- --------------------------------------------------------------------------------
[PHOTO]
Dexter A. Dodge
Chairman
[LOGO] TO OUR SHAREHOLDERS
At the end of 1995, prospects were bright for the fixed income markets. The
Federal Reserve had just lowered the Federal funds rate (the overnight borrowing
rate charged by U.S. banks) to 5.50% and was widely expected to continue to
lower rates. The economy, beset by government shutdowns and severe winter
weather, was growing very slowly with no signs of any increase in inflation on
the horizon. Indeed, in January, the Federal Reserve fulfilled the expectations
of many by lowering the Federal Funds rate to 5.25%, where it still remains at
the end of June.
However, the benign outlook for yields has changed. Economic growth which has
been faster than expected has led market participants to expect no further
easing from the Federal Reserve. In fact, many, including the Freedom Group of
Money Funds, expect the next move by the Federal Reserve to be to increase rates
sometime in the third quarter of this year. As you will see in the individual
Fund summaries listed below, this has led us to shorten the average maturity of
the Freedom Group of Money Funds in anticipation of somewhat higher short-term
rates later in the year.
In one respect, however, the first half of 1996 has been quite similar to 1995.
In 1995 long-term yields showed a great deal of change while short-term yields
were stable. 1996 has seen the same thing occur. At the beginning of the year
the yield on a 91 day Treasury Bill stood at 5.07%. As of the end of June the
yield was higher, but not a great deal so at 5.19%. Long-term yields during the
same period have gone from 5.95% to 6.91%, and intermediate-term yields have
gone from 5.37% to 6.50%.
As we look to the second half of 1996 we anticipate that short-term yields will
begin to rise as the Federal Reserve needs to reassert its credentials as an
institution interested in price stability. Whereas at the end of last year we
were concerned that the markets had become too optimistic regarding the
direction of Federal Reserve policy, we now believe it likely that once the
Federal Reserve does begin to raise rates the markets could well become too
pessimistic and will be looking for opportunities to lock in higher rates once
they occur. As always we will continue to maintain the highest quality
investments in the Freedom Group of Money Funds.
/s/Dexter A. Dodge
Dexter A. Dodge
Chairman
- --------------------------------------------------------------------------------
[PHOTO] [PHOTO] [PHOTO] [PHOTO]
Michael M. Spencer Sarah Scranton Mary Jeanne Currie Paul Marandett
Director of Fixed Portfolio Manager Portfolio Manager Portfolio Manager
Income Investments Cash Management Government Tax Exempt Money
Fund Securities Fund Fund
FINANCIAL REVIEW
CASH MANAGEMENT FUND
We began the year with an optimistic view on interest rates. The economy was
slowing, inflation was benign, and the last move by the Federal Reserve was an
ease, or lowering of rates. Based on this outlook, our strategy in the Freedom
Cash Management Fund was to maintain a relatively long average maturity.
However, as discussed above, by spring we became more cautious as it appeared
that the economy was picking up speed. With mounting evidence of a revival in
economic activity, continued easing by the Federal Reserve seemed unlikely, and
in fact an increase in the Federal Funds rates seemed possible. Correspondingly,
we steadily shortened maturities as the year progressed. As of the end of June,
the average maturity of the Fund is relatively short, positioning us well for
what we see as an imminent rate hike by the Federal Reserve.
As always, the primary objective of our money funds is the preservation of
capital. All of our investments carry the highest rating assigned to short-term
instruments and we constantly monitor and evaluate the creditworthiness of our
holdings to ensure that our very conservative investment policy is maintained.
This conservative investment approach is also reflected in the fact that both
the Freedom Cash Management Fund and the Freedom Tax Exempt Money Fund are rated
"AAA" by Standard & Poor's.
FREEDOM GOVERNMENT SECURITIES FUND
The Freedom Government Securities began the year with an average maturity that
mirrored that of the industry. Soon, though, we began to see signs that there
was more strength in the economy than had been predicted (an increase in
payrolls, housing starts and sales) and that the Federal Reserve may have to
reverse their current policy. This led us to shorten the maturity of the Fund in
order to have more money available as rates started to rise. As mentioned above,
rates did begin to rise although the impact on short-term rates was not as
dramatic as the rise in the longer end. Part of this is attributable to the fact
that when investors anticipate a rise in rates, they tend to buy shorter term
securities. As a result, yields in that area are not subject to the same
pressures that are apparent in the long end. This strategy will continue until
we begin to see concrete reasons for a slowing economy. At that time, we will
start to buy longer dated securities
- --------------------------------------------------------------------------------
in order to capture higher yields for a greater period of time.
All of the investments in the Government Securities Fund are either in U.S.
Treasury bills or Treasury notes or Government Agency securities giving our
shareholders the additional advantage of tax exemption from income earned from
the Fund at the state level.
FREEDOM TAX EXEMPT MONEY FUND
Tax exempt money fund yields were relatively high as we began 1996. The yield on
the Freedom Tax Exempt Money Fund stood at 3.83% which was approximately 75% of
taxable yields. Yield levels at that time, however, were more a result of
year-end portfolio repositioning than economic conditions. Indeed, the economy
at year-end seemed to be slowing thus causing the Federal Reserve to lower the
Federal Funds rate at the end of January. This action caused a sharp decline in
money fund rates, almost 100 basis points in the tax exempt sector.
Yields in this sector were somewhat more volatile during the first half of the
year due to seasonal supply pressures as well as the many economic uncertainties
effecting the securities markets. Proposed changes to our tax system, which
greatly effected the municipal securities markets last year, have not been a
topic so far this year. That could change as we near election time but it seems
unlikely that any radical changes to the tax codes will be offered by either
political party. At this time we are primarily concerned with supply constraints
and the overall strength of the economy as factors most effecting the tax exempt
sector.
Lack of supply in the short-term municipal market has resulted in comparatively
low yields; 3-month, 6-month and one year tax exempt yields are all
approximately 66.3% of taxable yields. At the same time, however, we anticipate
the Federal Reserve Board's next move will be to tighten, or raise short-term
interest rates, in reaction to the recently displayed economic growth. Because
of these uncertainties and the expected volatility in the tax exempt sector we
will continue to maintain a shorter than average maturity in the Freedom Tax
Exempt Money Fund. We expect to increase the Fund's maturity later in the year
after interest rates have increased. We will also continue our analytical
efforts to maintain the highest credit quality of the Freedom Tax Exempt Money
Fund.
/s/ Michael M. Spencer
Michael M. Spencer
Director of Fixed Income
Investments
/s/ Sarah Scranton
Sarah Scranton
Portfolio Manager
/s/ Mary Jeanne Currie
Mary Jeanne Currie
Portfolio Manager
/s/ Paul Marandett
Paul Marandett
Portfolio Manager
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
COMMERCIAL PAPER -- 84.5%
AMERICAN EXPRESS CREDIT CORP.
$10,000,000 5.280% 07/03/1996 $ 9,997,067
10,000,000 5.300% 07/09/1996 9,988,222
10,000,000 5.290% 07/18/1996 9,975,019
10,000,000 5.270% 08/22/1996 9,923,878
10,000,000 5.280% 08/30/1996 9,912,000
AMERICAN GENERAL FINANCE CORP.
