Filed On 12/29/97 ˇ SEC File 811-07470 ˇ Accession Number 950144-97-13671
As Of Filer Filing On/For/As Docs:Pgs Issuer Agent
12/29/97 Heritage Series Trust N-30D 10/31/97 1:43 950144
Subsequent Filings That Reference This Filing:
12/29/97 Heritage Series Trust 485BPOS 12/29/97 13:142 898432
1/07/98 Heritage Series Trust 497 1:97 898432
1/07/98 Heritage Growth & Income Trust 497 1:97 898432
1/07/98 Heritage Capital Appreciat..Trust 497 1:97 898432
10/27/98 Heritage Series Trust 497 1:84 898432
10/27/98 Heritage Capital Appreciat..Trust 497 1:49 898432
Heritage Income Growth Trust
Annual or Semi-Annual Report Mailed to Shareholders ˇ Rule 30d-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: N-30D Heritage Series Trust Annual Report N-30D 43 285K
HERITAGE
SERIES
TRUST
[Photos of people working and playing]
From Our Family to Yours: The Intelligent Creation of Wealth.
Eagle International Equity Portfolio
Growth Equity Fund
Small Cap Stock Fund
Value Equity Fund
Annual Report
and Investment Performance
Review for the Year Ended
October 31, 1997
[HERITAGE LOGO]
---------------
Series Trust (TM)
-----------------
HERITAGE SERIES TRUST
ANNUAL REPORT
TABLE OF CONTENTS
ˇ Download Table
PRESIDENT'S LETTER.......................................... 1
PORTFOLIO COMMENTARY AND GRAPHS:
EAGLE INTERNATIONAL EQUITY PORTFOLIO
Investment Commentary............................. 2
Performance Graphs................................ 3
GROWTH EQUITY FUND
Portfolio Management Letter....................... 4
Performance Graphs................................ 5
SMALL CAP STOCK FUND
Portfolio Management Letters...................... 6
Performance Graphs................................ 8
VALUE EQUITY FUND
Portfolio Management Letter....................... 9
Performance Graphs................................ 10
INVESTMENT PORTFOLIOS....................................... 11
STATEMENT OF ASSETS AND LIABILITIES......................... 27
STATEMENT OF OPERATIONS..................................... 28
STATEMENT OF CHANGES IN NET ASSETS.......................... 29
FINANCIAL HIGHLIGHTS........................................ 31
NOTES TO FINANCIAL STATEMENTS............................... 35
(This page intentionally left blank)
December 5, 1997
Dear Fellow Shareholders:
It is my pleasure to provide you with the annual report for Heritage Series
Trust for the fiscal year ended October 31, 1997. Continuing with the approach
we began earlier this year, the reports for each of the four separate investment
portfolios available within the Heritage Series Trust are provided to you in
this combined document. We have received positive comments from many of you
regarding this process. I hope it continues to provide you with the investment
information you need, while reducing the volume of mail for those of you who own
more than one of these funds. As always, please feel free to call us at
800/709-FUND (3863) with any comments you would like to share with us.
For the fiscal year covered by this report, each of the funds in Heritage
Series Trust generated positive returns for our investors and performed quite
well compared to their respective fund category averages and market indices.
These returns are given in the table below:
ˇ Enlarge/Download Table
FUND "EAGLE" SHARES "A" SHARES(1) "C" SHARES(1) INDEX(2) CATEGORY AVERAGE(3)
---- ---------------- --------------- --------------- -------- -------------------
Eagle International Equity
Portfolio........................ +9.98% +10.71% + 9.79% + 4.63% +10.43%
Growth Equity Fund................. N/A +33.99 +32.99 +32.12 +27.37
Small Cap Stock Fund............... N/A +36.68 +35.63 +29.33 +26.57
Value Equity Fund.................. N/A +28.69 +27.79 +32.12 +28.40
In the pages that follow, you will find portfolio commentaries and
performance graphs for each of these funds. (Because the assets of the Small Cap
Stock Fund are allocated to two subadvisers, you will find two letters relating
to this fund.) Following this information you will find portfolio holdings and
other important information for all of the funds. We hope that you will discuss
with your financial advisors how any of these funds that you do not currently
own may fit into your investment plans.
At their August 15, 1997 meeting, your Board of Trustees authorized us to
reallocate the assets of the Value Equity Fund to Eagle Asset Management, Inc.
from Dreman Value Advisors, Inc. This change was effective October 1, 1997.
Eagle had previously managed the Value Equity Fund's portfolio and had remained
as a subadviser to this fund, even though no assets were allocated to Eagle from
mid-1996 through September 1997. We and your Board of Trustees feel very
confident in the abilities of Michael Chren and the investment team at Eagle to
provide excellent investment leadership for this fund. One result of almost any
subadviser change is a repositioning of the portfolio to reflect the new
manager's investment strategy. The short-term effect of this can be to generate
additional portfolio turnover and the accompanying capital gains that must be
distributed to shareholders and reported on their Form 1099S. This repositioning
now is substantially complete. Thus, we should expect this fund to have lower
portfolio turnover in fiscal 1998 than in fiscal 1997.
During the portion of the fiscal year for which Dreman Value Advisors, Inc.
managed the Value Equity Fund portfolio, this fund added to its holdings in
basic industries, while reducing its holdings in banking and oil and gas in
order to provide additional industry diversification. Additionally, some profits
were taken in selected technology and health care companies as these stocks rose
to price/earnings ratios that triggered the manager's sell discipline. The
number of stocks in the portfolio declined by about one-third as the subadviser
chose to concentrate in fewer individual holdings. Generally, for the first
eleven months of the fiscal year, this fund benefited from its holdings in
consumer cyclical, financial and health care stocks and was hampered by sluggish
returns from utility stocks. In the commentary on page 9, Michael Chren
discusses how the portfolio is currently positioned.
Thank you for your continuing confidence in Heritage Series Trust. On behalf
of all of us at Heritage, we wish you a happy and healthy 1998.
Sincerely,
/s/ STEPHEN G. HILL
Stephen G. Hill
President
---------------
(1) Calculated without the imposition of front or back-end sales charges.
