<PAGE>
Leadership Trust
Leadership
Global
High Yield
Securities
Fund
Semi-Annual Report
March 31, 1995
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 1
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
INTRODUCTION FROM PRESIDENT....................................... 2
LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER.................... 3
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND
Statement of Assets and Liabilities........................ 6
Statement of Operations.................................... 7
Statement of Changes in Net Assets......................... 8
Financial Highlights....................................... 9
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
Statement of Assets and Liabilities........................ 10
Statement of Operations.................................... 11
Statement of Changes in Net Assets......................... 12
Financial Highlights....................................... 13
Schedule of Portfolio Investments.......................... 14
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND
Notes to Financial Statements.............................. 16
GLOBAL HIGH YIELD SECURITIES PORTFOLIO
Notes to Financial Statements.............................. 18
For shareholder account information and current price and yield quotations,
shareholders may call their relationship manager or servicing agent.
Prospectuses containing more extensive information regarding the Leadership
Global High Yield Securities Fund may be obtained by calling or writing to
Supervised Service Company, Inc. or MDS Securities Incorporated, the primary
Servicing Agent and Distributor, respectively, of the Leadership Trust:
LEADERSHIP TRUST
SUPERVISED SERVICE COMPANY, INC.
P.O. BOX 419088
KANSAS CITY, MISSOURI 64141-6088
(800) 655-1818
You may write to the Leadership Global High Yield Securities Fund at the
following address:
LEADERSHIP TRUST
MDS SECURITIES, INC.
301 GIBRALTAR DRIVE, SUITE 2A
MORRIS PLAINS, NJ 07950
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 2
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INTRODUCTION FROM PRESIDENT
- --------------------------------------------------------------------------------
May, 1995
Dear Shareholders:
We are pleased to present your 1995 Semi-Annual Report for the Leadership Global
High Yield Securities Fund. This Report provides you with an investment overview
as well as a financial summary of the Fund's operations for the period January
23, 1995 (commencement of operations) to March 31, 1995. We have also included a
Letter from the Investment Adviser detailing the factors that affected the
Fund's performance. Also presented in your Report is a pie chart displaying
diversification of Portfolio investments, financial statements, financial
highlights and a listing of the Portfolio's holdings.
Looking ahead, we will continue to closely observe the economic conditions and
how they affect the financial markets.
We appreciate your ongoing support of the Leadership Global High Yield
Securities Fund and look forward to continuing to serve your investment needs.
Thomas Sarkany
President
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 3
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LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
- --------------------------------------------------------------------------------
The Leadership Global High Yield Securities Fund had a total return of
(0.60)% for the period from January 23, 1995 through March 31, 1995, versus
(6.10)% for the J.P. Morgan Emerging Bond Market Index over the same
period.
The Fund's outperformance is a result of both asset allocation and security
selection. First, during the crisis in Mexico, the Fund was significantly
underweighted in Mexican issues, and held no peso-denominated securities.
Thus, the damage to the Fund's emerging markets positions was limited. By
late March, conditions began to improve in many emerging markets, causing a
turnaround in sentiment. The subsequent rally was led by a rally in
Argentine Brady bonds, the Fund's largest holdings.
Secondly, the Fund benefited from its holdings in U.S. high yield debt.
U.S. high yield bond spreads to Treasuries widened during October and
November. This trend reversed in December, and U.S. high yield bonds
appreciated significantly. These bonds continued to perform well throughout
the first quarter of 1995 due to strength in the U.S. government bond
market, continued growth in cash flows of high yield companies and large
net inflows into U.S. high yield bond mutual funds. Although significant
new issue supply is planned for April, we believe that the strong demand
from mutual funds will provide a firm tone to the markets.
Looking ahead, we believe that the emerging debt markets will continue to
offer significant long-term values. Although Latin America still has many
long-term issues that need to be resolved, we believe that the worst of the
crisis has passed. In the U.S. high yield market, we believe that positive
fundamental and technical factors should lead to continued credit
improvement and spread tightening. We will also continue to monitor East
European markets. We believe that Poland is likely to receive a strong
rating during the second quarter and that the bonds will continue to
outperform the market.
