================================================================================
[PHOTO]
Dexter A. Dodge
Chairman
TO OUR SHAREHOLDERS
One of the great benefits of our semi-annual communication to our shareholders
is the opportunity to step back from our day to day wrestling with market forces
and reflect over a longer time frame. In some respects, as we look at the first
six months of 1997, we see the mirror image of 1996. In 1n 1996, we began the
year with widespread expectations of lower interest rates. These expectations
were met, as the Federal Reserve actually lowered interest rates in January of
1996. As the year wore on, however, expectations changed and by the middle of
last year there was widespread anticipation that interest rates would move
higher, expectations which we shared.
Now look at 1997. We have had what appears to be a reverse replay. We began the
year with the widespread expectation that the Federal Reserve would move to
change rates, just as we had in 1996. And, just as in 1996, the Federal Reserve
fulfilled that expectation. This time, however, the expectation and the movement
were in the direction of higher rates, with the Federal Reserve raising the
federal funds rate (the rate charge by banks to other banks for overnight
borrowing) by 0.25% or 25 basis points. Also, just as in 1996, as the year has
worn on, expectations have reversed course. Most now expect the Federal Reserve
to at least remain neutral and refrain from either raising or lowering rates for
at least the next few months.
But the most remarkable thing about all these observations, is not that 1997
just looks like 1996 in reverse. Rather, the most remarkable thing has been the
continuing stability of the fixed income markets during these changes of
direction by the Federal Reserve. On June 30, 1996 the 91-day Treasury Bill was
priced to yield 5.20%, on December 31, 1996 it was priced to yield 5.19%, and on
June 30, 1997 it was priced to yield 5.17%. While less stable than the
short-term rate on the 91-day Treasury Bill, the long-term yield represented by
the 30-year Treasury Bond has also shown remarkably little fluctuation,
registering readings of 6.91%, 6.64%, and 6.78% on the three dates in question.
At least in the short-term, we expect this stability to continue. Recent
testimony by Alan Greenspan, as well as other governors of the Federal Reserve
System, leads us to believe that the Federal Reserve is unlikely to move rates
in either direction over the next few months. In addition, the economy, in the
word of the Federal Reserve Chairman, remains exceptional. Economic growth
continues, but not at a pace that has yet been fast enough to accelerate
inflation.
As always, we will continue to maintain the highest quality investments in the
Freedom Group of Money Funds.
Sincerely,
/s/ Dexter A. Dodge
Dexter A. Dodge
Chairman
[PHOTO] [PHOTO] [PHOTO]
------- ------- -------
Michael M. Spencer Mary Jeanne Currie Paul Marandett
Director of Fixed Portfolio Manager Portfolio Manager
Income Investments Cash Management Fund Tax Exempt Money Fund
Government Securities Fund
FINANCIAL REVIEW
FREEDOM CASH MANAGEMENT FUND
As 1997 began, there were numerous positive indications that led us to believe
that the strong economic growth which had started to materialize in the last
quarter of 1996 would continue. This was a major concern to the Federal Reserve
which had given indications that they would act to curtail any signs of a rise
in inflation. The same sentiment was also apparent in the bond market where
rates had been on a rising trend since the end of November. In reaction to this
outlook, we developed a cautious stance and began to shorten the average
maturity of the Cash Management Fund which would provide us with more
opportunity to take advantage of the continued upward movement in interest
rates. The Federal Reserve did move to raise rates in March in an action that
they deemed preemptive. Whether this action provided the desired result or the
economy continued to grow while inflation remained subdued remains to be seen.
It now seems that we may be able to continue along at a steady pace without any
undesirable side effects. As a result, we foresee no drastic swings in interest
rates throughout the rest of the year and have taken a neutral approach in the
Cash Management Fund, keeping the average maturity closer to that of our peer
group.
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 Fund are rated AAA
by Standard & Poors.
FREEDOM GOVERNMENT
SECURITIES FUND
The Freedom Government Securities Fund began the year with an average maturity
that was neutral to that of other money funds. Soon though we began to see signs
that there was continued strength in the economy and that the Federal Reserve,
always wary of an increase in inflation, would take action to stem this from
occurring. This led us to adopt a more cautious stance to shorten the maturity
of the Fund in order to have more money available as rates started to rise. As
mentioned above, the Federal Reserve did vote to raise rates in March and it
appears that the desired effect has been achieved. We now feel that fears of
inflation may be unwarranted throughout the end of this year. Although our
current strategy is to be neutral to the index, we are constantly analyzing
economic events to ensure that this is the most desirable approach.
All of the investments in the fund are made in debt of U.S. Government agencies
which provide income exempt from state taxation.
FREEDOM TAX EXEMPT MONEY FUND
At the end of June the Freedom Tax Exempt Money Fund offered a 7-day yield of
3.42%, which represents 68% of yields offered by comparable taxable money funds.
Six months ago that ratio stood at 55% thus demonstrating the strong relative
performance of the tax exempt sector this year. The Funds annualized total
return rose from 2.78% in the first quarter to 3.26% in the second quarter. This
jump in rates was initially caused by the Federal Reserve which raised the
federal funds rate from 5.25% to 5.50% on March 25th of this year. At that time
the Fed was in a preemptive mode, anticipating inflationary pressures from
tremendous first quarter economic growth.
The economic slowdown during the second quarter, however, has seen long-term
interest rates decline to levels well below those of last March. Surprisingly,
this has not been the case in the short-term or money market sector. Strong
corporate profits along with stock market appreciation resulted in larger than
normal money fund redemptions or outflows as shareholders made tax payments.
Those outflows coupled with an increase in the supply of variable rate product
produced a supply/demand balance that kept short-term rates stable but
comparatively high.
The month of June is historically the heaviest in terms of tax exempt note
issuance as June 30th is the most common year end for governmental units. Note
issuance this June is much lighter than normal, however, as better overall
economic conditions have produced greater tax revenues. The supply side of the
equation is also smaller as individual investors continue to focus on the equity
markets and corporations await word from Washington regarding the limits to be
imposed on their tax exempt investments. Interest rate volatility, therefore,
has been much lower than in past years.
