GoAmerica, Inc.* ....................... 313,031
----------
1,656,156
----------
COMMUNICATIONS EQUIPMENT --11.7%
--------------------------------
90,000 Cisco Systems, Inc.* ................... 6,239,530
13,800 Motorola, Inc. ......................... 1,643,063
48,800 Nokia Corporation, Sponsored
ADR, Class "A" ........................ 2,775,500
27,000 Nortel Networks Corporation* ........... 3,057,750
----------
13,715,843
----------
COMPUTER EQUIPMENT -- 9.8%
--------------------------
87,800 Dell Computer Corporation* ............. 4,400,975
79,000 Gateway Inc* ........................... 4,364,750
40,000 Solectron Corporation* ................. 1,872,500
----------
10,638,225
----------
COMPUTER PERIPHERAL EQUIPMENT -- 9.8%
-------------------------------------
7,500 Brocade Communications
Systems Inc.* ......................... 930,000
30,000 EMC Corporation* ....................... 4,168,125
70,500 Interlink Electronics Inc.* ............ 2,115,000
62,000 Jabil Circuit, Inc.* ................... 2,538,125
15,000 Lexmark International Group,
Inc., Class "A"* ...................... 1,770,000
----------
11,521,250
----------
COMPUTER SYSTEMS DESIGN -- 2.8%
-------------------------------
30,000 Cabletron Systems, Inc.* ............... 686,250
150,000 Cadence Design Systems, Inc.* .......... 2,521,875
----------
3,208,125
----------
ELECTRONIC EQUIPMENT -- 2.7%
----------------------------
20,000 Sanmina Corporation* ................... 1,201,250
25,000 Sycamore Networks Inc.* ................ 1,962,500
----------
3,163,750
MARKET
SHARES VALUE
------ ---------
COMMON STOCKS (CONTINUED)
-------------------------
INDUSTRIAL MEASURING DEVICES -- 4.8%
------------------------------------
52,100 KLA-Tencor Corporation* ............. 3,900,988
28,000 Microchip Technology Inc.* .......... 1,737,750
---------
5,638,738
---------
INFORMATION RETRIEVAL SERVICES -- 2.5%
--------------------------------------
27,100 America Online, Inc.* ............... 1,620,919
22,500 Corillian Corporation* .............. 281,250
8,500 YAHOO! Inc.* ........................ 1,107,125
---------
3,009,294
---------
LOGIC SEMICONDUCTORS -- 7.8%
----------------------------
48,800 Intel Corporation ................... 6,188,449
27,900 LSI Logic Corporation* .............. 1,743,750
7,500 Texas Instruments Inc. .............. 1,221,563
---------
9,153,762
---------
MACHINERY -- 5.0%
-----------------
25,300 Applied Materials Inc.* ............. 2,575,856
61,800 Lam Research Corporation* ........... 2,835,075
5,000 PRI Automation Inc.* ................ 399,375
---------
5,810,306
---------
MEMORY & COMMODITY SEMICONDUCTORS -- 14.0%
------------------------------------------
59,000 Atmel Corporation* .................. 2,887,313
28,800 Cypress Semiconductor
Corporation* ....................... 1,495,800
81,800 Fairchild Semiconductor
International Inc., Class "A"* ...... 3,885,500
35,100 Integrated Device Technology
Inc.* .............................. 1,686,994
115,300 MEMC Electronic Materials,
Inc.* .............................. 2,003,338
4,000 Micron Technology, Inc. ............. 557,000
181,250 SCG Holding Corporation* ............ 3,976,171
---------
16,492,116
----------
MISCELLANEOUS SERVICES -- 3.8%
------------------------------
45,000 Ceridian Corporation ................ 975,938
80,000 Convergys Corporation* .............. 3,520,000
----------
4,495,938
----------
PHARMACEUTICAL -- 0.3%
----------------------
37,500 Lexicon Genetics, Inc.* ............. 365,625
----------
RETAIL STORES -- 3.3%
---------------------
71,500 Amazon.com Inc.* .................... 3,945,906
----------
The accompanying notes are an integral part of the financial statements.
31
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - TECHNOLOGY FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ -----------
COMMON STOCKS (CONTINUED)
-------------------------
SOFTWARE -- 14.6%
-----------------
46,000 Ariba, Inc.* ........................... $ 3,412,625
40,000 Epiphany Inc.* ......................... 2,642,500
117,000 Microsoft Corporation* ................. 8,160,750
11,500 Oracle Corporation* .................... 919,280
10,400 Veritas Software Corporation* .......... 1,115,563
20,000 Vignette Corporation* .................. 963,750
-----------
17,214,468
-----------
Total Common Stocks
(cost $106,798,542).............................. 115,680,109
REPURCHASE AGREEMENT--3.4%(a)
-----------------------------
Repurchase Agreement with State Street Bank
and Trust Company, dated April 28, 2000
@ 5.60% to be repurchased at $4,044,887 on
May 01, 2000, collateralized by $3,680,000
United States Treasury Bonds, 7.25% due
May 15, 2016, (market value $4,144,215
including interest) (cost $4,043,000)...... 4,043,000
------------
TOTAL INVESTMENT PORTFOLIO
(cost $110,841,542)(b), 101.7%(a)........ 119,723,109
OTHER ASSETS AND LIABILITIES, net, (1.7%)(a) (2,009,721)
------------
Net Assets, 100.0% ........................ $117,713,388
============
----------------------
* Not an income-producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized appreciation
of $8,881,657 which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $15,361,172 and aggregate gross unrealized depreciation for all
securities in which there is an excess tax cost over market value of
$6,479,605.
ADR -- American Depository Receipt
The accompanying notes are an integral part of the financial statements.
32
<PAGE>
June 1, 2000
Dear Fellow Shareholders:
The first four months of this period proved to be a very difficult time for
"Value" investing. However, March and April signaled at least a partial return
to reality when investors came to the realization that there is risk in the
stock market and that the value of stocks come down, as well as go up. We are
very pleased with our performance during the past 6 months and in particular
year-to-date.
The Value Equity Fund's (the "Fund") Class A Shares performance over the past
six months was +7.4%* versus the Standard & Poor's Barra Value Index that was
up +2.7% and the Russell 1000 Value Index which was down -1.0%. The Fund's
Class A Shares performance for the 3 months ended April 30, 2000 was +6.8% and
ranked by Lipper Analytical Services, Inc. in the top 29th percentile(a) out of
502 multi-cap value equity funds. This has been a positive improvement of the
Fund's performance over the prior 3 years.
Our performance to date was driven by several sectors that were considered "out
of favor" over the past year or so, such as financial services and energy
companies. Investors finally recognized the extremely low valuations accorded
to financial service companies, levels which had not been seen since the early
90's when banks had severe capital adequacy problems. Those questions do not
exist today. We benefited from our positions in property & casualty insurance
companies such as Chubb, Hartford Financial Services, and Everest Re Group.
Also, we purchased Citigroup, the largest diversified financial services
company, and Fannie Mae, the largest government sponsored mortgage lender, at
the end of February when the market was not looking favorably at financial
stocks. Early in the quarter, we bought El Paso Energy and Williams Companies.
Both companies are benefiting from the recovery in energy prices while Williams
is also receiving better recognition for its state-of-the-art nationwide fiber
optic communications network, which has SBC Communications as its anchor
tenant. US West was sold at a nearly 10% premium to its take out price and was
replaced with GTE. Newell Rubbermaid, a diversified consumer products company,
was purchased when its valuation fell into our buy range.
In keeping with our value discipline of selling a stock when its price/earnings
multiple exceeds the market multiple, we sold 3Com, Hewlett Packard and Intel.
Also, we sold Interstate Bakeries and Manor Care whose fundamentals we believe
would not be restored on a timely basis. In addition, we trimmed a number of
positions as they approached our sell targets such as Cable & Wireless (2
times), Cardinal Health, Williams Cos and Parker-Hannifin.
We believe that the Fund's portfolio is well positioned for the year ahead.
However, we continually look for new investment opportunities and have a number
of investment recommendations approved by our Committee. These stocks are
sitting in our "bullpen", ready to be opportunistically acted upon.
We at Osprey are pleased with the progress of the Fund's portfolio, and hope
that you are encouraged with our performance year-to-date while maintaining the
"Value" philosophy.
Sincerely, Sincerely,
/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 Osprey Partners Investment
Management, LLC Management, LLC
Portfolio Manager, Value Equity Portfolio Manager, Value Equity
Fund Fund
----------------
* Calculated without the imposition of either front-end or contingent
deferred sales charges.
(a) Lipper Analytical Services, Inc. performance rankings for the Value Equity
Fund's Class A Shares were 143 out of 502 multi-cap value equity funds for
the quarter ended April 30, 2000. The Fund's Class A Shares were also
ranked 306 out of 472 and 178 out of 205 multi-cap value equity funds for
the 1- and 5-years ended April 30, 2000, respectively. This puts the Fund
in the 65th and 87th percentile for the 1- and 5- years ended April 30,
2000. The performance numbers used for the Fund did not take into account
any front - or back -end sales charges. See the previous letter by Brian
C. Lee for a full statement of returns since inception. Past performance
is no guarantee of future results.