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 4
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LETTER TO SHAREHOLDERS FROM INVESTMENT ADVISER
- --------------------------------------------------------------------------------
About the
Portfolio Managers STEPHEN C. FREIDHEIM
Managing Director & Portfolio Manager
* Responsible for portfolio management and trading
of high yield investment products
* Formerly Senior Vice President and Director of
Research and Trading. Board of Directors: Nomura
Corporate Research and Asset Management;
Director of Research: Kidder Peabody High Yield
Asset Management
* Eight years investment experience, including two
years as a sell-side industry analyst for Kidder
Peabody
* Joined Bankers Trust Global High Yield group in
1993
* B.A. (Economics) - Yale University
- --------------------------------------------------------------------------------
DAVID A. REISS
Vice President & Emerging Markets Portfolio Manager
* Responsible for portfolio management, trading
and credit analysis of emerging markets
* Managed $700MM of high yield assets for Kidder
Peabody Asset Management
* Served as Associate in Mortgage Research at
Goldman Sachs
* Joined Bankers Trust in 1994
* M.B.A. (Finance) Wharton School of Business
B.A. (Mathematics) University of Pennsylvania
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<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 5
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- --------------------------------------------------------------------------------
OBJECTIVE Seeks high level of current income, with a
secondary objective of capital appreciation,
through investments in the global high yield debt
markets.
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INVESTMENT INSTRUMENTS Primarily high yield, non-investment grade debt
securities issued in many of the world's securities
markets.
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DIVERSIFICATION OF PORTFOLIO
INVESTMENTS BY ASSET TYPE
as of March 31, 1995 (unaudited)
(percentages are based on market value)
[GRAPHIC OMITTED: pie chart]
Government Bonds 40.40%
Foreign Corporate Debentures 27.29%
Foreign Preferred Stocks 4.67%
U.S. Corporate Debentures 27.64%
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 6
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment in Global High Yield Securities Portfolio, at Value $2,296
- --------------------------------------------------------------------------------
Due from MDS Securities 3,401
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Total Assets 5,697
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LIABILITIES
- --------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 3,321
- --------------------------------------------------------------------------------
Total Liabilities 3,321
- --------------------------------------------------------------------------------
NET ASSETS (Applicable to 239 Outstanding Shares of $.001 Par Value Per
Share, Unlimited Number of Shares of Beneficial Interest Authorized) $2,376
================================================================================
NET ASSET VALUE, Redemption Price Per Share
($2,376/239 Shares) $9.94
================================================================================
OFFERING PRICE (SALES CHARGE 4.75% [ $9.94/.9525 ] ) $10.44
================================================================================
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in Capital $2,391
- --------------------------------------------------------------------------------
Undistributed Net Investment Income 44
- --------------------------------------------------------------------------------
Accumulated Net Realized (Loss) from Securities Transactions (13)
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (46)
- --------------------------------------------------------------------------------
NET ASSETS, MARCH 31, 1995 $2,376
- --------------------------------------------------------------------------------
See Notes to Financial Statements on Pages 16 and 17
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 7
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the period January 23, 1995 (commencement of operations) to March 31, 1995
(unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Income Allocated from Global High Yield Securities Portfolio, net $51
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Administration and Services Fee $4
- --------------------------------------------------------------------------------
Distribution Fee 2
- --------------------------------------------------------------------------------
Trustees Fees 500
- --------------------------------------------------------------------------------
Professional Fees 2,057
- --------------------------------------------------------------------------------
Miscellaneous 863
- --------------------------------------------------------------------------------
Total Expenses 3,426
- --------------------------------------------------------------------------------
Less: Expenses Absorbed by MDS Securities (3,419) 7
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 44
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
- --------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (13)
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (46)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED (LOSS) ON SECURITIES (59)
- --------------------------------------------------------------------------------
NET (DECREASE) IN NET ASSETS FROM OPERATIONS $(15)
================================================================================
See Notes to Financial Statements on Pages 16 and 17
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 8
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period
January 23, 1995
(Commencement of
Operations) to
March 31, 1995
(unaudited)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
FROM OPERATIONS
- --------------------------------------------------------------------------------
Net Investment Income $44
- --------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (13)
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (46)
- --------------------------------------------------------------------------------
Net (Decrease) in Net Assets from Operations (15)
- --------------------------------------------------------------------------------
FROM TRANSACTIONS IN SHARES OF BENEFICIAL INTEREST
- --------------------------------------------------------------------------------
Net Increase in Net Assets from Transactions in
Shares of Beneficial Interest 2,391
- --------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 2,376
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of Period --
- --------------------------------------------------------------------------------
End of Period $2,376
================================================================================
See Notes to Financial Statements on Pages 16 and 17
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 9
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below are selected data for a share outstanding, total investment
return, ratios to average net assets and other supplemental data for the period
indicated for the Leadership Global High Yield Securities Fund.