These fundamental constraints have resulted in a fairly flat yield curve, a
condition that has persisted for some time. Interest rates on variable rate
securities have, on average, matched those offered by 3-, 6- and 12-month
securities for the last few quarters. The Freedom Tax Exempt Money Fund has
continued to maintain a shorter than average maturity in response to the flat
short-term yield curve. Our general economic forecast as well as our outlook for
interest rates dictates no change in strategy at this time. We will endeavor to
maintain for our shareholders the highest rates of return consistent with our
high standards of superior credit quality.
Sincerely,
Michael M. Spencer
Director of Fixed Income
Investments
Mary Jeanne Currie
Portfolio Manager
Paul Marandett
Portfolio Manager
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- 95.2%
ABBEY NATIONAL BANK
$20,000,000 5.580% 07/10/1997 $19,972,100
20,000,000 5.730% 10/14/1997 19,665,750
AMERICAN EXPRESS CREDIT CORP.
13,000,000 5.280% 07/01/1997 13,000,000
20,000,000 5.540% 07/28/1997 19,916,900
20,000,000 5.530% 07/29/1997 19,913,978
10,000,000 5.540% 08/04/1997 9,947,678
AMERICAN GENERAL FINANCE CORP.
5,000,000 5.540% 07/22/1997 4,983,842
8,000,000 5.570% 08/05/1997 7,956,678
10,000,000 5.580% 08/20/1997 9,922,500
15,000,000 5.580% 08/25/1997 14,872,125
5,000,000 5.580% 08/28/1997 4,955,050
14,000,000 5.570% 09/08/1997 13,850,538
10,000,000 5.640% 09/09/1997 9,890,333
10,000,000 5.590% 10/08/1997 9,846,275
ASSET SECURITIZATION COOPERATIVE CORP.
15,000,000 5.640% 07/21/1997 14,953,000
14,000,000 5.550% 07/30/1997 13,937,408
10,000,000 5.620% 08/19/1997 9,923,506
15,000,000 5.560% 08/20/1997 14,884,167
4,000,000 5.650% 08/28/1997 3,963,589
20,000,000 5.630% 08/29/1997 19,815,461
ASSOCIATES CORPORATION OF NORTH AMERICA
30,000,000 5.610% 07/02/1997 29,995,325
15,000,000 5.600% 07/08/1997 14,983,667
15,000,000 5.620% 09/09/1997 14,836,083
15,000,000 5.550% 09/23/1997 14,805,750
BANK OF AMERICA FSB
10,000,000 5.530% 07/24/1997 9,964,669
BANK OF MONTREAL
6,500,000 5.600% 07/03/1997 6,497,978
BANK OF NOVA SCOTIA
10,000,000 5.570% 09/02/1997 9,902,525
25,000,000 5.580% 09/02/1997 24,755,875
10,000,000 5.580% 09/03/1997 9,900,800
25,000,000 5.540% 09/15/1997 24,707,611
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
BEAR STEARNS COMPANIES, INC.
$20,000,000 5.580% 09/24/1997 $19,736,500
CAISSE NATIONALE D'AMORTISSEMENT DE LA DETTE SOCIALE
5,000,000 5.370% 07/01/1997 5,000,000
16,000,000 5.270% 07/15/1997 15,967,209
13,300,000 5.540% 08/11/1997 13,216,084
CANADIAN IMPERIAL HOLDINGS INC.
15,000,000 5.600% 07/14/1997 14,969,667
15,000,000 5.560% 08/13/1997 14,900,383
10,000,000 5.570% 08/22/1997 9,919,544
CAPITAL ONE CORP.
20,684,000 5.630% 07/03/1997 20,684,000
CARCO AUTO LOAN MASTER TRUST
50,000,000 5.705% 07/15/1997 50,000,000
CHEVRON OIL FINANCE CO.
10,000,000 5.300% 07/03/1997 9,997,056
2,000,000 5.610% 07/14/1997 1,995,948
5,000,000 5.630% 08/05/1997 4,972,632
CHEVRON U.K. INVESTMENT PLC
15,000,000 5.630% 08/04/1997 14,920,242
11,000,000 5.640% 08/06/1997 10,937,960
5,000,000 5.610% 09/08/1997 4,946,238
15,000,000 5.610% 10/06/1997 14,773,263
CIESCO LP
15,000,000 5.580% 07/16/1997 14,965,125
COMMERZBANK U.S. FINANCE INC.
15,000,000 5.580% 08/21/1997 14,881,425
COOPERATIVE ASSOCIATION OF TRACTOR DEALERS INC.
1,500,000 5.630% 07/02/1997 1,499,765
7,310,000 5.610% 07/07/1997 7,303,165
7,000,000 5.570% 07/15/1997 6,984,837
5,000,000 5.700% 07/15/1997 4,988,917
11,100,000 5.570% 07/16/1997 11,074,239
3,300,000 5.600% 07/18/1997 3,291,273
14,000,000 5.660% 07/22/1997 13,953,777
6,000,000 5.690% 07/22/1997 5,980,085
2,900,000 5.610% 07/24/1997 2,889,606
11,200,000 5.600% 07/28/1997 11,152,960
9,100,000 5.660% 10/07/1997 8,959,789
</TABLE>
4
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1997--(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- (CONTINUED)
DUN & BRADSTREET CORP.
$11,127,000 5.650% 07/08/1997 $ 11,114,776
10,000,000 5.620% 07/15/1997 9,978,144
21,862,000 5.630% 08/12/1997 21,718,403
10,000,000 5.630% 08/14/1997 9,931,189
8,000,000 5.600% 08/19/1997 7,939,022
8,000,000 5.590% 08/26/1997 7,930,436
9,000,000 5.620% 09/04/1997 8,908,675
E.I. DUPONT DE NEMOURS & CO.
10,000,000 5.520% 07/09/1997 9,987,733
15,000,000 5.590% 09/16/1997 14,820,654
25,000,000 5.610% 09/26/1997 24,661,063
25,000,000 5.600% 10/28/1997 24,537,222
FORD CREDIT EUROPE PLC
15,000,000 5.670% 08/12/1997 14,900,775
FORD MOTOR CREDIT CORP.