(2) Indices used for comparison are the Morgan Stanley Capital International
Europe Australia and Far East Index (EAFE) for the Eagle International
Equity Portfolio, the Standard & Poor's 500 Stock Composite Price Index
("S&P 500") for the Growth Equity and Value Equity Funds, and the Russell
2000 Index for the Small Cap Stock Fund.
(3) Fund category averages are the Lipper International Funds for the Eagle
International Equity Portfolio, Lipper Growth Funds for the Growth Equity
Fund, Lipper Small Company Growth Funds for the Small Cap Stock Fund and
Lipper Growth & Income Funds for the Value Equity Fund. Averages are
published by Lipper Analytical Services, Inc.
MARKET COMMENTARY from MARTIN CURRIE, INC. December 5, 1997
Subadviser Eagle International Equity Portfolio
The Eagle International Equity Portfolio (the "Fund") invests a substantial
portion of its investment portfolio in securities traded in developed foreign
securities markets, such as those included in the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE Index"). The countries in
which it invests are selected for their ability to generate high real rates of
economic growth, consistent with reasonable political and currency stability.
Individual securities are selected following an intensive research process,
designed to screen out companies with either weak financial structures, market
positions or poor management. The ability to produce premium growth in earnings
is paramount.
In the twelve months to October 31, 1997, the Fund continued to outperform
the EAFE Index. While the UK and Continental European markets moved strongly
ahead, the collapse of many southeast Asian markets and weakness of the Japanese
market and currency have impacted on confidence in international markets in
general. A substantial exposure to the UK market, good stock selection against a
weak Japanese index and investments in Latin America have enabled the Fund to
place in the top half of the Lipper rankings for our category.
The UK market (22% of net assets) has benefited from the support of bonds,
good liquidity and corporate activity. We remain overweighted in this market
against the industry average and EAFE Index. The best performing stocks have
included financials, such as Lloyds TSB Group and Royal Bank of Scotland Group,
while consumer stocks such as Marks & Spencer have recovered. The Sterling's
strength has held back export stocks. The new Labour administration's public
support for Europe's Economic and Monetary Union (EMU) has raised the prospect
of yet lower bond yields in the UK.
Continental Europe (37% of net assets) has been pushed ahead by corporate
restructuring and significant efforts to improve returns for shareholders. We
added to the region over the period. Novartis, Rhone-Poulenc, and Philips
Electronics rose strongly as their restructuring plans bore fruit. Domestic
growth has begun to pick up while Maastricht targets look closer to being met. A
rights issue from Volkswagen upset markets in the third quarter but EMU
disciplines will ensure the restructuring theme will persist. Asian turmoil has
impacted on individual stocks, such as ABB with its Malaysian contracts or
Gucci, reliant on the Japanese consumer, rather than the region as a whole.
The Japanese market (17% of net assets) has continued to weaken and the yen
has fallen further against the dollar. We reduced our exposure over the period
and removed the final part of the currency hedge. Despite a relaxed monetary
policy, economic forecasts continue to be reduced. Great sector polarisation has
continued with export related "blue chips", where we are overweight, performing
relatively well. Financials, utilities, construction, and domestic plays have
suffered. The collapse of the southeast Asian financial markets and demand
(particularly Korean) have put back further the hope of economic recovery for
Japan. However, current bankruptcies among major financial conglomerates should
be regarded as an encouraging sign; the Japanese authorities are at last
tackling the underlying structural problems of uncompetitive practices and cross
share ownership which have beset both the stock market and economy for years.
Service sector confidence and a revival of the property market are prerequisites
to economic recovery. This is proceeding very slowly.
Returns for the rest of Asia (7% of net assets) have been dramatically
weak. A combination of rising interest rates to protect local currencies,
slowing growth and destocking in traditional export markets has resulted in
savage market collapses. Worst affected have been Thailand, Korea and Malaysia.
The Philippines, Singapore and ultimately Hong Kong were caught in the wake. We
substantially reduced our exposure to the region over the period, held nothing
in Thailand and Korea, and remained underweight to Singapore and Malaysia. The
sale of a large proportion of our Hong Kong assets in the summer, prior to the
market's collapse in October, helped relative returns. Australia, India and Hong
Kong now make up the bulk of our exposure to the region.
Latin America (6% of net assets) represents the majority of exposure to
non-index markets. We took profits in the region over the second quarter, with
the current portfolio concentrated on Mexico, Brazil, Venezuela, Chile and
Argentina. After a dramatic recovery in the earlier part of year, the Asian
crisis has seen a withdrawal of capital. The most vulnerable markets have been
Argentina (with its dollar link) and Brazil (with its current account deficit
and deteriorating trade deficit). We reduced both positions. Looking into 1998,
the region looks oversold and risk premiums should decline. The earnings outlook
is still robust.
On behalf of all of us at Martin Currie, Inc., we appreciate the confidence
you have in us. We look forward to reporting to you again in the Spring of 1998.
2
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF THE HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY
PORTFOLIO-EAGLE SHARES ON MAY 1, 1995
[CHART]
The graph contained in the annual report compares the performance of the
Heritage Series Trust-Eagle International Equity Portfolio Eagle Shares with the
Morgan Stanley Capital International EAFE Index from inception of Eagle Shares
(May 1, 1995) through October 31, 1997.
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF THE HERITAGE SERIES TRUST-EAGLE INTERNATIONAL EQUITY
PORTFOLIO-CLASS A & C SHARES ON DECEMBER 27, 1995
[CHART]
The graph contained in the annual report compares the performance of the
Heritage Series Trust- Eagle International Equity Portfolio Class A and C Shares
with the Morgan Stanley Capital International EAFE Index from inception of Class
A and C Shares (December 27, 1995) through October 31, 1997.
*Average annual total returns for Heritage Series Trust-Eagle International
Equity Portfolio are calculated in conformance with Item 22 of Form N-1A, which
assumes the reinvestment of dividends and a sales load of 4.75% for Class A
Shares. These returns are calculated based on the published net asset value.
3
December 5, 1997
Dear Fellow Shareholders:
The Heritage Series Trust - Growth Equity Fund (the "Fund") continued to
perform well for the fiscal year ended October 31, 1997. For the period, the
Fund outperformed the Standard & Poor's 500 Composite Stock Price Index and the
Class A Shares ranked in the 17th percentile of all growth funds according to
Lipper Analytical Services, Inc.