10,000,000 5.300% 08/07/1996 9,945,528
10,000,000 5.270% 08/09/1996 9,942,908
10,000,000 5.270% 08/21/1996 9,925,342
10,000,000 5.360% 08/23/1996 9,921,089
10,000,000 5.360% 08/27/1996 9,915,133
AMERITECH CORP.
15,000,000 5.290% 07/12/1996 14,975,754
AT&T CORP.
15,000,000 5.290% 08/19/1996 14,891,996
ASSET SECURITIZATION COOPERATIVE CORP.
10,000,000 5.300% 07/17/1996 9,976,444
10,000,000 5.280% 07/18/1996 9,975,067
10,000,000 5.280% 07/24/1996 9,966,267
10,000,000 5.280% 07/26/1996 9,963,333
10,000,000 5.370% 08/26/1996 9,916,467
10,000,000 5.400% 09/26/1996 9,869,500
ASSOCIATES CORP. OF NORTH AMERICA
10,000,000 5.300% 07/16/1996 9,977,917
10,000,000 5.310% 07/31/1996 9,955,750
10,000,000 5.360% 08/16/1996 9,931,511
10,000,000 5.370% 08/21/1996 9,923,925
10,000,000 5.380% 08/29/1996 9,911,828
BANKAMERICA CORP.
10,000,000 5.400% 09/18/1996 9,881,500
BEAR STEARNS COMPANIES INC. (THE)
10,000,000 5.320% 07/09/1996 9,988,178
10,000,000 5.280% 07/25/1996 9,964,800
CAISSE D'AMORTISSEMENT DE LA DETTE SOCIALE
10,000,000 5.370% 08/19/1996 9,926,908
10,000,000 5.395% 09/19/1996 9,880,111
9,880,000
10,000,000 5.400% 09/19/1996
CANADIAN IMPERIAL HOLDINGS INC.
$10,000,000 5.300% 08/28/1996 $ 9,914,611
10,000,000 5.320% 08/29/1996 9,912,811
10,000,000 5.330% 09/03/1996 9,905,244
10,000,000 5.320% 09/04/1996 9,903,944
10,000,000 5.450% 09/09/1996 9,894,028
CARCO AUTO LOAN MASTER TRUST
50,000,000 5.525% 07/15/1996 50,000,000
CHEVRON U.K. INVESTMENT PLC
10,000,000 5.280% 07/10/1996 9,986,800
10,000,000 5.320% 07/30/1996 9,957,144
10,000,000 5.400% 09/17/1996 9,883,000
CIESCO LP
15,000,000 5.290% 08/02/1996 14,929,467
15,000,000 5.370% 08/22/1996 14,883,650
10,000,000 5.380% 08/23/1996 9,920,794
COMMERZBANK U.S. FINANCE INC.
10,000,000 5.260% 07/01/1996 10,000,000
10,000,000 5.280% 07/22/1996 9,969,200
10,000,000 5.410% 09/24/1996 9,872,264
COMMONWEALTH BANK OF AUSTRALIA
10,000,000 5.280% 08/13/1996 9,936,933
7,400,000 5.360% 08/20/1996 7,344,911
COOPERATIVE ASSOCIATION OF TRACTOR DEALERS INC.
20,000,000 5.300% 07/22/1996 19,938,167
10,000,000 5.400% 08/12/1996 9,937,000
5,000,000 5.300% 08/26/1996 4,958,778
6,000,000 5.400% 08/28/1996 5,947,800
CORPORATE ASSET FUNDING CO. INC.
10,000,000 5.270% 07/24/1996 9,966,331
10,000,000 5.320% 09/04/1996 9,903,944
DELUXE CORP.
10,000,000 5.380% 07/02/1996 9,998,506
DUPONT (E.I.) DE NEMOURS & CO.
6,000,000 5.370% 08/15/1996 5,959,725
FEDERAL NATIONAL MORTGAGE ASSOCIATION
15,000,000 5.270% 07/18/1996 14,962,671
4
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1996 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
COMMERCIAL PAPER -- (CONTINUED)
FORD CREDIT EUROPE PLC
$10,000,000 5.310% 07/02/1996 $ 9,998,525
9,000,000 5.310% 07/12/1996 8,985,398
10,000,000 5.290% 07/16/1996 9,977,958
10,000,000 5.300% 07/19/1996 9,973,500
10,000,000 5.375% 08/14/1996 9,934,306
10,000,000 5.390% 09/05/1996 9,901,183
GENERAL ELECTRIC CAPITAL CORP.
10,000,000 5.300% 08/05/1996 9,948,472
10,000,000 5.310% 08/06/1996 9,946,900
10,000,000 5.400% 09/23/1996 9,874,000
10,000,000 5.360% 10/02/1996 9,861,533
10,000,000 5.420% 10/08/1996 9,850,950
GLAXO WELLCOME PLC
10,000,000 5.290% 07/23/1996 9,967,672
9,000,000 5.270% 07/29/1996 8,963,110
9,900,000 5.280% 08/13/1996 9,837,564
10,000,000 5.310% 09/03/1996 9,905,600
GOLDEN PEANUT CO.
8,000,000 5.370% 09/09/1996 7,916,467
GOLDMAN SACHS & CO.
10,000,000 5.320% 07/12/1996 9,983,744
10,000,000 5.330% 09/13/1996 9,890,439
10,000,000 5.420% 10/04/1996 9,856,972
KNIGHT-RIDDER INC.
8,000,000 5.280% 07/17/1996 7,981,227
10,400,000 5.300% 07/31/1996 10,354,067
10,100,000 5.270% 08/09/1996 10,042,337
9,500,000 5.370% 08/30/1996 9,414,975
LILLY (ELI) & CO.
7,100,000 5.300% 07/19/1996 7,081,185
15,000,000 5.280% 08/15/1996 14,901,000
15,000,000 5.270% 09/18/1996 14,826,529
LUCENT TECHNOLOGIES INC.
$10,000,000 5.290% 07/15/1996 $ 9,979,428
10,000,000 5.260% 07/24/1996 9,966,394
4,000,000 5.360% 08/08/1996 3,977,369
MERRILL LYNCH & CO. INC.
10,000,000 5.330% 07/11/1996 9,985,194
10,000,000 5.330% 07/15/1996 9,979,272
10,000,000 5.290% 08/16/1996 9,958,856
10,000,000 5.290% 08/22/1996 9,916,242
METLIFE FUNDING INC.
10,000,000 5.300% 07/03/1996 9,997,056
15,000,000 5.370% 08/16/1996 14,897,075
10,000,000 5.270% 08/22/1996 9,923,878
MISSISSIPPI BUSINESS FINANCE CORP. TAXABLE
INDUSTRIAL DEVELOPMENT REVENUE BONDS
10,000,000 5.600% 07/03/1996 10,000,000
MONSANTO CO.
9,240,000 5.290% 07/02/1996 9,238,642
10,000,000 5.280% 08/12/1996 9,938,400
10,000,000 5.300% 08/15/1996 9,933,750
10,000,000 5.280% 09/11/1996 9,894,400
10,000,000 5.310% 09/12/1996 9,892,325
MORGAN (J.P.) & CO. INC.