33
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
MARKET
SHARES VALUE
------ ---------
COMMON STOCKS--95.9%(a)
-----------------------
AUTOMOTIVE -- 6.6%
------------------
18,000 Dana Corporation ....................... $ 546,750
23,000 Genuine Parts Company .................. 603,750
10,000 TRW Inc. ............................... 585,000
---------
1,735,500
---------
BANKS -- 8.5%
-------------
8,000 Citigroup Inc. ......................... 475,500
15,000 First Union Corporation ................ 478,125
28,500 National City Corporation .............. 484,500
20,000 Regions Financial Corporation .......... 408,750
14,000 Union Planters Corporation ............. 396,375
---------
2,243,250
---------
CHEMICALS -- 8.3%
-----------------
19,000 Air Products & Chemicals Inc. .......... 590,187
8,400 E.I. du Pont de Nemours &
Company ............................... 398,475
26,300 Millennium Chemicals Inc. .............. 524,356
18,400 Rohm & Haas Company .................... 655,500
---------
2,168,518
---------
COMMUNICATION SERVICES -- 6.3%
------------------------------
7,000 Cable & Wireless Plc, Sponsored
ADR ................................... 345,625
7,800 GTE Corporation ........................ 528,450
17,800 SBC Communications, Inc. ............... 779,862
---------
1,653,937
---------
COMPUTER SYSTEMS DESIGN -- 1.9%
-------------------------------
21,900 Unisys Corporation ..................... 507,805
---------
ELECTRONIC EQUIPMENT -- 2.2%
----------------------------
13,500 Arrow Electronics Inc. ................. 591,469
---------
FOOD -- 3.6%
------------
26,000 ConAgra, Inc. .......................... 490,750
27,000 Universal Foods Corporation ............ 443,813
---------
934,563
---------
FURNITURE & FIXTURES -- 1.9%
----------------------------
20,000 Newell Rubbermaid Inc. ................. 503,750
---------
HEALTH CARE -- 2.6%
-------------------
27,000 Tenet Healthcare Corporation* .......... 688,500
---------
INSURANCE -- 7.3%
-----------------
9,000 Chubb Corporation ...................... 572,625
26,100 Everest Re Group, Ltd. ................. 763,425
11,000 Hartford Financial Services ............ 574,062
---------
1,910,112
MARKET
SHARES VALUE
------ ---------
COMMON STOCKS (CONTINUED)
-------------------------
MACHINERY -- 4.2%
-----------------
14,000 Deere & Company ...................... 565,250
11,400 Parker Hannifin Corporation .......... 530,100
-----------
1,095,350
-----------
METAL PRODUCTS -- 2.0%
----------------------
8,000 Alcoa Inc. ........................... 519,000
-----------
MINING -- 2.0%
--------------
8,100 Rio Tinto PLC, Sponsored ADR 525,488
-----------
OIL & GAS -- 11.6%
------------------
22,600 Baker Hughes Inc. .................... 718,962
22,340 Conoco Inc., Class "B" ............... 555,708
16,400 EL Paso Energy Corporation ........... 697,000
10,000 Kerr-Mcgee Corporation ............... 517,500
11,500 Phillips Petroleum Company ........... 545,531
-----------
3,034,701
-----------
PAPER PRODUCTS -- 2.9%
----------------------
13,000 Kimberly-Clark Corporation ........... 754,813
-----------
PHARMACEUTICAL -- 3.1%
----------------------
15,000 Cardinal Health, Inc. ................ 825,938
-----------
RETAIL STORES -- 6.9%
---------------------
18,000 Albertson's Inc. ..................... 586,125
45,000 K Mart Corporation ................... 365,625
35,000 Sherwin-Williams Company ............. 870,625
-----------
1,822,375
-----------
SOFTWARE -- 4.1%
----------------
19,300 Computer Associates
International Inc. .................. 1,077,181
-----------
TRANSPORTATION -- 3.5%
----------------------
19,000 Burlington Northern Santa Fe
Corporation ......................... 458,375
17,000 CNF Transportation Inc. .............. 474,938
-----------
933,313
-----------
UTILITIES -- 6.4%
-----------------
12,000 FPL Group, Inc. ...................... 542,250
17,300 Texas Utilities Company .............. 582,794
14,700 Williams Companies, Inc. ............. 548,494
-----------
1,673,538
-----------
Total Common Stocks (cost $26,844,350)......... $25,199,101
-----------
The accompanying notes are an integral part of the financial statements.
34
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - VALUE EQUITY FUND
INVESTMENT PORTFOLIO
APRIL 30, 2000
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MARKET
VALUE
-------------
REPURCHASE AGREEMENT--3.7%(a)
-----------------------------
Repurchase Agreement with State Street Bank
and Trust Company, dated April 28, 2000
@ 5.60% to be repurchased at $969,452 on
May 01, 2000, collateralized by $885,000
United States Treasury Bonds, 7.25% due
May 15, 2016, (market value $996,639
including interest) (cost $969,000)...... 969,000
-----------
TOTAL INVESTMENT PORTFOLIO
(cost $27,813,350)(b), 99.6%(a)........ 26,168,101
OTHER ASSETS AND LIABILITIES, net, 0.4%(a) 110,654
-----------
NET ASSETS, 100.0% ...................... $26,278,755
===========
----------------------
* Not an income-producing security.
(a) Percentages indicated are based on net assets.
(b) The aggregate identified cost for federal income tax purposes is
substantially the same. Market value includes net unrealized depreciation
of $1,645,249, which consists of aggregate gross unrealized appreciation
for all securities in which there is an excess of market value over tax
cost of $1,667,614 and aggregate gross unrealized depreciation for all
securities in which there is an excess tax cost over market value of
$3,312,863.
ADR -- American Despostory Receipt
The accompanying notes are an integral part of the financial statements.
35
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGGRESSIVE
GROWTH
FUND
--------------
<S> <C>
ASSETS
------
Investments, at market value (identified cost $75,195,018,
$37,836,745, $206,603,253, and $27,827,017, respectively) (Note 1) ...... $81,892,864
Repurchase agreement, at market value (identified cost $5,642,000,
$961,000, $11,320,000, and $1,050,000, respectively) (Note 1)............ 5,642,000
Cash ..................................................................... 600
Foreign Currency (Cost $706,475) ......................................... --
Receivables:
Investments sold ........................................................ --
Fund shares sold ........................................................ 403,082
Dividends and interest .................................................. 2,633
Foreign taxes recoverable ............................................... --
Deferred organization expenses (Note 1) .................................. --
Deferred state qualification expenses (Note 1) ........................... 12,167
Prepaid insurance ........................................................ 7,683
-----------
Total assets ......................................................... $87,961,029
===========
LIABILITIES
-----------
Payables (Note 4):
Investments purchased ................................................... $ 1,375,626
Fund shares redeemed .................................................... 80,247
Accrued management fee .................................................. 103,842
Accrued distribution fee ................................................ 44,002
Other accrued expenses .................................................. 72,335
-----------
Total liabilities .................................................... $ 1,676,052
-----------
Net assets, at market value .............................................. $86,284,977
===========
NET ASSETS
----------
Net assets consist of:
Paid-in capital (Note 5) ................................................ $66,326,713
Undistributed net investment loss (Notes 1 and 5) ....................... (587,573)
Accumulated net realized gain (loss) (Notes 1 and 5) .................... 13,847,991
Net unrealized appreciation investments and other assets and
liabilities denominated in foreign currencies .......................... 6,697,846
-----------
Net assets, at market value .............................................. $86,284,977
===========
Net assets, at market value
Class A Shares .......................................................... $42,585,109
Class B Shares .......................................................... 15,190,052
Class C Shares .......................................................... 28,509,816
Eagle Shares ............................................................ --
-----------
Total ................................................................ $86,284,977
===========
Shares of beneficial interest outstanding
Class A Shares .......................................................... 1,723,148
Class B Shares .......................................................... 623,155
Class C Shares .......................................................... 1,169,711
Eagle Shares ............................................................ --
-----------
Total ................................................................ 3,516,014
===========
Net Asset Value -- offering and redemption price per share
(Notes 1 and 2) Class A Shares .......................................... $ 24.71
===========
Maximum offering price per share (100/95.25 of $24.71, $30.90, $53.50
and $22.40)............................................................. $ 25.95
===========
Class B Shares .......................................................... $ 24.38
===========
Class C Shares .......................................................... $ 24.37
===========
Eagle Shares ............................................................
<CAPTION>
EAGLE
INTERNATIONAL GROWTH MID CAP
EQUITY EQUITY STOCK
PORTFOLIO FUND FUND
--------------- --------------- --------------
<S> <C> <C> <C>
ASSETS
------
Investments, at market value (identified cost $75,195,018,
$37,836,745, $206,603,253, and $27,827,017, respectively) (Note 1) ...... $49,180,740 $265,064,319 $32,136,925
Repurchase agreement, at market value (identified cost $5,642,000,
$961,000, $11,320,000, and $1,050,000, respectively) (Note 1)............ 961,000 11,320,000 1,050,000
Cash ..................................................................... 792 130 921
Foreign Currency (Cost $706,475) ......................................... 706,475 -- --
Receivables:
Investments sold ........................................................ 866,463 23,606,520 661,755
Fund shares sold ........................................................ 464,010 1,571,170 113,225
Dividends and interest .................................................. 102,276 42,635 1,245
Foreign taxes recoverable ............................................... 38,521 -- --
Deferred organization expenses (Note 1) .................................. -- 2,833 12,924
Deferred state qualification expenses (Note 1) ........................... 30,915 16,174 12,370
Prepaid insurance ........................................................ 6,746 7,683 4,872
----------- ------------ -----------
Total assets ......................................................... $52,357,938 $301,631,464 $33,994,237
=========== ============ ===========
LIABILITIES
-----------
Payables (Note 4):
Investments purchased ................................................... $ 928,057 $ 33,016,018 $ 703,271
Fund shares redeemed .................................................... 89,087 368,268 154,689
Accrued management fee .................................................. 50,046 168,384 21,999
Accrued distribution fee ................................................ 37,130 145,444 14,451
Other accrued expenses .................................................. 74,047 114,949 46,735
----------- ------------ -----------
Total liabilities .................................................... $ 1,178,367 $ 33,813,063 $ 941,145
----------- ------------ -----------
Net assets, at market value .............................................. $51,179,571 $267,818,401 $33,053,092
=========== ============ ===========
NET ASSETS
----------
Net assets consist of:
Paid-in capital (Note 5) ................................................ $37,208,466 $158,490,581 $20,657,893
Undistributed net investment loss (Notes 1 and 5) ....................... (250,205) (1,253,127) (219,679)
Accumulated net realized gain (loss) (Notes 1 and 5) .................... 2,882,493 52,119,881 8,304,970
Net unrealized appreciation investments and other assets and
liabilities denominated in foreign currencies .......................... 11,338,817 58,461,066 4,309,908
----------- ------------ -----------
Net assets, at market value .............................................. $51,179,571 $267,818,401 $33,053,092
=========== ============ ===========
Net assets, at market value
Class A Shares .......................................................... $ 9,196,660 $114,380,540 $19,792,374
Class B Shares .......................................................... 709,527 32,967,327 3,039,199