The Fund currently has 35 equity investments that we consider to be
premier, quality growth stocks. We expect each company to grow its earnings at a
minimum of 12% per year for the next three years and maintain a 15% return on
equity. In addition, we focus on owning companies with consistent, predictable
earnings and businesses that have established a sustainable competitive
advantage in their industry.
A predominant theme in the Fund continues to be the ownership of
outstanding U.S. multinational companies that derive significant revenues and
earnings from overseas sales. Examples include: The Coca Cola Company, Gillette
Company, Warner-Lambert Company, Guidant Corporation, American International
Group Inc., and Illinois Tool Works, Inc. Our technology exposure has remained
constant at approximately 19% with core investments in Intel Corporation,
Microsoft Corporation, Cisco Systems Inc., Tellabs Inc., and PeopleSoft.
Cyclical investments remain underweighted in our Fund as they typically do not
meet our investment criteria. Other stocks that have significantly contributed
to our performance results include: Omnicom Group, Inc., Kohl's Corporation, and
Home Depot Inc.
Earnings growth within the Fund continues to be robust. During the latest
quarter, 26 out of 35 of our companies reported earnings higher than we expected
and only three companies reported disappointing results. In 1998, we expect the
average company in our portfolio to grow 19% versus 7% for the S&P 500.
We continue to invest new cash flows to keep the Fund substantially
invested with cash levels under 10%. Annual portfolio turnover remains in the
25%-50% range.
Going forward, we continue to see robust earnings for our companies and a
relatively hospitable investment environment for quality growth companies. With
declining interest rates and some slowdown in the economy, our investments
should continue to provide attractive results.
Sincerely,
/s/ KENNETH W. CORBA
Kenneth W. Corba
Executive Vice President
Chief Investment Officer
Eagle Asset Management, Inc.
Portfolio Manager, Growth Equity
Fund
4
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-GROWTH EQUITY FUND
ON NOVEMBER 16, 1995
[CHART]
The graph contained in the annual report compares the performance of the
Heritage Series Trust- Growth Equity Class A and C Shares with the S&P 500 and
S&P Barra Growth Index from inception of Class A and C Shares (November 16,
1995) through October 31, 1997.
* Average annual total returns for Heritage Series Trust-Growth Equity Fund are
calculated in conformance with Item 22 of Form N-1A, which assumes the
reinvestment of dividends and a sales load of 4.75% for Class A Shares.
5
December 5, 1997
Dear Fellow Shareholders:
The Heritage Small Cap Stock Fund had another excellent year, providing a
return on its A shares of +36.68%*. This is well in excess of the average for
small cap stock funds (according to Lipper Analytical Services) and the Russell
2000 (an index comprised of smaller capitalization companies).
During the fiscal year, we took gains on several long-term holdings that
contributed significantly to your Fund's positive performance. These positions
included Norand Corporation, National Education Corporation and Assisted Living
Concepts, Inc., 7.0% Convertible Bond. The Fund also benefited from significant
gains in Cooper Companies, Inc., Midcoast Energy Resources, Middleby Corporation
and Alternative Living Services, Inc. Additionally, the Fund enjoyed gains in
new share purchases of several oil service companies including Precision
Drilling Corporation and Comstock Resources, Inc. New purchases that contributed
to the Fund's performance include ITEQ, Inc. and Volt Information Sciences, Inc.
Reflecting the diversification of your Fund's portfolio, these companies
represent investments across a number of different industries.
Fortunately, the 1997 fiscal year was a very good one for the Fund. However,
not all stocks were winners for us. During the past fiscal year, we reduced or
eliminated our position in several companies whose stock price performance was
disappointing. These include Angeion Corporation, Peak Technologies Group, Inc.,
and Sterling House Corporation. Other companies whose stock prices declined
during the year but whose prospects we still believe are positive include
StarTek, Inc., Ascent Entertainment Group, Inc., Eltron International, Inc., and
LanVision Systems, Inc. Again, these companies did not reflect concentration in
any particular industry.
Looking forward, we expect our good fortune to continue. We believe the
requisite building blocks for long-term capital appreciation continue to exist
in the stock market and in the domestic economy.
We continue to see significant cash flows into the equity markets, despite
recent market volatility. Recent academic studies have suggested that
individuals between the ages of 50 and 65 save a higher percentage of their
income than any other age group. This demographic group is growing rapidly and
suggests continued demand for equity assets in the next twelve months. The
available supply of stocks has declined slightly over the period 1990 through
1997 as the result of stock buybacks, such as the one announced by IBM in early
November, and mergers, such as the recently announced acquisition of portfolio
company Sano Corporation. This supply/demand imbalance suggests the possibility
of higher equity valuations in the future.
The domestic economy continues to grow at a reasonable pace while the
Federal Reserve appears to be vigilantly monitoring inflation. This combination
of moderate economic growth with low inflation is leading to a lower budget
deficit and lower long-term interest rates. We expect this trend to continue
into 1998 suggesting, again, higher equity valuations.
While we continue to have a positive outlook for 1998, we remain ever
mindful of the possibility of negative performance. We continue to search for
high quality, growing companies with good balance sheets and high insider stock
ownership. These are characteristics that we believe will positively withstand
the test of time. We maintain a regular dialogue with our portfolio companies to
ensure we are fully aware of their progress.
We continue to have concentrations in health care, financial services,
publishing and real estate industries. Within the health care industry, we
believe assisted living facilities companies offer long-term promise as the
aging of our population continues. The financial services industry (encompassing
brokerage, banking, insurance and money management), and the publishing industry
continue to be consolidating industries. Our focus has been on local and
regional banks such as Doral Financial and IBS Financial and specialized
publishers such as John Wiley & Sons, Inc. and Waverly, Inc. Finally, we
continue to selectively add Real Estate Investment Trusts ("REITs") to our
portfolio. REITs continue to offer generous yields, low volatility and capital
appreciation potential.
We continue to be excited by the long-term prospects for our economy, stock
market and the Heritage Small Cap Stock Fund. We look forward to serving you for
years to come.
Sincerely,
/s/ JAMES D. AWAD
James D. Awad
Chairman
Awad & Associates
Portfolio Manager, Small Cap Stock
Fund
* Calculated without the imposition of front or back-end sales charges.
6
December 5, 1997
Dear Fellow Shareholders:
I'm pleased to report fiscal 1997 was another outstanding year for the
Heritage Series Trust - Small Cap Stock Fund (the "Fund") with appreciation of
36.68%* for Class A Shares.