8,100,000 5.260% 07/01/1996 8,100,000
10,000,000 5.500% 07/10/1996 9,986,250
10,000,000 5.410% 10/08/1996 9,851,225
NEW CENTER ASSET TRUST
10,000,000 5.300% 07/10/1996 9,986,750
10,000,000 5.300% 07/22/1996 9,969,083
10,000,000 5.380% 08/14/1996 9,934,244
10,000,000 5.290% 08/19/1996 9,927,997
NEW YORK (CITY OF) GENERAL OBLIGATION BONDS
18,000,000 5.560% 08/01/1996 18,000,000
14,000,000 5.530% 08/08/1996 14,000,000
5
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1996 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
COMMERICAL PAPER -- (CONTINUED)
PITNEY BOWES CREDIT CORP.
$ 7,600,000 5.370% 08/30/1996 $ 7,531,980
PRUDENTIAL FUNDING CORP.
10,000,000 5.280% 07/15/1996 9,979,467
10,000,000 5.280% 07/17/1996 9,976,533
10,000,000 5.400% 09/25/1996 9,871,000
10,000,000 5.360% 10/04/1996 9,858,556
SHEFFIELD RECEIVABLES CORP.
11,510,000 5.320% 07/10/1996 11,494,692
7,520,000 5.300% 07/11/1996 7,508,929
15,000,000 5.370% 07/19/1996 14,959,725
UBS FINANCE (DE) INC.
30,000,000 5.580% 07/01/1996 30,000,000
USAA CAPITAL CORP.
10,000,000 5.290% 07/11/1996 9,985,306
10,000,000 5.270% 07/16/1996 9,978,042
10,000,000 5.360% 08/28/1996 9,913,644
WALT DISNEY CO.
10,000,000 5.280% 07/10/1996 9,986,800
---------
TOTAL COMMERCIAL PAPER.................................. 1,273,445,282
-------------
CERTIFICATES OF DEPOSIT -- 9.2%
ABBEY NATIONAL PLC
40,000,000 5.345% 07/08/1996 40,000,189
BAYERISCHE LANDESBANK GZ
20,000,000 5.230% 07/25/1996 20,000,130
COMMERZBANK AG
15,000,000 5.370% 08/02/1996 15,000,131
15,000,000 5.410% 09/06/1996 15,000,551
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
$20,000,000 5.010% 08/20/1996 $ 20,000,271
NATIONAL WESTMINSTER BANK PLC
9,000,000 5.140% 08/01/1996 9,000,524
ROYAL BANK OF CANADA
20,000,000 5.330% 07/01/1996 20,000,000
-----------
TOTAL CERTIFICATES OF DEPOSIT .......................... 139,001,796
-----------
BANK NOTES -- 2.3%
MORGAN GUARANTY TRUST COMPANY OF NEW YORK
10,000,000 5.500% 01/08/1997 10,000,000
NBD BANK, NA
25,000,000 5.050% 08/01/1996 25,000,000
-----------
TOTAL BANK NOTES ....................................... 35,000,000
----------
DESCRIPTION
REPURCHASE AGREEMENTS -- 3.0%
44,434,000 Bankers Trust Co. 5.30% dated
6/28/96, due 7/01/96
(Collateralized by U.S.
Treasury Notes Valued at
$44,436,369. Repurchase
proceeds of 44,453,625 ....... 44,434,000
----------
TOTAL INVESTMENTS -- 99.0% ............................. 1,491,881,078(A)
Other Assets & Liabilities, Net -- 1.0% 14,813,836
----------
TOTAL NET ASSETS -- 100.0% ............................. $1,506,694,914
==============
</TABLE>
- -----------
(a) Cost for tax purposes is the same.
See Notes to Financial Statements.
6
FREEDOM GOVERNMENT SECURITIES FUND
INVESTMENTS AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
<S> <C> <C> <C>
U.S. GOVERNMENT ISSUES -- 99.9%
U.S TREASURY BILLS -- 99.9%
$15,700,000 4.985% 07/05/1996 $ 15,691,304
2,150,000 5.000% 07/05/1996 2,148,806
9,135,000 4.930% 07/11/1996 9,122,490
225,000 4.995% 07/11/1996 224,688
1,550,000 5.000% 07/11/1996 1,547,847
325,000 4.880% 07/18/1996 324,251
29,950,000 5.015% 07/25/1996 29,849,867
7,425,000 4.975% 08/01/1996 7,393,191
2,790,000 4.980% 08/01/1996 2,778,036
1,700,000 4.990% 08/01/1996 1,692,695
1,000,000 4.960% 08/08/1996 994,764
10,000,000 4.980% 08/08/1996 9,947,433
15,000,000 4.990% 08/08/1996 14,920,992
690,000 4.950% 08/15/1996 685,731
19,000,000 4.965% 08/15/1996 18,882,081
4,500,000 5.005% 08/15/1996 4,471,847
20,000,000 4.935% 08/22/1996 19,857,433
2,850,000 5.010% 08/22/1996 2,829,376
1,350,000 5.015% 08/22/1996 1,340,221
950,000 5.040% 08/22/1996 943,084
19,000,000 5.000% 09/05/1996 18,825,833
950,000 5.010% 09/05/1996 941,274
$ 2,150,000 5.020% 09/05/1996 $ 2,130,213
3,225,000 5.005% 09/12/1996 3,192,269
15,000,000 5.090% 09/12/1996 14,845,179
12,750,000 5.100% 09/12/1996 12,618,144
6,950,000 5.010% 09/19/1996 6,872,623
20,000,000 5.035% 09/19/1996 19,776,222
2,805,000 5.085% 09/19/1996 2,773,304
150,000 5.000% 09/26/1996 148,188
300,000 5.020% 09/26/1996 296,361
1,350,000 5.025% 09/26/1996 1,333,606
20,000,000 5.045% 09/26/1996 19,756,158
15,000,000 5.080% 10/03/1996 14,801,033
11,800,000 5.140% 10/03/1996 11,641,631
2,475,000 5.080% 10/10/1996 2,439,726
13,850,000 5.110% 10/10/1996 13,651,441
400,000 5.120% 10/10/1996 394,254
2,400,000 5.125% 10/10/1996 2,365,492
3,000,000 5.150% 10/10/1996 2,956,654
----------
TOTAL U.S. GOVERNMENT ISSUES -- 99.9% 297,405,742(a)
Other Assets & Liabilities, Net -- 0.1% 295,631
----------
TOTAL NET ASSETS -- 100.0% $297,701,373
============
</TABLE>
- -----------
(a) Cost for tax purposes is the same.
See Notes to Financial Statements.