20,000,000 5.580% 07/07/1997 19,981,400
10,000,000 5.570% 07/25/1997 9,962,867
5,000,000 5.530% 07/28/1997 4,979,263
20,000,000 5.540% 08/19/1997 19,849,189
8,000,000 5.570% 10/20/1997 7,862,607
GENERAL ELECTRIC CAPITAL CORP.
15,000,000 5.590% 07/08/1997 14,983,696
7,000,000 5.610% 08/05/1997 6,961,821
5,000,000 5.550% 08/11/1997 4,968,396
5,000,000 5.610% 08/11/1997 4,968,054
7,000,000 5.640% 08/20/1997 6,945,167
6,000,000 5.590% 09/03/1997 5,940,373
14,000,000 5.560% 09/15/1997 13,835,671
9,000,000 5.560% 10/29/1997 8,833,200
10,000,000 5.630% 10/30/1997 9,810,769
GLAXO WELLCOME PLC
20,000,000 5.600% 07/01/1997 20,000,000
GOLDEN PEANUT CO.
3,000,000 5.370% 07/07/1997 2,997,315
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
GOLDMAN SACHS & CO.
$18,000,000 5.550% 08/06/1997 $17,900,100
15,000,000 5.630% 10/02/1997 14,781,838
15,000,000 5.610% 10/07/1997 14,770,925
15,000,000 5.680% 11/04/1997 14,701,800
15,000,000 5.650% 11/06/1997 14,698,667
LUCENT TECHNOLOGIES INC.
5,000,000 5.620% 09/25/1997 4,932,872
MERRILL LYNCH & CO.
10,000,000 6.200% 07/01/1997 10,000,000
16,000,000 5.630% 07/16/1997 15,962,467
17,000,000 5.570% 09/04/1997 16,829,032
20,000,000 5.580% 09/10/1997 19,779,900
15,000,000 5.660% 10/27/1997 14,721,717
MORGAN (J.P.) & CO., INC .
18,000,000 5.420% 07/17/1997 17,956,640
10,000,000 5.600% 07/17/1997 9,975,111
10,000,000 5.500% 07/21/1997 9,969,444
10,000,000 5.400% 09/03/1997 9,904,000
NEW CENTER ASSET TRUST
20,000,000 5.560% 09/05/1997 19,796,133
PRUDENTIAL FUNDING CORP.
10,000,000 5.340% 07/07/1997 9,991,100
10,000,000 5.340% 07/09/1997 9,988,133
15,000,000 5.380% 08/04/1997 14,923,783
20,000,000 5.540% 08/07/1997 19,886,122
8,000,000 5.620% 08/11/1997 7,948,796
15,000,000 5.610% 09/29/1997 14,789,625
SHEFFIELD RECEIVABLES CO RP.
3,000,000 5.600% 07/15/1997 2,993,467
10,000,000 5.560% 07/22/1997 9,967,567
9,100,000 5.540% 07/25/1997 9,066,391
3,525,000 5.580% 07/25/1997 3,511,887
27,800,000 5.550% 07/29/1997 27,679,997
UBS FINANCE (DE) INC.
44,000,000 6.150% 07/01/1997 44,000,000
</TABLE>
5
FREEDOM CASH MANAGEMENT FUND
INVESTMENTS AS OF JUNE 30, 1997 - (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
COMMERCIAL PAPER -- (CONTINUED)
USAA CAPITAL CORP.
$6,290,000 5.620% 07/21/1997 $ 6,270,361
3,484,000 5.590% 07/24/1997 3,471,556
20,000,000 5.630% 07/24/1997 19,928,061
10,000,000 5.580% 09/22/1997 9,871,350
1,775,000 5.560% 10/01/1997 1,749,778
-------------
TOTAL COMMERCIAL PAPER 1,523,409,350
-------------
MUNICIPAL SECURITIES -- 1.7%
MISSISSIPPI BUSINESS FINANCE CORP. TAXABLE
INDUSTRIAL DEVELOPMENT REVENUE BONDS
10,000,000 5.750% 07/02/1997 10,000,000
NEW YORK (CITY OF) GENERAL OBLIGATION BONDS
18,000,000 5.820% 08/15/1997 18,000,000
-------------
TOTAL MUNICIPAL SECURITIES 28,000,000
-------------
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
CERTIFICATES OF DEPOSIT -- 1.3%
CANADIAN IMPERIAL HOLDINGS INC.
$10,000,000 5.680% 08/21/1997 $ 10,000,733
SOCIETE GENERALE
10,000,000 5.875% 11/24/1997 9,999,970
---------------
TOTAL CERTIFICATES OF DEPOSIT ............................. 20,000,703
---------------
TOTAL INVESTMENTS -- 98.2% ................................ 1,571,410,053(a)
Other Assets & Liabilities, Net -- 1.8% ................... 28,718,267
---------------
TOTAL NET ASSETS -- 100.0% ................................ $1,600,128,320
==============
</TABLE>
(a) Cost for tax purposes is the same.
See Notes to Financial Statements.