- --------------------------------------------------------------------------------
For the period
January 23, 1995
(Commencement of
Operations) to
March 31, 1995
(unaudited)
- --------------------------------------------------------------------------------
SELECTED PER SHARE DATA
Net Asset Value, Beginning of Period $10.00
------
Income from Investment Operations
Net Investment Income 0.18
Net Realized and Unrealized (Loss) on Securities (0.24)
-----
Total from Investment Operations (0.06)
-----
Net Asset Value, End of Period $9.94
=====
TOTAL INVESTMENT RETURN (0.60)%
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average Net Assets 10.09%*
Ratio of Expenses to Average Net Assets, Including Expenses of the
Global High Yield Securities Portfolio 2.25%*
Decrease Reflected in Above Expense Ratio Due to Absorption of
Expenses by MDS Securities and Bankers Trust 777.75%*
Net Assets, End of Period (000's omitted) $2
* Annualized
See Notes to Financial Statements on Pages 16 and 17
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 10
- --------------------------------------------------------------------------------
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------
March 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investments, at Value (Cost $15,477,592) $13,653,421
- --------------------------------------------------------------------------------
Cash 462,894
- --------------------------------------------------------------------------------
Interest Receivable 440,921
- --------------------------------------------------------------------------------
Prepaid Expenses 1,526
- --------------------------------------------------------------------------------
Deferred Organizational Expenses 13,350
- --------------------------------------------------------------------------------
Total Assets 14,572,112
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Due to Bankers Trust 7,750
- --------------------------------------------------------------------------------
Payable for Securities Purchased 465,260
- --------------------------------------------------------------------------------
Accrued Expenses and Accounts Payable 28,041
- --------------------------------------------------------------------------------
Total Liabilities 501,051
- --------------------------------------------------------------------------------
NET ASSETS $14,071,061
- --------------------------------------------------------------------------------
COMPOSITION OF NET ASSETS
- --------------------------------------------------------------------------------
Paid-in Capital $15,895,776
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (1,824,171)
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Foreign Currency Translation (544)
- --------------------------------------------------------------------------------
NET ASSETS, MARCH 31, 1995 $14,071,061
================================================================================
See Notes to Financial Statements on Pages 18 and 19
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 11
- --------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
For the six months ended March 31, 1995 (unaudited)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Interest (net of foreign withholding tax of $1,298) $834,882
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Advisory Fee $59,368
- --------------------------------------------------------------------------------
Administration and Services Fee 14,842
- --------------------------------------------------------------------------------
Professional Fees 10,106
- --------------------------------------------------------------------------------
Insurance 1,359
- --------------------------------------------------------------------------------
Trustees Fees 806
- --------------------------------------------------------------------------------
Amortization of Organizational Expenses 1,795
- --------------------------------------------------------------------------------
Miscellaneous 732
- --------------------------------------------------------------------------------
Total Expenses 89,008
- --------------------------------------------------------------------------------
Less: Expenses Absorbed by Bankers Trust (33,351) 55,657
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 779,225
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON SECURITIES
AND FOREIGN CURRENCY
- --------------------------------------------------------------------------------
Net Realized (Loss) from Securities Transactions (631,017)
- --------------------------------------------------------------------------------
Net Realized (Loss) from Foreign Currency Transactions (1,325)
- --------------------------------------------------------------------------------
Net Unrealized (Depreciation) on Securities (1,861,168)
- --------------------------------------------------------------------------------