During the fiscal year, the Fund benefited from many diversified special
situations demonstrating the value of diversification and stock picking. The
largest contributors to performance were Strayer Education, Inc., an owner and
operator of private colleges, Ethan Allen Interiors, Inc., a furniture
manufacturer and retailer, Legg Mason, Inc., a securities broker, Lennar
Corporation, a homebuilder, Interim Services, Inc., a provider of temporary
help, and Gulf Island Fabrication, Inc., a fabricator of drilling rigs and
related equipment.
On the downside, Sodak Gaming, Inc., a distributor of gaming equipment,
NABI, a plasma and biotechnical company, Coherent Inc., a manufacturer of
lasers, Spectrian Corporation, a manufacturer of power amplifiers for wireless
communication, and Allen Telecom Inc., a diversified manufacturer and provider
of telecommunications equipment and services, performed poorly during the
period.
While your Fund has performed admirably in 1997, it appears that 1997 will
be the fourth consecutive year of underperformance by small capitalization
stocks in general. As of this writing, for 1997, the Russell 2000 was up a
healthy 22%. However, this pales in comparison to the 33% rise in the Standard &
Poor's 500 Index.
In my opinion, the sustained underperformance of smaller capitalization
stocks has made them all the more attractive. Eagle's portion of the Fund
currently has a 1998 projected earnings growth of approximately 30%, yet the
portfolio trades at just under 20 times earnings. This compares with a price
earnings ratio of 21 times 1998 projected earnings for the S&P 500; however,
those larger capitalization stocks are growing earnings at only about 10%
annually.
Currently many technology stocks are depressed reflecting, in part,
concerns over the Far East, further compounded by tax related selling. We
believe the weakness in this sector is overdone and will be looking to increase
our technology exposure as we enter 1998.
As always, I thank you for your support and will endeavor to do my best for
your Fund.
Wishing you and your families a happy and prosperous new year.
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 or back-end sales charges.
7
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-SMALL CAP STOCK FUND CLASS A SHARES
ON MAY 7, 1993
[CHART]
The graph contained in the annual report compares the performance of the
Heritage Series Trust- Small Cap Stock Fund Class A Shares with the Russell 2000
Index from inception of Class A Shares (May 7, 1993) through October 31, 1997.
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-SMALL CAP STOCK FUND CLASS C SHARES
ON APRIL 3, 1995
[CHART]
The graph contained in the annual report compares the performance of the
Heritage Series Trust- Small Cap Stock Fund Class C Shares with the Russell 2000
Index from inception of Class C Shares (April 3, 1995) through October 31, 1997.
* Average annual total returns for Heritage Series Trust-Small Stock Fund are
calculated in conformance with Item 22 of Form N-1A, which assumes the
reinvestment of dividends and a sales load of 4.75% for Class A Shares.
8
December 5, 1997
Dear Fellow Shareholders:
It is both a privilege and a pleasure to address you for the first time as
portfolio manager of the Heritage Series Trust-Value Equity Fund. Our management
philosophy is driven by the straightforward notion that selecting the right
companies for purchase is only half of the investment equation; buying them at a
significant discount to their true worth is the other. As with most value
investors who are true to their roots, we are not looking for admiration when we
select stocks for the portfolio, but rather the most attractive risk/reward
scenarios we can uncover. In the short run, buying into the pessimism that
creates value is a difficult and lonely way to invest. However, over time, the
efficiency inherent in the market serves to unlock true value, eventually
leading, we believe, to above average returns for investors.
Our disciplined stock selection process consists of three distinct steps:
1) an initial "generic value" screen based upon selected absolute and relative
value criteria, 2) exhaustive industry and company-specific fundamental
research, and 3) a conservative estimation of underlying intrinsic value. Only
those stocks that we believe are trading at a significant discount to their
intrinsic value are considered for purchase in the Fund.
Since taking over the management of the Fund on October 1, 1997, we have
begun restructuring the portfolio and anticipate that this process will be
complete by the end of this year. Our investments fall into three general
categories: 1) "pure" value opportunities, such as Philips Electronics, 2)
"relative value" opportunities, such as Sunbeam Corporation, and 3)
"event-driven" value opportunities, such as Columbia Healthcare. Each of these
top holdings exhibit the fundamental characteristics that are consistent with
all of our holdings in the Fund; we focused on creating shareholder value, true
company worth that we believe is substantially higher than the current stock
price, and an extremely attractive long-term risk/reward profile.
As we enter 1998 with the stock market at record valuation levels from
nearly every perspective, we feel more strongly than ever that a disciplined,
focused, value-driven investment approach will offer our shareholders superior
returns over the long run.
Sincerely,
/s/ Michael J. Chren
Michael J. Chren
Senior Vice President
Eagle Asset Management, Inc.
Portfolio Manager, Value Equity Fund
9
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-VALUE EQUITY FUND CLASS A SHARES
ON DECEMBER 30, 1994
[GRAPH]
The graph contained in the annual report compares the performance of the
Heritage Series Trust-Value Equity Fund Class A Shares with the S&P 500 and S&P
Barra Value Index from inception of Class A Shares (December 30, 1994) through
October 31, 1997.
GROWTH OF A $10,000 INVESTMENT
SINCE INCEPTION OF HERITAGE SERIES TRUST-VALUE EQUITY FUND CLASS C SHARES
ON APRIL 3, 1995
[GRAPH]
The graph contained in the annual report compares the performance of the
Heritage Series Trust-Value Equity Fund Class C Shares with the S&P 500 and S&P
Barra Value Index from inception of Class C Shares (April 3, 1995) through
October 31, 1997.
* Average annual total returns for Heritage Series Trust-Value Equity Fund are
calculated in conformance with Item 22 of Form N-1A, which assumes the
reinvestment of dividends, a sales load of 4.75% for Class A Shares.