Class C Shares .......................................................... 9,605,079 120,470,534 10,221,519
Eagle Shares ............................................................ 31,668,305 -- --
----------- ------------ -----------
Total ................................................................ $51,179,571 $267,818,401 $33,053,092
=========== ============ ===========
Shares of beneficial interest outstanding
Class A Shares .......................................................... 297,670 2,137,907 883,459
Class B Shares .......................................................... 23,671 639,462 138,248
Class C Shares .......................................................... 320,495 2,337,443 464,893
Eagle Shares ............................................................ 1,047,842 -- --
----------- ------------ -----------
Total ................................................................ 1,689,678 5,114,812 1,486,600
=========== ============ ===========
Net Asset Value -- offering and redemption price per share
(Notes 1 and 2) Class A Shares .......................................... $ 30.90 $ 53.50 $ 22.40
=========== ============ ===========
Maximum offering price per share (100/95.25 of $24.71, $30.90, $53.50
and $22.40)............................................................. $ 32.44 $ 56.17 $ 23.52
=========== ============ ===========
Class B Shares .......................................................... $ 29.97 $ 51.55 $ 21.98
=========== ============ ===========
Class C Shares .......................................................... $ 29.97 $ 51.54 $ 21.99
=========== ============ ===========
Eagle Shares ............................................................ $ 30.22
===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
36
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF ASSETS AND LIABILITIES
APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAP VALUE
STOCK TECHNOLOGY EQUITY
FUND FUND FUND
--------------- --------------- --------------
<S> <C> <C> <C>
ASSETS
------
Investments, at market value (identified cost $144,708,434, $106,798,542 and
$26,844,350, respectively) (Note 1) ....................................... $165,668,345 $115,680,109 $ 25,199,101
Repurchase agreement, at market value (identified cost $15,887,000,
$4,043,000 and $969,000, respectively)
(Note 1) .................................................................. 15,887,000 4,043,000 969,000
Cash ....................................................................... 314 45 703
Receivables:
Investments sold .......................................................... 282,629 9,853,076 --
Fund shares sold .......................................................... 141,680 1,024,728 150,013
Dividends and interest .................................................... 39,947 2,205 38,209
Deferred state qualification expenses (Note 1) ............................. 19,233 49,199 19,713
Prepaid insurance .......................................................... 14,336 -- 6,746
------------ ------------ ------------
Total assets ........................................................... $182,053,484 $130,652,362 $ 26,383,485
============ ============ ============
LIABILITIES
-----------
Payables (Note 4):
Investments purchased ..................................................... $ 1,537,924 $ 12,624,030 $ --
Fund shares redeemed ...................................................... 339,132 81,793 19,355
Accrued management fee .................................................... 135,485 93,180 14,966
Accrued distribution fee .................................................. 76,153 57,039 12,927
Other accrued expenses .................................................... 131,394 82,932 57,482
------------ ------------ ------------
Total liabilities ...................................................... $ 2,220,088 $ 12,938,974 $ 104,730
------------ ------------ ------------
Net assets, at market value ................................................ $179,833,396 $117,713,388 $ 26,278,755
============ ============ ============
NET ASSETS
----------
Net assets consist of:
Paid-in capital (Note 5) .................................................. $137,812,959 $109,735,117 $ 25,161,669
Undistributed net investment income (loss) (Notes 1 and 5) ................ (670,705) (683,346) 53,856
Accumulated net realized gain (loss)
(Notes 1 and 5) .......................................................... 21,731,231 (219,950) 2,708,479
Net unrealized appreciation (depreciation) on investments and other
assets and liabilities denominated in foreign currencies ................. 20,959,911 8,881,567 (1,645,249)
------------ ------------ ------------
Net assets, at market value ................................................ $179,833,396 $117,713,388 $ 26,278,755
============ ============ ============
Net assets, at market value
Class A Shares ............................................................ $115,229,012 $ 60,859,214 $ 13,779,755
Class B Shares ............................................................ 10,445,789 21,689,707 944,353
Class C Shares ............................................................ 54,158,595 35,164,467 11,554,647
------------ ------------ ------------
Total .................................................................. $179,833,396 $117,713,388 $ 26,278,755
============ ============ ============
Shares of beneficial interest outstanding
Class A Shares ............................................................ 3,992,999 3,489,139 720,821
Class B Shares ............................................................ 376,336 1,247,666 50,015
Class C Shares ............................................................ 1,950,220 2,022,952 612,034
------------ ------------ ------------
Total .................................................................. 6,319,555 6,759,757 1,382,870
============ ============ ============
Net Asset Value -- offering and redemption price per share
(Notes 1 and 2) Class A Shares ............................................ $ 28.86 $ 17.44 $ 19.12
============ ============ ============
Maximum offering price per share ($28.86, $17.44 and $19.12)............... $ 30.30 $ 18.31 $ 20.07
============ ============ ============
Class B Shares ............................................................ $ 27.76 $ 17.38 $ 18.88
============ ============ ============
Class C Shares ............................................................ $ 27.77 $ 17.38 $ 18.88
============ ============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
37
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENT OF OPERATIONS
FOR THE SIX-MONTH PERIOD ENDED APRIL 30, 2000
(UNAUDITED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
EAGLE
AGGRESSIVE INTERNATIONAL GROWTH
GROWTH EQUITY EQUITY
FUND PORTFOLIO FUND
-------------- ----------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME
-----------------
Income:
Dividends .................................. $ 47,977 $ 287,997(a) $ 322,347
Interest ................................... 130,052 43,457 237,665
----------- ---------- ------------
Total income ............................ 178,029 331,454 560,012
Expenses (Notes 1 and 4):
Management fee ............................. 385,543 262,609 834,893
Distribution fee (Class A Shares) .......... 48,090 11,239 117,426
Distribution fee (Class B Shares) .......... 71,495 3,021 127,884
Distribution fee (Class C Shares) .......... 123,325 44,258 515,600
Distribution fee (Eagle Shares) ............ -- 170,376 --
Shareholder servicing fees ................. 35,050 -- 71,513
Shareholder servicing fees
(Class A Shares) .......................... -- 5,844 --
Shareholder servicing fees
(Class B Shares) .......................... -- 393 --
Shareholder servicing fees
(Class C Shares) .......................... -- 5,754 --
Shareholder servicing fees
(Eagle Shares) ............................ -- 1,704 --
Custodian/Fund accounting fees ............. 38,899 81,668 54,734
Professional fees .......................... 14,950 25,937 19,865
Amortization of state qualification
expenses .................................. 25,001 20,888 32,500
Federal registration expenses .............. 6,109 -- 12,510
Organization expenses ...................... -- 5,200 2,833
Reports to shareholders .................... 11,329 14,433 15,983
Trustees' fees and expenses ................ 4,672 4,799 4,799
Other ...................................... 1,139 2,014 2,599
----------- ---------- ------------
Total expenses before waiver ............ 765,602 660,137 1,813,139
Fees waived by Manager
(Note 4) .............................. -- -- --
----------- ---------- ------------
Total expenses after waiver ............. 765,602 660,137 1,813,139
----------- ---------- ------------
Net investment income (loss) ................ (587,573) (328,683) (1,253,127)
----------- ---------- ------------
REALIZED AND UNREALIZED GAIN (LOSS)
-----------------------------------
ON INVESTMENTS
--------------
Net realized gain (loss) from investment
transactions ............................... 13,848,219 3,308,800 52,751,382
Net realized loss from foreign currency
transactions ............................... -- (235,371) --
Net unrealized appreciation
(depreciation) of investments during
the period ................................. 1,987,932 2,322,075 9,399,893
Net unrealized appreciation from
foreign currency during the period ......... -- 172,755 --
----------- ---------- ------------
Net gain on investments ..................... 15,836,151 5,568,259 62,151,275
----------- ---------- ------------
Net increase in net assets resulting from
operations ................................. $15,248,578 $5,239,576 $ 60,898,148
=========== ========== ============
<CAPTION>
MID CAP SMALL CAP VALUE
STOCK STOCK TECHNOLOGY EQUITY
FUND FUND FUND FUND
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME
-----------------
Income:
Dividends .................................. $ 22,578 $ 547,329 $ 23,058 $ 290,636
Interest ................................... 27,849 234,664 125,204 24,613
---------- ----------- ---------- -------------
Total income ............................ 50,427 781,993 148,262 315,249
Expenses (Notes 1 and 4):
Management fee ............................. 109,098 773,213 403,798 96,926
Distribution fee (Class A Shares) .......... 21,487 151,643 53,053 17,050
Distribution fee (Class B Shares) .......... 12,465 52,297 75,781 4,608
Distribution fee (Class C Shares) .......... 47,051 289,203 124,827 56,425
Distribution fee (Eagle Shares) ............ -- -- -- --
Shareholder servicing fees ................. 15,160 98,127 39,455 16,673
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 ............. 33,974 48,285 39,230 29,972
Professional fees .......................... 14,950 15,278 15,452 15,593
Amortization of state qualification
expenses .................................. 23,651 22,500 42,501 16,000
Federal registration expenses .............. -- -- 21,763 --
Organization expenses ...................... 2,585 -- -- 1,767
Reports to shareholders .................... 6,694 22,870 10,953 9,452
Trustees' fees and expenses ................ 4,799 4,799 4,672 4,676
Other ...................................... 1,419 5,561 123 2,019
---------- ----------- ---------- -------------
Total expenses before waiver ............ 293,333 1,483,776 831,608 271,161
Fees waived by Manager
(Note 4) .............................. (23,227) -- -- (38,000)
---------- ----------- ---------- -------------
Total expenses after waiver ............. 270,106 1,483,776 831,608 233,161
---------- ----------- ---------- -------------
Net investment income (loss) ................ (219,679) (701,783) (683,346) 82,088
---------- ----------- ---------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net realized gain (loss) from investment
transactions ............................... 8,355,633 26,957,272 (219,950) 2,713,403
Net realized loss from foreign currency
transactions ............................... -- -- -- --
Net unrealized appreciation
(depreciation) of investments during
the period ................................. 903,946 15,287,692 8,881,567 (1,032,948)
Net unrealized appreciation from
foreign currency during the period ......... -- -- -- --
---------- ----------- ---------- -------------
Net gain on investments ..................... 9,259,579 42,244,964 8,661,617 1,680,455
---------- ----------- ---------- -------------
Net increase in net assets resulting from
operations ................................. $9,039,900 $41,543,181 $7,978,271 $ 1,762,543
========== =========== ========== =============
</TABLE>
----------
(a) Net of $39,514 foreign taxes
The accompanying notes are an integral part of the financial statements.