Net Unrealized Appreciation on Foreign Currency Translation 3,049
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED (LOSS) ON SECURITIES AND
FOREIGN CURRENCY (2,490,461)
- --------------------------------------------------------------------------------
NET (DECREASE) IN NET ASSETS FROM OPERATIONS $(1,711,236)
================================================================================
See Notes to Financial Statements on Pages 18 and 19
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 12
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------
For the period
For the six December 14, 1993
months ended (Commencement of
March 31, 1995 Operations) to
(unaudited) September 30, 1994
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
- --------------------------------------------------------------------------------
FROM OPERATIONS
- --------------------------------------------------------------------------------
Net Investment Income $779,225 $531,903
- --------------------------------------------------------------------------------
Net Realized (Loss) from Securities and Foreign
Currency Transactions (632,342) (183,030)
- --------------------------------------------------------------------------------
Net Unrealized Appreciation (Depreciation) on
Securities and Foreign Currency Translation (1,858,119) 33,404
- --------------------------------------------------------------------------------
Net Increase (Decrease) in Net Assets
from Operations (1,711,236) 382,277
- --------------------------------------------------------------------------------
FROM CAPITAL TRANSACTIONS
- --------------------------------------------------------------------------------
Proceeds from Capital Invested 6,202,581 21,182,075
- --------------------------------------------------------------------------------
Value of Capital Withdrawn (5,149,282) (6,835,354)
- --------------------------------------------------------------------------------
Net Increase in Net Assets from Capital
Transactions 1,053,299 14,346,721
- --------------------------------------------------------------------------------
TOTAL INCREASE (DECREASE) IN NET ASSETS (657,937) 14,728,998
================================================================================
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of Period 14,728,998 --
- --------------------------------------------------------------------------------
End of Period $14,071,061 $14,728,998
================================================================================
See Notes to Financial Statements on Pages 18 and 19
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 13
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
Contained below are selected ratios and supplemental data for each of the
periods indicated for the Global High Yield Securities Portfolio.
- --------------------------------------------------------------------------------
For the period
For the six December 14, 1993
months ended (Commencement of
March 31, 1995 Operations) to
(unaudited) September 30, 1994
- --------------------------------------------------------------------------------
RATIOS AND SUPPLEMENTAL DATA
Ratio of Net Investment Income to Average
Net Assets 10.50%* 6.44%*
Ratio of Expenses to Average Net Assets 0.75%* 0.75%*
Decrease Reflected in Above Ratio of Expenses to
Average Net Assets Due to Absorption of Expenses
by Bankers Trust 0.45%* 0.59%*
Portfolio Turnover Rate 63% 347%
Net Assets, End of Period (000's omitted) $14,071 $14,729
* Annualized
See Notes to Financial Statements on Pages 18 and 19
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 14
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1995 (unaudited)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- -------------------------------------------------------------
GOVERNMENT BONDS - 39.20%
- -------------------------------------------------------------
ARGENTINA - 11.78%
- -------------------------------------------------------------
$2,000,000 Argentina Par Series
L-GL 7.125%, 3/31/23 (a) $1,082,500
- -------------------------------------------------------------
1,400,000 Argentina Par Series
L-GP 4.25%, 3/31/23 (a) 574,875
- -------------------------------------------------------------
1,657,375
- -------------------------------------------------------------
BRAZIL - 10.95%
- -------------------------------------------------------------
357,000 Brazil C 8.00%, 4/15/14 131,867
- -------------------------------------------------------------
1,224,000 Brazil C Series L 8.00%,
4/15/14 452,115
- -------------------------------------------------------------
1,000,000 Brazil Series EI-L 6.687%,
4/15/06 (a) 505,000
- -------------------------------------------------------------
1,000,000 Brazil New Money Bond
6.75%, 4/15/09 (a) 452,500
- -------------------------------------------------------------
1,541,482
- -------------------------------------------------------------