10
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EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
--------------------------------------------------------------------------------
ˇ Enlarge/Download Table
MARKET
SHARES VALUE
------
COMMON STOCKS--87.8%(A)
-----------------------
ARGENTINA--0.5%
---------------
17,843 Compania Perez Companc SA................................... $ 111,765
3,000 Telefonica de Argentina, ADR................................ 84,375
-----------
196,140
-----------
AUSTRALIA--1.5%
---------------
70,000 John Fairfax Holdings, Ltd.................................. 154,574
6,000 Lend Lease Corporation...................................... 122,872
33,000 Mayne Nickless, Ltd......................................... 150,847
43,000 News Corporation, Ltd....................................... 190,813
-----------
619,106
-----------
AUSTRIA--0.9%
-------------
2,200 V.A. Technologie AG......................................... 390,374
-----------
BELGIUM--1.3%
-------------
1,300 Generale de Banque.......................................... 531,752
-----------
BRAZIL--1.8%
-------------
15,500 Centrais Electricas Brasileiras, ADR........................ 341,000
10,000 Petroleo Brasileiro......................................... 190,000
2,200 Telecomunicacues Brasileiras, ADR........................... 223,300
-----------
754,300
-----------
CHILE--0.6%
------------
8,500 Compania de Telefonos de Chile SA, ADR...................... 235,875
-----------
DENMARK--1.5%
-------------
5,717 Novo Nordisk................................................ 619,327
-----------
FRANCE--6.9%
-------------
9,400 AXA-UAP Groupe.............................................. 643,696
4,859 Compagnie Generale.......................................... 566,915
2,950 L'Air Liquide SA............................................ 457,721
17,000 Rhone-Poulenc SA............................................ 741,213
8,940 Schneider SA................................................ 477,358
-----------
2,886,903
-----------
GERMANY--11.2%
--------------
700 Bayerische Motoren Werke AG................................. 506,381
11,700 Deutsche Bank AG............................................ 765,611
16,300 Hoechst AG.................................................. 620,304
1,600 Mannesmann AG............................................... 675,716
1,700 Preussag AG................................................. 440,828
2,900 SGL Carbon AG............................................... 407,124
15,001 VEBA AG..................................................... 836,290
700 Volkswagen AG............................................... 413,795
-----------
4,666,049
-----------
The accompanying notes are an integral part of the financial statements.
11
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EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
ˇ Enlarge/Download Table
MARKET
SHARES VALUE
------ ------
HONG KONG--2.2%
---------------
6,500 Amoy Properties, Ltd........................................ $ 5,591
14,800 Cheung Kong Holdings, Ltd................................... 102,891
26,000 China Light and Power Company, Ltd.......................... 136,869
26,100 Citic Pacific, Ltd.......................................... 124,905
112,000 First Pacific Bank.......................................... 70,620
3,496 HSBC Holdings............................................... 79,131
19,500 Hutchison Whampoa, Ltd...................................... 134,935
48,400 New World Development, Ltd.................................. 170,275
18,000 Swire Pacific, Ltd, Class "A"............................... 96,152
-----------
921,369
-----------
INDIA--1.4%
-------------
8,032 Indian Opportunities Fund, Ltd.(c) ......................... 81,446
30,500 Schroder India Fund......................................... 320,189
12,000 Videsh Sanchar Nigam, Ltd................................... 165,600
-----------
567,235
-----------
INDONESIA--1.1%
---------------
750,000 Bank International Indonesia................................ 161,234
316,000 PT Telekumunikasi........................................... 293,648
-----------
454,882
-----------
ITALY--1.8%
-----------
80,472 ENI......................................................... 452,506
8,000 Gucci NV.................................................... 291,000
-----------
743,506
-----------
JAPAN--15.8%
-------------
20,000 Canon, Incorporated......................................... 485,251
41 DDI Corporation............................................. 136,951
48,000 Hitachi, Ltd. .............................................. 368,924
11,000 Honda Motor Corporation..................................... 370,170
8,000 Ito-Yokado Company, Ltd. ................................... 397,507
34,000 Kamigumi Company, Ltd. ..................................... 153,968
3,000 Mabuchi Motor Company, Ltd. ................................ 167,013
12,000 Marui Company, Ltd. ........................................ 202,410
54,000 Mitsubishi Heavy Industries................................. 265,177
17,000 Mitsui Fudosan Company, Ltd. ............................... 192,106
24,000 Nippon Express Company, Ltd. ............................... 129,223
2,000 Riso Kagaku Corporation..................................... 117,823
7,000 Rohm Company, Ltd. ......................................... 692,148
24,000,000 Sakura Finance.............................................. 187,952
The accompanying notes are an integral part of the financial statements.
12
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EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
--------------- ------
4,000 Secom Company, Ltd.......................................... $ 258,579
7,000 Shimachu Company, Ltd....................................... 148,899
10,000 Shin-Etsu Chemical Company, Ltd............................. 244,287
7,000 Sony Corporation............................................ 581,055
17,000 Sumitomo Electric Industries, Ltd........................... 224,595
15,000 Taisho Pharmaceutical Company............................... 383,880
24,000 Toppan Printing Company, Ltd................................ 301,122
9,000 Toyota Motor Corporation.................................... 250,519
13,000 Yamanouchi Pharmaceuticals.................................. 319,734
-----------
6,579,293
-----------
MEXICO--2.0%
-------------
16,118 Cifra SA DE CV.............................................. 32,063
30,000 Corporation Industrial ALFA................................. 218,963
4,000 Empresas ICA Sociedad Contro................................ 53,250
130,000 Grupo Financiero Banamex.................................... 257,364
5,800 Telefonos De Mexico......................................... 250,850
-----------
812,490
-----------
NETHERLANDS--3.0%
-----------------
13,100 ING Groep NV................................................ 549,910
9,000 Philips Electronics NV...................................... 704,610
-----------
1,254,520
-----------
PHILIPPINES--0.3%
-----------------
1,920,000 Belle Corporation........................................... 144,487
-----------
SINGAPORE--0.5%
---------------
24,000 Development Bank of Singapore............................... 224,000
-----------
SPAIN--2.7%
------------
19,035 Banco de Santander SA....................................... 533,221
22,500 Telefonica de Espana SA..................................... 614,044
-----------
1,147,265
-----------
SWEDEN--1.3%
-------------
6,100 Incentive AB................................................ 534,266
-----------
SWITZERLAND--6.3%
-----------------
6,120 Credit Suisse Group......................................... 862,110
617 Novartis AG................................................. 966,315
90 Roche Holdings AG Genusscheine.............................. 790,894
-----------
2,619,319
-----------
The accompanying notes are an integral part of the financial statements.