38
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
------------------- ----------------
<S> <C> <C>
AGGRESSIVE GROWTH FUND
----------------------
Increase in net assets:
Operations:
Net investment loss . ................................................ $ (587,573) $ (430,858)
Net realized gain from investment transactions ....................... 13,848,219 6,487,570
Net unrealized appreciation of investments during the period ......... 1,987,932 3,177,004
------------ -----------
Net increase in net assets resulting from operations .................. 15,248,578 9,233,716
Distributions to shareholders from:
Net realized gains Class A Shares, ($2.20 per share) ................. (2,919,240) --
Net realized gains Class B Shares, ($2.20 per share).................. (1,121,963) --
Net realized gains Class C Shares, ($2.20 per share) ................. (1,813,382) --
Increase in net assets from Fund share transactions (Note 2) .......... 23,138,617 26,033,474
------------ -----------
Increase in net assets ................................................ 32,532,610 35,267,190
Net assets, beginning of period ....................................... 53,752,367 18,485,177
------------ -----------
Net assets, end of period (including accumulated net investment loss
of $587,573 for the period ended April 30, 2000) ..................... $ 86,284,977 $53,752,367
============ ===========
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
------------------ ----------------
<S> <C> <C>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
------------------------------------
Increase in net assets:
Operations:
Net investment loss ............................................................. $ (328,683) $ (420,664)
Net realized gain from investment transactions .................................. 3,308,800 6,904,858
Net realized gain (loss) from foreign currency transactions ..................... (235,371) 216,150
Net unrealized appreciation from foreign currrency during the period ............ 2,322,075 3,686,213
Net unrealized appreciation (depreciation) of investments during the period ..... 172,755 (177,933)
------------ ------------
Net increase in net assets resulting from operations ............................ 5,239,576 10,208,624
Distributions to shareholders from:
Net realized gains Class A Shares, ($4.44 and $0.12 per share, respectively)..... (1,110,521) (30,773)
Net realized gains Class B Shares, ($4.44 and $0.12 per share, respectively)..... (67,144) (1,581)
Net realized gains Class C Shares, ($4.44 and $0.12 per share, respectively)..... (1,095,583) (27,806)
Net realized gains Eagle Shares, ($4.44 and $0.12 per share, respectively)....... (4,405,006) (151,973)
Increase (decrease) in net assets from Fund share transactions (Note 2) .......... 4,743,983 (7,860,802)
------------ ------------
Increase in net assets ........................................................... 3,305,305 2,135,689
Net assets, beginning of period .................................................. 47,874,266 45,738,577
------------ ------------
Net assets, end of period (including accumulated net investment loss
of $250,205 and undistributed net investment income of $78,478) ................. $ 51,179,571 $ 47,874,266
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
39
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
----------------- ----------------
<S> <C> <C>
GROWTH EQUITY FUND
------------------
Increase in net assets:
Operations:
Net investment loss .................................................. $ (1,253,127) $ (1,219,288)
Net realized gain from investment transactions ....................... 52,751,382 24,524,653
Net unrealized appreciation of investments during the period ......... 9,399,893 25,441,900
------------ ------------
Net increase in net assets resulting from operations ................. 60,898,148 48,747,265
Distributions to shareholders from:
Net realized gains Class A Shares, ($5.47 per share) ................. (8,589,011) --
Net realized gains Class B Shares, ($5.47 per share) ................. (2,275,911) --
Net realized gains Class C Shares, ($5.47 per share) ................. (9,937,923) --
Increase in net assets from Fund share transactions (Note 2) .......... 69,304,691 25,151,363
------------ ------------
Increase in net assets ................................................ 109,399,994 73,898,628
Net assets, beginning of period ....................................... 158,418,407 84,519,779
------------ ------------
Net assets, end of period (including accumulated net investment loss
of $1,253,127 for the period ended April 30, 2000) ................... $267,818,401 $158,418,407
============ ============
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
------------------ ----------------
<S> <C> <C>
MID CAP STOCK FUND
------------------
Increase (decrease) in net assets:
Operations:
Net investment loss .................................................. $ (219,679) $ (427,785)
Net realized gain from investment transactions . ..................... 8,355,633 1,928,034
Net unrealized appreciation of investments during the period ......... 903,946 2,467,882
------------ ------------
Net increase in net assets resulting from operations ................. 9,039,900 3,968,131
Distributions to shareholders from:
Net realized gains Class A Shares, ($0.30 per share) ................. (254,362) --
Net realized gains Class B Shares, ($0.30 per share) ................. (37,315) --
Net realized gains Class C Shares, ($0.30 per share) ................. (146,539) --
Decrease in net assets from Fund share transactions (Note 2) .......... (1,417,352) (5,928,377)
------------ ------------
Increase (decrease) in net assets ..................................... 7,184,332 (1,960,246)
Net assets, beginning of period ....................................... 25,868,760 27,829,006
------------ ------------
Net assets, end of period (including accumulated net investment loss
of $219,679 for the period ended April 30, 2000) ..................... $ 33,053,092 $ 25,868,760
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
40
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
STATEMENTS OF CHANGES IN NET ASSETS
(CONTINUED)
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
=----------------- ----------------
<S> <C> <C>
SMALL CAP STOCK FUND
--------------------
Decrease in net assets:
Operations:
Net investment loss .................................................... $ (701,783) $ (1,115,476)
Net realized gain (loss) from investment transactions .................. 26,957,272 (2,081,165)
Net unrealized appreciation of investments during the period ........... 15,287,692 11,574,223
------------- -------------
Net increase in net assets resulting from operations ................... 41,543,181 8,377,582
Decrease in net assets from Fund share transactions (Note 2) . .......... (56,674,153) (80,494,684)
------------- -------------
Decrease in net assets .................................................. (15,130,972) (72,117,102)
Net assets, beginning of period ......................................... 194,964,368 267,081,470
------------- -------------
Net assets, end of period (including accumulated net investment loss
of $670,705 and undistributed net investment income of $31,078 ......... $ 179,833,396 $ 194,964,368
============= =============
</TABLE>
<TABLE>
<CAPTION>
FOR THE PERIOD
NOVEMBER 18, 1999
(COMMENCEMENT OF OPERATIONS)
TO APRIL 30, 2000
(UNAUDITED)
---------------------------
<S> <C>
TECHNOLOGY FUND
---------------
Increase in net assets:
Operations:
Net investment loss ...................................................... $ (683,346)
Net realized loss from investment transactions ........................... (219,950)
Net increase in unrealized appreciation of investments during the period . 8,881,567
------------
Net increase in net assets resulting from operations ..................... 7,978,271
Increase in net assets from Fund share transactions (Note 2) .............. 109,735,117
------------
Increase in net assets .................................................... 117,713,388
Net assets, beginning of period ........................................... --
------------
Net assets, end of period (including accumulated net investment loss
of $683,346 for the period ended April 30, 2000) ......................... $117,713,388
============
</TABLE>
<TABLE>
<CAPTION>
FOR THE SIX-MONTH
PERIOD ENDED FOR THE
APRIL 30, 2000 YEAR ENDED
(UNAUDITED) OCTOBER 31, 1999
------------------ ----------------
<S> <C> <C>
VALUE EQUITY FUND
-----------------
Decrease in net assets:
Operations:
Net investment income ............................................................... $ 82,088 $ 88,453
Net realized gain from investment transactions ...................................... 2,713,403 931,457
Net realized gains from covered call options written ................................ -- 17,466
Net unrealized depreciation of investments during the period ........................ (1,032,948) (1,115,216)
------------ ------------
Net increase (decrease) in net assets resulting from operations ..................... 1,762,543 (77,840)
Distributions to shareholders from: ..................................................
Net investment income Class A Shares, ($0.11 and $0.16 per share, respectively) ..... (83,002) (152,941)
Net investment income Class B Shares, ($0.01 per share) ............................. -- (752)
Net investment income Class C Shares, ($0.01 per share) ............................. -- (9,859)
Net realized gains Class A Shares, ($0.42 and $0.12 per share, respectively) ........ (329,738) (110,747)
Net realized gains Class B Shares, ($0.42 and $0.12 per share, respectively) ........ (22,188) (6,528)
Net realized gains Class C Shares, ($0.42 and $0.12 per share, respectively) ........ (270,040) (85,565)
Decrease in net assets from Fund share transactions (Note 2) ......................... (2,340,959) (4,259,045)
------------ ------------
Decrease in net assets ............................................................... (1,283,384) (4,703,277)
Net assets, beginning of period ...................................................... 27,562,139 32,265,416
------------ ------------
Net assets, end of period (including undistributed net investment income
of $53,856 and $54,770, respectively) ............................................... $ 26,278,755 $ 27,562,139
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
41
<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*
---------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 =-------------------------
(UNAUDITED) 1999 1998/dagger/
------------------ --------------------------
<S> <C> <C> <C>
Net asset value, beginning of period ...................... $ 20.80 $ 15.35 $ 14.29
---------- -------- ------------
Income from Investment Operations:
Net investment loss (a) .................................. (0.14) ( 0.15) --
Net realized and unrealized gain on investments .......... 6.25 5.60 1.06
---------- -------- ------------
Total from Investment Operations ......................... 6.11 5.45 1.06
---------- -------- ------------
Less Distributions:
Distributions from net realized gains .................... (2.20) -- --
---------- -------- ------------
Net asset value, end of period ........................... $ 24.71 $ 20.80 $ 15.35
========== ======== ============
Total Return (%) (b) ..................................... 30.36 (c) 35.50 7.42 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net assets ..... 1.60 (d) 1.65 1.65 (d)
Net investment income (loss) to average daily net assets . ( 1.14)(d) (.78) .08 (d)
Portfolio turnover rate .................................. 125 (c) 195 34
Net assets, end of period ($ millions) ................... 43 27 11
<CAPTION>
CLASS B SHARES* CLASS C SHARES*
---------------------------------------------- ----------------
FOR THE FOR THE
SIX MONTH SIX MONTH
PERIOD PERIOD
ENDED FOR THE YEARS ENDED ENDED
APRIL 30, OCTOBER 31, APRIL 30,
2000 ------------------------------ 2000
(UNAUDITED) 1999 1998/dagger/ (UNAUDITED)
------------- ---------- ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ...................... $ 20.61 $ 15.33 $ 14.29 $ 20.61
---------- -------- ---------- ----------
Income from Investment Operations:
Net investment loss (a) .................................. (0.24) (0.29) (0.03) (0.24)
Net realized and unrealized gain on investments .......... 6.21 5.57 1.07 6.20
---------- -------- ---------- ----------
Total from Investment Operations ......................... 5.97 5.28 1.04 5.96
---------- -------- ---------- ----------
Less Distributions:
Distributions from net realized gains .................... (2.20) -- -- (2.20)
---------- -------- ---------- ----------
Net asset value, end of period ........................... $ 24.38 $ 20.61 $ 15.33 $ 24.37
========== ======== ========== ==========
Total Return (%) (b) ..................................... 29.94 (c) 34.44 7.28 (c) 29.89 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net assets ..... 2.35 (d) 2.40 2.40 (d) 2.35 (d)
Net investment income (loss) to average daily net assets . (1.89)(d) (1.53) (.77)(d) (1.89)(d)
Portfolio turnover rate .................................. 125 (c) 195 34 125 (c)
Net assets, end of period ($ millions) ................... 15 10 4 29
<CAPTION>
CLASS C SHARES*
-------------------------
FOR THE YEARS ENDED
OCTOBER 31,
--------------------------
1999 1998/dagger/
-------- ------------
<S> <C> <C>
Net asset value, beginning of period ...................... $ 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
-------- ----------
Less Distributions:
Distributions from net realized gains .................... -- --
-------- ----------
Net asset value, end of period ........................... $ 20.61 $ 15.33
======== ==========
Total Return (%) (b) ..................................... 34.44 7.28 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net assets ..... 2.40 2.40 (d)
Net investment income (loss) to average daily net assets . (1.53) ( .71)(d)
Portfolio turnover rate .................................. 195 34
Net assets, end of period ($ 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.
(a) The period ended April 30, 2000 includes recovery of previously waived
management fees paid to the manager of $.01 per Class A, B and C Shares.