6
FREEDOM GOVERNMENT SECURITIES FUND
INVESTMENTS AS OF JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
<S> <C> <C> <C>
U.S. GOVERNMENT AGENCY
ISSUES -- 98.6%
FEDERAL FARM CREDIT BANK DISCOUNT
NOTES -- 24.1%
$5,225,000 5.440% 07/01/97 $ 5,225,000
5,000,000 5.420% 07/02/97 4,999,247
1,930,000 5.470% 07/07/97 1,928,240
5,000,000 5.480% 08/05/97 4,973,361
8,000,000 5.410% 08/07/97 7,955,518
6,200,000 5.510% 08/11/97 6,161,093
10,000,000 5.490% 08/13/97 9,934,425
3,000,000 5.430% 09/05/97 2,970,135
9,300,000 5.475% 09/05/97 9,206,651
5,000,000 5.550% 10/27/97 4,909,042
4,200,000 5.470% 11/03/97 4,120,229
5,790,000 5.480% 11/03/97 5,679,829
5,500,000 5.520% 11/03/97 5,394,583
-----------
TOTAL FEDERAL FARM CREDIT BANK
DISCOUNT NOTES 73,457,353
-----------
FEDERAL HOME LOAN BANK DISCOUNT
NOTES -- 66.3%
400,000 5.260% 07/10/97 399,474
10,000,000 5.400% 07/11/97 9,985,000
1,400,000 5.430% 07/22/97 1,395,566
9,000,000 5.430% 07/24/97 8,968,778
10,000,000 5.490% 07/24/97 9,964,925
4,500,000 5.415% 07/25/97 4,483,755
14,840,000 5.420% 07/25/97 14,786,378
4,485,000 5.270% 07/29/97 4,466,616
705,000 5.420% 07/31/97 701,816
600,000 5.500% 07/31/97 597,250
650,000 5.510% 07/31/97 647,015
4,500,000 5.470% 08/01/97 4,478,804
2,900,000 5.500% 08/04/97 2,884,936
15,000,000 5.270% 08/05/97 14,923,146
3,250,000 5.290% 08/06/97 3,232,808
PRINCIPAL MATURITY
AMOUNT RATE DATE VALUE
------ ---- ---- -----
$4,260,000 5.310% 08/07/97 $ 4,236,751
7,300,000 5.490% 08/08/97 7,257,697
4,000,000 5.410% 08/13/97 3,974,152
19,500,000 5.520% 08/18/97 19,356,480
3,500,000 5.500% 08/19/97 3,473,799
2,200,000 5.410% 08/20/97 2,183,469
2,200,000 5.510% 08/21/97 2,182,827
135,000 5.540% 08/25/97 133,857
15,000,000 5.450% 08/28/97 14,868,292
3,300,000 5.480% 09/03/97 3,267,851
4,280,000 5.420% 09/05/97 4,237,471
1,475,000 5.480% 09/05/97 1,460,181
6,000,000 5.430% 09/12/97 5,933,935
1,500,000 5.430% 09/17/97 1,482,353
2,650,000 5.450% 09/22/97 2,616,702
2,625,000 5.450% 10/08/97 2,585,658
5,700,000 5.430% 12/02/97 5,567,599
15,700,000 5.500% 12/03/97 15,328,215
20,000,000 5.523% 07/28/97 20,000,000
-----------
TOTAL FEDERAL HOME LOAN BANK
DISCOUNT NOTES 202,063,556
-----------
STUDENT LOAN MARKETING FLOATING RATE NOTES -- 8.2%
10,000,000 5.180% 10/16/97 10,000,000
15,000,000 5.180% 11/20/97 14,991,706
-----------
TOTAL STUDENT LOAN MARKETING FLOATING
RATE NOTES .............................................. 24,991,706
-----------
TOTAL U.S. GOVERNMENT AGENCY
ISSUES -- 98.6%.......................................... 300,512,615(a)
Other Assets & Liabilities Net -- 1.4% .................... 4,146,619
-----------
Total Net Assets -- 100.0% ................................ $304,659,234
=============
</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, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MUNICIPAL SECURITIES -- 100.6%
ALABAMA -- 1.4%
$3,800,000 Alabama HFA Series 92A
(AmSouth LOC) 4.15%
7-02-97 $ 3,800,000
-----------
ARIZONA -- 13.0%
Apache County IDA
(Tucson Electric & Gas)
13,000,000 (Barclays Bank LOC)
4.15% 7-02-97 13,000,000
2,100,000 (Chemical Bank LOC)
4.15% 7-02-97 2,100,000
4,500,000 Maricopa County IDA
(Grand Canyon
University) (Banc One
LOC) 4.20% 7-03-97 4,500,000
2,000,000 Maricopa County PCR
(P.S. of New Mexico)
(Canadian Imperial Bank
of Commerce LOC) 4.10%
7-02-97 2,000,000
1,500,000 Mesa Municipal
Development Corp. (West
Deutche Landesbank LOC)
3.80% 7-30-97 1,500,000
Pima County IDA (Tucson
Electric Power Co.)
3,000,000 (Barclays Bank LOC)
4.15% 7-02-97 3,000,000
9,300,000 (Societe Generale
LOC) 4.15% 7-02-97 9,300,000
-----------
35,400,000
-----------
ARKANSAS -- 2.8%
7,700,000 Arkansas Development
Finance Authority
(Citibank LOC) 4.15%
7-03-97 7,700,000
-----------
CALIFORNIA -- 3.7%
2,000,000 California Higher
Education Loan
Authority (National
Westminster LOC) 3.95%
5-01-98 2,000,000
1,000,000 California School Cash
Reserve Program 4.75%
7-02-97 1,000,024
3,000,000 Los Angeles County
TRANS 4.50% 6-30-98 3,018,720
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
CALIFORNIA -- (CONTINUED)
$ 2,000,000 Los Angeles Department
of Water and Power
(Toronto
Dominion/Bank of Nova
Scotia LOC) 3.90%
10-06-97 $ 2,000,000
2,000,000 Riverside County TRANS
4.50% 6-30-98 2,010,540
------------
10,029,284
------------
FLORIDA -- 5.7%
3,500,000 Citrus Park Community
Development Authority
(Dresdner Bank LOC)
4.15% 7-02-97 3,500,000
2,000,000 Dade County IDA
(Societe Generale
LOC) 4.15%
7-02-97 2,000,000
2,600,000 Florida HFA
(Multi-Family)
(Chemical Bank LOC)
4.20% 7-02-97 2,600,000
1,000,000 Florida HFA (So. Pointe
Proj.) (Chemical Bank
LOC) 4.20% 7-02-97 1,000,000
Putnam County PCR
(Seminole Electric)
(NRUCFC)
1,950,000 3.55% 9-15-97 1,950,000
3,565,000 3.60% 12-15-97 3,565,000
1,000,000 West Orange Memorial
Hospital Tax District
(Rabobank LOC) 3.70%
7-24-97 1,000,000
------------
15,615,000
------------
GEORGIA -- 3.3%
2,800,000 Georgia Municipal Gas
Authority (Wachovia
Bank LOC) 3.80%
7-11-97 2,800,000
2,190,000 Fulton County TANS
4.20% 7-02-97 2,190,000
4,100,000 Savannah Port Authority
IDA (Pier 1 Imports)
(National Westminster
LOC) 4.20% 7-02-97 4,100,000
------------
9,090,000
------------
</TABLE>
8
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
IDAHO -- 0.6%
$ 1,500,000 IDAHO TANS Series 96
4.625% 6-30-98 $ 1,510,725
------------
ILLINOIS -- 10.6%
Chicago O'Hare
International Airport
6,200,000 Series 84A (Societe
Generale LOC) 4.20%
7-02-97 6,200,000
3,500,000 Series 84B (Societe
Generale LOC) 4.20%
7-02-97 3,500,000
Illinois Development
Finance Authority
4,300,000 (Aurora Central
Catholic H.S.)