7
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
<S> <C> <C>
MUNICIPAL BONDS -- 102.1%
ALABAMA -- 2.9%
$3,900,000 Alabama HFA (Heatherbrook) Series 0 (AmSouth
LOC) 3.30% 7-03-96 $ 3,900,000
4,200,000 Huntsville HCA Series 4B (MBIA/Amsouth LOC)
3.30% 7-05-96 4,200,000
---------
8,100,000
---------
ALASKA -- 0.9%
2,600,000 Anchorage TANS 4.25%
12-13-96 2,609,279
---------
ARIZONA -- 11.9%
Apache County IDA (Tucson Electric & Gas)
13,000,000 (Barclays Bank LOC) 3.40% 7-03-96 13,000,000
2,100,000 (Chemical Bank LOC) 3.40% 7-03-96 2,100,000
3,500,000 Maricopa County PCR (Arizona Public Services)
Series 85B (Bank of America LOC) 3.60% 7-01-96 3,500,000
4,700,000 Maricopa County IDA (Grand Canyon University)
(Banc One LOC) 3.40% 7-05-96 4,700,000
2,000,000 Maricopa County PCR (P.S. of New Mexico)
(Canadian Imperial Bank of Commerce LOC) 3.40%
7-03-96 2,000,000
Pima County IDA (Tucson Electric Power Co.)
3,000,000 (Barclays Bank LOC) 3.40% 7-03-96 3,000,000
5,600,000 (Societe Generale LOC) 3.40% 7-03-96 5,600,000
---------
33,900,000
---------
ARKANSAS -- 2.8%
7,800,000 Arkansas Development
Finance Authority
(Citibank LOC) 3.25% 7-05-96 7,800,000
---------
CALIFORNIA -- 5.0%
1,000,000 California PCR (San Diego Gas & Electric) 4.00%
9-01-96 1,000,000
$1,000,000 California School Cash
Reserve Program 4.75% 7-02-97 $ 1,008,640
Los Angeles Regional Airport Commission
2,400,000 (Societe Generale LOC) 3.65% 7-01-96 2,400,000
900,000 (Wachovia LOC) 3.65% 7-01-96 900,000
1,000,000 Riverside County TRANS 4.50% 6-30-97 1,005,750
3,000,000 San Bernadino County (Toronto Dominion/Helaba
LOC) 4.50% 6-30-97 3,018,000
4,000,000 Santa Cruz County TRANS 4.50% 7-11-96 4,000,522
1,000,000 Tahoe-Truckee Unified School District TRANS
4.70% 9-05-96 1,000,951
---------
14,333,863
---------
CONNECTICUT -- 0.7%
2,000,000 Connecticut (CURB) Series 93C (FGIC-SPI
Insured) 3.90% 7-01-96 2,000,000
---------
FLORIDA -- 5.8%
2,600,000 Florida HFA (Multi-Family) (Chemical Bank LOC)
3.50% 7-03-96 2,600,000
1,000,000 Florida HFA (S. Pointe) (Chemical Bank LOC)
3.50% 7-03-96 1,000,000
Pinellas County EFA (MBIA/Credit Suisse LOC)
2,300,000 3.60% 7-11-96 2,300,000
2,700,000 3.55% 7-29-96 2,700,000
2,000,000 3.55% 8-13-96 2,000,000
Putnam County PCR (Seminole Electric) (NRUCFC)
2,945,000 3.25% 9-15-96 2,945,000
1,000,000 3.50% 12-15-96 1,000,000
2,000,000 West Orange Memorial Hospital Tax District
(Rabobank LOC) 3.60% 7-09-96 2,000,000
---------
16,545,000
---------
8
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1996 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
GEORGIA -- 5.4%
$3,000,000 Burke County Development Authority PCR Bonds
(Oglethorpe Power Corp.) (Credit Suisse LOC)
3.65% 8-22-96 $ 3,000,000
2,000,000 Georgia Municipal Gas
Authority 3.65% 7-22-96 2,000,000
4,090,000 Fulton County TANS 3.30% 7-03-96 4,090,000
2,000,000 Municipal Electric Authority of Georgia Series
85C (Morgan Guaranty/Helaba/ Credit Suisse
LOC) 3.70% 7-16-96 2,000,000
4,200,000 Savannah Port Authority IDA (Pier 1 Imports)
(National Westminster LOC) 3.50% 7-03-96 4,200,000
---------
15,290,000
----------
IDAHO -- 1.1%
3,000,000 IDAHO TANS Series 96 4.50% 6-30-97 3,017,220
----------
ILLINOIS -- 8.2%
2,500,000 Chicago GO Tender Notes Series 95A (Morgan
Guaranty LOC) 3.65% 10-31-96 2,500,000
2,500,000 Chicago O'Hare International Airport
(American Airlines) (Royal Bank of Canada LOC)
3.70% 7-01-96 2,500,000
10,000,000 Chicago O'Hare International Airport Series
84B (Societe Generale LOC) 3.40% 7-03-96 10,000,000
4,300,000 Illinois Development Finance Authority
(Aurora Central Catholic H.S.) (Northern Trust
LOC) 3.40% 7-03-96 4,300,000
1,000,000 Illinois Development Finance Authority (Lake
Forest Academy) (Northern Trust LOC) 3.40%
7-03-96 1,000,000
2,000,000 Illinois S.D. (Winnebago & Boone Co.'s) (FSA-
Insured) 4.35% 10-30-96 2,007,798
1,000,000 Lisle HFA (Ashley of Lisle Project) (Credit
Suisse LOC) 3.30% 7-03-96 1,000,000
----------
23,307,798
----------
INDIANA -- 2.6%
1,000,000 Indiana Bond Bank Series 96A-1 4.25% 7-08-96 1,000,171
1,000,000 Indiana Bond Bank Series 96A-2 4.25% 1-09-97 1,003,812
1,365,000 Indiana HFA Series D (FGIC Insured) 3.90%
7-01-96 1,365,000
1,400,000 Indianapolis Local Public
Improvement Bond Bank 4.50% 7-11-96 1,400,300
1,500,000 Indianapolis MFHA (Canal Square) (Societe
Generale LOC) 3.40% 7-03-96 1,500,000
1,000,000 Whiting Economic Development Revenue (Amoco)
3.40% 8-15-96 1,000,000
----------
7,269,283
---------
IOWA -- 0.4%
1,100,000 Iowa School Corporation (FSA Insured) Series
95/96B 4.50% 1-30-97 1,105,272
----------
KANSAS -- 2.4%
2,300,000 Burlington PCR (Kansas City Power & Light)
(Toronto Dominion LOC) 3.65% 9-09-96 2,300,000
2,250,000 Burlington PCR (Kansas Electric) (NRUCFC)
Series 85C2 3.65% 7-30-96 2,250,000
2,400,000 Mission (Woodland Village Project) (Citibank
LOC) 3.35% 12-01-97 2,400,000
----------
6,950,000
---------
LOUISIANA -- 6.5%
3,500,000 Ascension Parish IDA (Borden Project) (Credit
Suisse LOC) 3.40% 7-03-96 3,500,000
2,000,000 Desoto Parish PCR (Louisiana Electric) (Swiss
Bank LOC) 3.25% 7-03-96 2,000,000
9
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1996 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
LOUISIANA -- (CONTINUED)
$ 400,000 East Baton Rouge IDA (Georgia Pacific)
(Toronto Dominion LOC) 3.25% 7-05-96 $ 400,000
1,200,000 Louisiana Offshore Terminal Authority (United
Bank of Switzerland LOC) 3.55% 7-01-96 1,200,000
1,800,000 Louisiana Recovery District (Swiss Bank LOC)
3.65% 7-01-98 1,800,000
2,000,000 Plaquemines Port Harbor & Terminal (Morgan
Guaranty LOC) 3.25% 3-17-97 2,000,000
Plaquemines Port Harbor & Terminal (Tampa
Electric Co. Finance Corp.)