13
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EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ ------
UK--22.3%
------------
67,000 Cable & Wireless, PLC....................................... $ 535,068
57,000 General Electric Company, PLC............................... 364,118
23,000 GKN, PLC.................................................... 515,925
26,500 Glaxo Wellcome, PLC......................................... 568,204
33,200 Granada Group, PLC.......................................... 457,865
102,000 Ladbroke Group, PLC......................................... 456,919
84,000 LASMO, PLC.................................................. 387,560
51,000 Lloyds TSB Group, PLC....................................... 637,461
56,000 Marks & Spencer, PLC........................................ 568,422
24,000 McKechnie, PLC.............................................. 202,538
33,000 National Westminister Bank, PLC............................. 474,485
111,000 NFC, PLC.................................................... 251,411
32,950 Reckitt & Colman, PLC....................................... 505,553
43,100 Royal Bank of Scotland Group, PLC........................... 457,006
58,558 Safeway, PLC................................................ 381,439
69,000 Scottish Power, PLC......................................... 516,311
81,000 Shell Transport & Trading Company, PLC...................... 574,508
28,731 Smiths Industries, PLC...................................... 416,960
64,000 Unilever, PLC............................................... 476,750
44,357 Wassall, PLC................................................ 250,795
34,000 Wolseley, PLC............................................... 283,364
-----------
9,282,662
-----------
VENEZUELA--0.9%
---------------
8,200 Compania Anonima Nacional Telefonos......................... 358,750
-----------
Total Common Stocks (cost $34,543,491)...................... 36,543,870
-----------
ˇ Enlarge/Download Table
PRINCIPAL MATURITY MARKET
AMOUNT DATE VALUE
--------- -------- -----------
BONDS--1.5%(A)
--------------
JAPAN--1.5%
-------------
$311,000 MBL International Finance (Bermuda), 3.0%(d)................ 11/30/02 $ 317,026
10,000,000 Namco, 4.7%(d)(e)........................................... 09/30/98 108,018
23,000,000 Nitto Denko Corporation, 2.2%(d)(e)......................... 03/31/99 217,100
-----------
Total Bonds (cost $697,855)................................. 642,144
-----------
Total investment portfolio excluding repurchase agreement (cost
$35,241,346).................................................................. 37,186,014
REPURCHASE AGREEMENT--7.0%(A)
----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October
31, 1997, @ 5.58% to be repurchased at $2,899,329 on November 3, 1997,
collateralized by $2,580,000 United States Treasury Notes, 7.875% due November
15, 2004, (market value of $2,968,034 including interest) (cost $2,898,000)... 2,898,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $38,139,346)(B) 96.3%(A)..................... 40,084,014
OTHER ASSETS AND LIABILITIES, NET, 3.7%(A).................................... 1,530,909
-----------
NET ASSETS, 100%.............................................................. $41,614,923
===========
(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
$1,944,668 which consists of aggregate gross unrealized appreciation for all
securities in which there is an excess of market value over tax cost of
$4,708,721 and aggregate gross unrealized depreciation for all securities in
which there is an excess of tax cost over market value of $2,764,053.
(c) Martin Currie Investment Management Limited is the manager of the Indian
Opportunities Fund, Ltd.
(d) Convertible bond.
(e) Principal amount is stated in Japanese yen.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
14
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EAGLE INTERNATIONAL EQUITY PORTFOLIO
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
--------------------------------------------------------------------------------
ˇ Download Table
MARKET % OF NET
INDUSTRY DIVERSIFICATION VALUE ASSETS
------------------------ ----------- --------
Common Stocks
Banking................................................... $ 3,934,520 9.4%
Basic Industries.......................................... 2,858,725 6.9%
Building Materials and Merchandise........................ 283,364 0.7%
Capital Goods............................................. 4,989,508 12.0%
Consumer Goods and Services............................... 5,593,249 13.4%
Diversified Industrials................................... 825,749 2.0%
Electronic and Electrical Equipment....................... 1,068,728 2.6%
Energy.................................................... 1,217,451 2.9%
Engineering............................................... 1,135,423 2.7%
Finance................................................... 3,103,324 7.5%
Foods..................................................... 476,750 1.2%
Household Goods........................................... 505,553 1.2%
Insurance................................................. 643,696 1.6%
Leisure and Hotels........................................ 914,784 2.2%
Oil, Exploration and Production........................... 387,560 0.9%
Oil, Integrated........................................... 764,508 1.8%
Pharmaceuticals........................................... 1,271,818 3.1%
Retail Trade.............................................. 1,543,596 3.7%
Telecommunications........................................ 2,595,910 6.2%
Transportation and Storage................................ 685,449 1.6%
Utilities................................................. 1,744,205 4.2%
Bonds....................................................... 642,144 1.5%
Repurchase Agreement........................................ 2,898,000 7.0%
----------- ---
Total Investments........................................... $40,084,014 96.3%
=========== ===
The accompanying notes are an integral part of the financial statements.
15
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HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ -----------
COMMON STOCK--95.8%(A)
----------------------
ADVERTISING/COMMUNICATIONS--4.3%
--------------------------------
26,000 Omnicom Group, Inc. ........................................ $ 1,836,250
-----------
BANKING--5.6%
-------------
16,500 BankAmerica Corporation..................................... 1,179,750
20,000 NationsBank Corporation..................................... 1,197,500
-----------
2,377,250
-----------
BEVERAGES--1.3%
---------------
10,000 The Coca-Cola Company....................................... 565,000
-----------
BUILDING--2.3%
--------------
20,000 Illinois Tool Works, Inc. .................................. 983,750
-----------
CONGLOMERATES/DIVERSIFIED--2.2%
-------------------------------
25,000 Thermo Electron Corporation*................................ 932,813
-----------
COSMETICS/TOILETRIES--2.5%
--------------------------
12,000 Gillette Company............................................ 1,068,750
-----------
DATA PROCESSING--14.6%
----------------------
15,000 Cisco Systems, Inc.* ....................................... 1,230,468
12,000 Dell Computer Corporation* ................................. 961,500
25,000 HBO & Company............................................... 1,087,500
12,000 Intel Corporation........................................... 924,000
8,000 Microsoft Corporation*...................................... 1,040,000
16,000 PeopleSoft, Inc.*........................................... 1,006,000
-----------
6,249,468
-----------
ELECTRONICS/ELECTRIC--5.1%
--------------------------
20,000 General Electric Company.................................... 1,291,250
10,000 Nokia Corporation, Sponsored ADR, Class "A"................. 882,500
-----------
2,173,750
-----------
FINANCE--10.0%
---------------
12,000 American Express Company.................................... 936,000
30,000 Charles Schwab Corporation.................................. 1,023,750
25,000 Fannie Mae.................................................. 1,210,938
30,000 Freddie Mac................................................. 1,136,250
-----------
4,306,938
-----------
HOTELS/MOTELS/INNS--2.0%
------------------------
12,500 Marriott International, Inc. ............................... 871,875
-----------
INSURANCE--10.0%
----------------
12,000 Allstate Corporation........................................ 995,250
15,000 American International Group, Inc. ......................... 1,530,937
25,000 Travelers Group, Inc........................................ 1,750,000
-----------
4,276,187
-----------
The accompanying notes are an integral part of the financial statements.