(Northern Trust LOC)
4.15% 7-02-97 4,300,000
1,000,000 (Lake Forest Academy)
(Northern Trust LOC)
4.15% 7-02-97 1,000,000
3,000,000 (Presbyterian Homes)
(LaSalle National Bank
LOC) 4.15% 7-02-97 3,000,000
Illinois Health
Facilities Authority
3,900,000 (Rush-Presbyterian
Hospital) (Northern
Trust LOC) 3.55%
8-01-97 3,900,000
2,000,000 (University of
Chicago Hospital)
(Escrowed in U.S.
Government Securities)
8.10% 8-01-97 2,046,980
5,000,000 Lisle Health Facilities
Authority (FNMA
Insured) 4.25% 7-02-97 5,000,000
------------
28,946,980
------------
INDIANA -- 0.9%
1,500,000 Indianapolis MFHA
(Canal Square Proj.)
(Societe Generale LOC)
4.15%
7-15-97 1,500,000
1,000,000 Whiting Economic
Development Revenue
(Amoco) 3.50% 8-15-97 1,000,000
------------
2,500,000
------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
KANSAS -- 0.6%
$ 1,560,000 Leavenworth County
Series 97A (AMBAC
Insured) 3.70% 12-01-97 $ 1,560,000
------------
LOUISIANA -- 8.8%
4,200,000 Ascension Parish IDA
(Borden Project)
(Credit Suisse LOC)
4.15%
7-02-97 4,200,000
400,000 East Baton Rouge IDA
(Georgia Pacific)
(Toronto Dominion LOC)
4.15% 7-03-97 400,000
1,100,000 Lake Charles Harbor &
Terminal District
(Canadian Imperial Bank
of Commerce LOC) 4.15%
7-02-97 1,100,000
1,600,000 Louisiana PCFA (Societe
Generale LOC) 4.20%
7-02-97 1,600,000
Plaquemines Port Harbor
& Terminal Authority
2,000,000 (Morgan Guaranty LOC)
3.75% 3-15-98 2,000,000
2,000,000 (Tampa Electric Co.
Finance Corp.) 3.70%
7-10-97 2,000,000
3,000,000 (Tampa Electric Co.
Finance Corp.) 3.50%
7-14-97 3,000,000
2,500,000 (Tampa Electric Co.
Finance Corp.) 3.80%
7-18-97 2,500,000
2,100,000 (Tampa Electric Co.
Finance Corp.) 3.70%
7-22-97 2,100,000
5,000,000 West Feliciana Parish
PCR (GSU Industries)
(Canadian Imperial Bank
of Commerce LOC) 4.10%
7-15-97 5,000,000
------------
23,900,000
------------
MAINE -- 1.5%
4,035,000 Maine HEFA (Bowdoin
College) (State Street
Bank LOC) 4.15% 7-02-97 4,035,000
------------
</TABLE>
9
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1997 - (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
MARYLAND -- 0.4%
$ 1,100,000 Maryland HEFA (Pooled
Loan Program) (FNB-
Chicago LOC) 4.15%
7-02-97 $ 1,100,000
------------
MASSACHUSETTS -- 0.8%
2,300,000 Massachusetts Bay
Transit Authority
(State Street Bank LOC)
3.45% 9-01-97 2,300,000
------------
MICHIGAN -- 0.9%
1,000,000 Ingham Economic
Development Corp.
(National Australia
Bank LOC) 4.15% 7-02-97 1,000,000
1,500,000 Michigan Strategic Fund
(Dow Chemical) 3.50%
8-04-97 1,500,000
------------
2,500,000
------------
MINNESOTA -- 0.8%
1,100,000 Duluth PCR (Lake
Superior Paper
Industries) (Wachovia
Bank LOC) 4.15% 7-03-97 1,100,000
1,000,000 Southern Minnesota
Municipal Power Agency
(Escrowed in U.S.
Government Securities)
8.00% 1-01-98 1,041,265
------------
2,141,265
------------
MISSISSIPPI -- 1.5%
4,000,000 Perry County
Mississippi PCR
(Wachovia LOC) 4.05%
7-01-97 4,000,000
------------
MISSOURI -- 1.4%
1,300,000 Columbia (Insurance
Reserve Bonds) (Toronto
Dominion LOC) 4.20%
7-02-97 1,300,000
2,500,000 Missouri HEFA (SSM
Health Care Project)
(MBIA Insured/Credit
Suisse LOC) 4.15%
7-02-97 2,500,000
------------
3,800,000
------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
NEVADA -- 1.0%
$ 1,600,000 Nevada Department of
Commerce (FMC Corp.)