The operating expense ratios including such items would have been 1.53%
(annualized) for Class A Shares and 2.25% (annualized) for Class B and C
Shares. 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 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.
42
<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 statement.
<TABLE>
<CAPTION>
CLASS A SHARES*
----------------------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 ---------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996/dagger/
------------- -------- ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 31.56 $ 25.43 $ 23.97 $ 22.25 $ 21.11
---------- -------- ------------ ------------ --------------
Income from Investment
Operations:
Net investment income
(loss)(a) ...................... (0.11) (0.09) (0.01) 0.05 0.10
Net realized and unrealized
gain on investments ............ 3.89 6.34 2.14 2.28 1.04
---------- -------- ------------ ------------ --------------
Total from Investment
Operations ..................... 3.78 6.25 2.13 2.33 1.14
---------- -------- ------------ ------------ --------------
Less Distributions:
Dividends from net investment
income ......................... -- -- (0.05) (0.44) --
Distributions from net realized
gains .......................... (4.44) (0.12) (0.62) (0.17) --
---------- -------- ------------ ------------ --------------
Total Distributions ............. (4.44) (0.12) (0.67) (0.61) --
---------- -------- ------------ ------------ --------------
Net asset value, end of period ... $ 30.90 $ 31.56 $ 25.43 $ 23.97 $ 22.25
========== ======== ============ ============ ==============
Total Return (%) (b) ............. 24.68 (c) 24.68 9.04 (d) 10.71 (d) 5.40 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ....... 1.97 (e) 1.97 1.97 1.97 1.97 (e)
Net investment income (loss) to
average daily net assets ....... (.70)(e) (.32) (.02) .22 .44 (e)
Portfolio turnover rate ......... 34 (c) 78 71 50 59
Net assets, end of period
($ millions).................... 9 8 7 6 3
<CAPTION>
CLASS B SHARES*
--------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1999 -----------------------------------
(UNAUDITED) 1999 1998/dagger//dagger/
------------ ------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 30.83 $ 25.03 $ 23.95
---------- -------- ---------
Income from Investment
Operations:
Net investment income
(loss)(a) ...................... (0.22) (0.30) (0.16)
Net realized and unrealized
gain on investments ............ 3.80 6.22 1.24
---------- -------- -----------
Total from Investment
Operations ..................... 3.58 5.92 1.08
---------- -------- ----------
Less Distributions:
Dividends from net investment
income ......................... -- -- --
Distributions from net realized
gains .......................... (4.44) (0.12) --
---------- -------- -----------
Total Distributions ............. (4.44) (0.12) --
---------- -------- -----------
Net asset value, end of period ... $ 29.97 $ 30.83 $ 25.03
========== ======== ===========
Total Return (%) (b) ............. 23.70 (c) 23.70 4.51 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ....... 0.18 (e) 2.72 2.72 (e)
Net investment income (loss) to
average daily net assets ....... (.09)(e) (1.04) (.71)(e)
Portfolio turnover rate ......... 34 (c) 78 71
Net assets, end of period
($ millions).................... 1 .5 .2
<CAPTION>
CLASS C SHARES*
--------------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 ------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996/dagger/
----------- --------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 30.83 $ 25.03 $ 23.73 $ 22.12 $ 21.11
---------- -------- ------------ ------------ -------------
Income from Investment
Operations:
Net investment income
(loss)(a) ...................... (0.23) (0.30) (0.20) (0.13) (0.07)
Net realized and unrealized
gain on investments ............ 3.81 6.22 2.12 2.25 1.08
---------- -------- ------------ ------------ -------------
Total from Investment
Operations ..................... 3.58 5.92 1.92 2.12 1.01
---------- -------- ------------ ------------ -------------
Less Distributions:
Dividends from net investment
income ......................... -- -- -- (0.34) --
Distributions from net realized
gains .......................... (4.44) (0.12) (0.62) (0.17) --
---------- -------- ------------ ------------ -------------
Total Distributions ............. (4.44) (0.12) (0.62) (0.51) --
---------- -------- ------------ ------------ -------------
Net asset value, end of period ... $ 29.97 $ 30.83 $ 25.03 $ 23.73 $ 22.12
========== ======== ============ ============ =============
Total Return (%) (b) ............. 23.70 (c) 23.70 8.24 (d) 9.79 (d) 4.78 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ....... 2.72 (e) 2.72 2.72 2.72 2.72 (e)
Net investment income (loss) to
average daily net assets ....... (1.44)(e) (1.06) (1.06) (.79) (.32)(e)
Portfolio turnover rate ......... 34 (c) 78 78 71 59
Net assets, end of period
($ millions).................... 10 7 6 4 1
</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.
(a) Excludes management fees waived by Eagle in the amount of $0.01, $0.03,
$0.06 and $0.16 per Class A Shares for the four years ended October 31,
1996, respectively. The operating expense ratios 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 the Manager in
the amount of $0.01 and $0.03 per Class B Shares for the two years ended
October 31, 1998, 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
less than $0.01, $0.03, $0.06 and $0.16 per Class C Shares for the four
years ended October 31, 1996, respectively.
(b) Does not reflect the imposition of a sales charge.
(c) Not annualized.
(d) These returns are calculated based on the published net asset value at
October 31, 1997.
(e) Annualized.
The accompanying notes are an integral part of the financial statements.
43
<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
SIX MONTH FOR THE YEARS ENDED
PERIOD ENDED FISCAL YEAR
APRIL 30, 2000 --------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996/dagger/
---------------- --------- --------- -------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 43.44 $ 28.82 $ 23.77 $ 17.74 $ 14.29
---------- -------- -------- -------- ----------
Income from Investment
Operations:
Net investment loss (a) ........... (0.18) (0.20) (0.11) (0.07) (0.03)
Net realized and unrealized
gain on investments .............. 15.71 14.82 5.48 6.10 3.48
---------- -------- -------- -------- ----------
Total from Investment
Operations ....................... 15.53 14.62 5.37 6.03 3.45
---------- -------- -------- -------- ----------
Less Distributions:
Distributions from net realized
gains ............................ (5.47) -- (0.32) -- --
---------- -------- -------- -------- ----------
Net asset value, end of period ..... $ 53.50 $ 43.44 $ 28.82 $ 23.77 $ 17.74
========== ======== ======== ======== ==========
Total Return (%) (b) ............... 37.71 (c) 50.73 22.84 33.99 24.14 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 1.20 (d) 1.24 1.38 1.61 1.65 (d)
Net investment loss to average
daily net assets ................. (.69)(d) (.56) (.40) (.35) (.19)(d)
Portfolio turnover rate ........... 167 (c) 160 54 50 23
Net assets, end of period
($ millions)...................... 114 67 40 24 12
<CAPTION>
CLASS B SHARES*
-----------------------------------------------------
FOR THE
SIX MONTH FOR THE YEARS ENDED
PERIOD ENDED FISCAL YEAR
APRIL 30, 2000 ----------------------------------
(UNAUDITED) 1999 1998/dagger//dagger/
---------------- ---------- ---------------------
<S> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 42.17 $ 28.18 $ 24.33
---------- -------- ----------
Income from Investment
Operations:
Net investment loss (a) ........... (0.36) (0.47) (0.23)
Net realized and unrealized
gain on investments .............. 15.21 14.46 4.08
---------- -------- ----------
Total from Investment
Operations ....................... 14.85 13.99 3.85
---------- -------- ----------
Less Distributions:
Distributions from net realized
gains ............................ (5.47) -- --
---------- -------- ----------
Net asset value, end of period ..... $ 51.55 $ 42.17 $ 28.18
========== ======== ==========
Total Return (%) (b) ............... 37.19 (c) 49.65 15.82 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 1.94 (d) 1.98 2.11 (d)
Net investment loss to average
daily net assets ................. (1.45)(d) (1.30) (1.10)(d)
Portfolio turnover rate ........... 167 (c) 160 54
Net assets, end of period
($ millions)...................... 33 16 5
<CAPTION>
CLASS C SHARES*
-----------------------------------------------------------------------
FOR THE
SIX MONTH FOR THE YEARS ENDED
PERIOD ENDED FISCAL YEAR
APRIL 30, 2000 --------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996/dagger/
-------------- ---------- -------- --------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 42.15 $ 28.18 $ 23.42 $ 17.61 $ 14.29
---------- -------- -------- -------- ----------
Income from Investment
Operations:
Net investment loss (a) ........... (0.36) (0.47) (0.31) (0.24) (0.15)
Net realized and unrealized
gain on investments .............. 15.22 14.44 5.39 6.05 3.47
---------- -------- -------- -------- ----------
Total from Investment
Operations ....................... 14.86 13.97 5.08 5.81 3.32
---------- -------- -------- -------- ----------
Less Distributions:
Distributions from net realized
gains ............................ (5.47) -- (0.32) -- --
---------- -------- -------- -------- ----------
Net asset value, end of period ..... $ 51.54 $ 42.15 $ 28.18 $ 23.42 $ 17.61
========== ======== ======== ======== ==========
Total Return (%) (b) ............... 37.23 (c) 49.57 21.93 32.99 23.23 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 1.95 (d) 1.99 2.13 2.36 2.40 (d)
Net investment loss to average
daily net assets ................. (1.44) (d) (1.31) (1.15) 1.14) (.96)(d)
Portfolio turnover rate ........... 167 (c) 160 54 50 23
Net assets, end of period
($ millions)...................... 120 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 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 manger
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.