BULGARIA - 2.40%
- -------------------------------------------------------------
1,000,000 Bulgaria IAB Series PDI
7.563%, 7/28/11 (a) 337,500
- -------------------------------------------------------------
MEXICO - 4.18%
- -------------------------------------------------------------
1,000,000 Mexico Discount Series D
7.25%, 12/31/19 (a) 587,500
- -------------------------------------------------------------
MOROCCO - 3.30%
- -------------------------------------------------------------
800,000 Morocco Reconstruction &
Consolidation Agreement
Series A, 7.375%, 1/1/09 (a) 464,000
- -------------------------------------------------------------
PANAMA - 2.00%
- -------------------------------------------------------------
700,000 Panama Refinance Loan,
0.00%, 1/1/00 (d) 281,750
- -------------------------------------------------------------
POLAND - 2.88%
- -------------------------------------------------------------
275,000 Poland Discount 6.813%,
10/27/24 176,516
- -------------------------------------------------------------
145,000 Poland Series PDI 3.25%,
10/27/14 58,181
- -------------------------------------------------------------
521,000 Poland Series RSTA 2.75%,
10/27/24 171,279
- -------------------------------------------------------------
405,976
- -------------------------------------------------------------
URUGUAY - 1.71%
- -------------------------------------------------------------
500,000 Uruguay Discount Note Series
B, 7.875%, 2/18/07 (a) 240,000
- -------------------------------------------------------------
TOTAL GOVERNMENT BONDS
(Cost $7,258,034) $5,515,583
=============================================================
CORPORATE DEBENTURES - 53.30%
- -------------------------------------------------------------
ARGENTINA - 1.13%
- -------------------------------------------------------------
$200,000 Baesa Embotelladora 8.50%,
12/29/00 (c) $159,500
- -------------------------------------------------------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- -------------------------------------------------------------
CANADA - 4.97%
- -------------------------------------------------------------
$1,000,000 Call - Net Enterprises
0.00%, 12/1/04 (d) $552,500
- -------------------------------------------------------------
250,000 Rogers Cablesystems
9.65%, 1/15/14 146,612
- -------------------------------------------------------------
699,112
- -------------------------------------------------------------
COLOMBIA - 2.86%
- -------------------------------------------------------------
500,000 Celcaribe 0.00%
3/15/04 (b) (c) 402,500
- -------------------------------------------------------------
COSTA RICA - 2.14%
- -------------------------------------------------------------
700,000 Banco Central de Costa Rica
Series A 6.25%, 5/21/10 301,000
- -------------------------------------------------------------
HONG KONG - 2.77%
- -------------------------------------------------------------
500,000 Goldlion Capital 4.875%,
2/1/99 389,375
- -------------------------------------------------------------
INDONESIA - 4.57%
- -------------------------------------------------------------
700,000 PT Polysindo 13.00%,
6/15/01 644,000
- -------------------------------------------------------------
SOUTH AFRICA - 3.81%
- -------------------------------------------------------------
500,000 Liberty Life Association
6.50%, 9/30/04 536,250
- -------------------------------------------------------------
UNITED KINGDOM - 4.23%
- -------------------------------------------------------------
1,000,000 Videotron Holdings
0.00%, 7/1/04 (d) 595,000
- -------------------------------------------------------------
UNITED STATES - 26.82%
- -------------------------------------------------------------
250,000 Cencall Communications
0.00%, 1/15/04 (b) 93,750
- -------------------------------------------------------------
500,000 Crown Packaging 10.75%,
11/1/00 495,000
- -------------------------------------------------------------
250,000 Fort Howard Corporation
14.125%, 11/1/04 251,250
- -------------------------------------------------------------
500,000 Hollywood Casino 14.00%,
4/1/98 532,500
- -------------------------------------------------------------
500,000 Icon Health and Fitness
13.00%, 7/15/02 (c) 532,500
- -------------------------------------------------------------
500,000 Petroleum Heat and Water
12.25%, 2/1/05 522,500
- -------------------------------------------------------------
750,000 Pricellular 0.00%,
11/15/01 (d) 555,000
- -------------------------------------------------------------
250,000 S.D. Warren 12.00%,
12/15/04 (c) 263,750
- -------------------------------------------------------------
500,000 Schuller International Group
10.875%, 12/15/04 527,500
- -------------------------------------------------------------
3,773,750
- -------------------------------------------------------------
TOTAL CORPORATE DEBENTURES