5,700,000 3.35% 8-02-96 5,700,000
1,900,000 3.40% 8-07-96 1,900,000
----------
18,500,000
----------
MAINE -- 1.8%
3,000,000 Maine HEFA (State Street Bank LOC) 3.40%
7-03-96 3,000,000
2,000,000 Maine TANS 4.50% 6-27-97 2,011,860
----------
5,011,860
---------
MARYLAND -- 0.4%
1,100,000 Maryland HEFA (FNB- Chicago LOC) 3.35% 7-03-96 1,100,000
----------
MASSACHUSETTS -- 1.4%
2,300,000 Massachusetts Bay Transit Authority (State
Street Bank LOC) 3.05% 9-01-96 2,300,000
1,650,000 Massachusetts TANS 7.125% 10-01-96 1,697,168
----------
3,997,168
---------
MICHIGAN -- 3.2%
1,000,000 Ingham Economic Development Corp. (National
Australia Bank LOC) 3.40% 7-03-96 1,000,000
4,100,000 Michigan Strategic Fund (Dow Chemical) 3.60%
7-01-96 4,100,000
MICHIGAN -- (CONTINUED)
$4,000,000 Michigan USFA (Canadian Imperial Bank of
Commerce LOC) 3.45% 8-15-96 $4,000,000
---------
9,100,000
---------
MINNESOTA -- 1.2%
1,200,000 Duluth PCR (Lake Superior Paper Industries)
(National Australia Bank LOC) 3.50% 7-05-96 1,200,000
2,150,000 University of Minnesota 3.25% 8-01-96 2,150,000
---------
3,350,000
---------
MISSOURI -- 1.3%
3,800,000 Columbia (Insurance Reserve Bonds) (Toronto
Dominion LOC) 3.40% 7-03-96 3,800,000
---------
NEBRASKA -- 0.7%
2,000,000 Heartland Consumer Power District 7.625%
1-01-97 2,081,321
---------
NEVADA -- 1.8%
5,200,000 Clark County Airport Revenue Series 95A
(Toronto Dominion LOC) 3.30% 7-03-96 5,200,000
---------
NEW HAMPSHIRE -- 0.7%
2,100,000 New Hampshire Business Finance Authority (CT
Light & Power) Series 92A (Canadian Imperial
Bank of Commerce LOC) 3.30% 7-03-96 2,100,000
---------
NEW MEXICO -- 1.0%
1,200,000 Albuquerque Hospital Revenue Bonds (St. Joseph
Health Care) (Canadian Imperial Bank of
Commerce LOC) 3.40% 7-03-96 1,200,000
1,500,000 Farmington (Arizona Public Service) (Barclays
Bank LOC) 3.55% 7-01-96 1,500,000
---------
2,700,000
---------
10
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1996 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
NEW YORK -- 0.7%
$2,000,000 New York Energy Research & Development
Authority (Morgan Guaranty LOC) 3.30% 3-15-97 $ 2,000,000
NORTH CAROLINA -- 2.3%
3,000,000 North Carolina Educational Facilities (Bowman
Gray Medical School) (Wachovia Bank LOC) 3.25%
7-05-96 3,000,000
1,000,000 North Carolina Educational Facilities (Moses
Cone Hospital) (Wachovia Bank LOC) 3.25%
7-05-96 1,000,000
1,400,000 North Carolina Medical Care Facilities
Authority
(Nationsbank LOC) 3.60% 7-01-96 1,400,000
1,000,000 Raleigh-Durham Airport
Authority (Royal Bank of Canada LOC) 3.60%
7-01-96 1,000,000
---------
6,400,000
---------
OKLAHOMA -- 0.9%
2,500,000 Oklahoma City IDA (Credit Suisse LOC) 3.45%
7-02-96 2,500,000
---------
PENNSYLVANIA -- 0.4%
1,200,000 Beaver County IDA
(Duquesne Light) (Swiss Bank LOC) 3.45%
8-09-96 1,200,000
---------
RHODE ISLAND -- 0.4%
1,000,000 Rhode Island Port Authority (Newport Electric)
(Canadian Imperial Bank of Commerce LOC) 3.30%
7-03-96 1,000,000
SOUTH CAROLINA -- 1.5%
2,000,000 York County (North Carolina Electric) (NRUCFC)
3.25% 9-15-96 2,000,000
2,300,000 York County (Saluda River Project) (NRUCFC)
Series E1 3.10% 8-15-96 2,300,000
---------
4,300,000
---------
TENNESSEE -- 2.7%
$2,000,000 Franklin Industrial Development Board
(Landing Project) (Citibank LOC) 3.35% 7-02-96 $ 2,000,000
1,800,000 Industrial Development
Authority of Metropolitan Nashville-
Davidson- County (Credit Suisse LOC) 3.60%
7-15-96 1,800,000
1,400,000 Knox County IDA (Melrose Assoc.) (Credit
Suisse LOC) 3.60% 7-15-96 1,400,000
1,000,000 Metropolitan Government of Nashville &
Davidson County (Vanderbuilt
University) 3.50% 1-15-97 1,000,000
1,600,000 Metropolitan Nashville Airport Authority
Series A (Credit Suisse LOC) 3.65% 7-01-96 1,600,000
---------
7,800,000
---------
TEXAS -- 9.7%
2,650,000 Austin County IDA (Justin Industries Inc.)
(Citibank LOC) 3.40% 7-03-96 2,650,000
4,130,000 Brazos River Authority IDA (Monsanto Co.