44
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - MID 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
SIX MONTH FOR THE YEARS ENDED
PERIOD ENDED OCTOBER 31,
APRIL 30, 2000 ---------------------------
(UNAUDITED) 1999 1998/dagger/
-------------- --------- -------------
<S> <C> <C> <C>
Net asset value, beginning
of period ....................................... $ 16.56 $ 14.28 $ 14.29
---------- -------- ----------
Income from Investment Operations:
Net investment loss (a) ......................... (0.12) (0.18) (0.15)
Net realized and unrealized gain (loss) on
investments .................................... 6.26 2.46 0.14
---------- -------- ----------
Total from Investment Operations ................ 6.14 2.28 (0.01)
---------- -------- ----------
Less Distributions:
Distributions from net realized gains ........... (0.30) -- --
---------- -------- ----------
Net asset value, end of period ................... $ 22.40 $ 16.56 $ 14.28
========== ======== ==========
Total Return (%) (b) ............................. 37.46 (c) 5.97 (0.07) (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net
assets ......................................... 1.55 (d) 1.60 1.60 (d)
Net investment loss to average daily net
assets ......................................... (1.20)(d) (1.19) (.99)(d)
Portfolio turnover rate .................... .... 144 (c) 192 129
Net assets, end of period ($ millions)........... 20 15 16
<CAPTION>
CLASS B SHARES* CLASS C SHARES*
-------------------------------------------------- ----------------
FOR THE FOR THE
SIX MONTH FOR THE YEARS ENDED SIX MONTH
PERIOD ENDED OCTOBER 31, PERIOD ENDED
APRIL 30, 1999 -------------------------------- APRIL 30, 2000*
(UNAUDITED) 1999 1998/dagger//dagger/ (UNAUDITED)
--------------- -------- -------------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ....................................... $ 16.32 $ 14.17 $ 14.42 $ 16.32
---------- -------- ---------- ----------
Income from Investment Operations:
Net investment loss (a) ......................... (0.19) (0.30) (0.23) (0.19)
Net realized and unrealized gain (loss) on
investments .................................... 6.15 2.45 (0.02) 6.15
---------- -------- ---------- ----------
Total from Investment Operations ................ 5.96 2.15 (0.25) 5.96
---------- -------- ---------- ----------
Less Distributions:
Distributions from net realized gains ........... (0.30) -- -- (0.30)
---------- -------- ---------- ----------
Net asset value, end of period ................... $ 21.98 $ 16.32 $ 14.17 $ 21.98
========== ======== ========== ==========
Total Return (%) (b) ............................. 36.90 (c) 5.17 (1.73) (c) 36.96 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net
assets ......................................... 2.30 (d) 2.35 2.35 (d) 2.30 (d)
Net investment loss to average daily net
assets ......................................... (1.95)(d) (1.94) (1.85) (d) (1.95)(d)
Portfolio turnover rate .................... .... 144 (c) 192 129 144 (c)
Net assets, end of period ($ millions)........... 3 2 2 10
<CAPTION>
CLASS C SHARES*
--------------------------
FOR THE YEARS ENDED
OCTOBER 31,
---------------------------
1999 1998/dagger/
-------- ------------
<S> <C> <C>
Net asset value, beginning
of period ....................................... $ 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)
-------- ----------
Less Distributions:
Distributions from net realized gains ........... -- --
-------- ----------
Net asset value, end of period ................... $ 16.32 $ 14.18
======== ==========
Total Return (%) (b) ............................. 15.09 (0.77) (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net
assets ......................................... 2.35 2.35 (d)
Net investment loss to average daily net
assets ......................................... (1.95) (1.75)(d)
Portfolio turnover rate .................... .... 192 129
Net assets, end of period ($ 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,
$0.02 and $0.03 per Class A Shares, respectively. The operating expense
ratios including such items would have been 1.71% (annualized), 1.70% and
1.86% (annualized) per Class A Shares, respectively. Excludes management
fees waived by the Manager in the amount of $0.02, $0.02 and $0.03 per
Class B and Class C Shares, respectively. The operating expense ratios
including such items would have been 2.46% (annualized), 2.45% and 2.61%
(annualized) per Class B and 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.
45
<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
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 ------------------------------------------------------
(UNAUDITED) 1999* 1998* 1997* 1996* 1995
------------ -------- --------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 23.21 $ 22.62 $ 30.39 $ 24.08 $ 18.86 $ 16.20
---------- ------- --------- ------- ------- --------
Income from Investment
Operations:
Net investment income (loss) ...... (0.06) (0.04) (0.06) (0.02) (0.05) 0.02
Net realized and unrealized
gain (loss) on investments ....... 5.71 0.63 (5.98) 8.21 6.12 3.62
---------- ------- --------- ------- ------- --------
Total from Investment
Operations ....................... 5.65 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 period ..... $ 28.86 $ 23.21 $ 22.62 $ 30.39 $ 24.08 $ 18.86
========== ======= ========= ======= ======= ========
Total Return (%) (a) ............... 24.34 (b) 2.61 (20.96) 36.68 33.18 23.97
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 1.29 (c) 1.26 1.22 1.25 1.41 1.88
Net investment Income (loss)
to average daily net assets ...... (.47)(c) (.18) (.22) (.09) (.21) .15
Portfolio turnover rate ........... 41 (b) 42 52 54 80 89
Net assets, end of period
($ millions) ..................... 115 125 174 222 96 57
<CAPTION>
CLASS B SHARES*
---------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 ----------------------------
(UNAUDITED) 1999 1998/dagger/
------------ -------- ------------
<S> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 22.41 $ 22.00 $ 27.98
---------- -------- -------------
Income from Investment
Operations:
Net investment income (loss) ...... (0.16) (0.22) (0.20)
Net realized and unrealized
gain (loss) on investments ....... 5.51 0.63 (5.78)
---------- -------- -------------
Total from Investment
Operations ....................... 5.35 0.41 (5.98)
---------- -------- -------------
Less Distributions:
Dividends from net investment
income ........................... -- -- --
Distributions from net realized
gains ............................ -- -- --
---------- -------- -------------
Total Distributions . ............. -- -- --
---------- -------- -------------
Net asset value, end of period ..... $ 27.76 $ 22.41 $ 22.00
========== ======== =============
Total Return (%) (a) ............... 23.87 (b) -- (21.37) (b)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 2.05 (c) 2.01 1.98 (c)
Net investment Income (loss)
to average daily net assets ...... (1.22)(c) .95 (.93) (c)
Portfolio turnover rate ........... 41 (b) 42 52
Net assets, end of period
($ millions) ..................... 10 9 9
<CAPTION>
CLASS C SHARES
-----------------------------------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
1999 -----------------------------------------------------------------
(UNAUDITED) 1999* 1998* 1997* 1996* 1995/dagger//dagger/
------------- ------- --------- ------- ------- --------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ......................... $ 22.42 $ 22.01 $ 29.83 $ 23.84 $ 18.79 $ 15.67
----------- ------- --------- ------- ------- -------
Income from Investment
Operations:
Net investment income (loss) ...... (0.16) (0.22) (0.26) (0.23) (0.22) (0.02)
Net realized and unrealized
gain (loss) on investments ....... 5.51 0.63 (5.83) 8.10 6.11 3.14
----------- ------- --------- ------- ------- -------
Total from Investment
Operations ....................... 5.35 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 period ..... $ 27.77 $ 22.42 $ 22.01 $ 29.83 $ 23.84 $ 18.79
=========== ======= ========= ======= ======= =======
Total Return (%) (a) ............... 23.86 (b) 1.86 (21.55) 35.63 32.22 19.91 (b)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 2.04 (c) 2.01 1.97 2.00 2.13 2.36 (c)
Net investment Income (loss)
to average daily net assets ...... (1.22)(c) (.94) (.96) (.85) (.94) (.46)( c)
Portfolio turnover rate ........... 41 (b) 42 52 54 80 89
Net assets, end of period
($ millions) ..................... 54 61 84 90 25 4
</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, 1996.
(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.
46
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST - TECHNOLOGY FUND
FINANCIAL HIGHLIGHTS
--------------------------------------------------------------------------------
The following table includes selected data for a share outstanding
throughout the period and other performance information derived from the
financial statements.
<TABLE>
<CAPTION>
CLASS A SHARES*
---------------------
FOR THE PERIOD
ENDED
APRIL 30, 2000
(UNAUDITED) /dagger/
----------------------
<S> <C>
$14.29
Net asset value, beginning of period .............................. -------
Income from Investment Operations:
Net investment loss .............................................. (0.12)
Net realized and unrealized gain on investments .................. 3.27
------
Total from Investment Operations ................................. 3.15
------
Net asset value, end of period . .................................. $ 17.44
=======
Total Return (%) (a) (b) .......................................... 22.04
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net assets (c) ......... 1.58
Net investment loss to average daily net assets (c) .............. (1.23)
Portfolio turnover rate (b) ...................................... 208
Net assets, end of period ($ millions) ........................... 61
<CAPTION>
CLASS B SHARES* CLASS C SHARES*
------------------- -------------------
FOR THE PERIOD FOR THE PERIOD
ENDED ENDED
APRIL 30, 2000 APRIL 30, 2000
(UNAUDITED) /dagger/ (UNAUDITED) /dagger/
--------------------- --------------------
$14.29 $14.29
Net asset value, beginning of period .............................. ------ -------
<S> <C> <C>
Income from Investment Operations:
Net investment loss .............................................. (0.19) (0.19)
Net realized and unrealized gain on investments .................. 3.28 3.28
------ ------
Total from Investment Operations ................................. 3.09 3.09
------ ------
Net asset value, end of period . .................................. $ 17.38 $ 17.38
======= =======
Total Return (%) (a) (b) .......................................... 21.62 21.62
Ratios (%)/ Supplemental Data
Operating expenses, net, to average daily net assets (c) ......... 2.31 2.29
Net investment loss to average daily net assets (c) .............. (1.96) (1.95)
Portfolio turnover rate (b) ...................................... 208 208
Net assets, end of period ($ millions) ........................... 22 35
</TABLE>
-------
* Per share amounts have been calculated using the monthly average share
method.
/dagger/ For the period November 18, 1999 (commencement of operations) to
April 30, 2000.