(Barclays Bank LOC)
4.00% 9-15-97 $ 1,600,000
1,000,000 Washoe County School
District (Escrowed in
U.S. Government
Securities) 7.50%
8-01-97 1,023,202
------------
2,623,202
------------
NEW HAMPSHIRE -- 1.2%
2,100,000 New Hampshire Business
Finance Authority (CT
Light & Power) Series
92A (Canadian Imperial
Bank of Commerce LOC)
4.15% 7-02-97 2,100,000
1,300,000 New Hampshire HEFA
(Mary Hitchcock
Hospital) (FGIC
Insured/ Chemical Bank
LOC) 4.15% 7-02-97 1,300,000
------------
3,400,000
------------
NEW MEXICO -- 1.6%
2,400,000 Albuquerque GO
(Canadian Imperial Bank
of Commerce LOC) 4.20%
7-02-97 2,400,000
2,000,000 Farmington (Arizona
Public Service)
(Barclays Bank LOC)
4.05% 7-01-97 2,000,000
------------
4,400,000
------------
NEW YORK -- 3.7%
New York City Municipal
Water Finance Authority
(FGIC-SPI Insured)
5,000,000 4.05% 7-01-97 5,000,000
2,000,000 4.15% 7-01-97 2,000,000
3,000,000 New York Energy
Research & Development
Authority (J.P. Morgan
LOC) 3.65% 3-15-98 3,000,000
------------
10,000,000
------------
</TABLE>
10
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1997 - (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
NORTH CAROLINA -- 6.5%
North Carolina Eastern
Municipal Power
(Canadian Imperial Bank
of Commerce LOC)
$ 1,000,000 3.75% 7-14-97 $ 1,000,000
4,000,000 3.55% 8-11-97 4,000,000
7,700,000 North Carolina
Educational Facilities
(Bowman Gray Medical
School) (Wachovia Bank
LOC) 4.15% 7-02-97 7,700,000
4,900,000 North Carolina
Educational Facilities
(Moses Cone Hospital)
(Wachovia Bank LOC)
4.15% 7-03-97 4,900,000
------------
17,600,000
------------
OHIO -- 1.8%
5,000,000 Cincinatti Student Loan
Funding Corp. (Bank of
America LOC) 4.15%
12-29-98 5,000,000
------------
PENNSYLVANIA -- 1.4%
1,500,000 Emmaus General
Authority (Canadian
Imperial Bank of
Commerce LOC) 4.20%
7-02-97 1,500,000
2,300,000 Pennsylvania HEFA
(Allegheny Delaware
Valley) (PNC Bank LOC)
4.10% 7-02-97 2,300,000
------------
3,800,000
------------
RHODE ISLAND -- 0.4%
1,000,000 Rhode Island Port
Authority (Newport
Electric) (Canadian
Imperial Bank of
Commerce LOC) 4.15%
7-02-97 1,000,000
------------
SOUTH CAROLINA -- 3.2%
2,960,000 York County (North
Carolina Electric)
(NRUCFC) 3.55% 9-15-97 2,960,000
5,775,000 York County (Saluda
River Project) (NRUCFC)
Series E1 3.50% 8-15-97 5,775,000
------------
8,735,000
------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
TENNESSEE -- 0.4%
$ 1,000,000 Metropolitan Government
of Nashville & Davidson
County (Vanderbuilt
University) 3.65%
1-15-98 $ 1,000,000
------------
TEXAS -- 8.6%
2,650,000 Austin County IDA
(Justin Industries
Inc.) (Citibank LOC)
4.20% 7-02-97 2,650,000
5,430,000 Brazos River Authority
IDA (Monsanto Co.
Project) 4.15% 7-02-97 5,430,000
1,200,000 Lower Neches Valley
Authority PCR (Chevron)
3.50% 8-15-97 1,200,000
3,000,000 Mansfield IDA (Pier 1
Imports) (National
Westminster LOC)
4.20% 7-02-97 3,000,000
1,000,000 Northside Independent
School District (Texas
Permanent School Fund
Guaranty) 6.50% 2-15-98 1,017,702
2,000,000 Texas Board of Regents
(Permanent University
Fund) 4.10% 7-08-97 2,000,074
8,000,000 Texas TRANS 4.75%
8-29-97 8,009,946
------------
23,307,721
------------
UTAH -- 4.7%
Intermountain Power
Agency (Swiss Bank LOC)
1,000,000 3.80% 7-28-97 1,000,000
4,000,000 3.50% 9-15-97 4,000,000
7,700,000 State Board of Regents
Student Loan Revenue
Series 88B (AMBAC
Insured/Dresdner LOC)
4.15% 7-02-97 7,700,000
------------
12,700,000
------------
VIRGINIA -- 4.1%
2,900,000 Hampton Roads Regional
Jail Authority
(Wachovia Bank LOC)
4.15% 7-02-97 2,900,000
</TABLE>
11
FREEDOM TAX EXEMPT MONEY FUND
INVESTMENTS AS OF JUNE 30, 1997 - (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
<S> <C> <C>
VIRGINIA -- (CONTINUED)
$ 2,000,000 Harrisonburg Virginia
Redevelopment and
Housing Revenue Bonds
(Misty Ridge Project)
(BancOne LOC) 4.15%
7-03-97 $ 2,000,000
1,200,000 Peninsula Port
Authority (Dominion
Term. Assoc.) (National
Westminster LOC) 4.00%
7-01-97 1,200,000
4,100,000 Peninsula Port
Authority (Shell Oil)
4.05% 7-01-97 4,100,000
1,000,000 Virginia Transportation
Board (Escrowed in U.S.
Government Securities)
7.80% 3-01-98 1,045,368
------------
11,245,368
------------
WASHINGTON -- 1.5%
3,100,000 Seattle Water System
Revenue Bonds
(Bayerische Landesbank
LOC) 4.10% 7-02-97 3,100,000
1,000,000 Washington Health Care
Facilities (Sisters of
Providence) (Rabobank
LOC) 4.05% 7-01-97 1,000,000
------------
4,100,000
------------
WISCONSIN -- 1.5%
4,017,000 Wisconsin 3.75% 8-21-97 4,017,000
------------
PRINCIPAL
AMOUNT DESCRIPTION VALUE
------ ----------- -----
WYOMING -- 0.3%
$ 900,000 Platte County PCR
Series 84A (Societe
Generale LOC) 4.20%
7-01-97 $ 900,000
------------
TOTAL INVESTMENTS -- 100.6% ........................ 273,756,545(A)
Other Assets & Liabilities, Net -- (0.6)%.......... (1,547,593)
------------
TOTAL NET ASSETS -- 100.0%......................... 272,208,952
============
</TABLE>
Legend:
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.