(Cost $7,678,565) $7,500,487
=============================================================
See Notes to Financial Statements on Pages 18 and 19
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 15
- --------------------------------------------------------------------------------
SCHEDULE OF PORTFOLIO INVESTMENTS
- --------------------------------------------------------------------------------
March 31, 1995 (unaudited)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
- -------------------------------------------------------------
OTHER SECURITIES - 0.00%
- -------------------------------------------------------------
MEXICO - 0.00%
- -------------------------------------------------------------
$3,540,650 Mexico Recovery Rights
Expire 6/30/03 $ 0
=============================================================
SHARES PREFERRED STOCKS -4.53%
- -------------------------------------------------------------
SOUTH AFRICA- 4.53%
- -------------------------------------------------------------
8,800 Sasol 8.5% Convertible $ 84,201
- -------------------------------------------------------------
10,000 South African Breweries, 276,575
Cl. A
- -------------------------------------------------------------
SHARES DESCRIPTION VALUE
- -------------------------------------------------------------
10,000 South African Breweries, $276,575
Cl. B
- -------------------------------------------------------------
TOTAL PREFERRED STOCKS (Cost $540,993) $637,351
=============================================================
TOTAL INVESTMENTS
(Cost $15,477,592) 97.03% $13,653,421
- -------------------------------------------------------------
Other Assets in Excess of Liabilities 2.97% 417,640
- -------------------------------------------------------------
NET ASSETS 100.00% $14,071,061
=============================================================
(a) Floating Rate Security
(b) Purchased at Deep Discount
(c) Securities exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At the period
end, the value of these securities amounted to $1,358,250 or 9.65% of net
assets.
(d) Debt obligation initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
See Notes to Financial Statements on Pages 18 and 19
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 16
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
Leadership Trust (the "Trust") is registered under the Investment Company Act of
1940 (the "Act"), as amended, as an open-end management investment company. The
Trust was organized on July 20, 1992, as a business trust under the laws of the
Commonwealth of Massachusetts. The Leadership Global High Yield Securities Fund
(the "Fund") is one of the funds offered to investors by the Trust. The Fund
commenced operations and began offering shares of beneficial interest on January
23, 1995. The Fund invests substantially all of its assets in the Global High
Yield Securities Portfolio (the "Portfolio"). The Portfolio is an open-end
management investment company registered under the Act. The Fund seeks to
achieve its investment objective by investing all of its investable assets in
the Portfolio. The value of such investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio. At March 31, 1995,
the Fund's investment was approximately less than 1.0% of the Portfolio.
The financial statements of the Portfolio, including the Schedule of Portfolio
Investments, are contained elsewhere in this report.
B. Investment Income
The Fund earns income, net of expenses, daily on its investment in the
Portfolio. All of the net investment income and realized and unrealized gains
and losses from the security and foreign currency transactions of the Portfolio
are allocated pro rata among the investors in the Portfolio at the time of such
determination.
C. Dividends
It is the Fund's policy to declare and distribute dividends quarterly to
shareholders from net investment income. Dividends payable to shareholders are
recorded by the Fund on the ex-dividend date, which is the same as the
declaration date. Distributions of net realized short-term and long-term capital
gains, if any, earned by the Fund will be made annually to the extent they are
not offset by any capital loss carryforwards.
The Fund may periodically make reclassifications among certain of its capital
accounts as a result of the timing and characterization of certain income and
capital gains distributions determined annually in accordance with federal tax
regulations which may differ from generally accepted accounting principles.
D. Federal Income Taxes
It is the Fund's policy to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to shareholders. Therefore, no federal income tax provision is
required.
E. Other
The Trust accounts separately for the assets, liabilities, and operations of the
Fund. Expenses directly attributable to the Fund are charged to the Fund, while
expenses which are attributable to all of the Trust's funds are allocated among
them.