Project) 3.30% 7-03-96 4,130,000
1,000,000 Harris County Health
System Authority (Sisters of Charity) (Credit
Suisse LOC) 3.45% 8-15-96 1,000,000
1,330,000 Hunt County IDA (Trico
Industries) (ABN Amro LOC) 3.60% 7-02-96 1,330,000
2,500,000 Lonestar Airport Improvement Authority (Royal
Bank of Canada LOC) 3.65% 7-01-96 2,500,000
3,000,000 Mansfield IDA (Pier 1 Imports) (National
Westminster LOC) 3.50% 7-03-96 3,000,000
Texas Public Finance Authority Series 93A
2,000,000 3.20% 7-18-96 2,000,000
1,000,000 3.20% 7-25-96 1,000,000
1,000,000 3.30% 7-25-96 1,000,000
2,000,000 3.30% 8-01-96 2,000,000
11
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1996 -- (CONTINUED)
(UNAUDITED)
PRINCIPAL
AMOUNT DESCRIPTION VALUE
TEXAS -- (CONTINUED)
Texas TRANS
$2,000,000 Series 95B 3.65% 8-20-96 $ 2,000,000
3,000,000 4.75% 8-30-96 3,004,865
2,000,000 Texas State Veteran's
Housing Assistance
3.30% 7-03-96 2,000,000
----------
27,614,865
----------
UTAH -- 4.1%
Intermountain Power Agency
3,000,000 3.35% 9-16-96 3,000,000
1,000,000 3.93% 6-16-97 1,000,000
7,700,000 State Board of Regents Student Loan Revenue
Series 88B (AMBAC/Swiss Bank Insured) 3.30%
7-03-96 7,700,000
----------
11,700,000
----------
VIRGINIA -- 3.0%
2,900,000 Hampton Roads Regional Jail Authority
(Wachovia Bank LOC) 3.50% 7-03-96 2,900,000
2,000,000 Harrisonburg Virginia Redevelopment and
Housing Revenue Bonds (Misty Ridge Project)
(BankOne LOC) 3.35% 7-05-96 2,000,000
3,500,000 Peninsula Port Authority Revenue Bonds (Shell)
3.55% 7-01-96 3,500,000
----------
8,400,000
---------
WASHINGTON -- 0.7%
2,000,000 Seattle Water System Revenue Bonds (Helaba
LOC) 3.40% 7-03-96 2,000,000
----------
WISCONSIN -- 2.6%
4,000,000 Alma PCR (DairyLand Power Coop.) (Rabobank
LOC) 3.75% 7-01-96 4,000,000
2,000,000 Milwaukee RANS 3.50% 2-27-97 2,003,531
1,500,000 Milwaukee School Order Revenue Bonds 4.75%
8-22-96 1,501,817
----------
7,505,348
---------
WYOMING -- 3.0%
$1,700,000 Platte County PCR Series 84A (Societe Generale
LOC) 3.70% 7-01-96 $ 1,700,000
4,800,000 Sweetwater PCR VRDN (Pacificorp) (Credit
Suisse LOC) 3.30% 7-03-96 4,800,000
2,000,000 Uinta County PCR (Chevron Project) 3.50%
7-01-96 2,000,000
----------
8,500,000
----------
TOTAL INVESTMENTS -- 102.1%............................... 290,088,277(A)
Other Assets & Liabilities, Net -- (2.1)%................. (6,027,176)
----------
TOTAL NET ASSETS -- 100.0%................................ 284,061,101
===========
</TABLE>
Legend:
CURB--Connecticut Unemployment Reserve Bonds
EFA--Education Facilities Authority
HCA--Health Care Authority
HEFA--Health Education Finance Authority
HFA--Housing Finance Authority
IDA--Industrial Development Authority
LOC--Letter of Credit
MFHA--Multi-Family Housing Authority
NRUCFC--National Rural Utilities Cooperative
Finance Corp.
PCR--Pollution Control Revenue
RANS--Revenue Anticipation Notes
TANS--Tax Anticipation Notes
TRANS--Tax & Revenue Anticipation Notes
VRDN--Variable Rate Demand Note
Insurance Abbreviations:
FGIC--Federal Guaranty Insurance Corporation
FGIC--SPI--Federal Guaranty Insurance Corporation--
Securities Purchased Inc.
FSA--Financial Security Assurance
MBIA--Municipal Bond Investors Assurance
Maturity dates for many bonds and notes represent the next scheduled date
at which the interest rate may be adjusted or a "demand" or "put" feature
may be exercised.
- ----------
(a) Cost for tax purposes is the same.
See Notes to Financial Statements.
12
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
<S> <C> <C> <C>
ASSETS
Investments, at amortized cost $1,491,881,078 $297,405,742 $290,088,277
Cash 1,556,734 -- 1,344,159
Receivable for Fund shares sold 13,255,618 1,984,351 1,553,565
Interest receivable 4,437,014 -- 1,678,345
Prepaid expenses 18,745 4,317 3,903
Other assets 65,870 38,830 21,495
------ ------ ------
1,511,215,059 299,433,240 294,689,744
------------- ----------- -----------
LIABILITIES
Payable for Investments purchased -- -- 10,061,470
Payable for Fund shares redeemed 396,746 949,649 64,648
Payable to State Street Bank -- 39,872 --
Dividends payable 2,908,843 554,852 331,453
Accrued expenses:
Investment adviser's fee 582,014 129,946 118,799
Shareholder servicing fee 559,385 54,315 46,881
Trustees' fee 18,008 3,233 5,329
Other 55,149 -- 63
------ --------- --
4,520,145 1,731,867 10,628,643
--------- --------- ----------
NET ASSETS $1,506,694,914 $297,701,373 $284,061,101
============== ============ ============
NET ASSETS CONSIST OF:
Capital paid in $1,506,842,279 $297,703,935 $284,053,341
Accumulated net realized gain
(loss) (147,365) (2,562) 7,760
-------- ------ -----
$1,506,694,914 $297,701,373 $284,061,101
============== ============ ============
SHARES ISSUED AND OUTSTANDING
(UNLIMITED SHARES AUTHORIZED) 1,506,842,279 297,703,935 284,053,341
------------- ----------- -----------
NET ASSET VALUE PER SHARE $ 1.00 $ 1.00 $ 1.00
============= =========== ============
</TABLE>
See Notes to Financial Statements
13
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
<S> <C> <C> <C>
INTEREST INCOME $38,964,668 $8,255,505 $ 4,975,045
----------- ---------- -----------
EXPENSES
Investment adviser's fee 3,341,519 802,813 720,372
Transfer agent & shareholder
services 1,323,595 122,365 103,145
Custodian 126,653 28,182 910
Compensation of Trustees 24,570 7,300 8,215
Audit 19,110 5,450 17,290
Legal 17,290 905 10,070
Printing, postage and stationery 91,000 10,010 8,220
Membership dues 35,412 8,143 7,373
Registration expense 37,765 18,230 20,955
Insurance expense 25,604 6,100 5,369
Other 3,639 910 371
----- --- ---
5,046,157 1,010,408 902,290
--------- --------- -------
INVESTMENT INCOME -- NET 33,918,511 7,245,097 4,072,755
---------- --------- ---------
REALIZED GAIN/(LOSS) ON INVESTMENTS
-- NET -- (8,847) --
---------- ------ ---------
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS $33,918,511 $7,236,250 $4,072,755
=========== ========== ==========
</TABLE>
See Notes to Financial Statements
14
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH MANAGEMENT FUND GOVERNMENT SECURITIES FUND TAX EXEMPT MONEY FUND
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED DECEMBER 31, ENDED DECEMBER 31, ENDED DECEMBER 31,
JUNE 30, 1996* 1995 JUNE 30, 1996* 1995 JUNE 30, 1996* 1995
<S> <C> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS FROM OPERATIONS:
Net investment income $ 33,918,511 $ 64,952,356 $ 7,245,097 $ 13,913,080 $ 4,072,755 $ 8,713,802
Net realized gain (loss)
from security transactions -- -- (8,847) 8,262 --
-------------- --------------- --------------- -------------- --------------- -------------
Net increase resulting
from operations 33,918,511 64,952,356 7,236,250 13,921,342 4,072,755 8,713,802
Dividends to shareholders (33,918,511) (64,952,356) (7,245,097) (13,913,080) (4,072,755) (8,713,802)
-------------- --------------- --------------- -------------- --------------- -------------
-- -- (8,847) 8,262 -- --
-------------- --------------- --------------- -------------- --------------- -------------
FROM CAPITAL TRANSACTIONS:
(At Net Asset Value of
$1 per share)
Proceeds from sale of shares 2,678,901,676 4,507,108,299 545,532,973 1,187,233,854 555,187,539 1,033,773,788
Net asset value of shares
issued to shareholders in
reinvestment of dividends 30,440,637 62,392,885 6,481,016 13,179,702 3,498,081 8,090,985