(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 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
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 ----------------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995/dagger/
------------- -------- -------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $ 18.33 $ 18.56 $ 24.27 $ 20.27 $ 18.00 $ 14.29
---------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income
(loss) (a) ....................... 0.09 0.12 0.15 0.22 0.17 0.08
Net realized and unrealized
gain (loss) on investments ....... 1.23 (0.07) (0.76) 5.23 2.76 3.63
---------- -------- -------- -------- -------- --------
Total from Investment
Operations ....................... 1.32 0.05 (0.61) 5.45 2.93 3.71
---------- -------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income ................ (0.11) (0.16) (0.20) (0.15) (0.11) --
Distributions from net
realized gains ................... (0.42) (0.12) (4.90) (1.30) (0.55) --
---------- -------- -------- -------- -------- --------
Total Distributions ............... (0.53) (0.28) (5.10) (1.45) (0.66) --
---------- -------- -------- -------- -------- --------
Net asset value, end of period ..... $ 19.12 $ 18.33 $ 18.56 $ 24.27 $ 20.27 $ 18.00
========== ======== ======== ======== ======== ========
Total Return (%) (b) ............... 7.43 (c) 0.24 (3.52) 28.69 16.59 25.96 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 1.45 (d) 1.45 1.45 1.61 1.65 1.65 (d)
Net investment income (loss)
to average daily net assets ...... .99 (d) .63 .74 .96 .89 1.05 (d)
Portfolio turnover rate ........... 45 (c) 137 132 155 129 82
Net assets, end of period
($ millions)...................... 14 15 18 19 15 12
<CAPTION>
CLASS B SHARES*
--------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 -----------------------------------
(UNAUDITED) 1999 1998/dagger//dagger/
------------- -------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of
period ............................ $ 18.06 $ 18.29 $ 19.60
------------ -------- -----------
Income from Investment
Operations:
Net investment income
(loss) (a) ....................... 0.02 (0.02) 0.02
Net realized and unrealized
gain (loss) on investments ....... 1.22 (0.08) (1.33)
------------ -------- -----------
Total from Investment
Operations ....................... 1.24 (0.10) (1.31)
------------ -------- -----------
Less Distributions:
Dividends from net
investment income ................ -- (0.01) --
Distributions from net
realized gains ................... (0.42) (0.12) --
------------ -------- -----------
Total Distributions ............... (0.42) ( 0.13) --
------------ -------- -----------
Net asset value, end of period ..... $ 18.88 $ 18.06 $ 18.29
============ ======== ===========
Total Return (%) (b) ............... 7.03 (c) (0.56) (6.68)(c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 2.20 (d) 2.20 2.20 (d)
Net investment income (loss)
to average daily net assets ...... .24 (d) (.13) .15 (d)
Portfolio turnover rate ........... 45 (c) 137 132
Net assets, end of period
($ millions)...................... 1 1 1
<CAPTION>
CLASS C SHARES*
-----------------------------------------------------------
FOR THE
SIX MONTH
PERIOD
ENDED FOR THE YEARS ENDED
APRIL 30, OCTOBER 31,
2000 ---------------------------------------------
(UNAUDITED) 1999 1998 1997 1996
------------ --------- -------- -------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $ 18.06 $ 18.28 $ 23.98 $ 20.06 $ 17.92
------------- -------- -------- -------- --------
Income from Investment
Operations:
Net investment income
(loss) (a) ....................... 0.02 (0.02) -- 0.05 0.02
Net realized and unrealized
gain (loss) on investments ....... 1.22 (0.07) (0.75) 5.20 2.74
------------- -------- -------- -------- --------
Total from Investment
Operations ....................... 1.24 (0.09) (0.75) 5.25 2.76
------------- -------- -------- -------- --------
Less Distributions:
Dividends from net
investment income ................ -- (0.01) (0.05) (0.03) (0.07)
Distributions from net
realized gains ................... (0.42) (0.12) (4.90) (1.30) (0.55)
------------- -------- -------- -------- --------
Total Distributions ............... (0.42) (0.13) (4.95) (1.33) (0.62)
------------- -------- -------- -------- --------
Net asset value, end of period ..... $ 18.88 $ 18.06 $ 18.28 $ 23.98 $ 20.06
============= ======== ======== ======== ========
Total Return (%) (b) ............... 7.03 (c) (0.50) (4.27) 27.79 15.65
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 2.20 (d) 2.20 2.20 2.36 2.40
Net investment income (loss)
to average daily net assets ...... .24 (d) (.12) (.01) .21 .13
Portfolio turnover rate ........... 45 (c) 137 132 155 129
Net assets, end of period
($ millions)...................... 12 12 14 13 10
<CAPTION>
CLASS C SHARES*
-----------------------------
FOR THE YEARS ENDED
OCTOBER 31,
------------------------------
<S> <C>
1995/dagger//dagger//dagger/
====
Net asset value, beginning of
period ............................ $ 15.27
-------
Income from Investment
Operations:
Net investment income
(loss) (a) ....................... 0.01
Net realized and unrealized
gain (loss) on investments ....... 2.64
-------
Total from Investment
Operations ....................... 2.65
-------
Less Distributions:
Dividends from net
investment income ................ --
Distributions from net
realized gains ................... --
-------
Total Distributions ............... --
-------
Net asset value, end of period ..... $ 17.92
=======
Total Return (%) (b) ............... 17.35 (c)
Ratios (%)/ Supplemental Data
Operating expenses, net, to
average daily net assets ......... 2.40 (d)
Net investment income (loss)
to average daily net assets ...... .28 (d)
Portfolio turnover rate ........... 82
Net assets, end of period
($ millions)...................... 4
</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 $.03 per
Class A, B and C Shares for the period ended April 30, 2000. The operating
expense ratios including such items would have been 1.74%, 2.49% and 2.49%
for Class A, B and C Shares, respectively. 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 $1.03 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% and 2.33% (annualized), 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% assets of the Value Equity Fund was 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
(UNAUDITED)
--------------------------------------------------------------------------------
Note 1: SIGNIFICANT ACCOUNTING POLICIES. Heritage Series Trust (the "Trust") is
organized as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company and presently offers shares in seven series,
the Aggressive Growth Fund, the Eagle International Equity Portfolio, the
Growth Equity Fund, the Mid Cap Stock Fund (formerly the "Mid Cap Growth
Fund"), the Small Cap Stock Fund, the Technology 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 Stock 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 Technology Fund primarily seeks long-term
capital appreciation through equity investments in companies that rely
extensively on technology in their processes, products or services. 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 and may be subject to a contingent deferred sales load. 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
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
DISTRIBUTION OF NET REALIZED GAINS: Net realized gains from investment
transactions during any particular year in excess of available capital
loss carryforwards, which, if not distributed, would be taxable to each
Fund, will be distributed to shareholders in the following fiscal year.
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 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 and Technology 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.
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 April 30, 2000, there was an unlimited number of
shares of beneficial interest of no par value authorized.
AGGRESSIVE GROWTH FUND
-----------------------
Transactions in the Class A, B and C Shares of the Fund during six-month
period ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 A SHARES B SHARES C SHARES
(UNAUDITED) ------------------------- --------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
--------- ------------ -------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 436,408 $ 11,365,866 113,954 $ 2,982,267 395,330 $ 10,067,840
Shares issued on reinvestment of
distributions ................. 124,031 2,804,337 49,580 1,108,598 80,252 1,794,442
Shares redeemed . .............. (155,013) (3,867,478) (45,840) (1,134,169) (79,162) (1,983,086)
-------- ------------ ------- ------------ ------- ------------
Net increase ................... 405,426 $ 10,302,725 117,694 $ 2,956,696 396,420 $ 9,879,196
============ ============ ============
Shares outstanding:
Beginning of period ........... 1,317,722 505,461 773,291
--------- ------- ---------
End of period ................. 1,723,148 623,155 1,169,711
========= ======= =========
</TABLE>
50
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
AGGRESSIVE GROWTH FUND(CONTINUED)
---------------------------------
Transactions in the Class A, B and C Shares of the Fund during 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>
EAGLE INTERNATIONAL EQUITY PORTFOLIO
------------------------------------
Transactions in the Class A, B and C Shares of the Fund during six-month
period ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED A SHARES B SHARES
APRIL 30, 2000 ---------------------- ---------------------
SHARES AMOUNT SHARES AMOUNT
------- ---------- -------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C>
Shares sold ..................... 36,495 $1,189,801 7,673 $ 244,110
Shares issued on reinvestment
of distributions . ............ 31,859 1,034,768 2,120 66,936
Shares redeemed ................. (21,343) (699,613) (1,003) (31,898)
------- ---------- ------ ---------
Net increase .................... 47,011 $1,524,956 8,790 $ 279,148
========== =========
Shares outstanding:
Beginning of period ............ 250,659 14,881
------- ------
End of period .................. 297,670 23,671
======= ======
<CAPTION>
FOR THE PERIOD ENDED C SHARES EAGLE SHARES
APRIL 30, 2000 --------------------- -----------------------
SHARES AMOUNT SHARES AMOUNT
------- ----------- ---------- ------------
(UNAUDITED)
<S> <C> <C> <C> <C>
Shares sold ..................... 72,990 $2,334,355 114,947 $ 3,604,744
Shares issued on reinvestment
of distributions . ............ 34,473 1,089,009 137,365 4,373,714
Shares redeemed ................. (23,727) (750,768) (241,951) (7,711,175)
------- ---------- -------- ------------
Net increase .................... 83,736 $2,672,596 10,361 $ 267,283
========== ============
Shares outstanding:
Beginning of period ............ 236,759 1,037,481
======= =========
End of period .................. 320,495 1,047,842
======= =========
</TABLE>
Transactions in the Class A, B and C Shares of the Fund during the year
ended October 31, 1999 were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED A SHARES B SHARES
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>
FOR THE YEAR ENDED C SHARES EAGLE SHARES
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>
51
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
GROWTH EQUITY FUND
------------------
Transactions in the Class A, B and C Shares of the Fund during six-month
period ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 A SHARES B SHARES C SHARES
(UNAUDITED) -------------------------- ------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
----------- ------------ --------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................... 582,956 $ 30,367,757 228,944 $ 11,467,110 548,185 $ 27,245,556
Shares issued on reinvestment
of distributions ............. 178,364 8,265,382 49,268 2,206,210 215,500 9,647,936
Shares redeemed ............... (169,887) (8,584,312) (23,297) (1,172,489) (206,203) (10,138,459)
-------- ------------ ------- ------------ -------- -------------
Net increase .................. 591,433 $ 30,048,827 254,915 $ 12,500,831 557,482 $ 26,755,033
============ ============ =============
Shares outstanding:
Beginning of period .......... 1,546,474 384,547 1,779,961
--------- ------- =========
End of period . .............. 2,137,907 639,462 2,337,443
========= ======= =========
</TABLE>
Transactions in the 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>
MID CAP STOCK FUND
-------------------
Transactions in the Class A, B and C Shares of the Fund during six-month
period ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 A SHARES B SHARES C SHARES
(UNAUDITED) ------------------------ ---------------------- -------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
-------- ------------ -------- ----------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold . ................... 70,738 $ 1,480,844 20,191 $ 409,711 48,793 $ 995,001
Shares issued on reinvestment
of distributions ............... 13,219 243,221 2,056 37,227 7,859 142,331
Shares redeemed . ............... (78,927) (1,545,097) (11,120) (210,970) (158,257) (2,969,620)
------- ------------ ------- ---------- -------- ------------
Net increase (decrease) ......... 5,030 $ 178,968 11,127 $ 235,968 (101,605) $ (1,832,288)
============ ========== ============
Shares outstanding:
Beginning of period ............ 878,429 127,121 566,498
------- ------- --------
End of period . ................ 883,459 138,248 464,893
======= ======= ========
</TABLE>
52
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