<PAGE>
LEADERSHIP GLOBAL HIGH YIELD SECURITIES FUND 17
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Fund has entered into an Administration and Services Agreement with MDS
Securities Incorporated ("MDS"). Under this Administration and Services
Agreement, MDS provides administrative, custody, transfer agency and shareholder
services to the Fund in return for a fee computed daily and paid monthly at an
annual rate of 0.85 of 1% of the Fund's average daily net assets. For the period
January 23, 1995 to March 31, 1995, this fee aggregated $4.
The Trust has entered into a Distribution Agreement with MDS. Under the
Distribution Agreement with the Trust pursuant to Rule 12b-1 of the 1940 Act,
MDS may seek reimbursement, at an annual rate not exceeding 0.50 of 1% of the
Fund's average daily net assets for expenses incurred in connection with any
activities primarily intended to result in the sale of the Fund's shares. For
the period January 23, 1995 to March 31, 1995, this fee aggregated to $2.
MDS has voluntarily undertaken to waive and reimburse expenses of the Fund, to
the extent necessary, to limit all expenses to 1.50 of 1% of the average daily
net assets of the Fund, excluding expenses of the Portfolio and 2.25 of 1% of
the average daily net assets of the Fund, including expenses of the Portfolio.
For the period January 23, 1995 to March 31, 1995, expenses of the Fund have
been reduced $3,419
The Fund is subject to such limitations as may from time to time be imposed by
the Blue Sky laws of states in which the Fund sells its shares. Currently, the
most restrictive jurisdiction imposes expense limitations of 2.5% of the first
$30,000,000 of the average daily net assets, 2.0% of the next $70,000,000, and
1.5% of any excess over $100,000,000.
Certain trustees and officers of the Fund are also directors, officers and/or
employees of MDS. None of the trustees so affiliated received compensation for
services as trustee of the Fund. Similarly, none of the Fund's officers received
compensation from the Fund.
NOTE 3 - SHARES OF BENEFICIAL INTEREST
At March 31, 1995, there were an unlimited number of shares of beneficial
interest authorized. Transactions in shares of beneficial interest were as
follows:
For the period
January 23, 1995
(Commencement of
Operations) to
March 31, 1995
(unaudited)
---------------------
Shares Amount
Sold 239 $2,391
--- ------
Net Increase 239 $2,391
=== ======
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 18
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NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
A. Organization
The Global High Yield Securities Portfolio (the "Portfolio") is registered under
the Investment Company Act of 1940 (the "Act"), as amended, as an open-end
management investment company. The Portfolio was organized on August 6, 1993, as
an unincorporated trust under the laws of New York and commenced operations on
December 14, 1993. The Declaration of Trust permits the Board of Trustees (the
"Trustees") to issue beneficial interests in the Portfolio.
B. Security Valuation
The Portfolio's investments are valued each business day by an independent
pricing service (the "Service") approved by the Trustees. Investments for which
quoted bid prices in the judgment of the Service are readily available and are
representative of the bid side of the market are valued at the mean between the
quoted bid prices ( as obtained by the Service from dealers in such securities)
and asked prices (as calculated by the Service based upon its evaluation of the
market for such securities). Other investments (which constitute a majority of
the portfolio securities) are carried at fair value as determined by the
Service, based on methods which include consideration of: yields or prices of
securities of comparable quality, coupon, maturity and type; indications as to
values from dealers; and general market conditions. Securities traded primarily
on a principal securities exchange (domestic or foreign) are valued at their
last reported sale price on that exchange. If no sale is reported, or if local
custom or regulation so provides, the mean of the latest bid and asked price is
used. Securities traded over-the-counter are valued using either the mean
between the bid and asked price or, where local custom or regulations so
provide, the last sales price. Short-term obligations with remaining maturities
of 60 days or less are valued at amortized cost which with accrued interest
approximates value. Securities for which quotations are not available are stated
at fair value as determined by the Trustees.