16
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HERITAGE SERIES TRUST-GROWTH EQUITY FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ -----------
MEDICAL EQUIPMENT/SUPPLY--3.4%
------------------------------
25,000 Guidant Corporation......................................... $ 1,437,500
-----------
OIL & GAS--5.7%
---------------
18,000 Diamond Offshore Drilling, Inc.............................. 1,120,500
15,000 Schlumberger, Ltd........................................... 1,312,500
-----------
2,433,000
-----------
PHARMACEUTICAL--12.2%
---------------------
25,000 Eli Lilly & Company......................................... 1,671,875
25,000 Pfizer, Inc................................................. 1,768,750
12,500 Warner-Lambert Company...................................... 1,789,844
-----------
5,230,469
-----------
REAL ESTATE/LAND DEVELOPMENT--2.2%
----------------------------------
30,000 Security Capital Group, Inc., Class "B"*.................... 960,000
-----------
RETAIL STORES--8.4%
-------------------
25,000 Home Depot, Inc............................................. 1,390,625
20,000 Kohl's Corporation*......................................... 1,342,500
30,000 Walgreen Company............................................ 843,750
-----------
3,576,875
-----------
TELECOMMUNICATIONS--4.0%
------------------------
20,000 Telefonakliebolaget LM Ericsson, ADR........................ 885,000
15,000 Tellabs, Inc.*.............................................. 810,000
-----------
1,695,000
-----------
Total investment portfolio excluding repurchase agreement (cost
$30,969,425)................................................................. 40,974,875
REPURCHASE AGREEMENT--4.4%(A)
-----------------------------
Repurchase Agreement with State Street Bank and Trust Company, dated October 31,
1997 @ 5.58% to be repurchased at $1,890,879 on November 3, 1997, collateralized
by $1,685,000 United States Treasury Notes, 7.875% due November 15, 2004,
(market value $1,938,425 including interest) (cost $1,890,000).................. 1,890,000
-----------
TOTAL INVESTMENT PORTFOLIO (COST $32,859,425)(B), 100.2%(A)..................... 42,864,875
OTHER ASSETS AND LIABILITIES, NET, (0.2%)(A).................................... (72,273)
-----------
NET ASSETS, 100.0%.............................................................. $42,792,602
===========
---------------
* 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
$10,005,450, which consists of aggregate gross unrealized appreciation for
all securities in which there is an excess of market value over tax cost of
$10,100,917 and aggregate gross unrealized depreciation for all securities
in which there is an excess of tax cost over market value of $95,467.
ADR -- American Depository Receipt.
The accompanying notes are an integral part of the financial statements.
17
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HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ ------------
COMMON STOCK--92.7%(A)
----------------------
AEROSPACE--0.3%
-----------------
40,000 Kellstrom Industries, Inc.*................................. $ 842,500
------------
AUTO PARTS/EQUIPMENT--0.1%
--------------------------
50,000 Miller Industries, Inc.*.................................... 506,250
------------
AUTO RENTAL/SERVICE--0.1%
-------------------------
33,000 Earl Scheib, Inc.*.......................................... 297,000
------------
BANKING--3.6%
-------------
100,000 Bank Plus Corporation*...................................... 1,200,000
100,000 BankUnited Financial Corporation, Class "A"*................ 1,312,500
60,000 Commercial Federal Corporation*............................. 2,910,000
77,000 Doral Financial Corporation................................. 1,703,625
69,920 IBS Financial Corporation................................... 1,075,020
10,000 Independent Bankshares, Inc................................. 166,875
100,000 ITLA Capital Corporation*................................... 2,000,000
15,000 SIS Bancorp, Inc............................................ 511,875
25,000 Wayne Bancorp, Inc. ........................................ 550,000
------------
11,429,895
------------
BUILDING--2.1%
--------------
160,000 Lennar Corporation.......................................... 6,510,000
------------
CHEMICALS--0.7%
---------------
68,600 Lawter International, Inc. ................................. 767,462
75,000 Mississippi Chemical Corporation............................ 1,378,125
------------
2,145,587
------------
CONTAINERS--0.8%
----------------
100,000 ZERO Corporation............................................ 2,687,500
------------
COSMETICS/TOILETRIES--0.2%
--------------------------
50,000 Enamelon, Inc.*............................................. 775,000
------------
DATA PROCESSING--9.8%
---------------------
55,000 3D Systems Corporation*..................................... 522,500
25,000 Cayenne Software, Inc.*..................................... 75,000
123,750 Comdisco, Inc. ............................................. 3,905,859
5,000 DIDAX, Inc.*................................................ 19,844
190,000 Dynamic Healthcare Technologies, Inc.*...................... 979,688
39,350 Fiserv, Inc.*............................................... 1,760,912
23,617 Greentree Software, Inc.*................................... 27,307
25,000 Health Management Systems, Inc.*............................ 162,500
38,700 Information Resources, Inc.*................................ 638,550
240,300 LanVision Systems, Inc.*.................................... 1,449,309
40,000 Logic Works, Inc.*.......................................... 375,000
60,000 Medic Computer Systems, Inc.*............................... 2,092,500
70,000 National Data Corporation................................... 2,585,625
78,475 New Horizons Worldwide, Inc.*............................... 1,137,887
133,800 Ovid Technologies, Inc.*.................................... 1,204,200
25,000 Policy Management Systems Corporation*...................... 1,531,250
154,875 Printronix, Inc.*........................................... 2,826,468
60,000 ScanSource, Inc.*........................................... 1,192,500
The accompanying notes are an integral part of the financial statements.