PCFA--Pollution Control Finance Authority
PCR--Pollution Control Revenue
TANS--Tax Anticipation Notes
TRANS--Tax & Revenue Anticipation Notes
Insurance Abbreviations:
AMBAC--American Municipal Bond Assurance Corporation
FGIC--Federal Guaranty Insurance Corporation
FGIC--SPI--Federal Guaranty Insurance Corporation--
Securities Purchased Inc.
FNMA--Federal National Mortgage Association
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, 1997
(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 $1,571,410,053 $300,512,615 $273,756,545
Cash 1,798,618 286,766 1,667,643
Receivable for Fund shares sold 32,810,816 4,875,879 2,831,437
Interest receivable 592,835 250,414 1,548,352
Prepaid expenses 14,426 3,162 2,865
Other assets 65,871 18,473 21,495
------------- ----------- -----------
TOTAL ASSETS 1,606,692,619 305,947,309 279,828,337
------------- ----------- -----------
LIABILITIES
Payable for Investments purchased -- -- 6,539,985
Payable for Fund shares redeemed 2,199,182 476,724 550,981
Dividends payable 3,220,577 602,058 364,431
Accrued expenses:
Investment adviser's fee 602,754 123,845 107,231
Transfer agent and shareholder servicing fee 490,988 43,528 40,151
Trustees' fee -- 2,226 1,285
Other 50,798 39,694 15,321
------------- ----------- -----------
TOTAL LIABILITIES 6,564,299 1,288,075 7,619,385
------------- ----------- -----------
NET ASSETS $1,600,128,320 $304,659,234 $272,208,952
============== =========== ===========
NET ASSETS CONSIST OF:
Capital paid in $1,600,284,201 $304,658,557 $272,191,383
Accumulated net realized gain (loss) (155,881) 677 17,569
------------- ----------- -----------
$1,600,128,320 $304,659,234 $272,208,952
============== =========== ===========
SHARES ISSUED AND OUTSTANDING (UNLIMITED SHARES
AUTHORIZED) 1,600,284,201 304,658,557 272,191,383
------------- ----------- -----------
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, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
FREEDOM FREEDOM FREEDOM
CASH GOVERNMENT TAX EXEMPT
MANAGEMENT SECURITIES MONEY
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
INTEREST INCOME $44,017,140 $8,211,844 $ 4,748,839
----------- ---------- -----------
EXPENSES
Investment adviser's fee 3,705,937 755,918 658,244
Transfer agent & shareholder services 1,451,520 119,220 96,425
Custodian 157,524 40,394 1,400
Compensation of Trustees 18,880 8,230 6,590
Audit 17,450 5,430 19,005
Legal 27,150 5,020 17,775
Printing, postage and stationery 56,850 26,485 25,480
Membership dues 40,139 8,846 8,002
Registration expense 98,640 35,460 24,250
Insurance expense 27,172 5,396 5,140
Other 3,620 904 362
----------- ---------- -----------
TOTAL EXPENSES 5,604,882 1,011,303 862,673
----------- ---------- -----------
NET INVESTMENT INCOME 38,412,258 7,200,541 3,886,166
----------- ---------- -----------
NET REALIZED GAIN (LOSS) ON INVESTMENTS (4,832) (5,661) 9,809
----------- ---------- -----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $38,407,426 $7,194,880 $3,895,975
=========== ========== ==========
</TABLE>
See Notes to Financial Statements
14
FREEDOM GROUP OF MONEY FUNDS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FREEDOM FREEDOM
CASH MANAGEMENT FUND GOVERNMENT SECURITIES FUND
-------------------- --------------------------
SIX MONTHS YEAR ENDED SIX MONTHS YEAR ENDED
ENDED DECEMBER 31, ENDED DECEMBER 31,
JUNE 30, 1997* 1996 JUNE 30, 1997* 1996
-------------- ------------- -------------- ---------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM:
OPERATIONS:
Net investment income $ 38,412,258 $ 71,363,421 $ 7,200,541 $ 14,463,300
net realized gain (loss) from investments (4,832) (3,685) (5,661) 52
--------------- --------------- --------------- ---------------
Net increase in net assets resulting
from operations 38,407,426 71,359,736 7,194,880 14,463,352
DIVIDENDS TO SHAREHOLDERS (38,412,258) (71,363,421) (7,200,541) (14,463,300)
--------------- --------------- --------------- ---------------
(4,832) (3,685) (5,661) 52
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares 2,773,307,558 5,556,198,753 519,779,896 1,060,548,970
Net asset value of shares issued to
shareholders in reinvestment of
dividends 34,469,303 69,100,632 6,500,439 13,800,298
Cost of shares redeemed (2,844,929,378) (5,334,634,861) (531,553,562) (1,081,811,460)
--------------- --------------- --------------- ---------------
Net increase (decrease) from capital share
transactions (37,152,517) 290,664,524 (5,273,227) (7,462,192)
--------------- --------------- --------------- ---------------
Net increase (decrease) in net assets (37,157,349) 290,660,839 (5,278,888) (7,462,140)
NET ASSETS:
Beginning of period 1,637,285,669 1,346,624,830 309,938,122 317,400,262
--------------- --------------- --------------- ---------------
End of period $ 1,600,128,320 $ 1,637,285,669 $ 304,659,234 $ 309,938,122
=============== =============== =============== ===============
DIVIDENDS TO SHAREHOLDERS PER SHARE $ 0.0239 $ 0.0476 $ 0.0236 $ 0.0460
=============== =============== =============== ===============
</TABLE>
- ---------
* Unaudited.