C. Foreign Currency Transactions
The books and records of the Portfolio are maintained in U.S. dollars. All
assets and liabilities initially expressed in foreign currencies are converted
into U.S. dollars at prevailing exchange rates. Purchases and sales of
investment securities and interest income, and certain expenses are translated
at the rates of exchange prevailing on the respective dates of such
transactions.
D. Forward Foreign Currency Contracts
The Portfolio may enter into forward foreign currency contracts for the purpose
of settling specific purchases or sales of securities denominated in a foreign
currency or with respect to the Portfolio's investments generally. The net U.S.
dollar value of foreign currency underlying all contractual commitments held by
the Portfolio and the resulting unrealized appreciation or depreciation are
determined using prevailing exchange rates. With respect to forward foreign
currency contracts, losses in excess of amounts recognized in the Statement of
Assets and Liabilities may arise due to changes in the value of the foreign
currency or if the counterparty does not perform under the contract.
E. Security Transactions and Interest Income
Security transactions are accounted for on a trade date basis (date the order to
buy or sell is executed). Interest income is recorded on the accrual basis and
includes amortization of premium and discount on investments. Realized gains and
losses from securities transactions are recorded on the identified cost basis.
All of the net investment income and realized and unrealized gains and losses
from the securities and foreign currency transactions of the Portfolio are
allocated pro rata among the investors in the Portfolio at the time of such
determination.
<PAGE>
GLOBAL HIGH YIELD SECURITIES PORTFOLIO 19
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (unaudited)
- --------------------------------------------------------------------------------
F. Organizational Expenses
Costs incurred by the Portfolio in connection with its organization and initial
registration are being amortized over a five year period on a straight-line
basis.
G. Federal Income Taxes
It is the Portfolio's policy to comply with the requirements of the Internal
Revenue Code applicable to it. Therefore, no federal income tax provision is
NOTE 2 - FEES AND TRANSACTIONS WITH AFFILIATES
The Portfolio has entered into an Administration and Services Agreement with
Bankers Trust Company ("Bankers Trust"). Under this Administration and Services
Agreement, Bankers Trust provides administrative, custody, transfer agency and
shareholder services to the Portfolio in return for a fee computed daily and
paid monthly at an annual rate of 0.20 of 1% of the Portfolio's average daily
net assets. For the six months ended March 31, 1995, this fee aggregated
$14,842.
The Portfolio has entered into an Advisory Agreement with Bankers Trust. Under
this Advisory Agreement, Bankers Trust manages the Portfolio in accordance with
the Portfolio's investment objective and stated investment policies in return
for a fee computed daily and paid monthly at an annual rate of 0.80 of 1% of the
Portfolio's average daily net assets. For the six months ended March 31, 1995,
this fee aggregated $59,368.
Bankers Trust has voluntarily undertaken to waive and reimburse expenses of the
Portfolio, to the extent necessary, to limit all expenses to 0.75 of 1% of the
average daily net assets of the Portfolio. For the six months ended March 31,
1995, expenses of the Portfolio have been reduced $33,351.
Certain trustees and officers of the Portfolio are also directors, officers
and/or employees of Signature Broker Dealer Services Inc. None of the trustees
so affiliated received compensation for services as trustee of the Portfolio.
Similarly, none of the Portfolio's officers received compensation from the
Portfolio.
NOTE 3 - PURCHASES AND SALES OF INVESTMENT SECURITIES
The aggregate cost of purchases and proceeds from sales of investments, other
than short-term obligations, for the six months ended March 31, 1995, were
$10,670,086 and $9,015,105, respectively. The aggregate gross unrealized
appreciation for all investments was $319,657 and the aggregate gross unrealized
depreciation for all investments was $2,143,828.
NOTE 4 - CREDIT RISKS
Although the Portfolio's investments are diversified, the Portfolio invests in
primarily high yield, non-investement grade debt securities issued in many of
the world's securities markets. Investments in higher yielding securities are
accompanied by a greater degree of credit risk and the risk tends to be more
sensitive to economic conditions than higher rated securities. The risk of loss
due to default by the issuer may be significantly greater for the holders of
high yielding securities because such securities are generally unsecured and are
often subordinated to other creditors of the issuer.