18
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HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ ------------
20,000 Shared Medical Systems Corporation.......................... $ 1,095,000
160,000 Sykes Enterprises, Inc.*.................................... 3,980,000
105,000 The Pathways Group, Inc.*................................... 2,060,625
92,500 TransAct Technologics, Inc.*................................ 1,156,250
------------
30,778,774
------------
EDUCATION--1.7%
---------------
110,000 Strayer Education, Inc...................................... 5,252,500
------------
ELECTRONICS/ELECTRIC--5.9%
-------------------------
50,000 Chicago Miniature Lamp, Inc.*............................... 1,600,000
155,000 Computer Products, Inc.*.................................... 4,223,750
150,000 EA Industries, Inc.*........................................ 937,500
110,000 Eltron International, Inc.*................................. 3,203,750
100,000 Fluke Corporation........................................... 2,406,250
10,000 Holmes Protection Group, Inc.*.............................. 155,000
25,000 OPTEK Technology, Inc.*..................................... 453,125
75,000 Pioneer-Standard Electronics, Inc........................... 1,228,125
30,000 Polaroid Corporation........................................ 1,348,125
100,000 ThermoQuest Corporation*.................................... 1,787,500
65,000 Trident International, Inc.*................................ 991,250
------------
18,334,375
------------
FILMED ENTERTAINMENT--0.5%
--------------------------
110,000 Ascent Entertainment Group, Inc.*........................... 1,086,250
9,000 Cinar Films, Inc.*.......................................... 349,875
20,000 Todd-AO Corporation......................................... 212,500
------------
1,648,625
------------
FINANCE--1.8%
--------------
250,000 Cash America International, Inc............................. 2,953,125
50,000 Interra Financial, Inc...................................... 2,756,250
------------
5,709,375
------------
FOOD--1.2%
------------
75,000 J.M. Smucker Company, Class "B"*............................ 1,893,750
60,000 Smithfield Foods, Inc.*..................................... 1,792,500
------------
3,686,250
------------
HEALTH CARE CENTERS--2.5%
-------------------------
55,100 Alternative Living Services, Inc.*.......................... 1,349,950
50,000 American Retirement Corporation*............................ 971,875
52,000 ARV Assisted Living, Inc.*.................................. 780,000
55,000 Assisted Living Concepts, Inc.*............................. 1,127,500
37,800 Horizon Health Corporation*................................. 883,575
130,000 Sun Healthcare Group, Inc.*................................. 2,583,750
------------
7,696,650
------------
HOME FURNISHINGS--2.5%
----------------------
100,000 Ethan Allen Interiors, Inc.................................. 3,543,750
66,600 Falcon Products, Inc........................................ 1,028,138
195,000 Furniture Brands International, Inc.*....................... 3,266,250
------------
7,838,138
------------
The accompanying notes are an integral part of the financial statements.
19
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HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ ------------
HOTELS/MOTELS/INNS--2.1%
------------------------
85,000 CapStar Hotel Company*...................................... $ 3,012,187
225,000 Servico, Inc.*.............................................. 3,585,938
------------
6,598,125
------------
INSURANCE--1.4%
---------------
50,000 Danielson Holding Corporation*.............................. 393,750
137,600 Gryphon Holdings, Inc.*..................................... 2,218,800
100,000 INSpire Insurance Solutions, Inc.*.......................... 1,850,000
------------
4,462,550
------------
LEATHER/SHOES--1.8%
-------------------
100,000 Footstar, Inc.*............................................. 2,718,750
240,000 Genesco Inc.*............................................... 3,045,000
------------
5,763,750
------------
LEISURE/AMUSEMENT--2.0%
-----------------------
74,500 International Speedway Corporation, Class "A"............... 1,564,500
53,000 K2, Inc..................................................... 1,341,563
110,000 Rio Hotel & Casino Inc.*.................................... 2,413,125
85,000 Sodak Gaming, Inc.*......................................... 913,750
------------
6,232,938
------------
MACHINERY--2.2%
---------------
25,000 Blount International, Inc., Class "A"....................... 1,314,063
50,000 Gradall Industries, Inc.*................................... 781,250
206,500 ITEQ, Inc.*................................................. 2,581,250
160,000 Middleby Corporation*....................................... 1,620,000
40,000 WPI Group, Inc.*............................................ 445,000
------------
6,741,563
------------
MANUFACTURING/DISTRIBUTIONS--4.3%
---------------------------------
175,000 Amor Holdings, Inc.*........................................ 1,925,000
125,000 Gentex Corporation*......................................... 3,062,500
20,000 Gibson Greetings, Inc.*..................................... 492,500
115,300 Hughes Supply, Inc.......................................... 4,021,087
90,000 JLG Industries, Inc......................................... 1,141,875
69,100 Metrika Systems Corporation*................................ 1,131,513
92,000 Thermo Optek Corporation*................................... 1,558,250
------------
13,332,725
------------
MEDICAL EQUIPMENT/SUPPLY--6.4%
------------------------------
565,000 Angeion Corporation*........................................ 2,224,687
123,456 Angiosonics, Inc.*(c)....................................... 370,368
232,500 ATS Medical, Inc.*.......................................... 1,453,125
55,000 Aviron*..................................................... 1,203,125
200,000 CardioDynamics International Corporation*................... 575,000
92,500 Coherent, Inc.*............................................. 3,607,500
133,333 Cooper Companies, Inc.*..................................... 4,774,988
50,000 Cypress Bioscience, Inc.*................................... 81,250
30,000 Photoelectron Corporation*.................................. 330,000
113,000 Sano Corporation*........................................... 2,344,750
92,500 Somanetics Corporation*..................................... 659,063
44,444 SurVivaLink Corporation*(c)................................. 200,000
41,000 Thermedics, Inc.*........................................... 697,000
35,000 Thermo Bioanalysis Corporation*............................. 603,750
43,200 Thermo Cardiosystems, Inc.*................................. 934,200
------------
20,058,806
------------
The accompanying notes are an integral part of the financial statements.
20
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HERITAGE SERIES TRUST-SMALL CAP STOCK FUND
INVESTMENT PORTFOLIO
OCTOBER 31, 1997
(CONTINUED)
--------------------------------------------------------------------------------
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MARKET
SHARES VALUE
------ ------------
METAL--0.6%
-----------
124,500 Ma