MID CAP STOCK FUND (CONTINUED)
-----------------------------
Transactions in the 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 ................... 167,255 $ 2,515,905 42,991 $ 656,381 192,230 $ 2,895,086
Shares redeemed ............... (418,149) (6,408,277) (71,859) (1,083,381) (295,178) (4,504,091)
-------- ------------ ------- ------------ -------- ------------
Net decrease .................. (250,894) $ (3,892,372) (28,868) $ (427,000) (102,948) $ (1,609,005)
============ ============ ============
Shares outstanding:
Beginning of year ............ 1,129,323 155,989 669,446
--------- ------- --------
End of year .................. 878,429 127,121 566,498
========= ======= ========
</TABLE>
SMALL CAP STOCK FUND
-------------
Transactions in the Class A, B and C Shares of the Fund during six-month
period ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 A SHARES B SHARES C SHARES
(UNAUDITED) ----------------------------- ------------------------ ---------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
------------ -------------- -------- ------------ ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold ................... 177,807 $ 5,059,650 41,703 $ 1,128,413 155,209 $ 4,132,226
Shares redeemed ............... (1,564,885) (41,370,834) (88,902) (2,365,515) (907,707) (23,258,093)
---------- ------------- ------- ------------ -------- -------------
Net decrease .................. (1,387,078) $ (36,311,184) (47,199) $ (1,237,102) (752,498) $ (19,125,867)
============= ============ =============
Shares outstanding:
Beginning of period .......... 5,380,077 423,535 2,702,718
---------- ------- ---------
End of period ................ 3,992,999 376,336 1,950,220
========== ======= =========
</TABLE>
Transactions in the 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>
53
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
TECHNOLOGY FUND
---------------
Transactions in Class A, B and C Shares of the Fund during the period
November 18, 1999 (commencement of operations ) to April 30, 2000, were as
follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 A SHARES B SHARES C SHARES
(UNAUDITED) ------------------------- --------------------------- ------------------------
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
---------- ------------ ---------- ------------ --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Shares sold .................... 3,817,746 $ 62,475,663 1,303,025 $ 21,437,974 2,139,998 $ 34,829,782
Shares redeemed . .............. (328,607) (5,830,729) (55,359) (1,014,840) (117,046) (2,162,733)
--------- ------------ --------- ------------ --------- ------------
Net increase ................... 3,489,139 $ 56,644,934 1,247,666 $ 20,423,134 2,022,952 $ 32,667,049
============ ============ ============
Shares outstanding:
Beginning of period ........... -- -- --
--------- --------- ---------
End of period ................. 3,489,139 1,247,666 2,022,952
========= ========= =========
</TABLE>
VALUE EQUITY FUND
-----------------
Transactions in the Class A, B and C Shares of the Fund during six-month
period ended April 30, 2000 were as follows:
<TABLE>
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 A SHARES B SHARES
(UNAUDITED) ------------------------- ----------------------
SHARES AMOUNT SHARES AMOUNT
--------- ------------ --------- ----------
<S> <C> <C> <C> <C>
Shares sold ................................... 83,093 $ 1,535,598 4,365 $ 78,324
Shares issued on reinvestment of distributions 22,076 397,144 1,213 21,621
Shares redeemed ............................... (187,295) (3,392,192) (11,820) (215,584)
-------- ------------ ------- ----------
Net decrease .................................. (82,126) $ (1,459,450) (6,242) $ (115,639)
============ ==========
Shares outstanding:
Beginning of period .......................... 802,947 56,257
-------- -------
End of period ................................ 720,821 50,015
======== =======
<CAPTION>
FOR THE PERIOD ENDED APRIL 30, 2000 C SHARES
(UNAUDITED) --------------------------
SHARES AMOUNT
---------- -------------
<S> <C> <C>
Shares sold ................................... 92,235 $ 1,673,741
Shares issued on reinvestment of distributions 14,812 263,944
Shares redeemed ............................... (149,954) (2,703,555)
-------- -------------
Net decrease .................................. (42,907) $ (765,870)
=============
Shares outstanding:
Beginning of period .......................... 654,941
--------
End of period ................................ 612,034
========
</TABLE>
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 ................................... 136,595 $ 2,740,843 28,808 $ 558,979
Shares issued on reinvestment of distributions 13,519 254,838 389 7,278
Shares redeemed ............................... (302,249) (5,780,061) (22,484) (428,531)
-------- ------------ ------- -----------
Net increase (decrease) ....................... (152,135) $ (2,784,380) 6,713 $ 137,726
============ ===========
Shares outstanding:
Beginning of year ............................ 955,082 49,544
-------- -------
End of year .................................. 802,947 56,257
======== =======
<CAPTION>
C SHARES
FOR THE YEAR ENDED OCTOBER 31, 1999 ----------------------------
SHARES AMOUNT
----------- --------------
<S> <C> <C>
Shares sold ................................... 154,403 $ 3,058,861
Shares issued on reinvestment of distributions 5,023 93,852
Shares redeemed ............................... (249,936) (4,765,104)
-------- ------------
Net increase (decrease) ....................... (90,510) $ (1,612,391)
============
Shares outstanding:
Beginning of year ............................ 745,451
--------
End of year .................................. 654,941
========
</TABLE>
54
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
Note 3: PURCHASES AND SALES OF SECURITIES. For the six-month period ended April
30, 2000, 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 ....................... $104,890,030 $ 90,908,653
Eagle International Equity Portfolio ......... 17,623,318 20,217,367
Growth Equity Fund ........................... 422,332,248 360,460,462
Mid Cap Stock Fund ........................... 40,581,954 42,216,096
Small Cap Stock Fund ......................... 74,997,259 141,035,805
Technology Fund .............................. 266,550,722 159,532,230
Value Equity Fund ............................ 11,512,183 14,913,806
</TABLE>
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 Stock 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. For the Technology Fund, the
management fee is 1.0% on the first $100 million and 0.75% of any excess
over $100 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 2000 fiscal year as follows:
<TABLE>
<CAPTION>
CLASS A CLASS B AND CLASS C
--------- --------------------
<S> <C> <C>
Aggressive Growth Fund ....................... 1.60% 2.35%
Eagle International Equity Portfolio ......... 1.97% 2.72%
Growth Equity Fund ........................... 1.40% 2.15%
Mid Cap Stock Fund ........................... 1.55% 2.30%
Small Cap Stock Fund ......................... 1.30% 2.05%
Technology Fund .............................. 1.65% 2.40%
Value Equity Fund ............................ 1.45% 2.20%
</TABLE>
Management fees of $55,188 and $25,861 were waived for the Aggressive
Growth Fund for the periods ended October 31, 1999 and 1998, respectively.
During the six-month period ended April 30, 2000, expenses fell below the
expense cap and Management fees waived in prior periods in the amount of
$33,000 were recovered for the Aggressive Growth Fund and are included in
the management fee. There still remains $48,049 in waived management fees
from prior periods which may be recovered through October 31, 2001.
Management fees of $24,049 and $52,276 were waived for the Eagle
International Equity Portfolio for the years ended October 31, 1999 and
1998, respectively. If total Fund expenses fall below the expense
limitation agreed to by Eagle before the end of the years ending October
31, 2001 and 2000, respectively, Eagle International Equity Portfolio may
be required to pay Eagle a portion or all of the waived management fees.
Management fees of $23,227 were waived by the Mid Cap Stock Fund for the
six-month period ended April 30, 2000. For the years ended October 31,
1999 and 1998, respectively, management fees of $27,644 and $60,948 were
waived by the Fund. If total Fund expenses fall below the expense
limitation agreed to by the Manager before the end of the years ending
October 31, 2001 and 2000, respectively, the Mid Cap Stock Fund may be
required to pay the Manager a portion or all of the waived management
fees. Management fees of $38,000 were waived by the Value Equity Fund for
the six-month period ended April 30, 2000. For the years ended October 31,
1999 and 1998, respectively, management fees of $76,169 and $48,072 were
waived by the Fund. If total Fund expenses fall below the expense
limitation agreed to by the Manager before the end of the years ending
October 31, 2001 and 2000, respectively, the Value Equity Fund may be
required to pay the Manager a portion or all of the waived management
fees.
55
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
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 six-month period ended April 30, 2000 the Subadviser earned $131,305
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 Stock Fund and the
Technology 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
six-month period ended April 30, 2000, the total fees the Subadvisers
earned were $176,282, $417,446, $54,549, $386,606 and $201,899 for the
Aggressive Growth Fund, Growth Equity Fund, Mid Cap Stock Fund, Small Cap
Stock Fund and Technology 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, all of 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 subadviser to the Fund,
although there are no assets currently allocated to them. For the
six-month period ended April 30, 2000 Osprey earned $41,355 for Subadviser
fees, which was paid by the Manager.
Raymond James & Associates, Inc. (the "Distributor") has advised the Trust
that it received $152,607, $24,229, $454,172, $25,761, $76,652, $1,374,747
and $25,620 in front end sales charges for Class A Shares, $0, $13, $6,
$7, $0, $69 and $0 in contingent deferred sales charges for Class A
Shares, $19,161, $415, $23,988, $4,334, $34,642, $24,221 and $910 in
contingent deferred sales charges for Class B Shares and $3,219, $457,
$6,188, $752, $7,652, $8,728 and $2,312 in contingent deferred sales
charges for Class C Shares for the Aggressive Growth Fund, Eagle
International Equity Portfolio, Growth Equity Fund, Mid Cap Stock Fund,
Small Cap Stock Fund, Technology Fund and the Value Equity Fund,
respectively, for the six-month period ended April 30, 2000. 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
six-month period ended April 30, 2000.
<TABLE>
<CAPTION>
TOTAL AGENCY PAID TO
BROKERAGE RAYMOND JAMES
COMMISSIONS & ASSOCIATES, INC.
-------------- -------------------
<S> <C> <C>
Aggressive Growth Fund ....................... $125,988 $12,990
Eagle International Equity Portfolio ......... 88,667 --
Growth Equity Fund ........................... 467,793 --
Mid Cap Stock Fund ........................... 52,549 1,320
Small Cap Stock Fund ......................... 205,732 18,525
Technology Fund .............................. 202,417 --
Value Equity Fund ............................ 31,937 --
</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.
56
<PAGE>
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HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
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 Stock Fund, the Small Cap Stock Fund, the
Technology Fund and the Value Equity Fund. The amount payable to the
Manager for such expenses as of April 30, 2000 was $23,741, $16,583,
$53,023, $11,000, $71,428, $26,412 and $11,530, respectively. In addition,
the Manager performs Fund Accounting services for the Aggressive Growth
Fund, the Growth Equity Fund, the Mid Cap Stock Fund, the Small Cap Stock
Fund, the Technology Fund and the Value Equity Fund and charged $26,183,
$27,761, $22,805, $28,208, $21,190 and $22,434 during the current period,
of which $18,043, $18,633, $15,182, $18,880, $17,400 and $15,039, was
payable as of April 30, 2000, respectively.
Trustees of the Trust also serve as Trustees for Heritage Cash Trust,
Heritage Capital Appreciation Trust, Heritage Income-Growth Trust and
Heritage Income Trust, 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.
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 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, 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
capitalloss 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).
57
<PAGE>
--------------------------------------------------------------------------------
HERITAGE SERIES TRUST
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(CONTINUED)
--------------------------------------------------------------------------------
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.
58
<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
Mid Cap
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 many of your 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, Mid Cap Stock Fund, Small Cap Stock Fund, Technology Fund and Value
Equity Fund. It may also be used as sales literature when preceded or
accompanied by a prospectus.
(C) 2000 Heritage Asset Management, Incx.
52M 04/00
AR53415S-HST
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