Cost of shares redeemed (2,549,272,229) (4,306,537,450) (571,704,031) (1,151,455,435) (548,700,971) (1,015,833,634)
-------------- --------------- --------------- -------------- --------------- -------------
Increase (decrease) in
net assets derived
from capital share
transactions 160,070,084 262,963,734 (19,690,042) 48,958,121 9,984,649 26,031,139
Net increase (decrease)
in net assets 160,070,084 262,963,734 (19,698,889) 48,966,383 9,984,649 26,031,139
NET ASSETS:
Beginning of year 1,346,624,830 1,083,661,096 317,400,262 268,433,879 274,076,452 248,045,313
-------------- --------------- --------------- -------------- --------------- -------------
End of year $ 1,506,694,914 $ 1,346,624,830 $ 297,701,373 $ 317,400,262 $ 284,061,101 $ 274,076,452
=============== =============== =============== =============== ============== ===============
DIVIDENDS TO SHAREHOLDERS
PER SHARE $ 0.0236 $ 0.0526 $ 0.0224 $ 0.0500 $ 0.0141 $ 0.0319
=============== =============== =============== =============== ============== ===============
</TABLE>
- -------------
* Unaudited
See Notes to Financial Statements
15
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT MONEY FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES. The Freedom Mutual Fund and the Freedom Group
of Tax Exempt Funds (the Trusts ) are Massachusetts business trusts registered
under the Investment Company Act of 1940, as amended, as open-end management
companies. The Agreements and Declarations of Trust permit the issuance of an
unlimited number of shares of beneficial interest in separate series, with
shares of each series representing interests in a separate portfolio of assets
and operating as a separate distinct fund (a Fund ). The Freedom Mutual Fund
consists of the Freedom Cash Management Fund and the Freedom Government
Securities Fund. The Freedom Group of Tax Exempt Funds consists of the Freedom
Tax Exempt Money Fund and the Freedom California Tax Exempt Money Fund. The
financial statements of the Freedom California Tax Exempt Money Fund are
included in a separate semi-annual report for that Fund.
The following is a summary of significant accounting policies followed by
the Trusts in the preparation of their financial statements. The policies are in
conformity with generally accepted accounting principles. The preparation of
financial statements in accordance with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts and disclosures in the financial statements. Actual results could differ
from those estimates.
Security Valuation and Transactions. Each Trust values its portfolio
securities utilizing the amortized cost valuation method. This method involves
valuing a portfolio security at its cost and thereafter assuming a constant
amortization to maturity of any discount or premium. Cost is determined and
gains and losses are based upon the specific identification method for both
financial statement and federal income tax purposes. Investment securities
transactions are accounted for on the date the securities are purchased or sold.
Expenses. The majority of the expenses of each Trust are directly
identifiable to an individual Fund. Expenses which are not readily identifiable
as belonging to a specific Fund are allocated in such manner as deemed equitable
by the Trustees, taking into consideration, among other things, the nature and
type of expense and the relative sizes of the Funds.
Trustees' fees of $6,000 per Trust, per year, plus $250 per meeting of the
Board of Trustees and $350 per meeting of any committee thereof, are paid to
each Trustee who is not an interested person of the Trusts. No remuneration is
paid by either Trust to any Trustee or officer of that Trust who is affiliated
with Freedom Capital Management Corporation, the Trusts' adviser.
The Trusts have entered into an insurance agreement with ICI Mutual
Insurance Company, under which each Trust pays both an annual insurance premium
and a one-time reserve premium, and is committed to provide additional funds of
up to 300% of its initial annual premium if and when called upon.
Federal Income Tax. It is each Fund's policy to comply with the provisions
of the Internal Revenue Code applicable to regulated investment companies and to
distribute all of its income to its shareholders. It is also the intention of
the Funds to make sufficient distributions to shareholders to avoid imposition
of excise tax on undistributed amounts under the Internal Revenue Code.
Therefore, no federal income or excise tax provision is required.
16
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT MONEY FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
Interest Income and Dividends to Shareholders. Interest income is accrued as
earned. Dividends to shareholders are declared daily from net investment income,
which consists of interest accrued or discount earned (including original issue
and market discount) less amortization of premium and the estimated expenses of
the Fund applicable to the dividend period.
Other. Investment security transactions are accounted for on the date the
securities are purchased or sold. The custodian takes possession through the
federal book-entry system of securities collateralizing repurchase agreements.
Collateral is marked-to-market daily to ensure that the market value of the
underlying assets remains sufficient to protect the Funds in the event of
default by the seller. In connection with transactions in repurchase agreements,
if the seller defaults and the collateral declines, or if the seller enters an
insolvency proceeding, realization of the collateral by the Fund may be limited
or delayed.
The Funds may purchase or sell securities on a when-issued basis. Payment
and delivery may take place more than a week after the date of the transaction.
The price that will be paid for the underlying securities is fixed at the time
the transaction is negotiated.
NOTE 2. INVESTMENT ADVISOR AND OTHER RELATED PARTY TRANSACTIONS. Freedom
Capital Management Corporation ( FCMC ) is the investment advisor of the Funds
and also furnishes the Funds with administration and other services and office
facilities in Boston. For these services and facilities, each Fund pays a
monthly fee, computed separately for each Fund, based upon the average daily net
asset value of each Fund, at the annual rate of one half of one percent (.50%)
on the first $500 million of average daily net assets and forty-five hundreths
of one percent (.45%) for average daily net assets in excess of that amount. The
Funds themselves pay no salaries or compensation to any of their officers.
The Funds' Advisory Agreements provide that if, in any fiscal year, the
total expenses of any Fund (excluding taxes, interest, brokerage commissions and
extraordinary items, but including the management fee) exceed the expense
limitations applicable to that Fund imposed by the securities regulations of any
state in which it is registered to sell shares, FCMC will pay or reimburse that
Fund for that excess up to the amount of its management fee during that fiscal
year. Although there is no certainty that these limitations will be in effect in
the future, the most restrictive limitation on an annual basis currently
applicable to the Funds is 2.5% of the first $30 million of average daily net
assets, 2.0% of the next $70 million and 1.5% of average daily net assets over
$100 million.