<TABLE>
<CAPTION>
FREEDOM
TAX EXEMPT MONEY FUND
---------------------
SIX MONTHS YEAR ENDED
ENDED DECEMBER 31
JUNE 30, 1997* 1996
-------------- --------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS
FROM:
OPERATIONS:
Net investment income $ 3,886,166 $ 8,093,896
net realized gain (loss) from investments 9,809 --
--------------- ---------------
Net increase in net assets resulting
from operations 3,895,975 8,093,896
DIVIDENDS TO SHAREHOLDERS (3,886,166) (8,093,896)
--------------- ---------------
9,809 --
--------------- ---------------
CAPITAL SHARE TRANSACTIONS:
(At Net Asset Value of $1 per share)
Proceeds from sale of shares 529,812,735 1,066,733,465
Net asset value of shares issued to
shareholders in reinvestment of
dividends 3,434,753 7,489,562
Cost of shares redeemed (524,137,444) (1,085,210,380)
--------------- ---------------
Net increase (decrease) from capital share
transactions 9,110,044 (10,987,353)
--------------- ---------------
Net increase (decrease) in net assets 9,119,853 (10,987,353)
NET ASSETS:
Beginning of period 263,089,099 274,076,452
--------------- ---------------
End of period $ 272,208,952 $ 263,089,099
=============== ===============
DIVIDENDS TO SHAREHOLDERS PER SHARE $ 0.0146 $ 0.0283
=============== ===============
</TABLE>
- ---------
* Unaudited.
See Notes to Financial Statements.
15
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. ACCOUNTING POLICIES. Freedom Mutual Fund and 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 a 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' advisor.
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.
16
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
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.
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 parent of Freedom Distributors
Corporation as well as an affiliate of Sutro & Co., Inc. ("Sutro") and Tucker
Anthony Incorporated ("Tucker Anthony"). All are wholly owned subsidiaries of
Freedom Securities Corporation ("Freedom Securities"), formerly John Hancock
Freedom Securities. On November 29, 1996, John Hancock Subsidiaries, Inc. sold
approximately 95% of its interest in Freedom Securities to an investor group
which includes certain members of management and employees of Freedom Securities
and its subsidiaries, including FCMC. The consummation of the transaction
resulted in a change of control of the Advisor, causing the advisory agreement
between FCMC and the Trust, on behalf of each of the Funds, to be "assigned", as
such term is defined under the Investment Company Act of 1940. Shareholders have
subsequently approved the new advisory agreement, as necessitated by this change
in control. The new advisory agreement is substantially the same as the prior
advisory agreement.
FCMC, the investment advisor of the Funds, 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
17
FREEDOM MUTUAL FUND
FREEDOM GROUP OF TAX EXEMPT FUNDS
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
annual rate of one half of one percent (.50%) on the first $500 million of
average daily net assets and forty-five hundredths 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.
Tucker Anthony, Sutro and Freedom Distributors Corporation act as
distributors of the Trusts' shares and receive no compensation for such
services. Freedom Services Corp. (formerly 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, 1997 as follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---- ---- ----
<S> <C> <C>
$610,540 $51,340 $41,525
======== ======= =======
</TABLE>
John Hancock Signature Services, Inc. ("JHSS"), formerly John Hancock
Investor Services, Corp., a wholly-owned subsidiary of the Berkeley Financial
Group is transfer agent for the Funds. JHSS received the following from the
Funds for the six months ended June 30, 1997:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---- ---- ----
<S> <C> <C>
$601,280 $47,780 $38,850
======== ======= =======
</TABLE>
NOTE 3. Purchases and sales (including maturities) of investments (excluding
repurchase agreements) for the six months ended June 30, 1997 were as follows:
<TABLE>
<CAPTION>
CASH GOVERNMENT TAX
MANAGEMENT SECURITIES EXEMPT MONEY
FUND FUND FUND
---- ---- ----
<S> <C> <C> <C>
Purchases
U.S. Government -- $975,713,973 --
Other $5,419,959,525 -- $ 332,454,065
Sales
U.S. Government -- $982,373,667 --
Other $5,472,315,184 -- $312,526,081
</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, 1997++ $1.00 $0.0239 $(0.0239) $1.00 2.43% $1,600,128 0.70%+ 4.83%+
December 31, 1996 1.00 0.0476 (0.0476) 1.00 4.86% 1,637,286 0.71% 4.76%
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%
GOVERNMENT SECURITIES FUND
June 30, 1997++ $1.00 $0.0236 $(0.0236) $1.00 2.40% $ 304,659 0.67%+ 4.76%+
December 31, 1996 1.00 0.0460 (0.0460) 1.00 4.69% 309,938 0.65% 4.50%
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%
TAX EXEMPT MONEY FUND
June 30, 1997++ $1.00 $0.0146 $(0.0146) $1.00 1.49% $ 272,209 0.66%+ 2.95%+
December 31, 1996 1.00 0.0283 (0.0283) 1.00 2.86% 263,089 0.63% 2.82%
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)(a) 1.00 4.69% 205,166 0.57% 4.57%
December 31, 1987 1.00 0.0398 (0.0398)(a) 1.00 4.05% 222,820 0.53% 3.98%
- ---------------
+ Annualized.
++ Unaudited.
(a) Net of fees waived by the Adviser which amounted to $0.0008, $0.0016 per
share in the years 1988 and 1987, respectively.
</TABLE>
19
NO SALES OR REDEMPTION CHARGES
DISTRIBUTORS
Tucker Anthony Incorporated
One Beacon Street
Boston, Massachusetts 02108
Telephone Toll Free
800-453-8206
Sutro & Co. Incorporated
201 California Street
San Francisco, California 94111
INVESTMENT ADVISER
Freedom Capital Management Corporation
One Beacon Street
Boston, Massachusetts 02108-3105
TRANSFER AND SHAREHOLDER
SERVICES AGENT
John Hancock Signature
Services, Incorporated
P.O. Box 9102
Boston, Massachusetts 02205-9102
Telephone Toll Free
800-257-3336
[LOGO] FREEDOM
GROUP OF MONEY FUNDS
This report has been prepared for shareholders and may be distributed
to others only if preceded or accompanied by a current prospectus for
the Freedom Group of Money Funds.
F01ARD 0697
FREEDOM GROUP
OF MONEY FUNDS
[LOGO]
FREEDOM
CASH MANAGEMENT
FUND
FREEDOM
GOVERNMENT
SECURITIES FUND
FREEDOM
TAX EXEMPT
MONEY FUND
----------
SEMI-ANNUAL REPORT
JUNE 30,1997