Tucker Anthony Incorporated ( Tucker Anthony ) and Freedom Distributors
Corporation act as distributors of the Trusts' shares and receive no
compensation for such services. John Hancock Clearing Corporation, an affiliate
of Tucker Anthony, received reimbursements from the Funds for maintaining and
servicing certain shareholder accounts for the six months ended June 30, 1996 as
follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
<S> <C> <C>
$617,435 $57,785 $45,915
======== ======= =======
</TABLE>
17
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT MONEY FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
John Hancock Investor Services, Corporation ( JHIS ), a wholly-owned
subsidiary of the Berkeley Financial Group, an affiliate of FCMC, is transfer
agent for the Funds. JHIS received the following from the Funds for the six
months ended June 30, 1996:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
<S> <C> <C>
$706,160 $64,580 $57,230
======== ======= =======
</TABLE>
NOTE 3. Purchases and sales (including maturities) of investments (excluding
repurchase agreements) for the six months ended June 30, 1996 were as follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
<S> <C> <C> <C>
Purchases
U.S. Government $ 163,929,625 $664,492,796 --
Other $3,196,919,578 -- $450,933,865
Sales
U.S. Government $ 192,000,000 $690,753,251 --
Other $2,991,365,000 -- $428,815,000
</TABLE>
18
FREEDOM GROUP OF MONEY FUNDS
SELECTED PER SHARE DATA AND RATIOS
Selected data for each share of beneficial interest outstanding
throughout each period is as follows:
<TABLE>
<CAPTION>
RATIO OF NET
NET ASSET DIVIDENDS RATIO OF INVESTMENT
VALUE FROM NET ASSET NET ASSETS EXPENSES INCOME
BEGINNING NET NET VALUE END TO AVERAGE TO AVERAGE
OF INVESTMENT INVESTMENT END OF TOTAL OF PERIOD DAILY DAILY
PERIOD ENDED PERIOD INCOME INCOME PERIOD RETURN (THOUSANDS) NET ASSETS NET ASSETS
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CASH MANAGEMENT FUND
June 30, 1996++ $1.00 $0.0236 $(0.0236) $1.00 2.38% $1,506,695 0.71%+ 4.74%+
December 31, 1995 1.00 0.0526 (0.0526) 1.00 5.38% 1,346,625 0.73% 5.26%
December 31, 1994 1.00 0.0353 (0.0353) 1.00 3.59% 1,083,661 0.75% 3.54%
December 31, 1993 1.00 0.0247 (0.0247) 1.00 2.50% 1,138,578 0.75% 2.47%
December 31, 1992 1.00 0.0309 (0.0309) 1.00 3.13% 1,069,472 0.78% 3.09%
December 31, 1991 1.00 0.0546 (0.0546) 1.00 5.60% 1,183,684 0.77% 5.46%
December 31, 1990 1.00 0.0753 (0.0753) 1.00 7.80% 1,103,050 0.78% 7.49%
December 31, 1989 1.00 0.0844 (0.0844) 1.00 8.78% 1,111,954 0.80% 8.45%
December 31, 1988 1.00 0.0679 (0.0679) 1.00 7.01% 800,970 0.85% 6.81%
December 31, 1987 1.00 0.0588 (0.0588) 1.00 6.04% 691,151 0.84% 5.88%
December 31, 1986 1.00 0.0602 (0.0602) 1.00 6.19% 700,841 0.85% 5.93%
GOVERNMENT SECURITIES FUND
June 30, 1996++ $1.00 $0.0224 $(0.0224) $1.00 2.26% $ 297,701 0.63%+ 4.51%+
December 31, 1995 1.00 0.0500 (0.0500) 1.00 5.10% 317,400 0.65% 5.00%
December 31, 1994 1.00 0.0331 (0.0331) 1.00 3.36% 268,434 0.65% 3.31%
December 31, 1993 1.00 0.0246 (0.0246) 1.00 2.49% 349,808 0.59% 2.47%
December 31, 1992 1.00 0.0315 (0.0315) 1.00 3.18% 336,804 0.60% 3.15%
December 31, 1991 1.00 0.0521 (0.0521) 1.00 5.34% 352,803 0.57% 5.30%
December 31, 1990 1.00 0.0743 (0.0743) 1.00 7.69% 266,179 0.66% 7.41%
December 31, 1989 1.00 0.0817 (0.0817) 1.00 8.48% 179,730 0.69% 8.21%
December 31, 1988 1.00 0.0647 (0.0647) 1.00 6.67% 169,967 0.71% 6.47%
December 31, 1987 1.00 0.0550 (0.0550) 1.00 5.64% 195,394 0.72% 5.53%
December 31, 1986 1.00 0.0587 (0.0587) 1.00 6.03% 208,498 0.70% 5.89%
TAX EXEMPT MONEY FUND
June 30, 1996++ $1.00 $0.0141 $(0.0141) $1.00 1.41% $ 284,061 0.63%+ 2.83%+
December 31, 1995 1.00 0.0319 (0.0319) 1.00 3.23% 274,076 0.64% 3.19%
December 31, 1994 1.00 0.0216 (0.0216) 1.00 2.19% 248,045 0.65% 2.16%
December 31, 1993 1.00 0.0171 (0.0171) 1.00 1.73% 270,474 0.63% 1.71%
December 31, 1992 1.00 0.0232 (0.0232) 1.00 2.35% 243,333 0.63% 2.32%
December 31, 1991 1.00 0.0389 (0.0389) 1.00 3.96% 252,393 0.61% 3.90%
December 31, 1990 1.00 0.0522 (0.0522) 1.00 5.35% 251,439 0.59% 5.20%
December 31, 1989 1.00 0.0555 (0.0555) 1.00 5.69% 229,859 0.60% 5.58%
December 31, 1988 1.00 0.0459 (0.0459) 1.00 4.69% 205,166 0.57%(a) 4.57%(a)
December 31, 1987 1.00 0.0398 (0.0398) 1.00 4.05% 222,820 0.53%(a) 3.98%(a)
December 31, 1986 1.00 0.0434 (0.0434) 1.00 4.43% 230,799 0.49%(a) 4.31%(a)
- ------------
+ Annualized.
++ Unaudited.
(a) Net of fees waived by the Adviser which amounted to $0.0008, $0.0016,
and $0.0019 per share in the years 1988, 1987, and 1986, respectively.
</TABLE>
19
NO SALES OR REDEMPTION CHARGES
DISTRIBUTORS
Freedom Distributors Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
Telephone Toll Free
800-453-8206
INVESTMENT ADVISER
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
TRANSFER AND SHAREHOLDER
SERVICES AGENT
John Hancock Investor
Services Corporation
P.O. Box 9102
Boston, Massachusetts 02205-9102
Telephone Toll Free
800-257-3336
[LOGO]FREEDOM
GROUP OF MONEY FUNDS
No person has been authorized to give any information or to make any
representations not contained in this Prospectus in connection with the
offering made by this Prospectus and, if given or made, such information,
or representations must not be relied upon as having been authorized by
the Funds or their Distributors. This Prospectus does not constitute an
offering by the Funds or by the Distributors in any jurisdiction in which
such offering may not lawfully be made.
F01ARD 0696
FREEDOM GROUP OF MONEY FUNDS
FREEDOM CASH MANAGEMENT
FUND
*
FREEDOM
GOVERNMENT
SECURITIES FUND
*
FREEDOM
TAX EXEMPT
MONEY FUND
SEMI-ANNUAL REPORT
JUNE 30, 1996
